A roundup of some of the North American equities making moves in both directions today
On the rise
The Montreal-based meal kit company reported revenue for the third quarter of $86.6-million, rising from $49.9-million in fiscal 2019. Net income was $2.8-million, or 5 cents per share (basic and diluted), compared to a net loss of $3.6-million, or 6 cents per share, a year ago.
Analysts were expecting revenue of $81.8-million and a loss of 5 cents per share.
“The COVID-19 outbreak ignited the growth of online grocery shopping in Canada, where the penetration rate has historically been particularly low compared to many other developed economies,” said CEO Jonathan Ferrari. “The adoption rate of online grocery shopping has effectively outpaced industry growth projections by several years, with Canadians embracing a new way of shopping that we expect is here to stay. Seizing this truly unique opportunity has allowed Goodfood to grow significantly and reinforce its position as a leading online grocery company in Canada.”
Village Farms International Inc. (VFF-T) increased 5 per cent after announcing it has signed a definitive agreement to become one of seven equal shareholders with DutchCanGrow Inc., a Netherlands-based cannabis enterprise.
The Vancouver-based company will become one of six equal shareholders in DCG owning just under 16 per cent each, with a seventh shareholder owning 5 per cent..
DCG is pursuing the opportunity to become one of a limited number of licensed cannabis growers (up to a maximum of 10) when the Dutch government permits the first legal recreational cannabis market in Europe.
In a research note, Raymond James analyst Rahul Sarugaser said: “We are enthused to see VFF making an intentional, precise first step into the European cannabis market, we temper our enthusiasm pending a few critical milestones that still must be met: i) award of one of the 10 licenses, and; ii) a decision by the Dutch government to roll out the program country-wide, a process that could take three to five years. Hence, we do not yet ascribe value to VFF from this transaction, but do see this as an opportunity to add positions in a stock that we view as materially undervalued.”
A&W Revenue Royalties Income Fund (AW.UN-T) jumped 15.1 per cent after it announced that it’s resuming monthly distributions to its unitholders in the amount of 10 cents per trust unit. The next distribution for June will be paid on July 31.
The fund also announced that A&W Food Services of Canada Inc. will be resuming regular royalty payments. The fund said it restarted monthly distributions "on the basis of the recent improvement in the performance of the A&W restaurants in the royalty pool and the resumption of royalty payments by A&W Food Services."
The company also said same-store sales growth for A&W Restaurants in the royalty pool fell by 31.6 per cent for the second quarter of 2020 as compared to the second quarter of 2019.
Tesla Inc. (TSLA-Q) continues its rise, adding 0.2 per cent after the China Passenger Car Association said it sold 14,954 Shanghai-made Model 3 vehicles in China in June, up 35 per cent month-on-month.
Tesla sold 11,095 vehicles in May, up from around 3,635 units in April, CPCA data showed. CPCA uses a different counting method than Tesla’s deliveries.
Biogen Inc. (BIIB-Q) sat 5.2 per cent higher in the wake of saying on Wednesday that it has submitted a marketing application for its experimental Alzheimer’s disease therapy, aducanumab, to the U.S. Food and Drug Administration (FDA).
Currently, there are no drugs approved by the FDA that can reverse the mental decline resulting from Alzheimer’s disease, and investors believe that a successful treatment for the memory-robbing disease could bring in billions of dollars in sales.
The U.S. FDA now has 60 days to decide whether to accept the application for review, Biogen and partner Eisai Co Ltd said in a joint statement.
Biogen and Eisai decided in March 2019 to end two late-stage trials of aducanumab based on a so-called “futility analysis” of data, which revealed the trials had little hope of succeeding.
On the decline
The plans include a proposed recapitalization plan that involves a raise of $100-million in committed new equity, reduction of overall debt by approximately $275-million, and "materially lower" annual cash interest payments.
It also includes a renewed slate of seven board directors, of which at least four will be new. They will stand for election to the board at the company’s annual general meeting on Aug. 11.
“This comprehensive plan to strengthen and de-risk our business will result in a much stronger Just Energy, creating a sustainable capital structure and allowing our team to focus on driving our business and serving our clients,” said Just Energy’s CEO R. Scott Gahn.
DAVIDsTEA Inc. (DTEA-Q) plummeted 23.1 per cent after it announced that it is seeking court protection from creditors while it negotiates leases for many of its stores, which have been shut since March 17 due to the COVID-19 pandemic.
The Montreal-based company says it’s seeking an initial order in Quebec Superior Court today to allow it to restructure under the Companies’ Creditors Arrangement Act. It says it also plans to seek similar orders for its U.S. subsidiary under Chapter 15 of the U.S. Bankruptcy Code.
DavidsTea, which wants to significantly reduce its brick and mortar footprint, says it plans to continue operating online and its wholesale distribution channel.
It had warned in mid-June that it could begin a formal restructuring, depending on the outcome of its talks with landlords.
The company said at the time that it hadn’t paid rent on any of its stores for April, May and June.
DavidsTea’s founder and interim chief executive, Herschel Segal, says the goal of restructuring is to decrease losses caused by unprofitable stores and to continue wholesale and online sales.
United Airlines (UAL-Q) lost 3 per cent after saying on Wednesday it was preparing to send notices of potential furloughs to 36,000 U.S.-based frontline employees, or about 45 per cent of staff, as demand hit by the coronavirus pandemic struggles to recover.
The final number of furloughs, which would be effective starting Oct. 1, will depend on how demand evolves and how many employees accept early exit packages and temporary leaves, United executives said.
Chicago-based United continues to burn through about US$40-million of cash every day, with a number of efforts to cut costs and raise liquidity failing to compensate for the drastic drop-off in travel demand as COVID-19 cases continue to rise.
Allstate Corp. (ALL-N) slipped 3.8 per cent as the U.S. insurer said it would buy National General Holdings Corp. (NGHC-Q) for about US$4-billion in cash, scaling up its auto insurance business at a time when the coronavirus has crushed traffic on roads and reduced claims.
National General’s shareholders will receive US$32 per share in cash and closing dividends of US$2.50 per share for each share held. This would imply a total deal value of US$3.92-billion and a premium of about 69 per cent to National General’s Tuesday close, Reuters calculations showed.
New York-based National General lists automobile insurance as its chief business, and offers services in personal auto, recreational vehicle, motorcycle and commercial auto businesses.
Its shares were 64.6 per cent higher.
Levi Strauss & Co. (LEVI-N) fell 8.4 per cent as the denim apparel maker cautioned its business would be hit in the second half of the year, even as its sales have been improving at its reopened stores.
The company also said it would cut about 700 positions, or roughly 15 per cent of its workforce, in non-retail, non-manufacturing segments that would help it save US$100-million annually.
Met with temporary closure of its own stores as well as partner outlets, Levi introduced curbside pickup and started fulfilling online orders at its stores as customers turned to online shopping to avoid contact with people.
The company reported a 25-per-cent increase in its online business in the second quarter ended May 24, with a month-over-month rise of nearly 80 per cent in May.
Citi analyst Paul Lejuez said: “Wholesale has also begun to slowly improve (mgmt indicated they have begun receiving some summer/fall orders), though we expect this channel to be much slower and more volatile in its recovery. LEVI’s momentum prior to the pandemic points to its brand strength, which we believe will continue on the other side of the crisis. Importantly, it sells to retailers that we expect to gain share in the future (off-mall, value-based) and we believe this will help offset the declines in the traditional dept store channel.”
With files from Brenda Bouw, staff and wires