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WHAT'S ON TAP
HOT OFF THE PRESS
Update brings lower deficit, more spending
The Spring Economic Update was released after the close yesterday, bringing with it a revised fiscal deficit projection of $67B - down from $78B…
… on the back of higher nominal GDP and oil prices. Another ~$55B of spending was layered in since the initial budget, including a ~$6B package aimed at adding 80-100K Red Seal trades workers over five years…
… in industries that align with Carney’s agenda. Reinforcing that agenda is the new $25B Canada Strong Fund, which looks set to be seeded via borrowing and grown through asset monetization and retail involvement… interesting.
ARC Resources gets taken out for $22B
ARC Resources (ARX) announced it’s being taken out by Shell for ~$22B, a near-30% premium - but roughly in-line with where the stock has traded historically…
… given recent pressure from pulled production guidance at Attachie. Shell management expects $250M of run-rate synergies from the addition of ARC’s liquids-heavy portfolio…
… making it the third largest Montney producer and driving a bid for peers with exposure to the basin. With growing confidence in LNG Canada Phase 2…
… enhanced cash flow profiles from supply disruptions, and modest valuations…
… this might not be the last energy deal we see this year.
ON OUR RADAR
GAINERS & LOSERS
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Celestica (CLS) fell nearly 15% on Q1 results that met top line estimates, beat small on EPS, and came with a $2B bump to the full-year revenue guide. Great numbers, but the new $19B target is back-half weighted…
… with Q2 shaping up to deliver mid-single digit sequential growth, likely due to industry-wide supply constraints for a number of key components.
We are experiencing more component shortages now than 90 days ago. 2 main factors. One is the demand really continues to grow. And as a result, the suppliers are a little behind on adding capacity.
Management is addressing these challenges by meaningfully building inventory balances and extending procurement cycles out to 2028…
… supported by customer commitments, which give the company even greater revenue visibility and should keep the stock at a premium.
TFI International (TFII) gained 5% on the back of its Q1 results, which beat small on revenue and bigger on profit - with management showing some cautious optimism around an end market recovery…
… driven by tighter supply in truckload and a potential return to organic growth in the Less-Than-Truckload (LTL) segment. The US market recovery appears more pronounced so far…
… driving a larger re-rate than we’ve seen in peers like Mullen Group (MTL), given TFII’s greater exposure south of the border.
EARNINGS
YESTERDAY’S EARNINGS
| Company | Actual | Consensus |
|---|---|---|
| 🇨🇦 Toromont (TIH) | 1.13 | 1.08 |
| 🇨🇦 Aecon (ARE) | -0.21 | -0.22 |
TODAY’S EARNINGS
| Company | Time | Consensus |
|---|---|---|
| 🇨🇦 Bausch (BLCO) | AM | 0.05 |
| 🇨🇦 Cdn National (CNR) | AM | 1.81 |
| 🇨🇦 CGI (GIB-A) | AM | 2.26 |
| 🇨🇦 Brookfield Infra (BIP) | AM | 0.20 |
| 🇨🇦 First Quantum (FM) | AM | 0.05 |
| 🇨🇦 Capital Power (CPX) | AM | 0.56 |
| 🇨🇦 Capstone (CS) | PM | 0.15 |
| 🇨🇦 Kinross (K) | PM | 0.73 |
| 🇨🇦 GFL Env. (GFL) | PM | 0.12 |
| 🇨🇦 Centerra (CG) | PM | 0.45 |
| 🇨🇦 Whitecap (WCP) | PM | 0.23 |
| 🇨🇦 AltaGas (ALA) | PM | 1.24 |
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