A roundup of some of the North American equities making moves in both directions today
On the rise
Norbord Inc. (OSB-T) increased 3.7 per cent in early afternoon trading after it announced on Monday evening its intention to “indefinitely curtail production” at its oriented strand board mill in 100 Mile House, B.C. in August.
The company said the Cariboo region "has been under mounting wood supply pressure for the past decade as a result of the mountain pine beetle epidemic. This challenge has been more recently exacerbated by the significant wildfires that the province of British Columbia experienced in the summers of both 2017 and 2018. The resulting wood supply shortage and high wood prices do not support the economic operation of the mill at this time."
The 100 Mile House mill has a stated annual production capacity of 440 million square feet. Approximately 160 employees will be impacted by the curtailment, according to the company.
Neptune Wellness Solutions Inc. (NEPT-T) jumped 2.3 per cent after announcing a multi-year agreement with The Green Organic Dutchman Holdings Ltd. (TGOD-T) for extraction, formulation and packaging services.
Under the deal, TGOD will allocate more than 230,000 kilograms of cannabis and hemp biomass for Neptune to process and transform into premium certified organic consumer wellness products.
The companies called it the largest deal for a processor in the industry to date.
“The contract between TGOD and Neptune covers a period of three years and is expected to be back-end loaded with the first year accounting for approximately 20% of the total value," the companies said. "It also marks a significant milestone for cannabis manufacturing in Quebec, creating high value jobs, complementing TGOD’s large investment in Valleyfield where the Company is nearing the completion of the first phase of what will become the world’s largest organic cannabis growing facility at over 1.3 million square feet.”
Shares of TGOD were down 0.6 per cent on the news.
“Today’s announcement is significant not only because it enables us to start manufacturing certified organic consumer wellness products at scale, but also because of the large and sustained economic impact it will have in Quebec where TGOD is building the world’s largest organic cannabis production facility,” said TGOD CEO Brian Athaide.
The airline set the slots will allow it to operate up to 10 flights per day and over 1,000 flights during the first winter season from Dec. 17, 2019 to March 28, 2020.
“It is significant for Jetlines as we work to commence operations out of Vancouver International Airport," said chief executive officer Javier Suarez. "The Airport operates at a very high capacity in the winter season, as travellers plan trips to see family and friends, or to go on a vacation. These slots will allow us to fly our first passengers for these special occasions at incredibly low fares - at a price point that most Canadians have not had the opportunity to fly at.”
In a research note released before the bell, Raymond James analyst Frederic Bastien said: “SNC-Lavalin announced yesterday that CEO Neil Bruce was retiring from the company effective immediately. The Board of Directors concurrently asked Ian Edwards to take over the reins,expedite a strategic review of the business and develop a plan for sustainable success. Although we would view SNC’s exit of at-risk-construction activities as a positive first step, Mr. Edward still faces the daunting challenge of rallying employees, partners and customers around the company at a time of legal uncertainty. For this reason, we are sticking to the sidelines and maintaining our Market Perform recommendation on the stock.”
AltaCorp Capital’s Chris Murray said: “We continue to see significant value in SNC shares .... We believe there is significant value for shareholders not reflected in current share prices. While there are a several issues including the recent performance of the Resources segment, challenges with the close of the 407ETR sale, and the uncertainty created by the ongoing litigation around ethics issues, we continue to see value for shareholders that we believe can be surfaced in a strategic review, particularly as the Company’s Engineering and Construction segments have negative implied valuations based on current share prices, which we believe vastly undervalues what are functional going concerns with strong technical capability, strong backlogs and solid partnerships.”
Mattel Inc. (MAT-Q) increased 4.4 per cent after announcing late Tuesday that it has rejected another merger offer from Bratz doll maker MGA Entertainment Inc.
MGA Entertainment made the proposal in a letter to Mattel CEO Ynon Kreiz dated May 21, according to emails that Larian shared with Reuters.
In response, Bob Normile, Mattel’s chief legal officer, wrote to Larian on June 7 that the company’s board unanimously concluded that the proposal was “not in the best interests of Mattel and its shareholders.”
CGI Group Inc. (GIB-A-T) gained 0.8 per cent after announcing it intends to enter into a private agreement with Caisse de dépôt et placement du Québec for the purchase for cancellation of 5,158,362 of its Class A subordinate voting shares for a price of $96.93 per share, which represents a discount to Tuesday’s closing price.
Once the move is completed, Caisse will continue to hold approximately 37.4 million shares, representing approximately 13.9 per cent of CGI’s total outstanding shares.
“CDPQ rebalances its portfolio periodically, during the right conditions. CGI has delivered excellent results for its shareholders, and this transaction is an opportunity to monetize a portion of our investment in the company to the benefit of our depositors,” said Charles Émond, Executive Vice-President and Head of Québec Investments and Global Strategic Planning at CDPQ. “Following this transaction, we will continue as a significant shareholder of the company, and given the long-term nature of this investment, we intend to remain so to support the growth of this information technology leader. CGI is well positioned to continue its success at home and in international markets.”
On the decline
Shares of Tesla Inc. (TSLA-Q) were down 1.9 per cent after chief executive officer Elon Musk told shareholders on Tuesday that electric carmaker was on track to hit its volume production goal for the end of this year and had “a decent shot at a record quarter on every level.”
Tesla has said previously it plans to deliver 90,000 to 100,000 vehicles to customers in the second quarter, up from 63,000 vehicles in the first. Musk said it was on course to deliver a targeted 360,000 to 400,000 vehicles in 2019.
The retailer reported a loss for the period of $9.8-million or 23 cents per share, falling from a loss of $5.6-million or 13 cents during the same period a year ago. Total sales of $54.4-million rose from $51-million in the first quarter of fiscal 2018.
Analysts were expecting a loss of 14 cents and revenue of $53.7-million in the first quarter of 2019.
“Our sales growth in the quarter reflects our strength as a seamless omni-channel retailer, the continued success of our renovation and relocation strategy and growth in our partner-operated business in Asia,” said president and chief executive officer Jim Gabel. “Increased traffic and higher conversion drove Comparable Sales Growth of 1.5 per cent for the quarter, or 8.3 per cent on a two-year stacked basis. In addition, we saw positive consumer response to both new products and our recently launched brand campaign. While we realized short-term pressure on DTC gross margin, it was a result of our meaningful progress in improving our overall inventory position in advance of our move to our new integrated distribution centre in Q2 2019.”
Keyera Corp. (KEY-T) dipped 2.8 per cent after announcing Tuesday after market close that it has priced a Canadian offering of $600-million of 6.875-per-cent fixed-to-floating rate subordinated notes due June 13, 2079.
Proceeds will be used to fund its ongoing capital program, repay indebtedness under its revolving credit facility, and for general corporate purposes.
In a research note, CIBC World Markets analyst Robert Catellier said: “Keyera is issuing $600-million hybrid notes that reflect a larger raise and earlier timing than we were anticipating, which should materially reduce dilution risk. The company recently approved development of the Keyera Access Pipeline System (KAPS) in partnership with SemCAMS Midstream, and the hybrid issuance funds the majority of the expected $650-million (net to KEY) incremental capital expenditure. As a result, the announcement should be positive for sentiment.”
Dave & Buster’s Entertainment Inc. (PLAY-Q) dropped 22 per cent after reporting weaker-than-anticipated first-quarter financial results and lowering its revenue guidance for the fiscal year.
Before the bell, the entertainment and restaurant company reported earnings of US$1.13 per share and US$364 million, missing the Street’s projections of US$1.14 and US$372-million.
It moved its full-year revenue expectation to a range of US$1.365-billion to US$1.39-billion from a previous forecast of US$1.37-billion to US$1.4-billion. Analysts had expected US$1.399-billion.
With files from Brenda Bouw, staff and wires