A roundup of some of the North American equities making moves in both directions today
On the rise
The Vaughan, Ont.-based cannabis producer said it as signed a non-binding letter of intent that will provide access to over 3,000 acres of farmland for hemp production with Elk Grove Farming Company LLC, a California-based diversified farming company, to secure low-cost hemp with high cannabidiol content.
CannTrust and Elk Grove will each have 50-per-cent ownership of a new entity.
“This agreement represents another bold move for CannTrust," said CannTrust chief executive officer Peter Aceto. "Our U.S. operation is expected to deliver a significant increase in low-cost production capacity, which will leverage our expertise in standardized CBD-based product formulation, and will give the Company a foothold in the largest international CBD market in the world with an experienced and knowledgeable partner. Following our successful equity offering, we have the liquidity we need to fund our ambitious growth plans including our greenhouse expansion in Niagara, our outdoor cultivation operation in British Columbia , our global footprint expansion and now our U.S. operation. We continue to focus on delivering on our vision of becoming a global provider of innovative cannabis-based and hemp-derived products.”
The Montreal-based strategy and digital technology company reported revenue of $72.6-million, rising 79.5 per cent year-over-year but below the Street’s $73.5-million forecast. Adjusted EBITDA of $2.2-million also narrowly missed the consensus.
In a research note summarizing the results, Acumen Capital analyst Jim Byrne said: “In our view, ALYA shares offer an attractive entry point for a growing company with a strong management team and a solid balance sheet that allows them to pursue accretive acquisitions.”
Silvalea is a manufacturer of patient transfer slings and accessories. D-ansermed is an affiliate of Silvalea that develops safety components used in patient moving and handling operations.
Laurentian Bank Securities analyst Nick Agostino said: “While small in size, the acquisition completes SIS’s ceiling lift portfolio and should foster unit sales in the U.S. and abroad.”
“We believe SIS sought a sling product line for over a year to provide prospective ceiling lift clients a complete end-to-end offering, and use it as a point of differentiation in the North American market place to drive ceiling lift unit sales, as well as to add to its recurring revenue stream as multiple slings are sold over the life of a ceiling lift. We note ceiling lift comparable Prism Medical (PM), acquired by Handicare in 2016, had a similar lift and sling offering targeted at the North American market but Handicare elected to close PM’s St. Louis facilities to consolidate operations to Europe. At present 85% of Silvalea’s sales are from the UK/Europe with the balance from international markets, namely Australia and Canada. However SIS is looking to cross-sell the Silvalea sling portfolio into the U.S. market (and Canada) through manufacturing/distribution from its Span America Grenville, SC facility, adding to Silvalea’s sales growth. Conversely, SIS aims to offer its ceiling lift product portfolio into the UK and European markets through Silvalea’s customer channels. Silvalea management is expected to remain in place post transaction.”
Adobe Systems Inc. (ADBE-Q) rose 5.3 per cent after it exceeding analysts’ estimates for quarterly profit and revenue on Tuesday, driven by growth in its digital media business that houses its flagship product Creative Cloud.
The San Jose, Cal.-based company’s revenue jumped 25 per cent to US$2.74-billion in the quarter ended May 31, beating the consensus estimate of US$2.70-billion.
Excluding items, Adobe earned US$1.83 per share, above the average analyst estimate of US$1.78.
Credit Suisse analyst Brad Zelnick said: “Adobe maintained its reputation for continued execution, with another solid quarter of both Digital Media ARR and Digital Experience revenue exceeding expectations. While F3Q guidance was a touch light (though Street over-modelled), F4Q commentary was positive and we believe guidance remains conservative. We anticipate the ARR momentum continues, particularly with Document Cloud, as Adobe can both attract new customers and increase ARPU across the user base.”
On the decline
SNC-Lavalin Group Inc. (SNC-T) was down 3.3 per cent despite announcing that its Atkins business has been selected as part of the team to provide systems engineering services and support to the Los Angeles County Metropolitan Transportation Authority as part of a 10-year project.
LA Metro is expanding rail and bus services throughout Los Angeles County in preparation for the 2028 Summer Olympic Games.
The task order-based seven-year contract, with three one-year options, has an estimated US$30-million value, according to SNC.
It includes system engineering design and other related services, supplementing LA Metro’s Engineering Department resources in support of capital projects, state of good repair and joint venture projects for both rail and bus rapid transit.
Atkins will work as a subconsultant to SECOTrans.
Shares of Barrick Gold Corp. (ABX-T) slipped 0.1 per cent after Acacia Mining plc issued a statement Wednesday saying it “strongly disagrees with a number of statements” made by its largest shareholder on its views on the situation in Tanzania and Acacia’s mine plans.
Acadia also stated that it was “surprised with the circumstances and timing of the announcement,” and urged shareholders “to take no action at this time,” regarding Barrick’s plan to take over the company.
Barrick also issued a statement early Wednesday confirming that it is “proposing to engage intensively with Acacia’s minority shareholders in coming weeks” based on its proposal set out in a May 21 announcement.
The Calgary-based company said the expansions of its Acordionero’s central processing and water injection facilities, as well as the installation of gas-to-power turbines, are mechanically complete with commissioning expected during July 2019, which it said “represents a significant milestone for the company and its largest oil producing asset.”
Gran Tierra also said it has received a Global Environmental License for the Acordionero oil facility, located in Colombia, which will allow accelerated and optimized full field development.
Zymeworks Inc. (ZYME-T) fell 9.9 per cent after announcing late Tuesday it has filed a preliminary prospectus for an offering of its common shares and pre-funded warrants to purchase its common shares.
The offering is expected to raise total gross proceeds of approximately US$150-million.
The trust said it has an agreement with a syndicate of underwriters that will purchase 12,500,000 trust units of the REIT on a bought deal basis at a price of $14 each. The net proceeds will be used “to fund acquisitions, repay existing indebtedness, fund previously announced developments and for working capital purposes,” it said.
With files from Brenda Bouw, staff and wires