A roundup of some of the North American equities making moves in both directions today
On the rise
Uni Select Inc. (UNS-T) soared with the premarket release of better-than-expected third-quarter results.
The Quebec-based distributor of automotive refinish and industrial paint and related products reported revenue of US$426-million, up 8 per cent year-over-year and above the Street’s US$419-million estimate. Adjusted earnings before interest, taxes, depreciation and amortization of US$42-million and adjusted earnings per share of 40 US cents also easily exceeded the consensus projections (US$37-million and 22 US cents, respectively).
“Overall, we are very pleased with the strong margin performance across all three segments in 3Q as well as the impressive FCF generation. These results further reinforce our bullish stance on UNS,” said Desjardins Securities analyst Benoit Poirier.
Heroux-Devtek Inc. (HRX-T) fluctuated in Friday trading as its profits climbed but revenue fell last quarter as the landing-gear maker bore the impact of ongoing aerospace turbulence caused by the COVID-19 pandemic.
The Quebec-based company says civil aviation sales continued to fall, dropping more than 17 per cent in the quarter ended Sept. 30 compared to the same period a year earlier.
However, defence sales climbed by about nine per cent to $94-million.
Total revenue decreased to $131.3-million in the company’s second quarter compared to $137.1-million the year before, a drop the company attributes to the negative impact of foreign exchange fluctuations.
Heroux-Devtek’s net income nearly doubled in the latest quarter to $7.5-million from $3.8-million in the second quarter of 2020.
Adjusted net income of $7.5-million or 21 cents per share rose from 11 cents per share and beat analyst expectations of 18 cents per share, according to financial markets data firm Refinitiv.
“Heroux-Devtek has continued to mitigate the pandemic’s impact on civil production rates by consistently delivering strong growth in the defence sector. I am particularly proud of Heroux-Devtek’s financial performance, which demonstrates our agility to adapt to unforeseen events,” CEO Martin Brassard said in a statement Friday.
He noted that the company has extended its contract with Boeing for the 777 wide-body jetliner to 2030 and secured an agreement with Lockheed Martin to develop landing gear for its next generation of defence aircraft.
In a research report, Desjardins Securities analyst Benoit Poirier said: “Overall, we are very pleased with the solid 2Q results, especially the healthy FCF generation. We welcome the strong share buyback activity since the launch of the NCIB program alongside 4Q results, which supports our view that the shares are attractive at current levels. We believe management’s efforts to improve the cost structure of the business throughout the pandemic, as demonstrated by the solid margin reported in the quarter, should place the company in an ideal position to benefit from the eventual recovery of the Commercial segment and continued strength on the Defence side.”
Onex Corp. (ONEX-T) closed higher after it reported net earnings of US$602-million in its latest quarter compared with US$501-million in the same quarter last year — a leap of 20.2 per cent propelled by higher asset management earnings.
The private equity investment firm says the profit amounted to US$6.76 per diluted share for the quarter ended Sept. 30 compared with US$5.29 per diluted share in the same period a year earlier.
Onex says its segment net earnings, which excludes certain items, totalled US$607-million or US$6.59 per diluted share, up from US$515-million or US$5.39 per diluted share a year ago.
The Toronto-based company’s investing segment earnings totalled US$493-million compared with US$492-million 12 months before, while its asset management segment jumped to US$195-million from US$93-million in the same quarter last year.
Onex chairman and CEO Gerry Schwartz says Onex enjoyed a “very active quarter” with good momentum across all businesses.
He says investing capital per share grew by eight per cent and that fund performance at the company’s private equity platform was strong.
Johnson & Johnson (JNJ-T) was up with the premarket announcement it plans to split into two companies, separating its consumer health division that sells Band-Aids and Baby Powder from its pharmaceuticals and medical devices business in the biggest shake-up in its 135-year history.
The move by the world’s largest health-products company comes hot on the heels of similar announcements this week by industrial conglomerates Toshiba and General Electric and underscores how big, diversified corporations are under pressure to simplify.
This has been the case in the healthcare sphere, where the slow-and-steady business of selling consumer products such as moisturisers and shampoos has increasingly diverged from the high-risk, high-reward work of developing and marketing drugs.
Johnson & Johnson said it will separate its consumer health business into a new publicly traded company echoing a move by rivals GlaxoSmithKline plc and Pfizer Inc which plan to spin off their joint consumer health business next year.
Germany’s Merck KGaA sold its consumer health unit to Procter & Gamble Co in 2018.
“The new Johnson & Johnson and the new consumer health company would each be able to more effectively allocate resources to deliver for patients and consumers, drive growth and unlock significant value,” said Joaquin Duato, who is expected to become J&J’s chief executive officer in January.
The company is aiming to complete the planned separation in 18 to 24 months.
Johnson & Johnson will retain its pharmaceuticals and medical device units, which sells its COVID-19 vaccine, drugs such as cancer treatment Darzalex and medical devices. The units are expected to generate revenue of roughly US$77-billion in 2021.
On the decline
Cogeco Communications Inc. (CCA-T) inched lower despite reporting higher earnings last quarter and bumping up its financial projections for 2022 to account for its acquisition of an Ohio broadband system.
The Montreal-based company says profits attributable to shareholders rose 5.9 per cent to $96.2-million in the quarter ended Aug. 31, from $90.8-million in the same period a year earlier.
Revenue increased to $632.7-million in its fourth quarter from $605.2-million a year earlier, due largely to a 10.1 per cent jump in Canadian broadband revenue following Cogeco’s purchase of fellow Quebec cable and internet provider DERYtelecom last December.
The 64-year-old company also says growth in internet service users in Canada and a broader U.S. customer base, along with rate increases, more than offset a decline in video and telephone subscribers as consumers increasingly move online.
Earnings per diluted share rose eight per cent to $2.03 in the latest quarter compared to $1.88 the year before, an eight per cent rise that roughly aligned with analyst expectations, according to financial markets data firm Refinitiv.
Following its its broadband acquisition from Ohio’s WideOpenWest Inc. for US$1.13-billion in September, Cogeco is revising its guidance to project revenue growth of between 15 and 17 per cent and adjusted earnings of between 14 and 16 per cent in 2022.
In its fiscal year ended Aug. 31, Cogeco Communications increased revenue by 5.3 per cent to $2.51 billion and profit attributable to shareholders by seven per cent to $401.5 million.
“We are satisfied with the overall performance of Cogeco Communications, where revenue and adjusted EBITDA met our revised financial guidelines for fiscal 2021,” chief executive Philippe Jette said in a statement.
“In Canada, results for the fourth quarter were in line with expectations and we continued to see a positive trend with our Internet services.”
For a second consecutive day, Fortuna Silver Mines Inc. (FVI-T) sustained large losses amid worries about the future of its San Jose mine in Mexico after the expiry of its environmental impact authorization.
Before the bell, a pair of analysts downgraded its shares.
Parkland Corp. (PKI-T) dipped on the late Thursday announcement of the acquisition of Lynch Oil, a privately owned Idaho-based company.
With the deal, Parkland adds annual fuel sales of over 180 million litres and includes five large-format convenience stores and forecourts, two travel centres, two stand-alone car washes, and a rail storage terminal.
Terms of the deal were not disclosed.
ATB Capital Markets analyst Nate Heywood said: “Overall the transaction should be viewed as positive for PKI as it has acquired an asset base that can be strategically integrated into the existing business in Idaho, a region highlighted for its attractive growth profile.”
Tesla Inc. (TSLA-Q) was lower after regulatory filings showed Chief Executive Officer Elon Musk disclosed an additional share sale worth about US$687-million in the electric-car maker in the wake of offloading about US$5-billion in stock earlier in the week.
Mr. Musk sold 587,638 and 52,099 shares held by his trust on Nov. 11 in multiple transactions, according to two separate filings.
Mr. Musk, the world’s richest person and Tesla’s top shareholder, tweeted last weekend that he would sell 10 per cent of his stock if users of the social media platform approved the move.
In the first round of share sale, filings showed Mr. Musk’s trust sold nearly 3.6 million shares in Tesla, worth around US$4-billion, while he also sold another 934,000 shares for US$1.1-billion to cover tax obligations after exercising options to acquire nearly 2.2 million shares.
Prior to the sale, Mr. Musk owned a stake of about 23 per cent in Tesla, including stock options.
Mr. Musk had previously said he would have to exercise a large number of stock options in the next three months, which would create a big tax bill. Selling some of his stock could free up funds to pay the taxes.
See also: Musk’s Tesla sales cause a stir, but billionaires sell stock all the time
U.S.-listed shares of AstraZeneca PLC (AZN-Q) slipped despite its COVID-19 vaccine making a small contribution to earnings in the third quarter amid expectations the shot will move to “modest profitability” on new orders after the drugmaker on Friday posted US$1.05-billion in vaccine sales for the period.
The Anglo-Swedish company, which has said will not make a profit from the cheap and easy-to-use shot during the pandemic, this week unveiled plans to set up a separate unit for vaccines and antibody treatments to focus on its coronavirus efforts.
Total revenue jumped 47 per cent to US$9.74-billion for the three months to September on a constant-currency basis, while core earnings came in at US$1.08 per share, the company said, with the vaccine, Vaxzevria, contributing one cent to the profit.
The addition of rare-disease specialist Alexion from July 21, thanks to a US$39-billion deal agreed almost a year ago, also boosted sales.
Analysts on average were expecting profit of US$1.28 per share on sales of US$9.4-billion, according to Refinitiv IBES data.
Some of the company’s core treatments for cancer, rare-diseases and heart conditions disappointed, with lower-than-expected growth in sales of lung cancer drug Tagrisso due to price cuts in China.
Lordstown Motors Corp. (RIDE-Q) plummeted after announcing late Thursday a delay to next year’s launch of its Endurance electric pickup truck by a quarter, citing parts and materials shortages and other supply-chain issues.
The Ohio-based electric vehicle startup, while reporting its third-quarter results, said it would now begin production and deliveries in the third quarter of 2022, rather than in the second quarter that it forecast in August.
“We’re focused on the Endurance. We know we have to get that truck out. It’s been a challenging quarter with raw material shortages, parts shortages, supply-chain disruptions, particularly from international sourcing, but we’re doing everything we can to mitigate it,” Chief Executive Daniel Ninivaggi said on a conference call.
He also cited delayed semiconductor shipments that have dogged the entire auto industry.
“We’re going to do everything possible to get the truck out on our revised schedule,” Mr. Ninivaggi added.
Lordstown has struggled with the launch of the Endurance and unwanted attention since a short seller in March accused the company of misleading investors.
Its previous CEO, Steve Burns, subsequently resigned. The company still faces investigations by federal prosecutors in Manhattan and the U.S. Securities and Exchange Commission related to vehicle pre-orders and Lordstown’s deal to go public through a reverse merger with a blank-check firm.
A day after announcing it had finalized a deal for Taiwan’s Foxconn Technology Co Ltd to buy Lordstown’s plant in northeast Ohio for US$230-million and take over production of the Endurance, Lordstown said on Thursday it also signed a memorandum of understanding with Cox Automotive.
Cox will provide fleet customer service and support for Lordstown’s EVs, including maintenance, vehicle pickup and delivery, battery servicing, repairs and roadside assistance, Ninivaggi said.
With files from staff and wires
David Leeder