A roundup of some of the North American equities making moves in both directions today
On the rise
The retail, bakery and real estate business says the profit available to common shareholders totalled $582 million or $3.78 per diluted share for the quarter ended March 21.
That compared with a loss of $488 million or $3.18 per diluted share a year ago when it recorded a fair value adjustment of the trust unit liability of nearly $1.09 billion or $7.07 per share.
The company expects more than 90 per cent of stores to be open by early June, under modified operations and hours.
The Calgary-based company announced EBITDA of $129-million, exceeding the consensus projection of $118-million.
Industrial Alliance Securities analyst Elias Foscolos said: “It appears to us that GEI’s beat in Q1/20 EBITDA seems to be more technical in nature, and will likely not materially change our longer-term projections. Previously, GEI guided 2020 EBITDA from its Infrastructure segment at $360-380-million (iA estimate: $382-million), which appears to be unchanged. While the Q1/20 results are clearly setting GEI up to exceed the high end of its guidance, there could be losses in fee-for-service pipeline revenue due to production declines.”
MEG Energy Corp. (MEG-T) soared 16.2 per cent in the wake of announcing it has taken further steps to reduce its 2020 full year non-energy operating costs and general and administrative (G&A) expense.
It said non-energy operating costs are now targeted at $140-million to $150-million, which is about 12-per-cent lower than original guidance. G&A is now targeted at $52.5-million to $55-million, or approximately 16-per-cent lower than original guidance. “The majority of these cost reductions were a result of a reduction in staffing levels and rationalization of ongoing administrative costs,” the company stated.
MEG reported revenue of $665-million in the first quarter, down from $919-million a year ago. Analysts were expecting revenue of $700.7-million. Its net loss was $284-million or 95 cents per share versus a loss of $48-million or 16 cents a year earlier.
BMO Nesbitt Burns analyst Randy Ollenberger said: “We believe that MEG offers investors significant leverage to stronger crude oil prices and long-term growth in production from its best-in-class oil sands assets.”
After the bell on Monday, the Vancouver-based Caterpillar dealer reported adjusted earnings of 33 cents, up 9 per cent year-over-year and 4 cents higher than the consensus the Street.
Canaccord Genuity analyst Yuri Lynk said: “. In short, the company did a very good job navigating a volatile quarter and executed very well. Of course, this quarter won’t be so positive. Management noted the coronavirus pandemic began impacting Finning’s business in the first quarter. Initially the impact was felt in the UK & Ireland then Canada and South America. The most significant impacts on the company’s operations included delayed equipment deliveries in all regions, lower parts sales in the construction sector, and lower rental utilization in March in all regions. The company also experienced reduced productivity at rebuild facilities and lower labour recovery at the branches.”
Sleep Country Canada Inc. (ZZZ-T) increased 7.9 per cent in the wake of the announcing it’s suspending its dividend and normal course issuer bid program and will resume both initiatives “upon return to normal operating conditions.”
Its also expanding its senior secured credit agreement with an incremental $50-million. The company also said it’s deferring 100 per cent of the board’s unpaid cash compensation and deferring 50 per cent of the salaries of the CEO, president and Dormez-vous and chief business development officer, and 25 per cent of the salaries of remaining named executive officers.
The retailer also reported first-quarter revenue increased to $151.6-million from $149.3-million a year ago. Same-store sales decreased by 0.9 per cent compared to a year earlier. Net income was $5-million or 14 cents per share versus $7.8-million or 21 cents a year earlier. Adjusted EPS came in at 17 cents versus 23 cents a year ago.
Pfizer Inc. (PFE-N) rose about 2.3 per cent after it announced that its venture with BioNTech SE had started delivering doses of its experimental coronavirus vaccines for human testing in the United States.
The U.S. drugmaker and German partner said if the vaccine proves to be safe and effective in trials, it could potentially be ready for wide U.S. distribution by the end of the year, shaving several years off the typical vaccine development timeline.
The vaccine, which uses messenger RNA (mRNA) technology, has the potential to be among the first vaccines against the virus that has infected more than 1 million people in the United States and killed some 68,000.
There are currently no approved treatments or vaccines for the new coronavirus, though some drugs are being used on patients under an emergency use authorization.
Newmont Corp. (NGT-T) was up 2.7 per cent after its adjusted profit nearly doubled on Tuesday boosted by higher production and a surge in the prices of the precious metal, as investors rushed to the safe-haven asset amid market turmoil caused by the COVID-19 outbreak.
The world’s biggest gold miner said average realized price for gold in the first quarter rose to US$1,591 per ounce from US$1,300 an ounce last year, while attributable gold production rose 20% to 1.5 million ounce mainly due to new output from the Goldcorp mines that it acquired last year.
Gold prices have risen around 12 per cent this year, as investors shifted their investments to the metal after risk sentiment took a beating due to uncertainties in a coronavirus-hit global economy.
This has helped shares of gold miners to outpace broader stock indexes this year, despite shutting down production due to the virus-led lockdowns across the globe.
S&P/TSX’s Global Gold index, which tracks producers of gold and related products, including companies that mine or process gold globally, has gained about 36 per cent on an average in this quarter, compared to last year.
Newmont’s stock is up about 44 per cent this year as of Monday’s close.
On the decline
Restaurant Brands International Inc. (QSR-T) was down 0.3 per cent in reaction to activist investor Bill Ackman’s Pershing Square Capital Management raising its stake in the Tim Hortons owner to 9.6 per cent from the previous level of 6.6 per cent.
Bloomberg reports that Pershing viewed the company’s shares as being “undervalued” and an “attractive investment.”
In a filing, Pershing said it planned to hold discussions with Restaurant Brands’ management, board of directors and other shareholders on a range of topics that could include strategic plans and its governance, according to the Bloomberg report.
The company said the initiatives will result in a 10-per-cent reduction of the company's workforce, or approximately 225 employees, of which 125 are located in Quebec. As a result, the company said it will be closing its plant that was formerly known as Alta Precision.
“While our defence activities have been generally insulated from the global pandemic, we are seeing lower demand for our commercial products. We must, therefore, take the difficult but necessary decision to rationalize our cost structure by adjusting our manufacturing capacity to the current unprecedented environment. We regret the impact these actions will have on affected employees and will put in place appropriate measures to support them,” said Martin Brassard, CEO.
U.S. oil refiner Marathon Petroleum Corp. (MPC-N) slipped 1.3 per cent after it lowered spending by 30 per cent and detailed other measures to cut cost, as widespread lockdowns to contain the spread of the COVID-19 pandemic pummel demand for oil and gas.
Marathon said spending across its various businesses would decline by US$1.4-billion, reducing its budget for the year to US$3-billion.
Net loss attributable for the largest U.S. oil refiner stood at US$9.2-billion, or US$14.25 per share, in the first quarter, as it booked US$12.4-billion in charges related to inventory writedown and goodwill impairment.
On an adjusted basis, its loss of 16 cents US per share was much smaller than analysts’ average estimate of 31 US cents.
Marathon also forecast sharply lower refining throughput in the second quarter as it temporarily idled some facilities to save costs at a time when there is little demand for refined products.
Industrial materials maker DuPont (DD-N) sat 0.2 per cent lower in the wake of doubling its annual cost-savings target and slashing its capital expenditure by about US$500-million, as it looks to weather the global trade uncertainties brought on by the coronavirus outbreak.
DuPont now expects to save US$180-million this year, compared to US$90-million from steps announced in January to take out stranded costs.
The industrial giant had earlier suspended its full-year forecast, citing the pandemic.
The company’s adjusted earnings, in line with preliminary results released earlier, came in at 84 US cents per share for the first quarter, beating analysts’ estimates of 75 US cents, according to Refinitiv IBES.
Thomson Reuters Corp. (TRI-T) was down 0.4 per cent after it reported higher quarterly sales and operating profit that fell slightly short of Wall Street estimates on Tuesday, while cutting its full-year sales outlook due to disruption to the global economy from the coronavirus crisis.
The company said it was targeting a US$100-million cost reduction program and noted it has no debt due until 2023. It said it has enough liquidity for the next 12 months and does not expect to change its dividend.
The news and information provider, parent of Reuters News, reported a 2-per-cent rise in first quarter revenue to US$1.52-billion, helped by gains in its legal and corporates businesses, and said operating profit rose 6 per cent to US$290-million.
Adjusted earnings of 48 cents a share were 1 cent below Wall Street expectations, according to Refinitiv.
Thomson Reuters forecast 1-2-per-cent total revenue growth this year, below its February estimate of 4.5-5.5 per cent, saying its business of selling information and software solutions electronically and on a subscription basis was not immune to the recent global economic downturn.
“We don’t plan any layoffs at this point in time,” Steve Hasker, Chief Executive of Thomson Reuters, said in an interview. “We are focused on investing in our business.”
Fiat Chrysler Automobiles (FCAU-N) was 0.8 per cent lower after it plunged to a first-quarter loss of US$1.8-billion and scrapped its full-year earnings forecast on Tuesday, as the automaker grapples with a coronavirus crisis that has hammered production and sales.
The Italian-American company, which has struck a binding merger deal with France’s PSA Group to create the world’s fourth largest carmaker, said it remained committed to the tie-up, despite “unexpected and unprecedented times”.
“Together, we continue to push ahead on the various merger workstreams and we remain committed to completing the transaction by the end of this year or early 2021,” it said.
FCA said it made a net loss from continuing operations of 1.69 billion euros in the first quarter of this year. That compared with a 508 million euro net profit a year earlier.
“The pandemic has had, and continues to have, a significant impact on our operations,” the company said in a statement.
However, FCA still made an operating profit, albeit 95 per cent lower than a year earlier. Adjusted earnings before interest and tax (EBIT) amounted to 52 million euros.
Norwegian Cruise Line Holdings Ltd. (NCLH-N) plummeted 22.8 per cent in the wake of saying on Tuesday it does not have enough cash to meet its obligations in the next year and raised doubts about its ability to keep running its operations.
The company was evaluating strategies to increase its liquidity, it said in a regulatory filing.
Norwegian Cruise and rivals Carnival Corp. (CCL-N) and Royal Caribbean Cruises (RCL-N) have been among the worst-hit companies by the coronavirus crisis, bleeding cash and scrambling for funds to ride out the slowdown.
Shares of Carnival and Royal Caribbean were down 8.9 per cent and 10.1 per cent, respectively.
United Airlines Holdings Inc. (UAL-Q) slid 4.6 per cent after Reuters reported, based on two company memos, that it plans to cut at least 3,400 management and administrative positions in October as the coronavirus pandemic crushes air travel demand, and has told pilots to brace for changes as well.
Chicago-based United is among the U.S. airlines that have accepted U.S. government payroll aid that bans job or pay cuts before Sept. 30. However, United and other carriers have warned that demand is unlikely to recover to pre-crisis levels by that date, forcing them to shrink in the fall.
The United memos are the first indication of just how much major airlines might downsize due to the health crisis.
“We have to acknowledge that there will be serious consequences to our company if we don’t continue to take strong and decisive action, which includes making decisions that none of us ever wanted or expected to make,” Kate Gebo, Executive Vice President Human Resources and Labor Relations, said in the memo to some 11,500 management and administrative employees.
Affected employees will be notified in mid to late July for an Oct. 1 effective date, she said, while encouraging employees to consider a voluntary separation before that date.
In a separate memo seen by Reuters, pilots were told to prepare for a “displacement” that will affect roughly 30 per cent of roughly 12,250 pilots.
L Brands Inc. (LB-N) plunged 3.4 per cent after it said late Monday it has agreed to call off the sale of its majority stake in Victoria’s Secret lingerie business to buyout firm Sycamore, averting a bitter legal battle between the two companies over the US$525-million deal.
Columbus, Ohio-based L Brands said instead it was preparing to operate Victoria’s Secret as well as its personal care brand Bath & Body Works as separate, standalone units.
L Brands said it was in its best interests to focus on navigating an extremely challenging business environment rather than engaging in costly and distracting litigation to force a partnership with Sycamore.
Sycamore Partners, which had agreed to buy a 55-per-cent stake in the Victoria’s Secret business in February, said neither party would be required to pay a termination fee and that both sides have agreed to settle all pending litigation.
Before the bell, BMO Nesbitt Burns analyst Simeon Siegel upgraded L Brands shares to an “outperform” rating, noting “with the Sycamore news extinguished, noise will dissipate and it will become harder to ignore underlying fundamental value.”
Wendy’s Co. (WEN-Q) fell 2.4 per cent after it said on Tuesday its restaurants may face a shortage of many menu items, including hamburgers, as beef processors in the United States struggle to keep their plants open amid the COVID-19 pandemic.
U.S. meat manufacturers, including Tyson Foods Inc, have signaled disruptions to food supply as they are forced to shut many meat plants to curb the spread of the coronavirus.
“Beef suppliers across North America are currently facing production challenges. Because of this, some of our menu items may be in short supply from time to time at some restaurants in this current environment,” a Wendy’s spokesperson said.
The burger chain, known for its fresh-never-frozen patties, said it would continue to supply hamburgers to all of its restaurants, with deliveries two or three times a week.
With files from Brenda Bouw, staff and wires