A roundup of some of the North American equities making moves in both directions today
On the rise
Cenovus Energy Inc. (CVE-T) soared on Tuesday after Reuters reported it plans to cut 20 per cent to 25 per cent of its workforce after it acquires Husky Energy (HSE-T), as its begins to slash costs in the Canadian oil patch’s biggest merger in four years.
The job losses could total about 2,150 positions, based on the size of their workforces, with the majority to take place in Calgary,, Husky said in a statement.
Cenovus and Husky confirmed the job cuts after two sources told Reuters of the magnitude of the reductions.
It was not clear when the cuts would take effect.
“As with any merger of this type, there will be overlap and there will be some difficult decisions as we work to create a combined organization best positioned for the future,” Husky spokeswoman Kim Guttormson said.
Ottawa-based e-commerce company Shopify Inc. (SHOP-T) rose after it said on Tuesday it will partner with TikTok to help its one million-plus merchants more easily advertise their products on the video-sharing app, as it looks to grow its customer base.
The link-up with Shopify, which provides an e-commerce platform and distribution services to mostly small and medium-sized businesses, comes as a proposal for Walmart Inc to buy a stake in the Chinese-owned firm is stuck in limbo.
Shopify said the partnership will allow its merchants to sell product in the form of shoppable video ads, where TikTok users can click on an ad to buy the product.
All transactions will happen via Shopify’s site, helping the Toronto-based firm drive sales online, while the two companies “will also collaborate to test new commerce features” over the coming months, it said.
“It’s kind of a pinch-me moment, to be able to buy Rubik’s Cube,” Anton Rabie, Spin Master’s chairman, co-founder and co-chief executive officer, said in an interview. “We love the global nature of it. We’re really expanding our games business globally, and this gives us a lot of leverage.”
While interest in the cube has gone up and down over the decades, it has been growing in recent years. Rubik’s Brand now sells between five million and 10 million units per year across its range of toys – which includes the original cube as well as variations (such as a pyramid, Rubik’s-theme board games, a simplified two-by-two-square version, and more diabolical five-by-fives). Since its inception, Rubik’s has sold more than 450 million units around the world.
- Susan Krashinsky Robertson
PrairieSky Royalty Ltd. (PSK-T) gained after it said its oil and gas revenue and net earnings staged a rebound in the third quarter ending Sept. 30 as oil prices recovered from pandemic-related lows.
The Calgary-based company, which collects royalties from oil and gas production on lands for which it has the petroleum mineral rights, reports revenue increased 54 per cent to $43.5-million in the third quarter compared with the second.
It reported net earnings of $9.4-million, compared with a loss of $400,000, as royalty production averaged 18,745 barrels of oil equivalent per day, up from 18,670 boe/d in the second quarter.
It says it realized an average of $41.11 per barrel for oil in the third quarter, up from an average of $24.31 in the second quarter but short of the $59.04 per barrel it realized in the third quarter of 2019.
Meanwhile, its realized natural gas price rose to $1.62 per thousand cubic feet, up from $1.39 in the second quarter and 72 cents in the third quarter of 2019.
Producers took about 30 per cent of PrairieSky’s oil production off-line in the second quarter as COVID-19 lockdowns eroded global oil demand, but the company says activity in Western Canada was gradually restored during the most recent quarter, with 18 rigs working on its lands at the beginning of the period and 73 rigs at the end.
The Toronto-based company reported a 6-per-cent year-over-year drop in revenues (to $692.3-million), however adjusted EBITDA and earnings per share rose 9 per cent and 4 per cent, respectively, to $92.1-million and $1.08.
“Despite the far-reaching impact of the pandemic, Colliers delivered better than expected financial results for the third quarter with continued growth from recurring services. The results are a testament to the resilience of our global platform and differentiated business model that is diversified by geography, service and asset class,” said CEO Jay Hennick.
Harley-Davidson Inc. (HOG-N) soared after it beat profit expectations on Tuesday as shipments improved from pandemic lows and it reined in costs as part of Chief Executive Officer Jochen Zeitz’s restructuring plan.
Declines in shipments improved to 6 per cent, or 43,000 motorcycles, from a year earlier and compared with a 59-per-cent slump in the prior quarter, indicating a rise in demand for the maker of large cruisers.
Retail sales in its biggest market, the United States, where Harley has not recorded a sales rise for the past six years, fell 10 per cent from a year earlier, but was much less than the 27-per-cent slide in the second quarter.
Harley’s sharp recovery from the COVID-19 lows also comes amid CEO Zeitz’s efforts to shut unprofitable markets like India and focus on growth markets such as United States, Europe and parts of Asia-Pacific to lower costs.
Net income rose to US$120-million, or 78 US cents per share, in the third quarter ended Sept. 30, from US$87 -million, or 55 US cents per share, a year earlier. On an adjusted basis, it earned US$1.05 cents per share, according to Refinitiv data.
On the decline
Tim Hortons parent Restaurant Brands International Inc. (QSR-T) on Tuesday reported a 27.8-per-cent slump in quarterly profit, as stay-at-home orders kept diners away and investments in safety equipment and delivery orders increased.
Several restaurant chains across the globe have spent heavily on modernizing stores, wages and sanitizing, taking precautions to ensure safety and hygiene during the COVID-19 outbreak.
Operating costs and expenses in the third quarter rose about 4 per cent to US$920-million, Restaurant Brands said on Tuesday.
Total revenue fell 8.3 per cent to US$1.34-billion, meeting analyst expectations, according to IBES data from Refinitiv.
Comparable sales at Popeyes, the popular fried chicken sandwich chain that gathered a huge social media audience and long lines at stores last year, rose 17.4 per cent.
The company said it would modernize drive-thru at more than 10,000 Burger King, Tim Hortons and Popeyes locations in North America, beginning the rollout with the chicken sandwich chain later this year.
At Burger King, comparable sales fell 7 per cent and slumped 12.5 per cent at Tim Hortons, as fewer people bought their morning cups of coffee at cafes amid the work-from-home orders.
Net income attributable to the company’s shareholders came in at US$145-million, or 47 US cents per share, for the three months ended Sept. 30, from US$201-million, or 75 US cents per share, last year.
On an adjusted basis, the company earned 68 US cents, 5 US cents above expectations, according to IBES data from Refinitiv.
Teck Resources Ltd. (TECK.B-T) missed analysts' estimates for quarterly profit on Tuesday, hurt by a steep drop in the prices of steelmaking coal, sending it shares down.
Miners globally have been struggling after the COVID-19 pandemic wreaked havoc on commodity markets, forcing companies to shut mines, slash production and even wind down some operations.
Teck said labor intensive activities such as maintenance, mine operations and projects continue to be impacted by COVID-19 safety protocols.
The company, however, said construction work at its Quebrada Blanca Phase 2 copper mine in Chile was being ramped up and it was expecting the project to be about 40 per cent complete by year end.
Work at the site was suspended in March and remains partially on hold to limit the transmission of COVID-19.
Average price realized for steelmaking coal dropped 34.6 per cent to $102 per ton in the third quarter, while sales stood at 5.1 million tons compared with 6.1 million tons a year earlier.
The Vancouver-based miner also cut its forecast for copper production for the second half of the year by 5,000 tons and now expects it to be between 140,000 tons and 155,000 tons.
Teck said profit attributable to shareholders was $61-million, or 11 cents per share, in the quarter ended Sept. 30, compared with $369-million, or 66 cents per share, a year earlier.
Excluding items, it posted a profit of 24 cents per share, missing analysts' average estimate of 27 cents, according to IBES data from Refinitiv.
MEG Energy Corp. (MEG-T) declined in the wake of beating expectations as it posted its third consecutive quarter of net losses on a 44-per-cent drop in revenues caused by lower bitumen production and realized prices.
The Calgary-based company says it lost $9-million or three cents per share for the three months ended Sept. 30, compared with a $24-million profit or eight cents per share a year earlier.
It lost $80-million in the second quarter and $284-million in the first quarter of its fiscal year.
Revenues decreased to $533-million from $958-million.
MEG Energy was expected to lose 16 cents per share on $490.2-million of revenues, according to financial markets data firm Refinitiv.
Bitumen production fell to 71,516 bbls/d at a realized price of $39.68 per barrel, from 93,278 bbls/d at $53.37 per barrel in the third quarter of 2019.
Maple Leaf Foods Inc. (MFI-T) lost ground after it reported a third-quarter profit of $66-million, up from $13.4-million in the same quarter last year, as its sales also climbed higher.
The company says the profit amounted to 53 cents per diluted share for the quarter ended Sept. 30, up from 11 cents per share a year earlier.
The increase come as Maple Leaf says strong performance by its meat protein group more than offset costs to mitigate COVID-19 risks, strategic investment in its plant protein group, as well as a favourable resolution of an income tax audit last year.
Sales for the quarter totalled $1.06-billion, up from $995.8-million a year ago.
The company’s meat protein group reported sales growth of 6.4 per cent, while the plant protein group saw sales growth of 9.3 per cent.
On an adjusted basis, Maple Leaf says it earned 17 cents per share for the quarter, up from an adjusted profit of three cents per share in the same quarter last year.
Semiconductor designer Advanced Micro Devices Inc. (AMD-Q) declined in the wake of saying on Tuesday it would buy Xilinx Inc. (XLNX-Q) in a US$35-billion all-stock deal, intensifying its battle with Intel Corp. (INTC-Q) in the data center chip market.
The deal, which AMD expects to close at the end of 2021, will create a combined company with 13,000 engineers and a completely outsourced manufacturing strategy that relies heavily on Taiwan Semiconductor Manufacturing Co Ltd.
The two U.S. firms have benefited from a more nimble approach to grab market share from Intel, which has struggled with internal manufacturing.
AMD has long been Intel’s chief rival for central processor units (CPUs) in the personal computer business.
Eli Lilly and Co. (LLY-N) was down after it fell short of analysts' expectations for third-quarter profit on Tuesday due to increased costs to develop COVID-19 treatments and lower demand for some its medicines.
Lilly is one of the handful of companies racing to develop a treatment for COVID-19 and has sought emergency use authorization for its antibody treatment for mild to moderate patients as well as its arthritis drug baricitinib.
The company did not provide any fresh update on the treatment in its results statement, a day after it said no additional hospitalized COVID-19 patients would receive its the treatment as data suggested that the therapy was unlikely to help these patients recover.
The drugmaker said other trials of its coronavirus antibody therapy remain on track.
Lilly said it expects 2020 COVID-19 research and development expense to be roughly US$400-million. Overall operating expenses increased 9 per cent to US$3.04-billion in the third quarter.
Net income fell 4 per cent to US$1.21-billion, or US$1.33 per share, in the quarter ended Sept. 30.
Excluding items, the drugmaker earned US$1.54 per share, below analysts' average estimate of US$1.71 per share, according to IBES estimates from Refinitiv.
U.S. industrial conglomerate 3M Co. (MMM-N) was down after it topped Wall Street estimates for quarterly profit on Tuesday, as the maker of N95 masks benefited from robust demand for its healthcare products during the COVID-19 pandemic.
There has been a recovery from last quarter when the company suffered a plunge in sales, as demand for office supplies declined with more people working from home due to the pandemic.
The company said the third quarter benefited from strong demand for personal safety and home improvement products.
Sales in its healthcare unit, which also makes surgical supplies and dental products, jumped 25.5 per cent, and accounted for more than a quarter of the company’s total sales.
Net income attributable to 3M fell to US$1.41-billion, or US$2.43 per share, in the third quarter ended Sept. 30, from US$1.58-billion, or US$2.72 per share, a year earlier.
Net sales rose 4.5 per cent to US$8.35-billion.
Analysts on average had expected quarterly earnings of US$2.26 per share on revenue of US$8.32-billion, according to Refinitiv data.
Drugmaker Pfizer Inc. (PFE-N) was lower after it said on Tuesday it was not yet ready to release data from the late-stage trial of the COVID-19 vaccine candidate it is developing with Germany’s BioNTech SE.
Pfizer’s CEO Albert Bourla has said the company could release data on whether or not the vaccine works as early as this month, but the company said in a presentation that the independent data monitoring board which will determine whether or not the trial has been successful has not conducted any interim efficacy analyses yet.
The company also reported a 4.3-per-cent drop in third-quarter sales, hurt by increased competition for its off-patent pain drug Lyrica and lower demand for some of its treatments during the COVID-19 pandemic.
Pfizer said quarterly Lyrica sales fell 33 per cent to US$352-million.
Total sales fell to US$12.13-billion from US$12.68-billion a year ago.
As the pandemic crimps demand for certain Pfizer therapies and damages global economies, investors are keenly focused on seeing the late-stage study data of the vaccine candidate being developed with BioNTech.
Merck & Co Inc. (MRK-N) was narrowly lower after it posted a quarterly profit that beat estimates on Tuesday and raised its adjusted earnings forecast for the full year, as it expects a majority of the blow from the ongoing COVID-19 pandemic to now be behind it.
The upbeat results showed Merck was on a recovery path after its revenue took a hit at the height of the pandemic.
Sales of the drugs increased by 2 per cent to US$11.3-billion during the third-quarter, driven primarily by growth in its cancer drugs like blockbuster immunotherapy Keytruda and certain hospital acute care products.
Excluding items, Merck earned US$1.74 per share, beating analysts' average estimates of US$1.44 per share, according to IBES data from Refinitiv.
Chevron Corp. (CVX-N) was lower after telling Reuters it will lay off about 25 per cebt of Noble Energy’s employees who joined the oil major after its US$4.1-billion purchase of the smaller rival earlier this month.
A collapse in crude oil prices has forced most oil and gas producers to drastically cut costs by laying off thousands of employees and cutting down on drilling. For many companies, consolidation with larger players at low or no premiums is becoming the only option to survive.
The job cuts, which are on top of Chevron’s plan to reduce 10-15 per cent of its own workforce, come after the company promised to lower its operating expenses by US$1-billion this year to cope with the downturn.
Chevron’s 10-15-per-cent cuts would imply a reduction of between 4,500 and 6,750 jobs, while job cuts at Noble will reduce the total workforce by roughly another 570 positions.
Caterpillar Inc. (CAT-N) lost grounded after reporting lower quarterly earnings as equipment sales fell across all of its three primary segments, reflecting a slow and uneven recovery in global economic activity from coronavirus lockdowns.
The heavy equipment maker reported a third-quarter profit of US$1.22 per share, down 54 per cent from a year ago. Analysts surveyed by Refinitiv had on average expected earnings of US$1.16 per share.
Profit was shored up by lower than expected taxes in the quarter. Revenue was down an annual 23 per cent.
The company, a bellwether for economic activity, has been suffering from business uncertainty caused by the U.S.-China trade standoff and the coronavirus pandemic, with sales of its yellow bulldozers, mining trucks and other equipment hit by customers delaying capital expenditures.
Chief Financial Officer Andrew Bonfield said while customers are still wary of making big equipment purchases, a fast economic recovery in China as well as an improvement in residential activity in North America are expected to lift retail sales in the current quarter.
China is a “bright spot in our revenues”, Mr. Bonfield told Reuters, adding the world’s second-largest economy led a 14 per cent year-on-year increase in construction machine sales in Asia-Pacific in the latest quarter.
Yet overall equipment sales are expected to decline in the quarter through December from a year ago. The pace of decline, however, is expected to moderate.
Reflecting weak equipment demand, Caterpillar now expects dealer inventories to decline by US$2.5-billion this year compared with a more than $2 billion fall estimated earlier.
The company’s stock has gained about 23 per cent since the last earnings report, outperforming the broader Dow Jones industrial average , on hopes that the worst is over for its business.
Casino operator Las Vegas Sands Corp. (LVS-N ) was up following the confirmation of reports that it is exploring a sale of its flagship casinos in Las Vegas for about US$6-billion, a move likely to mark the exit of the group’s chairman from the U.S. gambling industry for now.
The properties included in the potential sale are Sands Expo Convention Center, the Venetian Resort Las Vegas and the Palazzo, the source added, asking not to be identified.
A potential sale of the Las Vegas properties will concentrate the company’s casino portfolio entirely in Macau and Singapore.
Bloomberg reported earlier that Las Vegas Sands is working with an adviser to solicit interest from potential suitors, with a company representative cited by the news outlet confirming there were early discussions about a sale and that nothing has been finalized.
In May, Sands ended plans to open an integrated resort casino in Japan without providing a reason for the cancellation of the project.
Chairman and chief executive of the group, Sheldon Adelson, said in the second quarter that a “recovery process from the COVID-19 pandemic in each of our markets is now under way.”
With files from staff and wires