On the rise
Shares of Enbridge Inc. (ENB-T) rose after it reported a 4.34-per-cent rise in first-quarter profit on Friday, as a surge in demand for oil and gas boosted the pipeline operator’s shipment volumes.
Canada, the world’s fourth-largest crude producer, is looking for ways to boost pipeline utilization amid surging U.S LNG export volumes to Europe, as it seeks to slash its dependence on Russian energy, following its invasion of Ukraine.
This has helped Enbridge, which moves about 20 er cent of all gas consumed in the U.S and most of Canada’s crude exports to the country.
Enbridge said it transported 3 million barrels per day (bpd) on its Mainline system in the first quarter, higher than 2.75 million a year earlier.
Separately, the company said it would jointly develop a low-carbon hydrogen and ammonia production and export facility with energy portfolio company Humble Midstream, at its Ingleside Energy Center (EIEC) in Texas.
The Calgary-based company’s adjusted earnings rose to $1.7-billion, or 84 cents per share, in the three months to March 31, from $1.63-billion, or 81 cents per share, a year earlier.
Pembina Pipeline Corp. (PPL-T) was up after announcing it is raising its 2022 guidance after posting record quarterly results due to higher natural gas and crude oil prices.
The Calgary-based company says it expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to range between $3.45-billion and $3.6-billion, up from its prior forecast of $3.35-billion to $3.55-billion.
Pembina reported a record $1-billion in adjusted EBITDA in the first quarter as net profits surged 50 per cent to $481-million or 81 cents per share, up from $320-million or 51 cents per share a year earlier.
Revenues for the three months ended March 31 were about $3-billion, up from $2-billion in the first quarter of 2021.
Pembina was expected to earn 66 cents per share on $2.33-billion of revenues, according to financial data firm Refinitiv.
Total volumes decreased about three per cent to 3,369 mboe/d due to contract expirations, with pipeline volumes decreasing 3.6 per cent to 2,493 mboe/d and facilities output dipping 2.1 per cent to 876 mboe/d.
In a research note to clients, iA Capital Markets analyst Matthew Weekes said: “Summary
PPL’s Q1/22 results beat estimates on record Marketing performance, driven by favourable crude oil and NGL pricing during the quarter. The Company increased its guidance to reflect Marketing tailwinds, offsetting other factors. Our revised 2022 estimate is above the high end of guidance. While the Marketing segment could provide further upside, factors such as the timing of arbitrage opportunities, a higher cost of inventories, and seasonality as the year progresses have to be considered. Finally, PPL reactivated the Peace Phase VIII expansion, adding visible medium-term organic growth while longer-lead projects are under development, and secured commitments from two Montney producers for future volumes, providing visibility to utilize existing infrastructure and participate in future growth in the basin, where sentiment has been positive. We are increasing our target price to $49.00, primarily due to increasing our DCF analysis.”
Telus Corp. (T-T) was higher on Friday after it boosted its first quarter profit as it added wireless customers and increased its revenue.
The Vancouver-based telecom had $4.28-billion in revenue for the three-month period ended March 31, up 6.4 per cent from a year ago when it had $4.02-billion in revenue.
Its profit came to $404-million for the quarter, up 21.3 per cent from $333-million in profits during the same quarter last year.
The telecom’s earnings amounted to 28 cents per share, up from 25 cents per share a year ago.
The company attributed the higher profits to increased operating income, driven by higher wireless and internet revenues as well as a greater contribution from its TELUS International business.
After adjusting for restructuring and other costs, as well as excluding losses related to real estate joint ventures from its year-ago results, Telus had $414-million in profits, up 15.3 per cent from a year ago. The adjusted profit came to 30 cents per share, up from 27 cents per share a year ago.
Analysts had been expecting 30 cents per share in adjusted profits and $4.35-billion in revenue, according to the consensus analyst estimate from S&P Capital IQ.
- Alexandra Posadzki
From Thursday: BCE profit jumps 36%, revenue climbs as results top pre-COVID-19 levels
Martinrea International Inc. (MRE-T) soared after it beat expectations even though its net profit plunged 35 per cent in the first quarter as it continued to face cost inflation, new product launches and production disruptions.
The Toronto-based auto parts manufacturer says it earned $25.2 million or 31 cents per diluted share, compared with $38.7 million or 48 cents per share a year earlier.
Excluding one-time items, adjusted net earnings were $24.8 million or 31 cents per share, down 24 per cent from $32.6-million or 41 cents per share in the first quarter of 2021.
Revenues for the three months ended March 31 increased about 16 per cent to $1.16-billion from $997.2-million led by North American sales rising 22 per cent to $859.7-million.
Martinrea was expected to report 11 cents per share in adjusted earnings on $997.3-million of revenues, according to financial data firm Refinitiv.
The company says the results were better than the third and fourth quarters because of a lower level of semiconductor-related production shutdowns and customer call-offs during the quarter, including the Chevrolet Equinox and Sierra and Silverado pickup truck platforms.
“We continue to experience production disruptions with some customers, as well as persistent inflationary cost pressures, with rising energy prices in Europe being the most pervasive,” stated CEO Pat D’Eramo in a news release.
The company is also experiencing the most new business launch activity in its history.
“These factors continue to keep margins below their long-run potential — based on history, and on what we believe our operations can achieve. The good news is, we are off to a good start in 2022 as our first quarter performance demonstrates.”
In a research note, Raymond James analyst Michael Glen said: “Overall, we view the results as encouraging given they potentially represent a shift from the considerable challenges and headwinds facing the business over the past few years. That said, as we look through the balance of this year, we are in need of more clarity regarding the outlook for both North American and European auto production. This will be particularly true as we need to assess how ongoing geopolitical uncertainty, rising interest rates, high gas prices and higher general overall inflation impact both overall consumer demand and mix for new vehicle purchases. As such, despite an encouraging 1Q result, we are maintaining our Market Perform rating on the stock.”
WildBrain Ltd. (WILD-T) was higher with the release of better-than-anticipated third-quarter results after the bell on Thursday.
The Halifax-based media company saw revenue rise 26.7 per cent year-over-year to $129.5-million and adjusted EBITDA jump 75.2 per cent to $30.2-million. Both exceeded the consensus forecasts on the Street ($126-million and $25.2-million, respectively).
“The positive EBITDA variance was mainly due to the flow-through of higher-margin distribution deals (Degrassi),” said RBC Dominion Securities analyst Drew McReynolds. “Given the inherent quarterly volatility, we caution investors that we put less emphasis on quarterly performance. Nevertheless, re-affirmed F2022 guidance (revenues of $480–500-million and adjusted EBITDA of $87–93-million) indicates continued momentum across the business.”
“On balance, we view results as neutral to a modest positive for the shares at current levels.”
After better-than-anticipated first-quarter results, Vancouver-based Premium Brands Holdings Corp. (PBH-T) increased on Friday.
Before the bell, the specialty foods company reported revenue of $1.25-billion, up 23.9 per cent year-over-year and above the Street’s estimate of $1.23. Earnings per share rose 22 per cent to 88 cents, topping the consensus forecast of 80 cent.
Premium Brands also reiterated its 2022 financial guidance, including EBITA in a range of $510-$530-million (versus the Street’s estimate of $516-million).
“Premium Brands continues to successfully deal with inflationary pressures reporting good earnings growth,” said Stifel analyst Martin Landry. “The company decided to hold-off introducing a new five-year plan, which may disappoint some investors which were looking at this as a near-term catalyst. However, we don’t see this as a major issue. We don’t expect a significant share price reaction, but the bias is to the upside.”
On the decline
A day after sustaining a 14.3-per-cent drop following its earnings release, shares of Shopify Inc. (SHOP-T) continued to fall on Friday.
Before the bell, a large group of equity analysts lowered their target prices for the Ottawa-based e-commerce firm, expressing concern over slowly revenue growth.
“We appreciate the magnitude of the [total addressable market], an acceleration of secular tailwinds coming into focus, a strong management team, and record of execution, we believe much of this is priced in at the current multiple — which earns a significant premium to the implied multiple of its growth/margin framework and implies a 10-year revenue CAGR that appears potentially too high,” said Citi’s Tyler Radke.
See also: Shopify earnings miss expectations amid e-commerce rout; Deliverr acquisition set for US$2.1-billion
Aritzia Inc. (ATZ-T) gave back early gains after saying founder and chief executive Brian Hill is stepping down from the role after leading the clothing retailer for 38 years.
The Vancouver-based company, which went public in 2016, says president and chief operating officer Jennifer Wong will step into the CEO role, while Mr. Hill will stay on as executive chair of the board.
Mr. Hill and his family founded Aritzia in 1984, while Ms. Wong started at the company in 1987 as a part-time sales associate.
The change in leadership comes as the company continues its expansion plans into the U.S., which helped boost its net revenue growth in its last quarter by 66.1 per cent from a year earlier.
Aritzia says net revenue in its fourth quarter came in at $444.3-million, up from $267.5-million for the same quarter last year.
Net income was reported as $34.2-million, up 113 per cent from the $16.1-million a year earlier.
Irene Nattel of RBC Dominion Securities said in a note to clients that the results were strong and better than expected with an “outstanding performance in the U.S. where the brand continues to build momentum.”
“Performance of ATZ prior to, during and through yet another wave of COVID reinforces our views around the strength, sustainability and upside potential of the company’s unique business model,” she said.
Ms. Nattel added that despite Hill’s departure as CEO, “importantly” he has no “immediate” plans to change current ownership levels, while Wong is well-known to investors.
David Leeder