A roundup of some of the North American equities making moves in both directions today
On the rise
Restaurant Brands International Inc. (QSR-T), the parent company of Burger King and Tim Hortons, was up 0.3 per cent after announcing at an Investor Day event on Wednesday that it plans to expand all three of its brands to more than 40,000 restaurants globally in the next 8-10 years, making it one of the largest restaurant companies in the world.
The company said it’s projecting its coffee, burger and chicken markets to grow between 5 per cent and 6 per cent per year over the next 5 years.
Keyera Corp. (KEY-T) rose 5.1 per cent after revealing on Tuesday after market close that it plans to proceed with the Key Access Pipeline System (“KAPS”) that will transport NGL and condensate from northwest of Grande Prairie into Fort Saskatchewan and Keyera’s fractionation facility and condensate hub.
“KAPS is expected to provide Keyera with secure, long-term, take-or-pay revenues, strong project returns and a platform for significant future growth. Keyera has partnered with SemGroup Corporation and KKR to develop KAPS. Keyera plans to fund KAPS without issuing common equity, aside from the existing DRIP program,” the company said.
The Calgary-based company made the announcement with the release of its first-quarter results, which fell short of the Street’s forecast.
AltaCorp Capital analyst Nate Heywood said: “Overall we view the update to be positive given the significance of the pipeline announcement, offsetting operating results that were below expectations.”
Laurentian Bank Securities analyst Elizabeth Johnston said: “Consolidated Q1/19 sales increased 23 per cent to $557.9-million, ahead of our expectations and consensus. The growth year-over-year was supported by another consecutive quarter of strong SSSG, which was negatively impacted by one less production day in the period (not adjusting for that impact, SSSG was indicated to be 6.6 per cent). Compared to our forecast, the higher revenue came from the higher SSSG, higher FX tailwinds on translation ($20.4-million vs our $15.4-million), and higher contribution from M&A (net $60.4-million vs our $47-million.
“Adjusted EBITDA was $54.2-million (9.7-per-cent margin). EBITDA margin benefitted from slightly higher gross margin and slightly lower operating expenses (as a percentage of sales; note that adjusted EBITDA excludes the impact of IFRS 16 adoption). The gross margin benefitted from the higher sales levels, higher pricing and parts/labour margin, partially offset by sales mix. Operating expenses, adjusted for the impact of IFRS 16, were 35.6 per cent of sales (compared to 35.8 per cent in Q1/18) improving as a result of higher leverage of fixed costs, but partially offset by the enhanced U.S. employee benefits program. Recall that in 2018, this was approximately a 30bps headwind on margin.”
National Bank Financial’s Maxim Sytchev said: "We stepped off the gas on WSP ahead of the quarter as relative performance / multiple expansion argument was getting tenuous. Looking however at what’s available for a long-term long-only investor in Canada in the industrial space (mid- to large-cap), there is generally a paucity of ideas. Names that are struggling somewhat (such as Stantec), trading at the same multiple as WSP do not make a huge amount of sense to us.”
Before market open, the Montreal-based company reported net earnings of $12.7-million or 45 cents per share compared to a net loss of $900,000 or 3 cents a year earlier. Analysts were expecting earnings of 19 cents per share.
It also announced it will make an aggregate redemption payment of $91.7-million composed of a $50.9-million mandatory redemption and $40.8-million optional redemption including accrued and unpaid interest of $0.9 million and an optional redemption premium of $0.8 -million, on its senior secured notes on May 31, 2019 and June 13, 2019 respectively.
“After yet another quarter of strong cash generation, our net debt excluding lease obligations is down to $154 million, a reduction of over $200 million since the end of 2017," said president and CEO David Eckert. “We are benefiting from having shed non-synergistic and unprofitable business and having implemented efficiencies throughout the company. As we are now working hard to bend the revenue curve in our core business, we are pleased that we are able to make such strides in eliminating debt and maintain strong cash generation.”
Aurora Cannabis Inc. (ACB-T) rose 3.1 per cent despite its quarterly results, released Tuesday evening, fell short of expectations.
Edmonton-based Aurora said marijuana sales in its third quarter rose to 9,160 kilograms from 6,999 kg in the second quarter.
Its gross revenue rose to $75.2-million from $62-million in the previous quarter. Analysts on average were expecting $77.16 million.
“We achieved solid revenue growth and strong operating results in a quarter proven challenging across the industry. We are laser focused on building a long-term sustainable business," said CEO Terry Booth in a statement.
Shares of Tilray Inc. (TLRY-Q) were up 0.5 per cent, a day reporting a rise in quarterly revenue on the back of increased marijuana demand following recreational legalization in Canada.
Nanaimo, B.C.-based Tilray said total kilogram equivalents of cannabis sold in its first quarter jumped more than twofold to 3,012 kilograms. The average selling price per gram, however, fell to US$5.60 from US$5.94 a year earlier.
Overall, its revenue nearly tripled to US$23-million, exceeding the expectation on the Street of US$20.2-million.
“Our growth internationally and in Canada continue to be limited by lack of supply that we expect to improve over time,” Tilray Chief Financial Officer Mark Castaneda said on a conference call with analysts.
On the decline
Shares of Macy’s Inc. (M-N) dipped 0.5 per cent despite the U.S. retailer exceeded the Street estimates for quarterly same-store sales and profit on Wednesday.
Seeing growth in its digital sales and rising demand at its off-price stores, it reported sales at Macy’s stores open more than 12 months, including sales in department stores licensed to third parties, rose 0.7 per cent, topping the 0.3-per-cent estimate among analysts.
Excluding special items, the company earned 44 US cents per share, easily beating the Street’s estimate of 33 US cents.
“Macy’s, Inc. is off to a solid start this year, delivering our sixth consecutive quarter of comparable sales growth and making progress against the North Star Strategy. As an omnichannel retailer, we are focused on growing our customer base by providing a great experience across all channels and taking market share category by category.Our brick & mortar sales trend improved sequentially in the first quarter, supported by the Growth50 stores and Backstage. We had another quarter of double-digit growth in our digital business, and mobile continues to be our fastest-growing channel," said chairman and chief executive officer Jeff Gennette in a release. “We are pleased with the progress we are making on our strategic initiatives as they continue to drive top-line growth, keeping us on track to reach our 2019 goals. We believe these initiatives, coupled with productivity improvements, position our company well for long-term profit growth.”
Shaw Communications Inc. (SJR-B-T) was down 1.8 per cent following an announcement after market close Tuesday that it is unloading its 38.6-per-cent stake in Corus Entertainment Inc. (CJR-B-T) in a $548-million share sale, after struggling to sell the position to a single buyer last year.
The offering is priced at $6.80 per Class B share, representing a 15.6-per-cent discount to Corus’s closing price.
Shares of Corus, which is the owner of the Global television network and a slate of specialty TV channels, were down 16.9 per cent.
With revenue falling short of projections for the second consecutive quarter, the Canadian online gambling firm reported earnings per share of 38 cents, which was 5 cents below the forecast on the Street and a drop from 66 cents during the same period a year ago.
In a research note, Echelon Wealth analyst Gianluca Tucci said: “The company was faced with an adverse net-win margin in Q119, particularly at its UK division where record low margin of 5 per cent was realized, versus 9.2 per cent year-over-year. We note if net-win margin was in-line with historical norms, Q119 would have produced revenue of $650-million and adjusted EBITDA of $240-million. We view the softness in its UK margins as a buying opportunity in the stock – in the long run, the house always wins.”
Fiera Capital Corp. (FSZ-T) was down 1.3 per cent after a Wednesday morning announcement that it will acquire all of the outstanding shares of Foresters Asset Management Inc., a wholly owned subsidiary of Foresters Financial, for an undisclosed price. Foresters Asset Management is an Ontario-based investment management firm focused on institutional and insurance liability-driven investment with approximately $10.5-billion in assets under management as of April 30, the company stated.
Following closing of the transaction, Fiera Capital said its total liability-driven investment AUM will exceed $25-billion.
“The combination of Foresters Asset Management with Fiera Capital will enhance our leading Canadian institutional fixed income and LDI capabilities,” said Jean-Philippe Lemay, president and chief operating officer of Fiera Capital’s Canadian Division.
With files from staff and wires