On the rise
Shares of miner Barrick Gold Corp. (ABX-T) were higher as it doubled its quarterly dividend on Wednesday after reporting first-quarter profit above Wall Street expectations, on the back of higher gold and copper prices.
Gold, traditionally seen as a safe haven to invest in during times of financial uncertainty, rose above US$2,000 an ounce in early March after Russia invaded Ukraine. It has since retreated to around US$1,850 an ounce.
The miner’s realized gold price in the quarter rose 5.6 per cent to US$1,876 per ounce from a year earlier, while copper saw a near 14-per-cent increase to US$4.68 per pound.
However, the company’s gold production in the quarter fell 10.1 per cent to 990,000 ounces from a year earlier, hurt by lower output at its Nevada gold mines.
The omicron coronavirus variant has caused labor shortages and other production disruptions, forcing rivals like Newmont Corp to take a hit of as much as 150,000 ounces in the first quarter.
The company said rising inflation, exacerbated by the conflict between Russia and Ukraine and western sanctions, has had a direct impact on Barrick’s business, not only in terms of fuel and gas prices but also the cost and availability of input commodities.
Barrick said its all in sustaining costs, an industry metric that reflects total costs associated with production, was up at US$1,164 per ounce of gold from US$1,018 per ounce a year earlier.
Barrick also declared a dividend of 20 US cents per share for the first quarter, nearly double from the previous quarter.
Barrick’s first-quarter adjusted earnings per share of 26 US cents was above estimates of 24 US cents, according to Refinitiv IBES.
The Lion Electric Co. (LEV-T) gained after saying it swung to a profit last quarter as sales nearly quadrupled on a large increase in vehicle deliveries.
The Montreal-based manufacturer of all-electric medium and heavy-duty urban vehicles says it earned US$2.1-million or one cent per diluted share in the first quarter, compared with a net loss of US$16.1-million or 15 US cents per share a year earlier.
Net earnings included a US$21.5-million gain related to non-cash decrease in the fair value of share warrant obligations and a US$3.8-million charge related to non-cash share-based compensation, compared with a US$5.2-million charge related to non-cash share-based compensation in the first quarter of fiscal 2021.
Its comprehensive profit reached US$5.35-million, versus a US$17.4-million loss in the first quarter of 2021.
Revenues for the three months ended March 31 were US$22.6-million, up from $6.2-million in the prior year.
Lion was expected to report a net loss of eight cents per share on US$23 million of revenues, according to financial data firm Refinitiv.
“Despite the ongoing challenges in the supply chain environment, we continued to experience improvements and achieved a record number of quarterly vehicle deliveries,” Lion CEO and founder Marc Bedard said in a news release.
“We also sustained momentum in vehicle manufacturing and we expect that cadence of production, and therefore of deliveries, should gradually improve over the rest of the coming year.”
The company, which has been a public company for a year, delivered 84 vehicles in the quarter, including 72 school buses and 12 trucks, an increase of 60 vehicles from the same period a year earlier.
Desjardins Securities analyst Benoit Poirier said: “Overall, we are pleased with the accelerated level of deliveries which occurred in the quarter despite ongoing supply chain disruptions. Management expects this cadence of production to continue and deliveries to gradually improve over the rest of 2022.”
Mullen Group Ltd. (MTL-T) rose after it announced a surprise 20-per-cent increase to its monthly dividend from 5 cents to 6 cents per share.
Raymond James analyst Andrew Bradford said: “This is the second dividend increase so far this year; Mullen increased its dividend by 25 per cent (from $0.04 to $0.05 monthly) in January. Mullen typically reviews its dividend along with its annual business plan in December, or rarely under extraordinary circumstances (3Q20 for example). In this instance, Mullen is simply redirecting $10-million of its annual discretionary cash flow from the NCIB to an increased dividend – $3-million per quarter. Mullen has been active on its NCIB since 1Q20, allocating an average of $12-million per quarter towards repurchases. The payout is now 53 per cent of our $1.37 per share 2022 discretionary cash flow estimate. The remaining unallocated discretionary cash flow will be allocated to debt reduction and to padding the balance sheet for M&A.”
Doman Building Materials Group Ltd. (DBM-T) was up after it reported first-quarter revenue increased by 63.7 per cent to $851.3-million, compared to $519.9-million in 2021, driven by acquisitions. The expectation was for revenue to come in at $713.6-million.
Net earnings of $42-million were up from $34.2-million a year ago.
With the results exceeding his forecast, RBC’s Paul Quinn said: “Management noted that it is seeing ‘general economic headwinds manifesting in inflation, increased interest rates along with price volatility in certain product categories.’ It expects market pricing for its products could be volatile due to various factors, including but not limited to interest rates and higher borrowing costs for consumers, production capacity restoration and industry operating rates, and the impact of COVID-19 on residential construction and the economy. However, management also noted that it expects higher demand for its products will be sustained beyond the duration of the pandemic as governments in Canada and the US have identified investment in housing and infrastructure as a policy priority and a key source of economic stimulus during the recovery phase.”
Maple Leaf Foods Inc. (MFI-T) reversed early losses after reporting its first-quarter profit fell compared with a year ago even as its sales rose seven per cent as it dealt with COVID-19 and supply chain disruptions and higher costs.
Chief executive Michael McCain says the impact of the Omicron variant, including high levels of absenteeism, inflation, and supply chain disruptions, challenged the company in the quarter.
Maple Leaf says it earned $13.7 million or 11 cents per share for the quarter ended March 31 compared with a profit of $47.7 million or 39 cents per share a year earlier.
Sales totalled $1.13 billion, up from $1.05 billion in the same quarter last year.
The increase came as sales in its meat protein group rose to $1.09 billion for the quarter compared with $1.01 billion a year earlier, while sales for its plant protein business climbed to $44.9 million from $42.6 million.
On an adjusted basis, Maple Leaf says it earned three cents per share for the quarter, down from an adjusted profit of 27 cents per share a year ago.
Starbucks Corp. (SBUX-Q) soared despite suspending its guidance for the rest of its fiscal year on Tuesday as sales growth missed Wall Street targets due to China’s tough COVID-19 curbs.
Comparable sales in China, where the chain has rapidly expanded in recent years to tap rising coffee consumption, declined 23 per cent, overshadowing 12-per-cent growth in North America.
China’s strict lockdown measures to meet its zero-COVID policy have upended operations of most global companies that have a significant presence in the Chinese market, including Apple, Gucci-parent Kering and Taco Bell-owner Yum China.
“I remain convinced Starbucks’ business in China will be eventually larger than our business in the U.S.,” Chief Executive Officer Howard Schultz said in a call with investors.
The company expects “even greater impact” to its third-quarter results because of the timing of lockdowns in Shanghai and resurgence of the virus in Beijing and other cities.
Even so, demand in its U.S. stores has been “relentless,” Mr. Schultz said. Shares rose following the results.
“Demand and revenue are key drivers,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners. Tigress owns Starbucks stock on behalf of clients and accounts it manages. “Everything is going well in spite of the pandemic and strength in the United States offset the weakness in China.”
Global comparable sales at Starbucks, which recently brought Schultz back to lead the company amid a wave of unionization at its U.S stores, rose 7 per cent in the second quarter, while analysts polled by Refinitiv had expected 7.1-per-cent growth.
More than 50 U.S. cafes have elected to join the Workers United union out of roughly 240 altogether that have sought to hold elections since August.
Despite already raising wages since last year, the company will invest an additional US$200-million in fiscal 2022 to lift pay for store managers, increase training, revitalize its “Coffee Master” program for baristas and launch an internal app to communicate directly with its 240,000 U.S. employees.
The company will also accelerate the rollout of new ovens and espresso machines and speed up maintenance and repairs. And it will update its consumer-facing app to give customers more accurate times to pick up their beverages.
The new money will bring total investments in employees and cafes to US$1-billion this fiscal year alone.
Mr. Schultz also said customers will be able to start adding tips to their credit and debit card purchases by late 2022, something that baristas at unionized stores in Buffalo, New York, asked for at the bargaining table.
Mr. Schultz said his latest term as CEO will be temporary and that he and the board hope to name a successor by the autumn, with the aim for that person to take over entirely by the first calendar quarter of 2023. Schultz plans to remain on the board afterwards.
Total net revenue rose to US$7.64-billion from US$6.67-billion a year earlier, as the company opened 313 net new stores during the quarter. Analysts had expected US$7.59-billion in quarterly revenue.
Toronto-based Russel Metals Inc. (RUS-T) was flat after it reported record first-quarter revenue of $1.3-billion, up from $885-million a year ago and ahead of expectations of $1.1-billion.
Net earnings came in at $99-million or $1.56 per share, which was ahead of expectations of $1.20 per share and compared to net income of $102-million or $1.62 per share a year ago.
RBC’s Alexander Jackson said: “We expect a positive reaction from Russel shares to better than expected Q1 results driven by higher volumes and top line revenue, partially offset by lower than expected margins at the Metals Service Center (“MSC”) and Energy business. Russel declared its regular 38 cents per share quarterly dividend and management noted they continue to expect margins to remain above historical levels going forward, inline with our expectations.”
Vacation rental firm Airbnb Inc. (ABNB-Q) jumped in the wake of projecting second-quarter revenue above market estimates late Tuesday, betting on pent-up demand to drive a summer of strong travel after COVID-19 curbs were eased globally.
The San Francisco-based firm expects revenue between US$2.03-billion and US$2.13-billion, compared with the average analyst expectation of US$1.96-billion, according to Refinitiv data.
The rise of hybrid working has in recent months encouraged people to book longer and more frequent stays in destinations away from cities, giving a boost to rental providers.
“We are going to continue to see continued and sustained growth for stays of longer than a month and stays of longer than a week,” Chief Executive Brian Chesky said on a call with analysts.
Airbnb, which made a slew of changes to its service last year to take advantage of the post-pandemic travel surge, said it posted the strongest growth in gross nights booked in non-urban areas in the first three months of 2022.
Gross booked nights in urban destinations also rose sharply to above pre-pandemic levels, while the number of nights and experiences booked - a key metric of the platform’s performance - exceeded 100 million for the first time.
That along with a 37-per-cent surge in average daily rates over 2019 levels drove Airbnb’s revenue 70-per-cenbt higher from a year earlier. The company reported a net loss of 3 US cents per share which was much smaller than analysts’ estimates.
“Airbnb exceeded expectations on almost every line item, with strong bookings trends for the summer and balance of the year,” Baird Equity Research analyst Colin Sebastian said.
“Travel recovery in urban areas, cross-border and APAC (Asia-Pacific) should fuel additional bookings growth in the coming quarters/years,” he added.
The New York Times Co. (NYT-N) was higher after it reported first-quarter revenue on Wednesday that missed analysts’ estimates, hurt by slowing digital subscriptions growth at a time when competing online news platforms are trying to lure subscribers.
The Times attracted millions of digital subscribers in the last two years as the pandemic, the U.S. presidential election and climate crisis dominated the news cycle.
But with people stepping out more and spending less time online, the news publisher’s digital subscriber growth has slowed and digital ad sales are dominated by tech behemoths Facebook and Google.
Still, The Times has been pouring money into acquisitions such as sports news website The Athletic and viral daily word game “Wordle” and other podcasts and newsletters.
The company’s total revenue rose 13.6 per cent to US$537.4-million in the first quarter, compared with estimates of US$546-million, according to Refinitiv data.
“Wordle brought an unprecedented tens of millions of new users to The Times, many of whom stayed to play other games which drove our best quarter ever for net subscriber additions to Games and we’re off to a great start on our work with The Athletic,” Chief Executive Officer Meredith Kopit Levien said in a statement.
Net income attributable to The Times’ common stockholders fell to US$4.73-million, or 3 US cents per share, in the first quarter, from US $41.12-million, or 24 US cents per share, a year earlier.
Moderna Inc. (MRNA-Q) gained on Wednesday after it reported US$6-billion in first-quarter revenue from its COVID-19 vaccine that breezed past estimates, and said it expects vaccine sales to be higher in the second half of the year than in the first.
The results eased some worries about vaccine sales this year as an increasing number of people globally receive a complete vaccination course.
Still, future sales remain uncertain as countries relax pandemic curbs, cases fall in some regions and the need for annual booster shots remains unclear.
Moderna, like rival Pfizer (PFE-N), maintained its full-year sales forecast for the vaccine at US$21-billion. The bigger drugmaker also stuck to its forecast for its COVID pill, signaling a dearth of new sales contracts for the drug.
Moderna’s vaccine is based on messenger RNA (mRNA), the same technology that is also used by Pfizer, and recently gained authorization for a second booster dose in the United States.
U.S. regulators granted authorization for boosters of both vaccines in March for people age 50 and older, citing data showing waning immunity and the risks posed by Omicron variants of the virus.
Moderna Chief Executive Officer Stephane Bancel told CNBC that he hoped people, especially those at high-risk of disease, would get a booster dose in the fall.
Moderna’s COVID shot has propelled it from a developer of experimental vaccine technology with no approved products to a vaccine maker with billions of dollars in sales.
Sales of its vaccine rose to US$5.9-billion in the first quarter from US$1.7-billion a year ago. Total sales of US$6.1-billion beat estimates of US$4.62-billion, according to IBES data from Refinitiv.
The company said it expected to test a booster shot to target the Omicron variant, in addition to the original coronavirus, in a late-stage trial in the second quarter.
On the decline
Loblaw Cos Ltd. (L-T) was down as it missed Wall Street estimates for first-quarter revenue on Wednesday, signaling that pandemic-led demand for groceries and drugs were waning from its peak.
Loblaw profit jumps nearly 40% even as inflation drives up costs for retailers
Consumers returning to restaurants and outdoor activities and spending less time cooking at home due to easing COVID-19 restrictions has slowed sales growth at grocery retailers who saw their businesses boom during the heights of the pandemic.
Total revenue rose 3.3 per cent to $12.26-billion in the three months ended March 26, missing analysts’ estimates of $12.36-billion, according to IBES data from Refinitiv.
Net earnings available to common shareholders rose to $437-million, or $1.30 per share for the quarter from $313-million, or 90 cents per share.
In a research note, Desjardins Securities equity analyst Chris Li said: “As expected, L reported a solid quarter with adjusted EPS of $1.36 vs our estimate of $1.34 and consensus of $1.32. The outperformance came mainly from slightly better-than-expected Retail gross margin and lower-than-expected expenses. Consistent with what we saw from MRU’s results a couple of weeks ago, L benefited from high food inflation (it was more than 7.5 per cent during the quarter); this drove more people to shop at discount (L derives 60 per cent of its revenue from discount). It appears that cost pass-through was well-managed, supported by a healthy consumer (strong employment) and continuing elevated food-at-home demand. Pharmacy also recovered as COVID-19-related restrictions were loosened and continuing strong pharmacy services drove higher margins. There is no change to management’s 2022 outlook. It continues to expect 1H22 sales to benefit from the pandemic and elevated inflation. As economies reopen and the company starts to lap elevated 2021 inflationary prices and COVID-19-related pharmacy services, year-over-year revenue growth will be more challenged.”
Iamgold Corp. (IMG-T) plummeted despite releasing better-than-expected first-quarter results after the bell on Tuesday.
The Street expressed concern over a capital increase at its Côté Gold project in Northern Ontario, leading three equity analysts on the Street to downgrade its shares.
“IAG had a strong operating quarter in 1Q22 however results were overshadowed by preliminary findings from the Cote project review and risk analysis which highlighted a significant capex increase and timeline extension at the project. We have incorporated 1Q22 results and new Cote guidance into our model and are downgrading our rating,” said Raymond James’ Farooq Hamed.
Uber Technologies Inc. (UBER-N) on Wednesday beat expected operating earnings and forecast a strong second quarter, saying it had no need to offer extra incentives to boost its driver supply, unlike its smaller rival Lyft Inc. (LYFT-Q).
The ride hail giant brought forward its results to Wednesday morning from the afternoon after Lyft Inc shares sank 26 per cent on Tuesday when it said it needed to pay more to get drivers, dragging down Uber’s stock in its wake.
Uber shares were also down, paring some of the losses made Tuesday after-hours following Lyft’s earnings release.
Uber reported a dip in monthly active users in the first three months of the year from the previous quarter, a common trend in the industry during the colder winter months, but was keen to set itself apart from its smaller competitor.
“Our driver base is at a post-pandemic high and is more engaged on Uber than on other platforms. Importantly, we expect this trend to continue without significant incremental incentive investments,” Uber Chief Executive Dara Khosrowshahi said in prepared remarks.
Uber reported first-quarter adjusted EBITDA, which excludes stock-based compensation and other expenses, of US$168-million. That surpassed the average analyst expectation of US$132-million, according to IBES data from Refinitiv.
Uber’s second-quarter adjusted EBITDA forecast of between US$240-million and US$270-million also topped the average analyst expectation for US$237-million.
At US$6.9-billion, total first-quarter revenue rose 136 per cent and exceeded estimates for US$6.13-billion.
Uber also said it expected to generate “meaningful positive cash flows” for the full year, which would mark the first time it achieved this goal in the company’s 13-year history.
However, on a net basis, Uber’s first-quarter loss surged to US$5.9-billion from US$10- million a year ago, driven by $5.6 billion in drops in the value of stakes in other, poorly performing companies, primarily Chinese ride-hail company Didi Global Inc.
Uber Chief Financial Officer Nelson Chai in a statement said Uber had the liquidity to sit on the loss-making positions and wait for a better time to sell them.
Uber’s ride-hail business appears on track to top pre-pandemic levels in the second quarter, with April mobility bookings exceeding 2019 levels in all global markets.
The return of riders did not come at the expense of Uber Eats customers, who continued ordering food deliveries from restaurants.
But monthly active platform consumers, a metric that includes both ride-hail and food delivery users, dropped from 118 million in the fourth quarter to 115 million in the three months ending March 31.
With files from staff and wires
David Leeder