Taking a look at publicly traded Manitoba firms

Opinion

Hey there, time traveller!
This article was published 15/11/2021 (1137 days ago), so information in it may no longer be current.

During the first wave of the pandemic, there was so much mayhem and uncertainty that global stock markets reset, hitting a floor on March 20, 2020 when it became indisputable that COVID-19 would become a global pandemic.

That’s not to say every commercial enterprise was at risk, but just about every listed company took the hit and global portfolios plummeted in value.

As economies in North America and around the world started feeling their way around the obstacles of rolling shutdowns and the different stages of public health restrictions imposed jurisdiction to jurisdiction, much of the commercial world is slowly starting to get back to some semblance of normalcy — save for the hospitality and tourism industries.

Publicly traded Manitoba companies have fared no better or worse than most. None of them rely exclusively on the Manitoba market, so they were all exposed to whatever restrictions might be in place in the markets in which they operate.

After the global economy just about shut down completely at the beginning of the pandemic, the restart has been choppy and the interconnectedness of the global economy has been showing its vulnerabilities ever since.

So now, even companies like Pollard Banknote which flourished in the environment of social distancing — casinos were closed but retail and online lottery tickets were a fine alternative — have come back to earth.

In September, Pollard was listed among the TSX’s 30 top-performing stocks over a three-year period with a 166 per cent increase over that time.

But after the release of its third-quarter results last week, its share price fell 20 per cent, or $10 in one day. While total revenue was almost identical to the prior year, earnings from operations was only about one quarter what it was in the third quarter or 2020 because of a one-time expense this year and a one-time revenue event last year.

Boyd Group Services Inc, another longtime TSX star lost almost $25, close to 10 per cent, also in one day last week.

Boyd has its hands full trying to staff back up again after the demand for auto repair was quiet for months as people stayed at home and company officials acknowledged that it’s not likely the challenge will be solved in a month or two. One analyst said, “Sober guidance leads us to review our estimates in depth and slash our profitability forecasts in the coming quarters.”

Even though revenue for the quarter was up almost 30 per cent from the year before, profits were down 75 per cent as Boyd was hit with the double whammy of post-pandemic operational challenges — they couldn’t find staff to meet demand and supply chain disruptions meant repair jobs took longer and parts were more expensive.

NFI Inc., the Winnipeg bus-maker, got out in front of its supply-chain woes by announcing six weeks ahead of the release of its third-quarter results that it was lowering its previously published financial guidance, something every company is loath to do. (Companies release guidance numbers to give analysts an idea of the range the company expects to perform within.)

The supply chain bottlenecks forced NFI to reduce production rates and it has stated clearly that supply chain challenges are “anticipated to continue to impact NFI’s operations throughout the first half of 2022.”

But after taking the market hit in mid September when it restated guidance, its shares have since regained 12 per cent of their value but are still down 15 per cent from the day before the guidance announcement.

The market has treated other Winnipeg companies more favourably. The perennially profitable Great-West Lifeco — which now does business in Canada as Canada Life — increased its dividend by 12 per cent after its strong third quarter. Company CEO Paul Mahon said the increase was “in line with expected earnings growth while maintaining financial strength.”

Exchange Income Corp., the diversified holding company that owns regional airlines, other aviation industry players, building construction suppliers and a number of manufacturing companies, posted a record $400 million in revenue in the third quarter.

Company shares are now trading near all-time highs and its diversification thesis is proving very strong as its regional airline business has come back strong after shelter-in-place restrictions earlier in the pandemic grounded much of that business.

Other companies, like Farmers Edge, continue to struggle to regain traction lost from the pandemic and are paying the price of missing earlier guidance numbers.

And some companies, like Delta 9 Cannabis, continue to do everything it says it will but the market ignores its continuing strong results, preferring to lump it in with the much-larger, underperforming cannabis companies. Delta 9 remains one of only a small handful of cannabis companies which are EBITDA-positive.

After releasing third-quarter results on Monday morning showing a 16 per cent increase in revenue and a 55 per cent increase in gross profits, its shares were up one cent.

martin.cash@freepress.mb.ca