A roundup of some of the North American equities making moves in both directions today
On the rise
Mr. Pelz, the chief executive officer and founding partner of investment management firm Trian Fund Management, will assist in exploring potential partnerships and the company’s global expansion plans.
"Nelson is a globally recognized business visionary with a strong track record of constructive engagement to generate accelerated, profitable growth and shareholder value across many industry verticals that are of great interest to us," said Aurora CEO Terry Booth in a statement. "Like us, Nelson also takes a long-term view of value creation to benefit all stakeholders. We look forward to working with Nelson to further extend our global cannabis industry leadership by aligning Aurora with each of the major market segments cannabis is set to impact.
The Calgary-based company released revenue and EBITDA of $179-million and $49-million, respectively, exceeding analysts’ consensus expectations of $161-million and $42-million.
In a research note released Wednesday, Industrial Alliance Securities’ Elias Foscolos said: “BAD has maintained its 2019 guidance for 190-220 truck builds and $170-190-million in Adj. EBITDA. Given expectations for a weaker Canadian outlook, this would imply substantial growth projected for the U.S. business. As a result of a solid 2018 and a positive outlook, the Board approved a 6-per-cent increase to the monthly dividend. Our near-term outlook improves modestly and we expect the market will react positively, but we remain cautious for the mid to long term.”
Newstrike shareholders will receive 0.06332 of a HEXO common share in exchange for each Newstrike common share held.
The companies project the combined entity will realize annual synergies of $10-million, which they say will allow “HEXO to operate more efficiently with a commitment to continued excellence.”
“We’re thrilled to welcome the Newstrike team into the HEXO family. Jay Wilgar (CEO of Newstrike) and his team have built incredible relationships, including teaming up with The Tragically Hip, and they share HEXO’s vision of bringing exceptional branded cannabis experiences to adults everywhere,” said HEXO CEO Sebastien St-Louis. “With Newstrike, we’re adding talented employees and infrastructure to take HEXO to the next level on our journey to become one of the largest cannabis companies in the world. We’re extremely proud of our record of execution, and today are committing to achieving over $400 million in net revenue in 2020.”
Shares of Newstrike were up 11.1 per cent.
The location on Caribou Street will be the flagship of its Prairie Records brand of cannabis stores.
The Calgary-based company also said it is on track to open approximately 20 locations in Alberta and Saskatchewan by the end of the third quarter, subject to receipt of required regulatory approvals.
Empire Company Ltd. (EMP-A-T) jumped 1.1 per cent after reporting third-quarter financial results on Wednesday morning.
Sales of $6.247-billion fell in-line with the expectation on the Street ($6.251-billion), while adjusted EBITDA of $218.3-million missed the consensus estimate ($234.6-million).
Raymond James analyst Kenric Tyghe said: “While the headline (on adjusted EPS of $0.27 versus consensus of $0.31) reads as a miss, we believe this mischaracterizes the results, given that consensus did not (for the most part) adjust for charges of $0.12 that management had previously disclosed were being taken above the line in the quarter. The charges of $0.12 related to labour buyouts and FreshCo conversion costs, which are being taken above the line, as Sobeys is essentially in the first inning of the FreshCo conversion (aka it is reasonable to assume further such costs will be incurred over the next several years).The quarter, in our opinion (given the noise in the EPS consensus), is better framed in the context of the positive surprises on both SSS growth (on a tonnage increase) and gross margins.”
Brookfield Asset Management Inc. (BAM.A-T, BAM-N) was up 0.3 per cent after agreeing with Oaktree Capital Group LLC (OAK-N) to acquire 62 per cent of Oaktree’s business in a cash-and-stock deal valued at about US$4.8-billion.
Oaktree shareholders can exchange each of their shares for either $49 in cash or 1.0770 Class A shares of Brookfield. Brookfield said the total amount will be paid in 50-per-cent stock and rest in cash.
The offer is a premium of 12.4 per cent per Oaktree Class A unit to Tuesday’s closing price, Brookfield said in a statement
The Oaktree Board of Directors has unanimously recommended approval of the transaction.
“As we continue to strategically grow Brookfield, we are thrilled to be partnering with Oaktree and with its exceptional management team whose credit business is second to none,” said Brookfield CEO Bruce Flatt in a statement. “This transaction enables us to broaden our product offering to include one of the finest credit platforms in the world, which has a value-driven, contrarian investment style, consistent with ours.”
Shares of Oaktree were 12.5 per cent.
The Vancouver-based miner said it has entered into an agreement with Cantor Fitzgerald Canada Corp, as lead underwriter and sole bookrunner, on behalf of itself and a syndicate of underwriters including BMO Capital Markets, H.C. Wainwright and TD Securities to purchase 15,625,000 common shares at a price of 64 US cents each.
Boeing Co. (BA-N) rose 0.5 per cent on Wednesday after both Canada and the United the grounding of all 737 Max 8 airplanes over safety concerns arising from the crash of an Ethiopian Airlines flight that killed all on board, including 18 Canadians.
On Tuesday, Boeing ended down 6.1 per cent and registered its biggest two-day drop since June 2009.
On the decline
WestJet and Air Canada had a greater share of 737 Max planes in their fleet at year-end 2018 than any other publicly traded U.S. or Canadian airline stock, according to analysts at Cowen and Co. LLC.
On Tuesday, Air Canada lost nearly 4 per cent and WestJet dipped 3.2 per cent.
Consolidated revenue rose 2.6 per cent year-over-year to $1.09-billion, meeting the consensus expectation on the Street, while adjusted EBITDA rose 7.7 per cent to $450-million, beating the consensus of $440-million. Adjusted earnings per share of 52 cents also topped analysts’ estimates (45 cents).
In a research note, Desjardins Securities analyst Maher Yaghi said: “QBR reported 4Q results which were slightly above expectations in terms of financial performance, with a decent performance in both telecom and media. However, subscriber and ABPU metrics in wireless missed their targets in 4Q. Overall, we believe the stock’s elevated valuation is likely to preclude the name from outperforming its peers in the medium term.”
"We are very excited to partner with Walmart on this great initiative. We are two very like-minded retailers focused on world class customer service, high quality products and a convenient purchase experience making the partnership a natural fit," said chief business development officer Stewart Schaefer in a press release. "Walmart has enormous reach within Canada with over 23 million visits to their website every month and over 80 per cent of Canadian households shopping at Walmart. We could not think of a better partner to help bring more Canadians a great night's sleep with Bloom.”
Laurentian Bank Securities analyst Elizabeth Johnston deemed the move “slightly positive” and added “[The] partnership provides Sleep Country with additional reach, with no anticipated gross margin dilution.”
Neovasc Inc. (NVCN-T, NVCN-Q) dropped 11.1 per cent after announcing the pricing of its previously announced underwritten public offering of 11.1 million common shares at 45 US cents per share, which represents a 14.8-per-cent discount to Tuesday’s close.
The B.C.-based company plans to use the gross proceeds of US$5-million or the development and commercialization of its Reducer stent to treat refractory angina, development of its Tiara treatment for Mitral Regurgitation as well as and general corporate and working capital purposes.
Wednesday’s announcement comes about two weeks after the pricing of a similar offering, which sent shares down 28.6 per cent.
It plans to use the proceeds to repurchase a portion of its outstanding 2.875-per-cent convertible senior notes and for general corporate purposes.
With files from staff and wires