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Crescent Point Energy announces special dividend, reports third-quarter profit up from year ago

Crescent Point Energy Corp. CPG-T +2.63%increase announced a special dividend for shareholders Wednesday, as continued high oil prices helped the Calgary-based oil and gas company deliver a five-fold increase in profits in its third quarter.

Crescent Point, which has drilling operations in Alberta, Saskatchewan and North Dakota, reported third-quarter net income of $466.4 million, up from $77.5 million in the same quarter last year.

The company said it will pay a special dividend of 3.5 cents per share based on its latest quarterly results in addition to its regular quarterly dividend of eight cents per share.

However, the company also acknowledged it is beginning to feel the pinch of wide-spread inflation throughout the economy. On Wednesday, Crescent Point revised its capital expenditure guidance for 2022 to $950 million from its previously indicated range of between $875 and $900 million.

“Our new 2022 guidance of $950 million is a seven per cent bump from our previous mid-point,” said Crescent Point chief executive Craig Bryksa on a conference call with analysts, adding the increase is in part due to increased drilling activity in the Duvernay and North Dakota regions, but also the result of rising costs for everything from trucking, well servicing, labour and equipment repair.

“We’ve seen a little bit of a bump in drilling rig day rates … and obviously plays that are a little bit deeper, like Kaybob and North Dakota, require more casing, more fracking, and obviously fuel costs hit us.”

Canadian oil and gas companies have been enjoying windfall profits in 2022, ever since Russia’s invasion of Ukraine disrupted the global energy supply balance and drove up commodity prices.

In the third quarter alone, Crescent Point was able to pay down approximately $270 million worth of debt, bringing its total net debt as of Sept. 30 down to $1.2 billion.

The company’s excess cash flow in the third quarter totalled $233.7 million, and Bryksa said for 2023 Crescent Point expects to generate approximately $1.1 to $1.5 billion of excess cash flow, at forecast West Texas Intermediate oil prices of between US$75 to US$85 per barrel.

Crescent Point’s average production for the quarter ended September 30, 2022 was 133,019 boe/day, up from 132,186 a year earlier, and the company said it plans to generate an annual average production of 134,000 to 138,000 boe/d in 2023.

Oil and gas sales totalled nearly $1.1 billion, up from $826.7 million in the third quarter last year, boosted by higher realized oil and natural gas prices.

The company continues to be pleased with the performance of its Kaybob Duvernay assets in northern Alberta, which it acquired last year from Shell Canada for $900 million. During the third quarter, Crescent Point acquired additional lands in the Kaybob Duvernay for approximately $87 million, and Bryksa said the company expects to increase the proportion of capital it allocates to the asset within its five-year plan.

He said production in the Kaybob is expected to grow “in a disciplined manner” from approximately 35,000 boe/d in 2022 to over 50,000 boe/d by 2027, subject to commodity prices.

Thomson Reuters posts higher third-quarter revenue, holds guidance steady even as inflation lifts costs

Thomson Reuters Corp. TRI-T -3.32%decrease reported higher third-quarter revenue and kept its annual guidance steady even as inflation is starting to push the company’s costs higher, which could squeeze profit margins over the coming year.

The information and news provider’s three main business lines serving legal, tax and accounting as well as corporate clients, all posted higher revenue in the quarter that ended Sept. 30.

Revenue rose 3 per cent to US$1.57-billion, and was up 5 per cent after adjusting for the effects of currency fluctuations. Recurring revenues – the subscription-based fees that make up a large majority of the company’s revenue – were up 7 per cent. That was emblematic of the stability the company’s revenues have shown through more than two years of global economic upheaval, as most clients are locked in to contracts and there are a limited number of competitors for the same products and services.

With high inflation, rising interest rates and geopolitical upheaval starting to slow economic growth, however, some corporate clients are starting to look harder at the costs of their software contracts.

“We’re pretty optimistic on the revenue front as we head into 2023,” said chief executive officer Steve Hasker, in an interview. “I think where we’re cautious is in corporates, we see some software purchase decisions being put through an extra hurdle or two.”

Mr. Hasker said the company is also closely watching ad revenue from its Reuters News business, as well as revenues from events, one-time transactions and print products, which are “a little bit less bolted down” than income from its core subscription-based products.

Operating expenses decreased 3 per cent at Thomson Reuters, compared with a year ago, as the company continues to work through a two-year change program that will ultimately strip out costs while increasing the company’s focus on new technologies. But Mr. Hasker said the inflationary environment is pushing up labour costs, especially for engineering and technology skills, as well as the prices charged by the company’s vendors.

“We see it everywhere,” he said. “We see it in our input prices, everything from paper, through our print facility, all the way through to software renewals to run our front and back offices. … I can’t think of a single category where our vendors aren’t asking for price increases.”

Over time, Thomson Reuters also has an opportunity to raise prices in step with inflationary trends, and the company has made some price increases this year. But there is a lag before those increases take effect across the board as multi-year contracts with many clients gradually come due for renewal.

In the third quarter, Thomson Reuters reported profit of US$228-million, or 47 US cents per share, compared with a loss of US$240-million, or a loss of 49 US cents per share, in the same period last year.

“It was another solid quarter,” said Aravinda Galappatthige, an analyst at Canaccord Genuity Group Inc., in a note to clients.

Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.

Thomson Reuters kept its guidance for 2022 and 2023 unchanged, after six straight quarters in which it had increased some aspect of its targets. And the company has bought back US$855-million of shares through October 28 as part of a US$2-billion repurchase program announced in June.

The company’s leaders continue to hunt for acquisitions, as falling valuations for many technology companies make have made the math on deals “much friendlier to an acquirer,” Mr. Hasker said. In January, the company will be able to sell part of its US$6.3-billion stake in the London Stock Exchange Group (LSEG), which will give it added financial firepower.

The Reuters News division is also “moving methodically toward testing a paywall,” Mr. Hasker said, after Paul Bascobert was named president of Reuters in September. A previous attempt by the company to a website paywall was postponed last year after a dispute with financial data provider Refinitiv, which has since been acquired by LSEG, over the terms of an agreement to supply news.

The revamped paywall is likely to launch next year. “I’d put pretty modest growth expectations against that,” Mr. Hasker said, “but it does represent a pretty exciting step forward for the company.”

As the economy stumbles, FORTIS’s growth plans stand out

Fortis Inc.’s share price has been battered by rising interest rates over the past five months, yet the St. John’s-based utility is offering investors a compelling argument to consider the stock: low-risk growth built on the expansion of cleaner energy.

This reason is certainly worth a closer look.

Last Friday, Fortis FTS-T +0.28%increase updated its five-year capital plan with the release of its third-quarter financial results. The utility – whose electricity transmission and distribution operations span Canada, the United States and parts of the Caribbean – will make investments worth a total of $23.5-billion over the next five years through 2027.

That’s up $2.3-billion from the previous five-year plan through 2026.

“A good chunk of that is driven by our cleaner energy investments,” David Hutchens, chief executive officer of Fortis, said in an interview.

Fortis will spend $5.9-billion on such investments over five years, through building wind and solar interconnections in several U.S. states, developing renewable energy and storage in Arizona in place of existing coal generation, and upgrading the natural gas system in British Columbia.

“There is a very strong alignment among our stakeholders to progress as quickly as we can towards a cleaner energy future,” Mr. Hutchens said.

Traditional energy, such as oil and gas, has gained a lot of attention this year amid concerns about energy security and reliability, particularly in Europe.

But the U.S. Inflation Reduction Act, which includes US$370-billion to fight climate change through incentives and tax credits, is spurring growth in renewable energy in the United States. It is also accelerating the trend toward more electricity demand by encouraging things like electric vehicles.

Mr. Hutchens credits the act for bolstering Fortis’s long-term energy transition plans, which include being coal-free by 2032 and eliminating 75 per cent of greenhouse gas emissions by 2035 – even as some countries in Europe are now delaying planned shutdowns of aging power plants as fossil-fuel energy prices soar.

“You can get caught up in a short-term blip in energy prices, but longer-term we expect them to revert back to normal and for us to continue along with our plans,” Mr. Hutchens said.

He added: “I would not expect us to push back any of those retirements, because we do have economic ways of replacing that power.”

The best part for investors: The utility’s updated capital plans will translate into growth in its rate base – or the allowed rate of return on its assets – of 6.2 per cent a year over the next five years, according to the utility’s projections. That will underpin revenue growth and dividend increases.

David Quezada, an analyst at Raymond James, said in a note that the rate base projections, up from 6 per cent a year previously, are at “a level we consider to be highly attractive given Fortis’ diversified footprint and scale.”

The updated plan arrives at a time when the stock is trading at a relatively low valuation of 17.8 times the analyst’s estimated 2023 earnings. That’s near the low end of a price-to-earnings ratio that tends to hover between 16 and 23, according to Mr. Quezada.

The reason for the recent valuation dip: Rising interest rates have sent government bond yields surging to multiyear highs in recent months as central banks battle surging inflation.

The 10-year U.S. Treasury bond yields more than 4 per cent, for example, offering meaningful competition to stocks backed by slow-growing profits and dividends. Fortis stock currently yields 4.2 per cent.

“While we acknowledge the cycle of rising rates may not yet be complete, we stress that looking back over an extended period, this stock has only seen a valuation level below this a handful of times,” Mr. Quezada said.

The bullish case for utilities rests on central banks hitting the brakes on rate increases, perhaps by the start of 2023. And if the global economy falters from tighter monetary policy, as many economists expect, steady utilities can offer investors considerable safety from a broader downturn in corporate profits.

Fortis has laid out its growth plans for the next five years, offering an attractive opportunity in an economy that is looking increasingly murky.

Job openings surged in September despite Fed efforts to cool labor market

Job openings surged in September despite Federal Reserve efforts aimed at loosening up a historically tight labor market that has helped feed the highest inflation readings in four decades.

Employment openings for the month totaled 10.72 million, well above the FactSet estimate for 9.85 million, according to data Tuesday from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey.

The total eclipsed August’s upwardly revised level by nearly half a million.

Fed policymakers watch the JOLTS report closely for clues about the labor market. The latest numbers are unlikely to sway central bank officials from approving what likely will be a fourth consecutive 0.75 percentage point interest rate increase this week.

September’s data indicates that there are 1.9 job openings for every available worker. The disparity in supply and demand has helped fuel a wage increase in which the employment cost index, another closely watched data point for the Fed, is growing at about a 5% annual pace.

In other economic news Tuesday, the ISM Manufacturing Index posted a 50.2 reading, representing the percent of companies reporting expansion for October. That was slightly better than the Dow Jones estimate for 50.0 but 0.9 percentage points lower than September.

One good piece of news from the ISM data: The prices index fell another 5.1 points to a 46.6 reading, indicating a lessening of inflation pressures. Order backlogs also declined, falling 5.6 points to a 45.3 reading, while supplier deliveries fell 5.6 points to 46.8 and employment edged higher to 50.

Gordon Pape: NFI should be in a sweet spot, but nothing’s going right

At first glance, you’d think that Winnipeg-based NFI Group Inc. (NFI-T -7.53%decrease) is the right company in the right place at the right time. Instead, the company has been hit by Murphy’s law: Anything that can go wrong, will go wrong.

NFI is a leading manufacturer of buses and motor coaches. Its battery-electric and fuel cell-electric vehicles are in more than 110 cities in six countries. The company proudly proclaims on its website that it is “leading the evolution to zero-emission mobility.”

NFI operates in Canada and the United States. Apart from Winnipeg, it has facilities in Ontario and U.S. operations in Alabama, Minnesota, Washington and New York. Product names include New Flyer, MCI, Alexander Dennis and Arboc. The company has 3.5 million square feet of production space and the capability of manufacturing up to 8,000 vehicles a year, powered by everything from clean diesel and natural gas to a range of hybrid and electric products.

The buyers are out there. The company has a near-record backlog of 4,150 units. But it all seems to be falling apart.

As the switch to electric vehicles intensifies, you’d expect a company such as NFI Group to be flourishing. It’s not – quite the opposite. At this point, the firm looks more like a candidate for bankruptcy than an up-and-coming transportation disrupter.

The company’s woes are reflected in its share price. In April, 2018, the stock was trading at almost $60. A year ago at this time it was around $28. It closed Friday at $9.63, down about 65 per cent in the past 12 months.

What’s happening? On Oct. 24, the company released a third-quarter preview that can only be described as dismal. NFI expects adjusted EBITDA in the quarter to be a loss of between $15-million and $17-million. For the full year, the company is guiding toward an adjusted EBITDA loss of between $40-million and $60 million. (EBITDA stands for earnings before interest, taxes, depreciation and amortization.)

Full-year revenue is projected as coming in between $2-billion and $2.2-billion, down from the previous estimate of $2.3-billion and $2.6-billion.

“The third quarter was another very challenging period as we saw strong demand for our products and services, offset by continuing supply disruption resulting in production inefficiencies and the inability to complete and deliver contractually committed buses. In addition, we continued to experience short-term margin pressure from higher inflation and surcharge driven input costs,” Paul Soubry, NFI’s chief executive officer, said in the preview.

In response, the company is implementing a five-part action plan to attempt to stop the bleeding. This includes:

• A two-week freeze on new vehicle starts at New Flyer in hopes that suppliers can deliver the needed parts to complete projects already under way.
• Following the end of the freeze, the company will only increase production once confidence in supply chains has improved.
• NFI will work with suppliers and sub-suppliers to search for alternate or substitute parts where possible, increase production-line parts inventories and develop longer lead times to better support new vehicle output.
• Continue cost cutting initiatives, including reducing overhead. The company has already closed two production facilities, one fabrication facility and nine parts distribution locations.
• Discuss additional financing solutions with its bankers and government partners.

The company says that demand for its products is strong and that is expected to continue into 2023. But strong demand doesn’t translate into revenue if it can’t deliver its products.

NFI described these problems as “near-term headwinds” and reiterated its guidance for 2025 of between $3.9-billion and $4.1-billion in revenue and adjusted EBITDA of between $400-million and $450-million.

Investors are clearly taking this optimistic forecast with a large grain of salt. The stock continued to tumble last week, losing 17 per cent even in the midst of a strong TSX rally.

Despite all this bad news, the stock continues to pay a quarterly dividend of 5.31 cents a share (21.24 cents a year) to yield 2.2 per cent. The dividend was slashed by about 76 per cent last December, but it’s surprising it hasn’t been eliminated completely. That could be the next step in management’s austerity plan. Full third-quarter results will be released Nov. 2. A dividend suspension could come then.

NFI shares could enjoy a huge recovery in the next few years if the company can turn this mess around. Based on what we’ve seen to date, don’t bet on it.

Fed announces third consecutive 75-basis point rate hike

The Federal Reserve once again raised interest rates by 75 basis points on Wednesday. This marked the third consecutive 75-basis point increase and the fifth rate hike this year. 

The move came as the Fed continues to fight high inflation, which hit 8.3% annually in August. This was a slight improvement from July but still remains near the 40-year high set earlier this year and is much higher than the central bank’s preferred 2% annual average.

The increased federal funds rate also raises interest rates on products such as personal loans, mortgages, student loans and credit cards. 

The rate hike brings the federal funds rate to a targeted range of 3% to 3.25%, and the Fed said it anticipates that more rate hikes are on the horizon, as it is “strongly committed to returning inflation to its 2% objective.”

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While the Federal Reserve maintains its monetary policy and forecasts more rate hikes, it indicated that bringing down inflation could take longer than previously anticipated. 

“At 3%, the rate is now above what most FOMC members consider to be the long-term level and should be effective in reducing demand and slowing inflation over time,” Mike Fratantoni, Mortgage Bankers Association (MBA) senior vice president and chief economist, said in a statement.

“The FOMC members’ projections indicate slower growth, slowly decelerating inflation, and a fed funds rate that will likely top out well above 4%,” Fratantoni said. “The surprise for the market might be the median expectation that they could increase rates to 4.4% by the end of this year.”

The Federal Open Market Committee (FOMC) upped its projection for interest rates by the end of the year, showing that bringing down inflation could be a longer process than it originally anticipated. FOMC members increased their projections for year-end interest rates from 3.4% to 4.4%, and expects rates to remain at or above 4% through 2024.

“Focusing on the Fed’s interest rate decision totally misses what’s most important,” Morning Consult Chief Economist John Leer said in a statement. “FOMC members significantly increased their projections for inflation, unemployment and interest rates over the next two years and lowered their GDP growth forecasts. Even the Fed is growing less confident in its ability to achieve a soft landing.”

https://www.foxbusiness.com/personal-finance/federal-reserve-rate-hike-september-inflation?dicbo=v1-3b3c9ee5b125f1efc1729e8199e048d4-00e17b74303517cbe6bf08cea931e9f870-gezdsobqgi4wcljvmnqwiljugzrtcljzmm3tiljrgaydcmdemi2dsmzsmm

Dow closes 800 points higher on Friday, registers fourth straight week of gains

Stocks rose on Friday despite a tumble in Amazon shares after economic data pointed to slowing inflation and a steady consumer.

The Dow Jones Industrial Average closed 828.52 points, or about 2.6%, higher at 32,861.80. The S&P 500 added nearly 2.5%, to close at 3,901.06. The Nasdaq Composite ended up about 2.9%, to close at 11,102.45.

On a weekly basis, the major indexes made notable gains. It was the fourth positive week in a row for the Dow, a first since a five-week streak ending in November 2021. The 30-stock index is up 5.7% this week in its best performance since May. It’s also on track for its best month since January 1976.

The S&P 500 and the Nasdaq are up 3.9% and 2.2%, respectively, for the week.

https://www.cnbc.com/2022/10/27/stock-market-futures-open-to-close-news.html

Teck Resources Reports Q3 Loss On One-Time Charge For Fort Hills Sale

The Canadian Press – Canadian Press – Thu Oct 27, 5:59AM CDT

VANCOUVER — Teck Resources Ltd. reported a loss in its latest quarter as it took a one-time charge related to the sale of its stake in the Fort Hills oilsands project to Suncor Energy Inc.

The company says it lost $195 million or 37 cents per diluted share for the quarter ended Sept. 30.

The result compared with a profit of $816 million or $1.51 per diluted share in the same quarter a year ago.

Revenue in what was the company’s third quarter totalled $4.67 billion, up from $3.97 billion in the same quarter last year.

The results included a $952-million asset impairment charge related to the sale of the company’s 21.3 per cent stake in Fort Hills to Suncor for about $1 billion.

On an adjusted basis, Teck says it earned $923 million or $1.74 per diluted share for the quarter compared with an adjusted profit of nearly $1.02 billion or $1.88 per diluted share in the same quarter last year.

This report by The Canadian Press was first published Oct. 27, 2022.

Companies in this story: (TSX:TECK.B

CANADIAN UTILITIES REPORTS THIRD QUARTER 2022 EARNINGS

CALGARY, AB, Oct. 27, 2022 /CNW/ – Canadian Utilities Limited (TSX:CU.TO) (TSX:CU-X.TO)  

Canadian Utilities Limited (Canadian Utilities or the Company) today announced third quarter 2022 adjusted earnings of $120 million ($0.45 per share), $32 million ($0.12 per share) higher compared to $88 million ($0.33 per share) in the third quarter of 2021.

https://www.newswire.ca/news-releases/canadian-utilities-reports-third-quarter-2022-earnings-889619964.html