Amid uncertain market, GFL shares sink on first day of trading | Canada News Media
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Amid uncertain market, GFL shares sink on first day of trading

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GFL finished its first day of trading on the TSX at $22.40 a share, 11.6 per cent below the $25.33 initial offering price.

CARLOS OSORIO/Reuters

GFL Environmental Inc. shares fell more than 11 per cent on Tuesday afternoon as the waste-management company made its debut on the Toronto Stock Exchange and the New York Stock Exchange amid punishing market conditions.

GFL finished its first day of trading on the TSX at $22.40 a share, 11.6 per cent below the $25.33 initial offering price. The company had already cut its IPO price below the $26.66 to $28.00 range it had anticipated last week.

The IPO was the third largest in the history of the TSX, according to the TMX Group, with Toronto-based GFL raising $2.78-billion – $1.9-billion of which came from the sale of subordinate shares, and the remainder which came from the sale of “tangible units,” a combination equity and debt instrument.

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The company, however, hit the market at a moment of extreme uncertainty, with share prices buckling amid fears about the economic impact of COVID-19. The S&P 500 Index fell 2.8 per cent Tuesday despite a half-point interest-rate cut from the U.S. Federal Reserve, while the S&P/TSX Composite Index lost 0.78 per cent. Last week, markets around the world suffered their sharpest decline since the 2008 financial crisis.

The role of stabilizing the GFL’s sagging share price falls to a syndicate of investment banks that acted as joint book runners on the deal, which includes JPMorgan, BMO Capital Markets, Goldman Sachs, RBC Capital Markets and Scotiabank.

There was considerable interest on Bay Street in getting the deal across the finish line. Questions about pricing, however, have dogged the company’s attempts at going public since last summer, when it first announced plans for an IPO.

Throughout the early fall, GFL tried to build support for a public offering that priced its shares between US$20 to US$24. Institutional investors and investment bankers balked at the price, urging the company to reprice the deal to US$18 a share.

Instead of repricing the deal, GFL scrapped it. The company then raised $1.4-billion in December through a combination of debt and private equity, supported by its main backers, private equity firm BC Partners Securities LLC and the private capital arm of Ontario Teachers’ Pension Plan.

A renewed effort to go public gained momentum amid a run-up in public markets at the end of 2019 and through into February. Over that period of time, GFL’s main waste-management rivals Waste Connections Inc., Republic Services Inc. and Waste Management Inc. saw their share prices jump 15 per cent, on average. All three have largely given up those gains since mid-February when the markets turned.

“We think many investors may still find the deal pricey at the current offer range, however GFL’s updated deal structure likely has a better shot at closing,” Darryl McCoubrey, an analyst at Veritas Investment Research, wrote in note published on Friday.

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BC Partners and Teachers remain the largest shareholders of GFL after the public offering, respectively owning 39.9 per cent and 15.6 per cent of the company’s outstanding shares.

GFL chairman and CEO Patrick Dovigi owns 3.7 per cent of the outstanding shares post-IPO, although he controls 27.8 per cent of the company’s voting rights through the ownership of multiple voting shares, each which carry 10 votes a share.

The company, North America’s fourth-largest diversified waste-management business, plans to use the proceeds from the public offering to pay down debt and potentially to make acquisitions.

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Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

The Canadian Press. All rights reserved.

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Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

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Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.

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