A roundup of some of the North American equities making moves in both directions today
On the rise
General Electric Co. (GE-N) rose after it unexpectedly reported a quarterly profit and a positive cash flow on the back of cost cuts and improvements in its power and renewable energy businesses, sending its shares.
The Boston-based industrial conglomerate reported a free cash flow of US$514-million from industrial operations in the third quarter, compared with an outflow of US$2.1-billion in the previous quarter and Refinitiv’s average analyst estimate of an outflow of US$876-million.
GE said it expects industrial free cash flow to be at least US$2.5-billion in the fourth quarter and positive in 2021.
Adjusted profit for the quarter came in at 6 US cents per share compared with Refinitiv’s average analyst estimate of a loss of 4 US cents per share.
“We are managing through a still-difficult environment with better operational execution across our businesses,” said Chief Executive Lawrence Culp.
Mr. Culp is trying to turn around the company by improving free cash flow and cutting debt. However, the coronavirus pandemic has hit those efforts by hammering GE’s aviation unit, usually the company’s most profitable and most cash-generative segment.
In response to the pandemic-induced turmoil, GE is cutting US$2-billion in costs and aiming to generate US$3-billion in cash savings. The company said it has, thus far, realized 75 per cent of its target.
On the decline
Cogeco Inc. (CGO-T) was lower after saying its Quebec-focused media business continued to experience low ad revenue through the summer months but its cable and internet operations fared well in both Canada and the United States.
The Montreal-based company reported a net profit of $30.7-million or $1.92 per diluted share for the quarter ended Aug. 31, down from $31.4-million or $1.93 per diluted share a year ago.
Cogeco Inc.'s revenue in the quarter totalled $624.2-million, up from $610.5-million. Most of the revenue is generated by Cogeco Communications (CCA-T), which operates as Cogeco Connexions in Canada and Atlantic Broadband in the United States.
“We are satisfied with the results at Cogeco Media given the impact that the pandemic had on the advertising market,” chief executive Philippe Jette said in a statement.
“Our continued financial discipline contributed to improving profitability compared to last quarter and we are observing a slight upturn in the forward advertising bookings.”
Cogeco Communications earned $90.8-million or $1.88 per diluted share on $605.2-million in revenue for the quarter ended Aug. 31. The result was up from a profit of $89.8-million or $1.80 per diluted share on $583.7-million in revenue in the same period a year earlier.
The companies also increased their dividends by about 10 per cent, as they’ve done in previous years, and provided an outlook for fiscal 2021, which began Sept. 1.
Analysts had estimated Cogeco Communications would have $1.79 per share of adjusted earnings and $602-million of revenue in the quarter, according to financial data firm Refinitiv.
TC Energy Corp. (TRP-T) declined after announcing it has awarded more than US$1.6-billion worth of contracts to six major American union contractors to execute pipeline construction across 800 miles in three states in the U.S. on the Keystone XL Pipeline in 2021.
The six contractors will be directly responsible for hiring more than 7,000 union workers in 2021, and the company said “special emphasis [will be] placed on hiring locally first and giving priority to qualified local and Indigenous-owned businesses.”
Rogers Sugar Inc. (RSI-T) dipped after announcing it would collaborate with Israeli food tech firm DouxMatok to sell its sugar reduction technology to North American companies.
DouxMatok’s technology, which is based on cane sugar, is already available in Israel but will be sold to companies in the United States in 2021 through Rogers, the companies said.
Rogers is the parent of Lantic Inc, which operates sugar cane refineries across Canada.
Lantic and DouxMatok have been working together for two years on reducing sugar content in cookies, cakes, chocolate and other products while retaining the same taste.
They said they are collaborating with a number of food companies on new products and reformulating existing products with less sugar and more fibre and protein.
Average daily volumes in the United States rose 13.8 per cent on continued strength in residential demand, the company said.
“Our results were fueled by continued strong outbound demand from Asia and growth from small and medium-sized businesses,” Chief Executive Officer Carol Tomé said in a statement.
Last month, the company said it would hire more than 100,000 workers for the winter holiday season, which retailers are stretching out to avoid overwhelming a delivery network already taxed by pandemic-fueled online shopping.
Net income rose to about US$2-billion, or US$2.24 per share, in the quarter ended Sept. 30, compared with US$1.75-billion, or US$2.01 per share, a year earlier.
Excluding items, UPS earned US$2.28 per share, beating analysts' average estimate of US$1.90 per share, according to Refinitiv data.
Microsoft Corp. (MSFT-Q) declined in the wake of beating Wall Street estimates for quarterly revenue and profit on Tuesday, powered by a slight uptick in growth in its flagship cloud computing business as the software maker continued to benefit from a global shift to working from home and online learning.
The pandemic has accelerated a move already under way toward cloud-based computing, helping companies such as Microsoft, Amazon.com Inc’s cloud unit and Alphabet Inc’s Google Cloud. For Microsoft, it has also boosted demand for its Windows operating systems for laptops and its Xbox gaming services as families work, learn and play from home, leading to profit that was about 30 per cent above expectations.
“It was another healthy quarter, with continued demand for remote offerings continuing to power results,” Microsoft Chief Financial Officer Amy Hood told Reuters in an interview.
Revenue growth for Azure, the company’s flagship cloud computing business, was 48 per cent, up from 47 per cent in the previous quarter and ahead of Wall Street estimates of 43.45 per cent, according to consensus data from Visible Alpha. Ms. Hood said the rise was driven by “an increase in larger, long-term Azure contracts.”
The company’s revenue rose 12 per cent to US$37.2-billion in the quarter ended Sept. 30, beating analysts' estimates of US$35.72-billion.
“Microsoft’s strong earnings beat shows its market share in cloud computing is expanding while its legacy software products such as Windows and Office are in great demand during the pandemic,” said Haris Anwar, senior analyst at Investing.com.
Net income rose to US$13.89-billion, or US$1.82 per share, from US$10.68-billion, or US$1.38 per share, a year earlier. Analysts had expected a profit of US$1.54 per share.
Blackstone Group LP (BX-N) was lower after it said on Wednesday third-quarter distributable earnings rose 9 per cent year-on-year, as the world’s largest manager of alternative assets such as private equity and real estate took advantage of a rise in corporate valuations to cash out on some of its leverage buyout investments.
Distributable earnings - the cash available for paying dividends to shareholders - totaled US$772-million, up from $710-million a year earlier. This translated into distributable earnings per share of 63 US cents, surpassing analysts' average estimate of 57 US cents, according to data compiled by Refinitiv.
Blackstone said its private equity portfolio appreciated 12.2 per cent in the third quarter, compared with an 8.5-per-cent rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 6.4 per cent and 3.5 per cent respectively.
During the quarter, Blackstone completed the US$7-billion sale of Cheniere Energy Partners to Brookfield Asset Management and Blackstone Infrastructure Partners. It also completed the US$625-million initial public offering of India’s second real estate investment trust (REIT), Mindspace Business Parks.
“Blackstone reported excellent results in the third quarter, characterized by strong investment performance and earnings growth,” Blackstone CEO Stephen Schwarzman said in a statement.
Vancouver-based Neovasc Inc. (NVCN-T) plummeted after announcing the United States Food and Drug Administration’s Circulatory System Devices Advisory Panel voted against the “reasonable assurance of effectiveness” for its Reducer device to treat patients with refractory angina pectoris.
The panel also decided the relative risks outweighed the benefits.
“We would like to thank the FDA, the panel and members of the public that offered their insights during yesterday’s Circulatory System Devices Advisory Panel meeting,” said company President and CEO Fred Colen. “Clearly, we are disappointed with the meeting’s outcome, and we will provide further updates in the coming weeks.”
Boeing Co. (BA-N) lost ground after it reported its fourth straight quarterly loss on Wednesday as the coronavirus pandemic and 737 MAX grounding hurt sales, while reaffirming its expectation that U.S. deliveries of the jet would resume before year-end.
The U.S. planemaker also said it was sticking with the deeply reduced twin-aisle production rates announced in July, as well as the goal to hit a build rate of 31 narrowbodies monthly in early 2022.
The COVID-19 pandemic has brought air travel to a near halt, pushing major airlines to the brink of bankruptcy and forcing them to seek government aid, cut costs and defer aircraft deliveries. Boeing expects passenger travel to return to pre-pandemic levels in about three years, it said.
As a result, Chicago-based Boeing has slashed production, shed thousands of jobs and shifted its jet development strategy, while working to emerge from the depths of the pandemic and the 19-month-old worldwide 737 MAX ban triggered by two fatal accidents.
The U.S. Federal Aviation Administration was expected to lift its March 2019 grounding order on the 737 MAX as soon as next month, pending approval of software and training changes, meaning the jet could return to service in 2021.
Boeing said it recorded additional severance costs linked to its massive job-shedding campaign earlier this year, and expects to cut 19,000 jobs by year-end for a workforce of about 130,000 employees by end-2021, down from roughly 160,000 it had in 2019.
Boeing also announced a US$67-million charge in the quarter on its KC-46 aerial refueling tanker program, which Boeing attributed to COVID-19 disruptions and production issues.
The company’s free cash outflow rose to US$5.08-billion in the quarter, from US$2.89-billion, a year earlier, while total debt jumped to US$61-billion, from US$19.2-billion.
Excluding items, Boeing lost US$1.39 per share in the third-quarter ended Sept. 30.
Mastercard Inc.'s (MA-N) quarterly profit missed analyst estimates on Wednesday as the COVID-19 pandemic led to a slowdown in global travel and related spending, sending the payment processor’s shares lower.
The pandemic has forced companies to lay off workers by the millions, hurting their spending power, and the hit to air travel has also taken a toll on cross-border card transaction volumes.
Mastercard reported a 36-per-cent drop in cross-border volume on a local currency basis in the reported quarter. Gross dollar volume, the dollar value of transactions processed, rose 1 per cent to US$1.6-trillion.
Cross-border volumes have continued to fall since the quarter ended, with all first three weeks of October clocking declines of more than 30%, according to an investor presentation.
“We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge,” Chief Executive Officer Ajay Banga said in a statement.
American Express Co on Friday warned that business travel spending would not pick up before early 2022 after reporting underwhelming third-quarter profit due to weak spending on travel and entertainment by its card users.
Mastercard’s total operating expenses fell 4 per cent to US$1.7-billion in the quarter.
Net income fell 28 per cent to US$1.5-billion, or US$1.51 per share, in the third quarter ended Sept. 30. Excluding items, profit was US$1.60 per share, missing Street estimates of US$1.66, according to IBES data from Refinitiv.
With files from staff and wires