A roundup of some of the North American equities making moves in both directions today
On the rise
The purchase price implies an enterprise value for Calgary-based Storm of approximately $960-million, including transaction related expenses and decommissioning obligations.
WSP Global Inc. (WSP-T) rose after its head said the US$1-trillion infrastructure package passed by U.S. Congress on Friday marks a boon for the Montreal-based engineering firm.
CEO Alexandre L’Heureux says the company, whose design and management services overlay directly onto the types of projects backed by President Joe Biden’s bill, is poised to boost its backlog over the next year and beyond as a result.
He says clients are “excited” and even “nervous” about their ability to deliver — given the scope of the package — which bodes well for WSP.
While Biden predicted last week Americans would begin to feel the impact of the infrastructure bill within two to three months, Mr. L’Heureux says federal funds won’t start “entering the pipeline” for up to six months.
The bill, passed last Friday, holds the promise of rebuilding aging roads, highways and bridges across the United States as well as improving broadband, ports, water supplies and other public works.
WSP beat expectations yesterday as its net profit increased 33 per cent in its latest quarter, with acquisitions helping to boost revenues.
In a research note, National Bank Financial analyst Maxim Sytchev said: “Another solid quarter from WSP, especially in light of stumbles from international peers this quarter. The company is again sitting in the driver’s seat with organic growth acceleration vs. prior quarter, improving margins, clean balance sheet (leverage of only 0.9 times AFTER Golder), three-year strategic plan upon us in early 2022, and U.S. Infra stimulus that will lift 2023E prospects. We fully subscribe to M&A optionality, explicitly modeling a sizeable deal over the forecast time horizon. WSP remains a must-own name in our coverage universe.”
On the decline
Vermilion Energy Inc. (VET-T) fell despite saying it plans to reinstate its dividend in the first quarter of 2022 even though its net loss more than doubled in its latest quarter despite a big increase in revenues.
The oil and gas producer says the payout, subject to final board approval, will be 5 to 10 per cent of fund flows from operations.
The Calgary-based company says it lost $147.1-million or 91 cents per share in the third quarter, compared with a loss of $69.9-million or 44 cents per share a year earlier. The loss is also above the $451.3-million or $2.70 per share earned in the second quarter.
Revenues for the three months ended Sept. 30 were $538.5-million, up from $282-million in the third quarter of 2020 and $407.2-million in the prior quarter.
Vermilion was expected to earn 35 cents per share on $43- million in revenues, according to financial data firm Refinitiv.
Fund flows from operations was $263-million, up from $114.8-million a year ago and $172.9 million in the second quarter, primarily due to higher commodity prices.
Production in the quarter averaged 84,633 barrel of equivalent per day, down from 95,471 boe/d in the third quarter of 2020.
In a research note, Raymond James analyst Jeremy McCrea said: “Vermillion delivered yet another quarter of strong FCF on the back of strong production results and price realizations. The Company now has line-of-sight to a manageable leverage position which supports Management’s decision to reinstate the dividend in 1Q22. This could prove to be a key catalyst for a stock that was traditionally a dividend stalwart. Heading into yearend, the Company’s FCF profile continues to benefit from strong European gas pricing (17 per cent of production), accelerating debt reduction in the near-term. On a longer timescale, we see a rightsized balance sheet enabling a more flexible capital allocation plan that will offer shareholders a competitive cash return augmented by high-return conventional development. At 2.9 times EV/EBITDA with a share price that has lagged a rebound in FFO, we believe there is some catching up to do.”
Books and lifestyle retailer Indigo Books and Music Inc. (IDG-T) erased early gains after saying a surge in online purchases helped revenues to surpass pre-pandemic levels in its latest quarter.
The Toronto-based company says revenues for the three months ended Oct. 2 were $238.8-million, up from $205.3-million in the second quarter of 2020 despite occupancy constraints in several key markets.
Indigo says the revenue improvements came from its e-commerce business, which grew 85 per cent from the prior-year quarter.
While retail at stores remains challenged, it says customers who came to shop demonstrated a strong commitment to books and responded positively to its other offerings.
Net earnings were $3.5-million or 13 cents per share, compared with a net loss of $17.5-million or 63 cents per share.
The company says it received a one-time payment of $17-million from a renegotiation of its partnership with Starbucks, with 36 cafes continuing to operate within its stores.
CI Financial Corp. (CIX-T) slid in late trading after announcing before the bell the acquisition of Gofen and Glossberg LLC, a US$7.5-billion wealth and investment management firm based in Chicago.
Terms of the deal, which is expected to close later in the current quarter, were not disclosed.
“Gofen is an exemplary wealth and investment management firm that has delivered remarkable service since its founding in 1932,” said CI Chief Executive Officer Kurt MacAlpine. “Gofen’s committed team, tenured client relationships and attention to customization highlight their desire to go above and beyond. This is exactly the type of firm CI looks to add to its growing CI Private Wealth group.”
Desjardins Securities analyst Gary Ho said: “We expect a fulsome update on CI’s RIA platform, as well greater details on the contingent equity structure and acquisition structure set-up, when it reports 3Q results tomorrow pre-market.”
AutoCanada Inc. (ACQ-T) dropped the release of largely in-line third-quarter results after the bell on Tuesday as the impact of U.S. inflation worries grew.
The Edmonton-based company reported revenue of $1.207-billion, missing the Street’s forecast of $1.3-billion, while adjusted EBITDA of $68.3-million beat the consensus estimate ($65.3-million).
National Bank Financial equity analyst Maxim Sytchev called it a “good performance against tough comps.”
“Heading into the quarter, the biggest question was how bad new sales could be and whether that dynamic would derail overall profitability?,” he said in a rsearhc note. “Thankfully, used and F&I [finance and insurance] more than picked up the slack, especially vs. a high watermark in Q3/20. Rebound in the U.S. is also helping vs. being a drag last year. U.S. auto peers wobbled in the fall (as did ACQ) on chip shortages but the strong profitability momentum across the group reignited positive momentum. We believe that tonight’s print should do the same for ACQ.”
RioCan Real Estate Investment Trust (REI.UN-T) dipped in the wake of saying its net income reached $137.6-million in its most recent quarter as COVID-19 restrictions were lifted, allowing many businesses to reopen.
The Toronto-based shopping mall owner says that its third-quarter net income was up from $117.6-million in the same quarter last year.
The trust says it completed more than 31,958 square metres of new leases and 58,157 square metres of renewed leases during the quarter ended Sept. 30.
RioCan says by Nov. 9 almost all of its tenants were open and the trust had collected 98.1 per cent of its billed gross cash rents, up from 94.9 per cent in the prior quarter and 90.8 per cent at the same time last year.
The collection rate is the highest the trust has seen since the start of the pandemic, when many tenants were unable to cover rent and sought deferrals.
The trust says its collection rate has rebounded because its tenants are primarily necessity-based retailers that were resilient throughout the last 20 months.
CGI Inc. (GIB.A-T) was lower as it reported a fourth-quarter profit of $345.9 million, up from $251.9 million in the same quarter last year, as its revenue edged higher.
The technology and business consulting firm says the profit amounted to $1.39 per diluted share for the quarter ended Sept. 30, up from 96 cents per share a year earlier.
Revenue totalled $3.01-billion, up from $2.93-billion in the same quarter last year.
Excluding acquisition-related, integration and restructuring costs, CGI says it earned $1.40 per diluted share in its most recent quarter, up from $1.22 per diluted share a year ago.
Analysts on average had expected an adjusted profit of $1.35 per share, according to estimates compiled by financial markets data firm Refinitiv.
CGI chief executive George Schindler says the company ended its financial year in a strong position, with accelerating revenue growth and a robust book of business and balance sheet.
“Looking to the year ahead, we will accelerate our investments in the talent and capabilities necessary to expand our services and global footprint in support of clients’ evolving digital transformations,” Schindler said in statement.
Restaurant Brands International Inc. (QSR-T) was flat after announcing Tim Hortons has teamed up with pop superstar Justin Bieber to launch three new Timbit flavours — called Timbiebs — along with co-branded merchandise.
The celebrity endorsement deal marks a departure from the coffee and doughnut chain’s usual lineup of professional hockey players, a marketing strategy that could help attract a different demographic.
The partnership aligns with the Canadian singer’s frequent social media posts about the restaurant, which have ranged from snapshots of a holiday-themed Tims cup to complaints about a new lid.
“Doing a Tim Hortons collab has always been a dream of mine,” Mr. Bieber said in a statement. “I grew up on Tim Hortons and it’s always been something close to my heart.”
Hope Bagozzi, chief marketing officer for Tim Hortons, said Mr. Bieber’s genuine lifelong love of the brand made the collaboration authentic.
Indeed, the Stratford, Ont.-raised performer shared posts as far back as a decade ago about missing Tim Hortons while travelling outside Canada.
Aurora Cannabis Inc. (ACB-T) was down in the wake of revealing it will double down on premium products after reporting a $11.9-million loss in its most recent quarter.
Miguel Martin, the chief executive of the Edmonton-based cannabis company, said Tuesday that the premium focus is coming because the recreational pot market is “bottoming” and often “irrational.”
“We are not going to chase down the rabbit hole with lower margins, particularly in the discount category,” he said in a call with investors.
“Right now, those that are chasing the discount business, I think they’re in for a little bit of a more rocky road, but the premium business is rational.”
Aurora’s focus on its premium brands come after the pot industry recently celebrated the third anniversary of cannabis legalization in Canada.
Much of those first three years have been spent by pot companies trying to better align product offerings with consumer demand, so they can more quickly reach profitability.
While more affordable products have proved popular, recent growth is emerging in the premium and craft markets, which often earn cannabis companies higher profits.
The company says its most recent loss amounted to six cents per share for the period ended Sept. 30,a drop from a loss of 85 cents per share in the first quarter of the last year.
Aurora’s net revenue for the quarter amounted to $60.1-million, down from $67.6-million in the same quarter the year prior.
Aurora was expected to report a loss of $49.6-million per diluted share on $60.6-million of revenues, according to financial data firm Refinitiv
With files from staff and wires