A roundup of some of the North American equities making moves in both directions today
On the rise
Vancouver-based Standard Lithium Ltd. (SLI-X), a technology and lithium project development company, soared on Wednesday after it announced that Koch Strategic Platforms, a subsidiary of Koch Investments Group, will make a US$100-million investment in the company through a direct private placement.
Standard Lithium said it will issue 13,480,083 common shares at a price of $9.43 (US$7.42) each.
“In addition to the new capital, the Company, along with several Koch Industries subsidiaries, are exploring strategic opportunities to work collaboratively in several key areas,” it stated.
The net proceeds of the US$100-million direct investment will be used by the company to advance the first commercial project proposed for the Lanxess facility; accelerate and expand the development of the South West Arkansas Lithium Project and continue to develop and commercialize modern lithium extraction and processing technologies.
Deere & Co. (DE-N) surpassed market estimates for quarterly profit on Wednesday, as a surge in crop and livestock prices encouraged farmers to splurge on tractors and combines.
The results sent shares of the world’s largest farm equipment maker higher iand eased some fears around the impact of a worker strike that had hit Deere’s operations for about three weeks of the fourth quarter.
Higher corn and soybeans prices this year have brightened the financial outlook for farmers, with the U.S. Department of Agriculture projecting net farm income to rise 19.5 per cent to an eight-year high of US$113-billion in 2021.
That has driven up sales of farm equipment despite price hikes by manufacturers. Deere’s sales of its large and some medium equipment jumped 23 per cent in the quarter, while sales of smaller farm and turf equipment rose 17 per cent.
The Illinois-based company also signaled the boom was expected to continue, forecasting 2021 earnings between US$6.5-billion and US$7-billion. The midpoint of the range was higher than analysts’ estimates of US$6.72-billion, as per Refinitiv.
“Unlike previous boom/bust replacement cycles, the agriculture equipment industry is in the midst of a much smoother demand environment,” Third Bridge senior analyst Patrick Donnelly said.
Deere this month agreed to a new deal with its UAW workers, ending the near six-week strike just ahead of the winter buying period during which farmers purchase equipment for the spring planting.
It raised prices by 8 per cent for its large and medium equipment orders in the quarter to offset rising inflation, helping fatten its margins.
Net income rose 69 per cent to US$1.28-billion, or US$4.12 per share, in the quarter to Oct. 31, while analysts had expected a figure of US$3.90 per share.
Deere’s equipment sales rose 19 per cent to US$10.28-billion, but came in slightly below expectations.
Laptop maker Dell Technologies Inc. (DELL-N) rose as it forecast current-quarter revenue above estimates, highlighting strong demand for its personal computers and servers from companies moving toward a hybrid work model.
The company said it was expecting fourth-quarter revenue from continuing operations in the range of US$27-billion to US$28-billion, above analyst estimates of US$26.23-billion, according to Refinitv IBES.
Revenue at Dell’s client solutions business, home to its hardware devices, rose 35 per cent in the quarter on booming demand from companies upgrading their computer systems to meet work-from-home challenges.
Dell benefits from having a diverse portfolio of software and hardware revenue streams, and it is now trying to tap into high-growth markets, such as edge computing, cloud and telecoms, that have gained traction since the pandemic began.
Revenue from its infrastructure solutions group, which includes the data center business, was up 5 per cent at US$8.4-billion in the quarter.
Total revenue jumped 21 per cent to US$28.39-billion, compared with analysts’ average estimate of US$26.82-billion, according to Refinitiv data.
The company’s net income surged more than four-fold to US$3.89-billion, or US$4.87 per share, in the third quarter ended Oct. 29, from US$881-million, or US$1.08 per share, a year earlier.
Meanwhile, rival PC-maker HP Inc. (HPQ-N) also reported a quarterly profit that more than quadrupled to US$3.09-billion, and said its personal systems unit posted a 13-per-cent rise in revenue.
Dell’s freshly spun off cloud computing unit, VMware (VMW-N), posted a 10-per-cent rise in revenue during the quarter.
VMWare completed its spinoff from Dell, which owned 81 per cent of the software firm, to become a separate publicly traded company on Nov. 1.
Tesla Inc. (TSLA-Q) was higher after U.S. securities filings showed Chief Executive Elon Musk sold another 934,091 shares of the electric vehicle maker worth US$1.05-billion after exercising options to buy 2.15 million shares.
The world’s richest person had on Nov. 6 tweeted that he would sell 10 per cent of his stock if users of the social media platform approved. A majority of them had agreed with the sale.
Since then, he has sold 9.2 million shares worth US$9.9-billion. Last Tuesday, Mr. Musk sold 934,091 shares to meet tax withholding obligations related to the exercise of stock options.
On the decline
Alimentation Couche-Tard Inc. (ATD.B-T) dropped on the late Tuesday announcement it is boosting its quarterly dividend by nearly 26 per cent even as its net earnings decreased in its latest quarter despite higher revenues.
The Quebec-based convenience store operator says it will pay 11 cents per share, up from 8.75 cents.
Couche-Tard earned US$694.8-million or 65 US cents per diluted share in the second quarter of its fiscal year, down from US$757-million or 68 US cents per share a year earlier.
Adjusted profits were $693-million or 65 US cents per share, down from US$735-million or 66 US cents per share in the second quarter of fiscal 2021.
Revenues increased 33.5 per cent to US$14.22-billion from US$10.66-billion in the prior-year quarter, mainly due to higher fuel prices.
Couche-Tard was expected to report 66 US cents per share in adjusted profits of US$14-billion of revenues, according to financial data firm Refinitiv.
“Fuel volumes showed an upward trend in Europe, while other geographies remained impacted by COVID-19 traffic patterns. Across the board, we continue to achieve healthy fuel margins,” stated CEO Brian Hannasch.
Fuel revenues increased 48 per cent to US$10.1-billion. Same-store fuel volume increased 3.3 per cent in the U.S and 2.8 per cent in Canada, and dropped 0.3 per cent in Europe and other regions.
Merchandise revenues increased 5.8 per cent to US$4-billion with a 1.4-per-cent increase in the U.S. same-store revenues, 3.9 per cent gain in Europe and other regions and 2.1 per cent decrease in Canada.
“Like our peers across the retail and convenience landscape in North America, this quarter we continued to face unprecedented labour and supply chain challenges. No doubt, this is the most difficult market in recent history, and we are working hard to mitigate the situation,” he added.
In a research note, National Bank Financial analyst Vishal Shreehar said: “We consider results to be slightly negative; higher SG&A, driven in part by labour pressure, offset solid fuel margins and merchandising gross profit (vs. NBF estimates).”
Nordstrom Inc. (JWN-N) said labour costs pinched its quarterly profit and warned of product shortages at its off-price stores heading into the holiday season, sending its shares down.
The Seattle-based company, like other retailers, is under tremendous pressure to keep its shelves stocked for the holiday season as shipping logjams, shuttered factories in Asia and a scarcity of raw materials rip through global supply chains and result in product shortages.
Nordstrom Rack off-price stores have especially suffered from severe shortages of women’s apparel and shoes.
The company said third-quarter net sales at Nordstrom Rack stores fell 8 per cent from 2019 levels, at a time when rivals Macy’s Inc. (M-N) and Kohl’s Corp. (KSS-N) have returned to above pre-pandemic sales levels.
Chief Executive Officer Erik Nordstrom said the business’ underperformance was due to internal decisions as much as the broader supply-chain issues.
“We have not responded as quickly and as aggressively as we needed to, with Rack in particular... we’ve been significantly under inventory plans all year,” Nordstrom said on a call with analysts.
The company also reported a jump in costs in the quarter as it spent more on staffing its stores amid labour shortages in the United States that have forced retailers to increase wages and hand out hefty bonuses.
Nordstrom said in October it would hire more than 28,000 workers for the holiday season, offering new store employees up to $650 in incentive pay.
Nordstrom maintained its annual revenue growth forecast of more than 35 per cent, while rival Macy’s last week raised its sales expectations to as much as 40 per cent.
The company posted a quarterly profit of US$64-million, or 39 US cents per share, missing estimates of 56 US cents, according to Refinitiv IBES data.
Gap Inc. (GPS-N) dropped after it lowered its full-year forecast on Tuesday, with the apparel retailer expecting an up to US$650-million hit to revenue amid supply chain disruptions that include factory closures in Vietnam and pricey air freight to ship goods.
Extended factory closures in Vietnam, Gap’s top country for sourcing which accounts for 30 per cent of its production, have led to delays in the shipping of inventory and forced the retailer to invest about US$450-million to lift freight by air and ensure shelves are not empty during the crucial holiday season.
“While we had planned into the known supply chain constraints as we entered the quarter, including COVID-related closures in Vietnam, the shock to our business persisted longer than anticipated,” Chief Executive Officer Sonia Syngal said.
Inventory shortages due to port and airport congestion, surging shipping costs and labor crunches have been plaguing retailers globally, with companies such as Abercrombie & Fitch and Nike having to deal with the prospect of empty shelves.
Gap, which ended the third quarter with inventory down 1 per cent, said shortages dented quarterly sales by about US$300-million, as brands were unable to meet the strong demand stemming from eased restrictions and a return to social gatherings.
However, Ms. Syngal remained optimistic over plans to invest into air freight due to continued strong demand for Gap’s Yeezy hoodies and Old Navy clothing.
The Banana Republic owner expects annual net sales of about 20 per cent, compared with its prior forecast for growth of 30 per cent. Analysts expect a 28.4-per-cent growth, according to IBES data from Refinitiv.
Gap also cut its estimates for annual profit, excluding some charges, to between US$1.25 and US$1.40 per share from US$2.10 to US$2.25. Analysts on average expect a profit of US$2.20 per share.
With files from Brenda Bouw, staff and wires