A roundup of some of the North American equities making moves in both directions today
On the rise
Oil producer Suncor Energy Inc. (SU-T) soared after it doubled its dividend on Wednesday as a rebound in crude prices from pandemic-driven lows helped it post a third-quarter profit compared with a year-ago loss.
The company, Canada’s No.2 oil and gas producer, has generated strong free cash flow this year as energy prices soar on tight supplies and growing global fuel demand. Earlier this month, the North American crude oil benchmark hit a seven-year high of more than $85 per barrel.
The rebound helped Suncor reinstate its dividend to pre-pandemic 2019 levels of 42 cents per share, from 21 cents per share.
The company reported a net profit of $877-million, or 59 cents per share, compared with a loss of $12-million, or 1 cent per share, a year earlier.
The oil sands producer said its Fort Hills mine in northern Alberta was on track to ramp to full rates by the end of 2021. It had discovered in July that a critical slope at the mine was becoming unstable.
The company produced 698,600 barrels of oil equivalent per day (boepd) in the third quarter, compared with 616,200 boepd a year earlier and 699,700 boepd in the previous three months.
Refinery crude throughput, or the amount of oil it processed, was 460,300 barrels per day (bpd), 15.2 per cent higher than a year earlier and a jump of 41.5 per cent on the prior quarter.
Refinery utilization was 99 per cent, compared with 70 per cent in the second quarter and 87 per cent a year earlier.
In a research note, Greg Pardy, an equity analyst at RBC Dominion Securities, said: “Suncor Energy’s third-quarter performance reinforces our confidence in the company’s game plan to return free cash flow to shareholders while ensuring financial stability. The company’s third-quarter results were above Street consensus on OEPS and CFPS, while generally in line on production volumes and capital spending (see below).More importantly, the company also announced a doubling in its common share dividend to $1.68 per share (annualized) (5.9-per-cent yield). This came sooner and in much greater magnitude than we expected. Suncor’s Board also approved an increase to the company’s share repurchase program to circa 7 per cent (from 5 per cent) of the company’s public float as of January 31, 2021 (106.7 million shares). As of October 25, 2021, Suncor had repurchased 69.1 million shares under its NCIB, which leaves about 37.6 million shares to be potentially repurchased under its amended buyback.”
Shopify Inc. (SHOP-T) reversed an early decline after it reported third-quarter results that fell short of analysts’ expectations, as a pandemic-fueled boom in online shopping shows signs of cooling down ahead of the critical holiday shopping season.
O'Kane: Shopify’s pandemic growth decelerates as its ecosystem investment delivers profit
The widespread shift to e-commerce at the height of the pandemic brought a wave of new business to Shopify, which provides infrastructure for retailers to set up their stores online and generates revenue mainly through subscriptions and merchant services.
However, as people step out of their homes and bigger rivals like Amazon.com Inc bolster their offerings to retain customers, Shopify’s growth, driven primarily by mom-and-pop stores, is expected to taper, analysts have said.
The company said it expects revenue to grow rapidly through this year, but warned growth would be at a slower rate than in 2020.
For the quarter ended Sept. 30, the company reported a smaller-than-expected rise of 46 per cent in revenue. Adjusted profit of 81 US cents per share also missed analysts’ estimate of US $1.18, according to Refinitiv data.
Gross merchandise volume (GMV), a widely watched figure for the e-commerce industry’s performance, stood at US $41.8-billion in the quarter, up 35%.
Shopify entered into partnerships with companies like TikTok and payments providers like Affirm, AmazonPay and Paypal to better enable merchants to process sales.
More merchants joined the platform, boosting subscription solutions revenue by 37 per cent to US $336.2-million in the quarter.
Crescent Point Energy Corp. (CPG-T) sat flat after it reported a third-quarter profit of $77.5-million, up from $500,000 a year earlier, helped by higher energy prices and increased production.
The company says the profit amounted to 13 cents per diluted share for the quarter ended Sept. 30. Oil and gas sales totalled $826.7-million, up from $437.0-million a year ago.
On an adjusted basis, Crescent Point says its net earnings from operations were 24 cents per diluted share, up from 13 cents per diluted share in the same quarter last year.
The increase came as average daily production came in at 132,186 barrels of oil equivalent per day, up from 113,383 boe/d a year ago.
In an update to its outlook, Crescent Point says it expects production this year to average 132,000 to 134,000 boe/d, at the high end of its earlier guidance for between 130,000 and 134,000 boe/d. Capital spending is now expected to be about $625-million, at the top end of its earlier guidance for between $600- and $625-million.
In its preliminary guidance for 2022, the company says production is forecast to average between 131,000 and 135,000 boe/d with a budget of $825- to $900-million in development capital spending.
West Fraser Timber Co. Ltd. (WFG-T) changed course in the wake of saying the addition of Norbord increased its third-quarter results from a year ago but B.C. wildfires and lower lumber prices contributed to a weakening from the second quarter.
The Vancouver-based lumber, oriented strand board and paper manufacturer says it earned US$460-million or US$4.20 per diluted share for the three months ended Sept. 30.
That’s up from US$262-million or US$3.82 per share in the third quarter of 2020, but down from US$1.45-billion or US$12.32 per share in the prior quarter.
Sales nearly doubled to US$2.36-billion from US$1.27-billion, but were down 37.6 per cent from the second quarter.
The company says wildfires slowed orders for forest products while output was reduced due to the availability of resins for panel products, transportation interruptions and inventory levels.
About 869,000 hectares of area were burned from wildfires in British Columbia in the second and third quarters, trailing only the provincial area lost from wildfires in 2017 and 2018.
“Despite a number of challenges, the third quarter of 2021 was one of West Fraser’s strongest quarter ever,” stated CEO Ray Ferris.
“We operated responsibly across the business, managing the complexities of transportation and mill disruptions in the face of higher duties and B.C. stumpage and softer demand in a cyclical commodity environment.”
Facebook Inc. (FB-Q) was up after it said on Thursday it would rebrand as Meta, a name change that comes as the company battles criticisms from lawmakers and regulators over its market power, its algorithmic decisions and the policing of abuses on its platforms.
CEO Mark Zuckerberg, speaking at the company’s live-streamed virtual and augmented reality conference, said the new name reflected its focus on building the metaverse.
“Right now, our brand is so tightly linked to one product that it can’t possibly represent everything that we’re doing today, let alone in the future,” he said.
The tech giant said the change would bring together its different apps and technologies under one new brand. It said it would not change its corporate structure.
The metaverse, a term first coined in a dystopian novel three decades ago and now attracting buzz in Silicon Valley, refers broadly to the idea of a shared virtual environment which can be accessed by people using different devices.
Ford Motor Co. (F-N) enjoyed big gains after it reported a stronger-than-expected third-quarter profit post-market on Wednesday and raised its full-year earnings forecast as strong demand for its trucks helped offset the hit from a global semiconductor shortage.
Ford said increased availability of chips and higher wholesale vehicle shipments in the third quarter enabled it to post higher profit, revenue and cash flow from the previous quarter. The worldwide shortage of computer chips has left car manufacturers unable to complete assembly of some new vehicles.
In an indication that it is managing the chip shortage better than its rival, Ford, with sales of US$35.7-billion, generated more revenue than competitor General Motors Co. GM (GM-N) earlier on Wednesday reported quarterly revenue of US$26.8-billion.
The carmaker announced it will restore a quarterly dividend, paying shareholders 10 US cents a share or US$400-million in total in the fourth quarter.
In an earnings call after the stock-market close, Chief Financial Officer John Lawler said Ford expects fourth quarter wholesale volume to rise 10 per cent, after jumping 30 per cent from the second quarter to the third. Wholesale shipments are largely to dealers.
Ford’s net income was US$1.8-billion, down from US$2.4-billion a year earlier.
Adjusted operating earnings were US$3.0-billion, compared with US$3.6-billion the previous year. Ford increased its guidance for full-year adjusted operating earnings to between US$10.5-billion and US$11.5-billion.
Earnings per share were 45 US cents, compared with 60 US cents in the year-ago period.
Tesla Inc. (TSLA-Q) rose after rental car company Hertz Global Holdings Inc. (HTZ-N) said on Thursday it could expand plans to supply its vehicles to Uber Technologies Inc. (UBER-N) to 150,000 during the next three years from an initial fleet of 50,000, if the partnership is successful.
But Hertz added a chip shortage and other constraints could affect the plan.
Hertz earlier this week said it would order 100,000 Tesla vehicles by the end of 2022, half of which would be offered exclusively as a rental option for Uber drivers by 2023.
“Hertz will kick off the program by providing up to 50,000 vehicles by 2023 exclusively to Uber drivers. If successful, the program could expand to 150,000 Teslas during the next three years,” Hertz said in a statement to Reuters.
“These ambitions could be affected by factors outside of its control, such as semiconductor chip shortages or other constraints,” Hertz added.
Hertz Chief Executive Mark Fields disclosed a plan for the possible expansion of Uber partnership during an interview with CNN on Wednesday.
On the decline
Brookfield Business Partners LP (BBU-UN-T) was down after announcing the US$6.05-billion acquisition of Scientific Games Corp.’s global lottery business.
The Las Vegas-based slot machine maker has been trimming down its business after ratcheting up US$8.2-billion in net debt as of June 30. Last month, it sold its sports betting divsion, OpenBet, to Endeavor Group Holdings Inc for US$1.2-billion in cash and stock.
The lotto unit deal with Brookfield Business Partners LP , the flagship listed business services and industrials company of Brookfield Asset Management, will consist of US$5.83-billion in cash, Scientific Games Corp said on Wednesday.
The company would also receive an additional payment of up to US$225-million based on achievement of certain profitability goals in 2022 and 2023, Scientific Games added.
“This marks a major milestone and puts us on a clear path to achieve our vision to become the leading cross-platform global game company and unlock our full value for shareholders,” Chief Executive Officer Barry Cottle said.
Reuters had earlier reported that the company was also in talks to potentially list the business in Australia, but those plans would now come to a halt with the deal.
The Scientific Games’ unit, which sells wholesale lottery system services to clients in more than 50 countries, is expected to see a 14-per-cent rise in adjusted earnings before interest tax depreciation and amortization to US$498-million in fiscal 2022.
“We are pleased to continue to grow our business with the acquisition of a market leader and essential service provider to governments around the world,” Brookfield Business Partners Managing Partner David Nowak said.
Brookfield said the deal for the lottery business would be funded with about US$2.6-billion of equity, of which 30 per cent will be raised through existing funds and the rest from its institutional partners.
Bombardier Inc. (BBD.B-T) closed lower with it posting a smaller third-quarter loss on Thursday as demand for private jets returned after the pandemic hurt sales last year.
Van Praet: Bombardier improves in third quarter, suggesting early results in turnaround effort
Easing travel restrictions and the lure of private flights have led to a surge in business aviation traffic, filling seats for private operators and expanding order backlogs for corporate planemakers like Bombardier and its rivals.
Bombardier generated US$100-million in free cash from operations in the quarter ended Sept. 30, a metric closely watched by investors, reversing negative usage from last year.
Business jet revenue jumped 17 per cent to US$1.4-billion on higher deliveries of large aircraft, compared with the US$1.37-billion that analysts were expecting, according to Refinitiv.
Revenue from business aircraft services also rose due to increased fleet flight hours, which have surpassed 2019 levels, Bombardier said. Business jet utilization in the United States rose 42.5 per cent year-on-year in the first eight months of 2021.
Bombardier recently unveiled an upscale variant of its Challenger 350 business jet as it vies to protect its dominant market share in the segment.
The Montreal-based group posted an adjusted net loss of US$95-million, or 4 US cents per share, in the quarter, compared with a loss of US$210-million, or 9 US cents, a year earlier. Analysts were expecting a loss of 5 US cents per share, according to Refinitiv. Revenue rose 3 per cent to US$1.45-billion.
Among its rivals, Cessna business jet maker Textron on Thursday raised its full-year earnings per share and cash guidance, while General Dynamics Corp’s Gulfstream Aerospace said on Wednesday business jet backlog reached a six-year high.
“We continued to see signs of a strong recovery in the general aviation market, with a 49% increase in revenues over last year’s third quarter and a $721 million increase in backlog,” said Textron Chief Executive Scott Donnelly in a release.
Methanex Corp. (MX-T) slid on the release weaker-than-anticipated third-quarter results after the bell on Wednesday
The Vancouver-based company reported adjusted EBITDA of US$264-million, up 0.7 per cent quarter-over-quarter but below the Street’s US$278-million forecast. Production slid 1.7 per cent, while total sales slid 2.6 per cent.
Separately, it announced it has finalized definitive agreements with Japan’s Mitsui O.S.K. Lines Ltd. establish a strategic partnership involving Methanex’s Waterfront Shipping (WFS) subsidiary.
Agnico Eagle Mines Ltd. (AEM-T) was lower in the wake of largely in line third-quarter results as it warned the pressures from rising costs are increasing.
After the bell, the miner reported adjusted earnings per share of 60 US cents, a penny below the Street’s expectations. Cash flow per share of US$1.69 topped the consensus forecast of US$1.55.
“In the second quarter of 2021, the Company noted that, given rising prices for many commodities and disruptions to global supply-chains, the resulting cost pressures were gradually being pushed downstream and were starting to be reflected in the prices for a number of goods and services used by the Company,” it said. “Since then, these inflationary pressures have accelerated (e.g., diesel prices have increased by approximately 20 per cent since August 1, 2021), and while the company continues to implement numerous initiatives to offset this, we anticipate upward cost pressure throughout the industry, including at the Company’s operations.
“While difficult to predict, the Company expects that these price pressures will extend into 2022, depending on when inflation conditions and global supply-chains normalize. As a result, the Company currently expects to see an approximate 5-per-cent to 7-per-cent increase in reagents and consumables prices in 2022, and a related impact on production costs next year. Given the uncertain nature of the inflationary pressures, the Company will continue to actively monitor and identify opportunities to manage and mitigate input cost increases.”
In a research note, iA Capital Markets analyst Puneet Singh said: “AEM is on track to achieve its production guidance for the year and has had a strong year operationally but the share price has been held back by weak gold price sentiment. The merger with Kirkland Lake should renew interest. The merged entity will have the majority of production coming from Canada (lower country risk), which will command a premium from the market. Additionally, the merged entity should be able to better compete for funds flow as the pro forma market capitalization would rival both peers Barrick and Newmont.”
Alamos Gold Inc. (AGI-T) dropped after weaker-than-anticipated third-quarter results and a reduction to its full-year guidance.
For the quarter, it reported production of 104,700 ounces, below the Street’s 123,200-ounce projection. All-in sustained costs of $1,152 per ounce also missed the consensus forecast ($1,074).
Adjusted earnings per share came in at 10 cents, 2 cents lower than analysts’ expectations.
Fiscal 2021 guidance fell by 3 per cent to a range of 455,000 to 495,000 ounces (from 470,000 to 510,000 ounces).
“Mulatos operations were impacted by rainfall and lowerrecoveries of 49 per cent, Island mill throughput was impacted by unplanned maintenance in July, and costs were generally impacted by stronger FX,” said RBC’s Josh Wolfson. “At Young-Davidson, underground mining rates improved and averaged 8,017tpd, in line with steady-state targets—mining rates are guided to continue at this level in Q4, while grades are expected to also improve.”
With files from staff and wires
David Leeder