A roundup of some of the North American equities making moves in both directions today
On the rise
Cenovus Energy Inc. (CVE-T) was higher after it said on Wednesday it would double its dividend and buy back shares after the oil and gas producer posted a quarterly profit, compared with a year-ago loss, on the back of rising production and oil demand recovery.
Investors have lapped up shares of companies that have used excess cash for dividends and buyback, rather than fund growth.
Shares of peer Suncor Energy Inc. (SU-T) climbed as much as 10 per cent last week after the second largest Canadian producer said that it would double its dividend and buy back more shares than it had previously planned.
Cenovus said it would buyback up to 146.5 million shares, or about 10 per cent of its public float, as it expects to achieve its interim net debt target of below $10-billion imminently.
Total upstream production stood at 804,800 barrels of oil equivalent per day (boepd) in the quarter, up 70.6 per cent from a year ago.
Downstream throughput, or the amount of crude it processed, also nearly tripled to 554,100 barrels per day, from a year ago.
In the company’s downstream operations, the Lloydminster Upgrader and Lloydminster Refinery achieved an average quarterly crude oil utilization rate of 98 per cent, while the U.S. refineries’ crude oil utilization rate was 89 per cent.
The Calgary-based company posted a net income of $551-million, or 27 cents per share, in the third quarter ended Sept. 30, compared with a loss of $194-million, or 16 cents per share, in the year-ago quarter.
Cameco Corp. (CCJ-N, CCO-T) jumped on Wednesday after an equity analyst at BoA Merrill Lynch upgraded his rating for its shares.
“Despite poor short-run profitability, CCJ trades with the spot uranium (U3O8) price,” said Lawson Winder. “We are bullish U3O8 in the near term, calling it to $60 per pound in Q1′22. The higher PO is driven by a 17-per-cent increase in our 2022 adjusted EBITDA to $599-million (Canadian) and a 13-per-cent increase in 2023 adjusted EBITDA to $628-million, both driven by a reduction in our forecast for spot market purchases. With tighter markets due to demand from the Sprott Physical Uranium Trust (SPUT, U-U CN, not covered) and rising acceptance of nuclear’s potential role in decarbonizing, we expect rising term contracting activity in the near to medium term. This would benefit CCJ. A robust contract book could clear CCJ to restart McArthur River and improve profitability.”
Following the premarket release of better-than-expected second-quarter 2022 financial results, shares of ATS Automation Tooling Systems Inc. (ATA-T) were up in Wednesday trading.
The Cambridge, Ont.-based company reported consolidated revenue of $522.1-million, up 56 per cent year-over-year and exceeding the Street’s $498-million forecast. Adjusted earnings per share of 53 cents was 12 cents higher than the consensus projection.
Organic growth jumped 24 per cent from the same period a year ago, driven by “increased activity in the life sciences market which generated higher revenues related to projects for COVID-19 applications and increased activity in other medical device and pharmaceutical projects.”
In a research note, National Bank Financial analyst Maxim Sytchev said: “We got a sense of the strength of the automation market through Rockwell’s Q3/21 yesterday; we note that ATA’s organic top-line growth of 23.8 per cent was materially higher (vs. 12.6 per cent for ROK). We believe investors will stay on the right side of history by being long ATA at this point of the macro cycle and the company’s own evolution into a larger, more predictable, better executing, M&A-focused entity (with Healthcare and EVs providing a positive thematic skew to boot). All the previously mentioned attributes are also multiple-enhancing, supporting our stance on ATA as being our top mid-cap name in our coverage universe.”
NFI Group Inc. (NFI-T) gained ground after saying it lost US$15.4-million in its latest quarter as the bus maker dealt with global supply disruptions that reduced the availability of key parts and components and hurt production.
The Winnipeg-based company says the loss amounted to 22 US cents per share for the quarter ended Sept. 26. The result compared with a loss of US$24.9-million or 40 US cents per share in the same quarter last year.
Revenue in the quarter totalled US$492.0-million, down from US$663.9-million.
On an adjusted basis, NFI says it lost US$11.3-million or 16 US cents per share in its most recent quarter, compared with an adjusted profit of US$5.7-million or 9 US cents per share a year earlier.
Analysts on average had expected an adjusted loss of 17 US cents per share and US$497.9-million in revenue, according to financial markets data firm Refinitiv.
Lyft Inc. (LYFT-Q) shares soared after the company reported an adjusted profit for the third quarter and outlined a path to sustained profitability on the back of drastic cost cuts and a return of riders and drivers.
Lyft’s leaner cost structure allowed it to increase ridership without incurring rising expenses and executives said they targeted even higher adjusted profit in the fourth quarter, outlining their conviction for a continued recovery from a bruising pandemic.
Rides to airports, which are among the most profitable routes, nearly tripled from a year ago, executives said on an earnings call with analysts, in a sign of a broader U.S. economic recovery.
Shares of larger rival Uber Technologies Inc. (UBER-N), which will report results on Thursday after the bell, also rose following Lyft’s release. Uber has said it expects to break even on an adjusted EBITDA basis for the first time.
Overall, Lyft’s active riders increased 11 per cent to 18.9 million in the quarter ended Sept. 30. But ridership remains 35 per cent below peak levels before the pandemic, with Lyft executives saying many consumers were waiting for COVID-19 vaccine booster shots or were hesitant to travel with unvaccinated children.
The company also said business travel to offices had not yet resumed, with workers particularly on the U.S. West Coast continuing to work from home. But executives said they were hopeful office workers would return in the first half of 2022.
“It’s a matter of when, not if,” Chief Financial Officer Brian Roberts said.
According to the California-based company’s own measure, Lyft was profitable for the second consecutive time in its nine-year history.
Lyft reported adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs, primarily stock-based compensation, of US$67.3-million. The metric came in significantly ahead of a Wall Street estimate for US$30.7-million, according to Refinitiv data.
Lyft said it expected adjusted EBITDA of between US$70-million and US$75-million in the fourth quarter.
Overall, Lyft’s third-quarter revenue rose about 73 per cent on a yearly basis to US$864.4-million, beating the Wall Street estimate of US$862.68-million, according to Refinitiv IBES data.
Lyft’s net loss narrowed to US$71.5-million, or 21 US cents per share, from US$459.5-million, or US$1.46 per share last year, but President John Zimmer declined to say whether or when the company would target net profit.
The company posted surprise adjusted earnings per share of 5 US cents in the quarter compared with a loss of 3 US cents expected by Wall Street.
U.S. shale oil producers Chesapeake Energy Corp. (CHK-Q) and Devon Energy Corp. (DVN-N) rose after they topped Wall Street earnings estimates, as energy demand recovered from pandemic slump and prices hit multi-year highs.
Chesapeake Energy’s third-quarter adjusted net income was US$269-million, or US$2.38 per share, topping forecasts of US$1.68 per share, according to Refinitiv IBES. Devon reported adjusted net income of US$733-million, or US$1.08 per share, beating expectations of 93 US cents a share, according to IBES data.
Producers are benefiting from a run-up in oil and natural gas prices, as the market rebounds from blistering losses during the pandemic. West Texas Intermediate futures are trading around US$84 a barrel - a level not seen since 2014, while Henry Hub natural gas futures are around US$5.53 per million British Thermal Unit (mmBTU), near a seven-year high.
Despite soaring prices, most publicly traded energy companies have vowed to focus on shareholder returns over increasing production. On Tuesday, Chesapeake and Devon said they anticipated full-year output at or above the upper end of their forecasts, while spending would remain within anticipated ranges.
Devon on Tuesday also said its board had authorized a US$1-billion share-repurchase program, which represents 4 per cent of its market capitalization.
Devon said its 2021 production and capital spending would come in at the upper end of its guidance range. Its third quarter production averaged 608,000 barrels of oil equivalent per day and the company said it anticipates production next year in the range of 570,000 to 600,000 barrels of oil equivalent per day.
Chesapeake forecast 2021 adjusted EBITDAX, which excludes exploration expenses, of US$2.1-billion to US$2.2-billion, up from US$1.8-billion to US$1.9-billion previously, and increase its total production while holding capital spending steady.
Marriott International Inc. (MAR-Q) turned higher in the wake of topping estimates for third-quarter revenue and profit as a rebound in leisure travel countered a hit from fresh restrictions in Asia caused by the Delta variant.
Occupancy rates across its hotels in major regions continued to improve from pandemic lows with vaccinations and the reopening of economies encouraging more people to travel.
“Globally, leisure travel generally remained very strong throughout the quarter, while the Delta variant had the most impact on business transient demand,” Chief Executive Officer Anthony Capuano said in a statement.
The owner of brands such as JW Marriott and the Ritz-Carlton said occupancy in its key U.S. & Canada stood at 63.5 per cent in the third quarter, compared to 37 per cent a year earlier. Europe occupancy was at 46.7 per cent, up 26.3 per cent from the same period in 2020.
However, lockdowns and tighter social restrictions in southeast Asia following fresh coronavirus infections took a toll on occupancy in Greater China markets. It was 52.7 per cent, compared to 61.4 per cent a year earlier.
Meanwhile, hotel operators are expected to benefit from a jump in demand as countries either ease or plan to lift COVID-19 travel restrictions for fully vaccinated international visitors.
Although occupancy has recovered from last year’s lows, it remains well below the rates seen before the pandemic. Marriott’s worldwide occupancy rates stood at 58.2 per cent, about 16.8 per cent below its 2019 occupancy rates.
Excluding items, the company earned 99 US cents per share in the third quarter, beating analysts’ average estimate of 98 US cents, according to IBES data from Refinitiv.
Revenue rose 75 per cent to US$3.95-billion, above Wall Street’s expectation of US$3.81-billion.
On the decline
Pembina Pipeline Corp. (PPL-T) was flat after its chief executive said it’s asking backers of two competing proposals for carbon capture hubs in the oil-producing province of Alberta to combine efforts with its own plan.
Pembina and TC Energy Corp. (TRP-T) said in June they were looking to develop a system to transport and sequester carbon. The Alberta government, which controls underground space for burying carbon, called for expressions of interest this autumn.
Carbon capture facilities are expected to be a key part of global efforts to contain emissions from fossil fuel production. Canada is the world’s fourth-largest oil producer and aims to cut national greenhouse gas emissions by at least 40% by 2030.
The Pembina-TC plan, called Alberta Carbon Grid, faces competition from at least two others - Oil Sands Pathways, pitched by the largest oil sands producers, and Polaris, a proposal by Royal Dutch Shell.
Pembina has spoken with both groups about joining together and talks remain active, CEO Mick Dilger told Reuters.
“A single, large carbon capture program at scale is by far the most sensible way to do things,” Mr. Dilger said. “If everybody works together, we’ll come up with a more cost-effective solution.”
Whether such cooperation happens remains to be seen, Mr. Dilger said.
Pembina and TC would need to convince Shell and the Pathways partnership of Canadian Natural Resources (CNQ-T), Cenovus Energy (CVE-T), Imperial Oil (IMO-T), Suncor Energy (SU-T) and MEG Energy (MEG-T), of a change in concept, he said.
Keyera Corp. (KEY-T) was down after missing the Street’s earnings projection for the third quarter and increasing its capex guidance.
Before the bell, the Calgary-based company reported adjusted EBITDA of $214-million, up from $196-million a year ago but below the consensus forecast of $226-million. Earnings per share of 32 cents was 7 cents under analysts’ estimate.
Concurrently, Keyera raised its 2021 growth capex guidance to a range of $460-$490-million from $400-$450-million due to higher-than-anticipated costs at its South Cheecham Sulphur facilities.
“Overall, we view results as slightly negative given that the modest financial miss and increasing capex guidance was partially offset with a positive marketing outlook for Q4/21,” said ATB Capital Markets analyst Nate Heywood. “The slight miss in Q3/21 was largely due to a $25-million realized hedging loss in the marketing segment. The quarterly print included a midpoint increase of 13 per cent to the annual marketing realized margin guidance, bringing the 2021 range to $300-$320-million (ATB estimate: $288-million.”
Shares of Oakville, Ont.-based Cardiol Therapeutics Inc. (CRDL-T) fell after announcing the pricing of its previously announced public offering of 16.35 million units at US$3.07 each for gross proceeds of US$50.19-million.
The company intends to use the net proceeds to advance its research and clinical development programs, additional product development, and for general corporate purposes.
Activision Blizzard Inc. (ATVI-Q) co-leader Jen Oneal on Tuesday decided to step down from her role, giving full control to Mike Ybarra and the videogame publisher put off the launch of two much-awaited titles, sending its shares down.
Mr. Ybarra said the delay in the rollout of Overwatch 2 and Diablo IV was due to the leadership change, but did not give a new timeline for their launch, while the company forecast an underwhelming adjusted sales in the holiday quarter.
Ms. Oneal and Mr. Ybarra took the helm three months ago after Allen Brack stepped down as president, a week after the company was sued for workplace harassment and pay discrimination.
Following this, the company last month fired more than 20 employees, with 20 more facing other forms of disciplinary action.
The owner of Call of Duty and Candy Crush franchises also created an US$18-million fund to compensate and make amends to eligible claimants, while Chief Executive Bobby Kotick said he would take a large paycut.
Meanwhile, as pandemic-related curbs eased, Activision’s total monthly active users in the third quarter remained unchanged at 390 million from a year earlier, indicating signs of slowing demand for games.
The company, which faces competition from rivals Electronic Arts Inc. (EA-Q) and Take-Two (TTWO-Q), said in-game net bookings were same as the third quarter of 2020.
Its adjusted sales for the third quarter was US$1.88-billion, in line with Wall Street expectations.
The company said it expects fourth-quarter adjusted sales to be US$2.78-billion. Analysts were expecting it to be US$2.93-billion, according to Refinitiv data.
The New York Times Co. (NYT-T) was lower after it reported better-than-expected quarterly earnings on Wednesday, as a surge in marketing spend by companies emerging from the pandemic bolstered its digital ad business.
The publisher’s digital ad revenue jumped 40.2 per cent in the third quarter, putting it on a path to growth following a hammering at the peak of the pandemic when companies slashed their ad budgets to save up on cash.
The 170-year-old company started its digital transformation more than a decade ago, focusing on a subscription-first business model that helped it weather steep declines in advertising and print readership.
In the process, it beefed up the business by pumping its digital products with a rich lineup of news, crosswords, podcasts - including “The Daily” - and cooking recipes, while making them stand out with multimedia and interactive elements using pictures, graphics and videos.
The Times said it added 455,000 digital-only subscribers during the quarter, its highest this year as the news cycle gathered pace.
“While COVID remained the dominant story as it has for the last 20 months, a wide range of topics also captured the public’s attention, including the Afghanistan withdrawal and the tragic events in Haiti, the resignation of New York’s Governor and our ongoing climate reporting,” Chief Executive Officer Meredith Kopit Levien said.
The Times allows readers to track the coverage of some important new items outside of its paywall, boosting traffic to its apps and websites, and leading to paid user conversions. It also launched paid subscriptions to its tech products review website, Wirecutter, in the third quarter.
The company posted an adjusted profit of 23 US cents per share in the third quarter on revenue of US$509.1-million. Analysts had expected a profit of 20 US cents per share on revenue of US$499.1-million, according to Refinitiv data.
With files from staff and wires
David Leeder