A survey of North American equities heading in both directions
On the rise
Shares of Bird Construction Inc. (BDT-T) jumped 10.5 per cent with the late Tuesday release of better-than-expected first-quarter results and constructive outlook.
The Mississauga-based company reported revenue of $688.2-million, up 28.3 per cent year-over-year and above the consensus forecast of $604.1-million. Adjusted EBITDA jumped 50.4 per cent to $24.2-million and adjusted earnings per share soared 100.2 per cent to 20 cents, which also easily blew past expectations $23.5-million and17 cents, respectively).
“Bird delivered strong Q1/24 results, with management reaffirming its bullish outlook for 2024,” ATB Capital Markets analyst Chris Murray said. “Management expects its sizeable backlog, improving project mix, and expanded self-perform capabilities to underpin high single-digit to low double-digit revenue growth and margin expansion in 2024. Management noted that the demand/booking conditions have extended into 2024, evidenced by a book-to-bill of more than 1.0 times in Q1/24, with demand across all targeted sectors remaining firmly intact and trends around infrastructure, public transportation, and renewable forms of energy remaining longer-term tailwinds for Bird’s services.
“Given Bird’s shift toward progressive contracts and recurring revenue-type work, we anticipate that the $3.4-billion pending backlog could see more significant growth, noting 11.0-per-cent growth in Q1/24. Despite a healthy demand environment, management reiterated that rising interest rates and ongoing supplyside challenges remain headwinds, particularly for legacy projects that were bid several years ago, with labour availability remaining constrained in certain markets.”
Saputo Inc. (SAP-T) finished 0.8 per cent higher after announcing its president and CEO Lino Saputo plans to transition to the role of executive chair of the board.
The Montreal-based dairy processor says the transition will take effect Aug. 9, the date of the company’s annual general meeting.
Saputo says Carl Colizza, the company’s current president and chief operating officer for North America, will take the top job in August.
Mr. Colizza has been with Saputo since 1998, and in his current role since 2019.
Saputo says Mr. Colizza will continue to perform the functions of his current role after the transition for the time being.
The company says Mr. Colizza’s track record and dedication to Saputo’s core values make him the ideal candidate to lead the company.
Vancouver-based Patriot Battery Metals Inc. (PMET-T) rose 1.4 per cent after announcing a mutual agreement to end its Memorandum of Understanding (MOU) with Albemarle Corp. (ALB-N).
The relationship, announced in July of 2013, intended to see the companies worked together on technical aspects of an integrated project, advancing the scope of mine concentrate production and opportunities for a downstream lithium hydroxide plant integrated with the Corvette project in the Eeyou Istchee James Bay region of Quebec.
“Patriot expects to fully engage with other downstream companies in the Lithium supply chain and as such all the rights granted to Albemarle have expired, including any levels of exclusivity in respect of future mine production and links to downstream chemical conversion facilities,” it said in a release.
“As the scale and quality of Patriot’s Corvette Project has become increasingly evident, the Company has received significant interest from participants in the lithium industry, given the potential for Corvette to be a large and high-quality raw material supplier for the future of lithium-ion battery supply chains ex-China. Enabling the company to fully engage with other downstream companies has been determined to be in the best interests of shareholders.”
On the decline
Shares of AtkinsRealis (ATRL-T) were lower by 4.6 per cent after it reported its first-quarter profit attributable to shareholders rose to $45.5-million as its revenue increased nearly 20 per cent compared with a year ago.
The company formerly known as SNC-Lavalin Group Inc. says the profit amounted to 26 cents per diluted share for the quarter ended March 31, up from a profit of $28.4-million or 16 cents per diluted share a year earlier.
Revenue for the quarter totalled $2.26-billion, up from $2.02-billion in the first quarter of 2023.
AtkinsRealis says its adjusted profit from its professional services and project management operations amounted to 42 cents per diluted share, up from an adjusted profit of 32 cents per diluted share a year earlier.
In its outlook, the company says it now expects its nuclear organic revenue growth for 2024 to come in between 15 and 20 per cent, up from earlier expectations for growth between 12 and 15 per cent.
It also says corporate selling, general and administrative expenses from its professional services and project management business for the full year to total about $130-million, up from previous guidance for about $110-million.
In a research note, Desjardins Securities analyst Benoit Poirier said: “ATRL reported healthy 1Q24 results. Although adjusted PS&PM [Professional Services & Project Management] core EBITDA of $175-million was below consensus of $185-million and our forecast of $186-million, adjusted PS&PM core EPS of $0.42 was above both the Street and our forecast of $0.41. PS&PM revenue of $2.258-bilion was above consensus of $2.117-billion and our forecast of $2.101-billion. On the EBITDA miss, corporate PS&PM SG&A was $40-million (vs $29-million in 1Q23), higher than our estimate of $28-million; this was driven by higher long-term compensation costs, primarily as a result of the share price (ATRL increased its SG&A target for the year to $130-million, up from $110-million). We calculate that if 1Q SG&A had been in line with our estimate, EBITDA would have been $187-million, relatively in line with expectations.”
“We expect a positive trading reaction given the stronger-than-expected organic, backlog growth, cash flow and increased Nuclear growth guidance.”
Boyd Group Services Inc. (BYD-T) dropped over 7 per cent on the premarket release of weaker-than-expected first-quarter results and an outlook deemed negative by the Street.
The Winnipeg-based company reported quarterly revenue of $787-million, missing the Street’s expectation by $2-million as same-store sales growth slowed. Adjusted EBITDA of $82-million was also lower than the consensus estimate of $88-million with margins of 10.4 per cent below analysts’ projection of 11.2 per cent.
“BYD reported soft 1Q results, with lower-than-expected SSSG and a 110bps weaker EBITDA margin,” said Desjardins Securities analyst Gary Ho. “Its 2Q outlook signals negative SSSG in the quarter to date, offset by growth in scanning and calibration (S&C) services. The 18.5-per-cent share price pullback since its 4Q reporting in March suggests some of this has been priced in, but commentary on the outlook is somewhat more negative than we had expected. Impact—negative.”
“Continuing mild weather and the resulting low demand environment have impacted demand into 2Q. Coupled with tough comps, this has made it challenging to deliver SSSG in the quarter to date (below our 6-per-cent forecast for 2Q). While BYD expects demand to normalize through the summer driving season, it is prepared to address the challenges should softer demand persists. Offsetting this, we are encouraged to see an increased focus on internalizing S&C—during 2024, BYD has increased the S&C workforce by more than 60 per cent. BYD’s medium-term goal of doubling its size by 2025 is unchanged.”
Shares of Netflix Inc. (NFLX-Q) closed narrowly lower after saying on Wednesday it would stream two National Football League games on Christmas Day this year, doubling down on efforts to add more live programming on its streaming service.
It will also stream at least one game on Christmas Day in 2025 and 2026 as part of the exclusive three-season agreement.
The deal marks the first time Netflix has licensed the rights to one of the world’s biggest sports leagues and also the first time it would show live football.
Netflix content chief Bela Bajaria said on Wednesday “there are no live annual events, sports or otherwise, that compare with the audiences NFL football attracts.”
The company did not disclose financial terms of the deal. Bloomberg News, which first reported on the negotiations, said Netflix will pay less than US$150-million per game.
The NFL is the most-watched sports league in the U.S. This year’s Super Bowl game between Kansas City Chiefs and the San Francisco 49ers drew a record 123.7 million U.S. viewers.
Boeing Co. (BA-N) was lower by 2.1 per cent after the U.S. Justice Department has determined it violated a settlement that allowed the company to avoid criminal prosecution after two deadly crashes involving its 737 Max aircraft, prosecutors told a federal judge on Tuesday.
It is now up to the Justice Department to weigh whether to file charges against the aircraft maker. Prosecutors will tell the court no later than July 7 how they plan to proceed, the Justice Department said.
Boeing failed to make changes to prevent it from violating federal anti-fraud laws — a condition of the the 2021 settlement, Glenn Leon, the head of the fraud section of the Justice Department’s criminal division said in a letter.
The determination means that Boeing could be prosecuted “for any federal criminal violation of which the United States has knowledge,” including the charge of fraud that the company hoped to avoid with the $2.5 billion settlement, the Justice Department said.
However, it is not clear whether the government will prosecute the manufacturing giant.
“The Government is determining how it will proceed in this matter,” the Justice Department said in the court filing.
Investigations into the 2018 and 2019 crashes pointed to a flight-control system that Boeing added to the Max without telling pilots or airlines. Boeing downplayed the significance of the system, then didn’t overhaul it until after the second crash.
Shares of GameStop (GME-N) and AMC (AMC-N) slipped on Wednesday, following sharp gains this week after “Roaring Kitty” Keith Gill, the central figure behind the 2021 meme stock frenzy, resurfaced on social media.
Cinema chain AMC had risen 135 per cent in the past two sessions, while video game retailer GameStop hits its highest level since June 2021 on Tuesday.
Why are meme stocks rallying again?
“This is a trend driven by entertainment rather than company fundamentals.. stocks which rocket up on pure speculation, tend to drop back down to earth very quickly,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Roaring Kitty,” the online persona of Gill, shared a clip from the movie “Braveheart” on social media platform X on Tuesday with the word “GameStop” flashing on the screen as Mel Gibson, playing William Wallace, screams “freedom.”
Meanwhile, AMC disclosed in a filing it would issue 23.3 million shares in exchange for its notes due 2026 for principal amount of US$164-million.
AMC and GameStop were among the top 10 securities bought by retail investors on Tuesday, with US$51-million and US$16-million daily inflows, respectively, according to Vanda Research.
The two stocks have also recorded strong options trading this week, with much of the action concentrated in bullish call options, which profit when stock prices rise.
New York Community Bancorp’s (NYCB-N) reversed course to trade down as a deal to sell US$5-billion of mortgage warehouse loans failed to assuage investors worried about the long road to profitability for the embattled lender.
The deal, already hinted by NYCB, with JPMorgan Chase on Tuesday bolsters its liquidity. However, concerns stemming from the bank’s exposure to the under-pressure commercial real estate (CRE) still remained.
“This (warehouse lending) is arguably one of the more profitable businesses, in our view, and the path to a respectable return on tangible equity will continue to be a difficult,” KBW analysts wrote a note.
Earlier this month, NYCB’s new management team unveiled a plan to return to profitability next year after a turmoil sparked by a surprise quarterly loss in January wiped billions off its market value, led to a mass exodus of bankers and shrank its total deposits.
“Profitability is likely to be close to zero for the next 3-5 years,” Raymond James analyst Steve Moss said.
NYCB has pledged to shrink its CRE lending footprint. CRE loans made up 16 per cent of the bank’s total at the end of the first quarter.
However, analysts have said NYCB will have to lure buyers for such loans with steep discounts.
With files from staff and wires