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BlackBerry Reports Fiscal 2020 Third Quarter Results – Yahoo Finance

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company non-GAAP revenue of $280 million , or 23% growth year-over-year; total company GAAP revenue of $267 million , or 18% growth year-over-year” data-reactid=”11″>- Total company non-GAAP revenue of $280 million , or 23% growth year-over-year; total company GAAP revenue of $267 million , or 18% growth year-over-year

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total non-GAAP Software and Services revenue of $275 million , or 26% growth year-over-year; total GAAP Software and Services revenue of $262 million , or 21% growth year-over-year; both are record quarterly highs” data-reactid=”12″>- Total non-GAAP Software and Services revenue of $275 million , or 26% growth year-over-year; total GAAP Software and Services revenue of $262 million , or 21% growth year-over-year; both are record quarterly highs

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company non-GAAP earnings per basic and diluted share of $0.03 ; GAAP loss per basic share of $0.06 and GAAP loss per diluted share of $0.07 ” data-reactid=”13″>- Total company non-GAAP earnings per basic and diluted share of $0.03 ; GAAP loss per basic share of $0.06 and GAAP loss per diluted share of $0.07

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- Total company free cash flow generated of $37 million , as reported” data-reactid=”14″>- Total company free cash flow generated of $37 million , as reported

WATERLOO, Ontario , Dec. 20, 2019 /CNW/ — BlackBerry Limited (NYSE: BB; TSX: BB) today reported financial results for the three months ended November 30, 2019 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

BlackBerry Logo Black (PRNewsfoto/Blackberry Limited)
BlackBerry Logo Black (PRNewsfoto/Blackberry Limited)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Third Quarter Fiscal 2020 Results” data-reactid=”36″>Third Quarter Fiscal 2020 Results

  • Total company non-GAAP revenue for the third quarter of fiscal 2020 was $280 million , up 23% year-over-year. Total company GAAP revenue for the third quarter of fiscal 2020 was $267 million , up 18% year-over-year. Total non-GAAP software and services revenue was $275 million , up 26% year-over-year. Total GAAP software and services revenue was $262 million , up 21% year-over-year. Third quarter recurring non-GAAP software and services revenue (excluding IP licensing and professional services) was over 90%. Non-GAAP gross margin was 77% and GAAP gross margin was 74%.
  • Total company non-GAAP operating earnings was $20 million . Total company GAAP operating loss was $29 million . Non-GAAP earnings per share was $0.03 (basic and diluted). GAAP net loss was $0.06 per basic share and $0.07 per diluted share. GAAP net loss includes $35 million for acquired intangibles amortization expense, $15 million in stock compensation expense, $10 million in restructuring charges, a benefit of $20 million related to the fair value adjustment on the debentures, and other amounts as summarized in a table below.
  • Total cash, cash equivalents, short-term and long-term investments was $970 million as of November 30, 2019 . Free cash flow generated, before considering the impact of acquisition and integration expenses, restructuring costs and legal proceedings, was $41 million . Cash generated from operations was $40 million and capital expenditures were $3 million .

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=""BlackBerry achieved sequential growth in revenue across all of our software businesses while generating healthy non-GAAP profitability and free cash flow as we continue to invest in our future," said John Chen , Executive Chairman and CEO, BlackBerry.&nbsp; "I am pleased with our progress.&nbsp; Our pipeline is growing as we deliver against our product roadmap and execute on our go-to-market expansion." ” data-reactid=”43″>“BlackBerry achieved sequential growth in revenue across all of our software businesses while generating healthy non-GAAP profitability and free cash flow as we continue to invest in our future,” said John Chen , Executive Chairman and CEO, BlackBerry.  “I am pleased with our progress.  Our pipeline is growing as we deliver against our product roadmap and execute on our go-to-market expansion.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Outlook
BlackBerry will provide fiscal year 2020 outlook in connection with the quarterly earnings announcement on its earnings conference call.&nbsp; The earnings call transcript will be made available on our website and on SEDAR.” data-reactid=”44″>Outlook
BlackBerry will provide fiscal year 2020 outlook in connection with the quarterly earnings announcement on its earnings conference call.  The earnings call transcript will be made available on our website and on SEDAR.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Reconciliation of GAAP revenue, gross margin, gross margin percentage, income (loss) before income taxes, net income (loss) and basic earnings (loss) per share to Non-GAAP revenue, gross margin, gross margin percentage, income before income taxes, net income and basic earnings per share for the three months ended November 30, 2019 :” data-reactid=”45″>Reconciliation of GAAP revenue, gross margin, gross margin percentage, income (loss) before income taxes, net income (loss) and basic earnings (loss) per share to Non-GAAP revenue, gross margin, gross margin percentage, income before income taxes, net income and basic earnings per share for the three months ended November 30, 2019 :

Q3 Fiscal 2020 Non-GAAP Adjustments

For the Three Months Ended November 30, 2019

(in millions, except for per share amounts)

Income statement
location

Revenue

Gross
margin
(before taxes)

Gross margin %
(before
taxes)

Income (loss)
before
income taxes

Net income
(loss)

Basic earnings
(loss) per
share

As reported

$

267

$

198

74.2

%

$

(30)

$

(32)

$

(0.06)

Debentures fair value adjustment (2)

Debentures fair value adjustment

%

(20)

(20)

Restructuring charges (3)

Cost of sales

3

1.1

%

3

3

Restructuring charges (3)

Selling, marketing and administration

%

7

7

Software deferred revenue acquired (4)

Revenue

13

13

1.1

%

13

13

Software deferred commission expense acquired (5)

Selling, marketing and administration

%

(4)

(4)

Stock compensation expense (6)

Cost of sales

1

0.4

%

1

1

Stock compensation expense (6)

Research and development

%

4

4

Stock compensation expense (6)

Selling, marketing and administration

%

10

10

Acquired intangibles amortization (7)

Amortization

%

35

35

Adjusted

$

280

$

215

76.8

%

$

19

$

17

$

0.03

Note: Non-GAAP revenue, non-GAAP gross margin, non-GAAP gross margin percentage, non-GAAP income before income taxes, non-GAAP net income and non-GAAP basic earnings per share do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company’s GAAP results.

(1)

During the third quarter of fiscal 2020, the Company reported GAAP gross margin of $198 million or 74.2% of revenue. Excluding the impact of stock compensation expense and restructuring charges included in cost of sales and software deferred revenue acquired included in revenue, non-GAAP gross margin was $215 million, or 76.8% of revenue.

(2)

During the third quarter of fiscal 2020, the Company recorded the Q3 Fiscal 2020 Debentures Fair Value Adjustment of $20 million. This adjustment was presented on a separate line in the Consolidated Statements of Operations.

(3)

During the third quarter of fiscal 2020, the Company incurred restructuring charges of approximately $10 million, of which $3 million was included in cost of sales and $7 million was included selling, marketing and administration expense.

(4)

During the third quarter of fiscal 2020, the Company recorded software deferred revenue acquired but not recognized due to business combination accounting rules of $13 million, which was included in BlackBerry Cylance revenue.

(5)

During the third quarter of fiscal 2020, the Company recorded deferred commission expense acquired but not recognized due to business combination accounting rules of approximately of $4 million.

(6)

During the third quarter of fiscal 2020, the Company recorded stock compensation expense of $15 million, of which $1 million was included in cost of sales, $4 million was included in research and development, and $10 million was included in selling, marketing and administration expense.

(7)

During the third quarter of fiscal 2020, the Company recorded amortization of intangible assets acquired through business combinations of $35 million, which was included in amortization expense.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Supplementary Geographic Revenue Breakdown” data-reactid=”51″>Supplementary Geographic Revenue Breakdown

BlackBerry Limited

(United States dollars, in millions)

Revenue by Region

For the Quarters Ended

November 30, 2019

August 31, 2019

May 31, 2019

February 28, 2019

November 30, 2018

North America

$

188

70.4

%

$

179

73.4

%

$

160

64.8

%

$

176

69.0

%

$

151

66.8

%

Europe, Middle East and Africa

60

22.5

%

47

19.3

%

61

24.7

%

61

23.9

%

56

24.8

%

Other regions

19

7.1

%

18

7.3

%

26

10.5

%

18

7.1

%

19

8.4

%

Total

$

267

100.0

%

$

244

100.0

%

$

247

100.0

%

$

255

100.0

%

$

226

100.0

%

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Supplementary Revenue by Product and Service Type Breakdown” data-reactid=”54″>Supplementary Revenue by Product and Service Type Breakdown

BlackBerry Limited

(United States dollars, in millions)

Revenue by Product and Service Type

U.S. GAAP

Adjustments

Non-GAAP

For the Three Months Ended

For the Three Months Ended

For the Three Months Ended

November 30,
2019

November 30,
2018

November 30,
2019

November 30,
2018

November 30,
2019

November 30,
2018

IoT

$

145

$

148

$

$

2

$

145

$

150

BlackBerry Cylance

40

1

13

53

1

Licensing

77

68

77

68

Other

5

9

5

9

Total

$

267

$

226

$

13

$

2

$

280

$

228

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Conference Call and Webcast
A conference call and live webcast will be held today beginning at 8 a.m. ET , which can be accessed by dialing 1- 877-682-6267 or by logging on at BlackBerry.com/Investors. A replay of the conference call will also be available at approximately 11 a.m. ET by dialing 1-800-585-8367 and entering Conference ID #9608207 and at the link above.” data-reactid=”57″>Conference Call and Webcast
A conference call and live webcast will be held today beginning at 8 a.m. ET , which can be accessed by dialing 1- 877-682-6267 or by logging on at BlackBerry.com/Investors. A replay of the conference call will also be available at approximately 11 a.m. ET by dialing 1-800-585-8367 and entering Conference ID #9608207 and at the link above.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="About BlackBerry
BlackBerry (NYSE: BB; TSX: BB) is a trusted security software and services company that provides enterprises and governments with the technology they need to secure the Internet of Things. Based in Waterloo, Ontario , the company is unwavering in its commitment to safety, cybersecurity and data privacy, and leads in key areas such as artificial intelligence, endpoint security and management, encryption and embedded systems. For more information, visit BlackBerry.com and follow @BlackBerry.” data-reactid=”58″>About BlackBerry
BlackBerry (NYSE: BB; TSX: BB) is a trusted security software and services company that provides enterprises and governments with the technology they need to secure the Internet of Things. Based in Waterloo, Ontario , the company is unwavering in its commitment to safety, cybersecurity and data privacy, and leads in key areas such as artificial intelligence, endpoint security and management, encryption and embedded systems. For more information, visit BlackBerry.com and follow @BlackBerry.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Investor Contact:
BlackBerry Investor Relations
+1-519-888-7465
investor_relations@blackberry.com ” data-reactid=”63″>Investor Contact:
BlackBerry Investor Relations
+1-519-888-7465
investor_relations@blackberry.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Media Contact:
BlackBerry Media Relations
(519) 597-7273
mediarelations@blackberry.com ” data-reactid=”64″>Media Contact:
BlackBerry Media Relations
(519) 597-7273
mediarelations@blackberry.com

This news release contains forward-looking statements within the meaning of certain securities laws, including under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements regarding: BlackBerry’s plans, strategies and objectives including the anticipated benefits of its strategic initiatives and its intentions to expand and enhance its product and service offerings.

The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by BlackBerry in light of its experience, historical trends, current conditions and expected future developments, as well as other factors that BlackBerry believes are appropriate in the circumstances. Many factors could cause BlackBerry’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including the following risks: BlackBerry’s ability to enhance, develop, introduce or monetize products and services for the enterprise market in a timely manner with competitive pricing, features and performance; BlackBerry’s ability to maintain or expand its customer base for its software and services offerings to grow revenue or achieve sustained profitability; the intense competition faced by BlackBerry; the occurrence or perception of a breach of BlackBerry’s network or product security measures or an inappropriate disclosure of confidential or personal information could significantly harm its business; risks related to BlackBerry’s continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively; BlackBerry’s dependence on its relationships with resellers and channel partners; risks related to acquisitions, divestitures, investments and other business initiatives, which may negatively affect BlackBerry’s results of operations; risks related to BlackBerry’s products and services being dependent upon interoperability with rapidly changing systems provided by third parties; the risk that failure to protect BlackBerry’s intellectual property could harm its ability to compete effectively and BlackBerry may not earn the revenues it expects from intellectual property rights; the risk that BlackBerry could be found to have infringed on the intellectual property rights of others; the risk that litigation against BlackBerry may result in adverse outcomes; risks related to the use and management of user data and personal information, which could give rise to liabilities as a result of legal, customer and other third-party requirements; BlackBerry’s ability to obtain rights to use third-party software; the risk that network disruptions or other business interruptions could have a material adverse effect on BlackBerry’s business and harm its reputation; BlackBerry’s ability to generate revenue and profitability through the licensing of security software and services or the BlackBerry brand to device manufacturers; the substantial asset risk faced by BlackBerry, including the potential for charges related to its long-lived assets and goodwill; risks related to BlackBerry’s indebtedness, which could adversely affect its operating flexibility and financial condition; risks related to government regulations applicable to BlackBerry’s products and services, including products containing encryption capabilities, which could negatively impact BlackBerry’s business; risks related to foreign operations, including fluctuations in foreign currencies; risks associated with any errors in BlackBerry’s products and services, which can be difficult to remedy and could have a material adverse effect on BlackBerry’s business; risks related to the failure of BlackBerry’s suppliers, subcontractors, channel partners and representatives to use acceptable ethical business practices or to comply with applicable laws, which could negatively impact BlackBerry’s business; BlackBerry’s reliance on third parties to manufacture and repair its hardware products; risks related to the Company’s success in fostering an ecosystem of third-party application developers; risks related to regulations regarding health and safety, hazardous materials usage and conflict minerals, and to product certification risks; risks related to tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities, which could materially impact BlackBerry’s financial condition; risks related to the fluctuation of BlackBerry’s quarterly revenue and operating results; the volatility of the market price of BlackBerry’s common shares; and risks related to adverse economic and geopolitical conditions, which may negatively affect BlackBerry.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry's Annual Information Form, which is included in its Annual Report on Form 40-F and the "Cautionary Note Regarding Forward-Looking Statements" section of BlackBerry's MD&amp;A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). All of these factors should be considered carefully, and readers should not place undue reliance on BlackBerry’s forward-looking statements. Any statements that are forward-looking statements are intended to enable BlackBerry’s shareholders to view the anticipated performance and prospects of BlackBerry from management’s perspective at the time such statements are made, and they are subject to the risks that are inherent in all forward-looking statements, as described above, as well as difficulties in forecasting BlackBerry’s financial results and performance for future periods, particularly over longer periods, given changes in technology and BlackBerry’s business strategy, evolving industry standards, intense competition and short product life cycles that characterize the industries in which BlackBerry operates. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.” data-reactid=”67″>These risk factors and others relating to BlackBerry are discussed in greater detail in BlackBerry’s Annual Information Form, which is included in its Annual Report on Form 40-F and the “Cautionary Note Regarding Forward-Looking Statements” section of BlackBerry’s MD&A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). All of these factors should be considered carefully, and readers should not place undue reliance on BlackBerry’s forward-looking statements. Any statements that are forward-looking statements are intended to enable BlackBerry’s shareholders to view the anticipated performance and prospects of BlackBerry from management’s perspective at the time such statements are made, and they are subject to the risks that are inherent in all forward-looking statements, as described above, as well as difficulties in forecasting BlackBerry’s financial results and performance for future periods, particularly over longer periods, given changes in technology and BlackBerry’s business strategy, evolving industry standards, intense competition and short product life cycles that characterize the industries in which BlackBerry operates. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions except share and per share amounts) (unaudited)

Consolidated Statements of Operations

For the Three Months Ended

For the Nine Months Ended

November 30,
2019

August 31,
2019

November 30,
2018

November 30,
2019

November 30,
2018

Revenue

$

267

$

244

$

226

$

758

$

649

Cost of sales

69

68

56

207

157

Gross margin

198

176

170

551

492

Gross margin %

74.2

%

72.1

%

75.2

%

72.7

%

75.8

%

Operating expenses

Research and development

66

62

55

199

167

Selling, marketing and administration

132

132

93

385

299

Amortization

49

48

33

146

105

Debentures fair value adjustment

(20)

(23)

(69)

(71)

(111)

227

219

112

659

460

Operating income (loss)

(29)

(43)

58

(108)

32

Investment income (loss), net

(1)

2

2

13

Income (loss) before income taxes

(30)

(43)

60

(106)

45

Provision for income taxes

2

1

1

5

3

Net income (loss)

$

(32)

$

(44)

$

59

$

(111)

$

42

Earnings (loss) per share

Basic

$

(0.06)

$

(0.08)

$

0.11

$

(0.20)

$

0.08

Diluted

$

(0.07)

$

(0.10)

$

(0.01)

$

(0.27)

$

(0.09)

Weighted-average number of common shares outstanding (000s)

Basic

554,585

552,343

540,406

552,931

538,251

Diluted

615,085

612,843

600,906

613,431

598,751

Total common shares outstanding (000s)

552,132

548,336

547,084

552,132

547,084

 

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions) (unaudited)

Consolidated Balance Sheets

As at

November 30, 2019

February 28, 2019

Assets

Current

Cash and cash equivalents

$

515

$

548

Short-term investments

367

368

Accounts receivable, net

216

233

Other receivables

13

19

Income taxes receivable

10

9

Other current assets

58

56

1,179

1,233

Restricted cash and cash equivalents

32

34

Long-term investments

56

55

Other long-term assets

23

28

Deferred income tax assets

2

Operating lease right-of-use assets

133

Property, plant and equipment, net

76

85

Goodwill

1,459

1,463

Intangible assets, net

955

1,068

$

3,913

$

3,968

Liabilities

Current

Accounts payable

$

27

$

48

Accrued liabilities

193

192

Income taxes payable

19

17

Debentures

609

Deferred revenue, current

264

253

1,112

510

Deferred revenue, non-current

117

136

Operating lease liabilities

127

Other long-term liabilities

8

19

Long-term debentures

665

Deferred income tax liabilities

1

2

1,365

1,332

Shareholders’ equity

Capital stock and additional paid-in capital

2,742

2,688

Deficit

(157)

(32)

Accumulated other comprehensive loss

(37)

(20)

2,548

2,636

$

3,913

$

3,968

 

BlackBerry Limited

Incorporated under the Laws of Ontario

(United States dollars, in millions) (unaudited)

Consolidated Statements of Cash Flows

For the Nine Months Ended

November 30, 2019

November 30, 2018

Cash flows from operating activities

Net income (loss)

$

(111)

$

42

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Amortization

160

116

Stock-based compensation

46

53

Non-cash consideration received from contract with a customer

(8)

Debentures fair value adjustment

(71)

(111)

Other long-term assets

2

Operating leases

(12)

Other

9

4

Net changes in working capital items:

Accounts receivable, net

17

13

Other receivables

6

46

Income taxes receivable

(1)

13

Other assets

3

(1)

Accounts payable

(21)

(14)

Income taxes payable

2

(1)

Accrued liabilities

(24)

(57)

Deferred revenue

(10)

(23)

Other long-term liabilities

7

Net cash provided by (used in) operating activities

(8)

82

Cash flows from investing activities

Acquisition of long-term investments

(1)

(2)

Proceeds on sale or maturity of long-term investments

2

Acquisition of property, plant and equipment

(9)

(14)

Proceeds on sale of property, plant and equipment

1

Acquisition of intangible assets

(24)

(24)

Business acquisitions, net of cash acquired

1

Acquisition of short-term investments

(829)

(2,754)

Proceeds on sale or maturity of short-term investments

830

2,962

Net cash provided by (used in) investing activities

(32)

171

Cash flows from financing activities

Issuance of common shares

8

5

Finance lease liability

(2)

Net cash provided by financing activities

6

5

Effect of foreign exchange loss on cash, cash equivalents, restricted cash, and restricted cash equivalents

(1)

(3)

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period

(35)

255

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period

582

855

Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period

$

547

$

1,110

As at

November 30, 2019

February 28, 2019

Cash and cash equivalents

$

515

$

548

Restricted cash and cash equivalents

$

32

$

34

Short-term investments

$

367

$

368

Long-term investments

$

56

$

55

 

Cision

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SOURCE BlackBerry Limited

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'How are people surviving?': Gas spike detrimental for rural mail carriers, residents – CP24 Toronto's Breaking News

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Fakiha Baig, The Canadian Press


Published Friday, June 24, 2022 5:50AM EDT


Last Updated Friday, June 24, 2022 5:50AM EDT

A mail carrier says her out-of-pocket costs for delivering packages along her rural route have doubled because of the steep hike in gas prices and cost of living being experienced by many Canadians.

“The stress is exhausting,” said Jennifer Henson, a Calgary mother of two boys and one of 11,000 rural and suburban mail carriers delivering letters for Canada Post across the country.

“It’s not just gas. The cost of living has skyrocketed,” Henson said. “I’m always wondering how to pay this bill and that bill and I’m no different than any working-class Canadian across the country.”

The 38-year-old said it used to cost her $60 to the fill the tank of her Ford Flex.

“Now it’s costing me $125 to fill my tank every two days, so it’s completely doubled.”

Canada Post’s rural and suburban mail carriers don’t get a red and white corporate truck and a gas card like their urban counterparts. So, along with being required to use a personal vehicle with a minimum cargo capacity of 1,415 litres, the rural carriers also cover the cost of gas, maintenance and insurance of their vehicle.

“I drive over 200 kilometres a day. We go through tires, oil change, a set of brakes a lot quicker than the average person,” Henson said,

She said the Crown corporation provides her with a $720 biweekly allowance with the help of the Canadian Revenue Agency to pay for those bills, but she said it hasn’t been enough.

“I don’t want to slam Canada Post, because if you talk to most carriers, whether they’re urban or rural, we do love our jobs. I love my route. The countryside is relaxing. I’ve met amazing people,” said Henson, who has been a carrier for 16 years.

“But Canada Post has also increased their fuel surcharge, so when you go to the post office to mail something, you’re paying more as a customer because of the fuel. That’s not trickling down to us at all.”

She also said the CRA raised carriers’ allowance by five cents a litre this year, but she “a few cents isn’t doing a whole lot when a year ago gas was about $1 less.”

Statistics Canada said this week the annual inflation rate has skyrocketed to its highest level in nearly 40 years in May, fuelled by soaring gas prices.

The agency says its consumer price index in May rose 7.7 per cent compared to a year ago. It’s the largest increase since January 1983.

Food prices for nearly everything in a grocery cart also grew by 9.7 per cent compared to a year ago.

Henson said the bill at the grocery store has also been a strain on her finances.

“My oldest son is 14 years old and my youngest will be 12 years old next month. They’re growing and they eat more than most of my friends,” she said.

“When you go to the grocery store, it just blows my mind. How are people surviving?”

Anna Beale, president of the Calgary Local of the Canadian Union of Postal Workers, said Canada Post needs to increase the allowance for its rural workers.

“Canada Post is able to provide all kinds of things like Tim Hortons gift cards (to their workers),” said Beale. “Why not take that money instead and make it work somehow for rural drivers so that they can afford these gas prices?”

A spokesperson for Canada Post said in a email the mail carrier is adapting to increased costs across many of its operations.

“Fuel prices are in unprecedented territory and have impacted the entire industry,” said Phil Legault.

He said to address any additional or unforeseen expenses, rural and suburban mail carriers are entitled to a cost-of-living allowance.

“This is reviewed throughout the year and paid out as per the collective agreements,” Legault said.

“The Canadian Union of Postal Workers has requested that we discuss the matter, and we will continue to engage them on this issue.”

Along with the carriers, a vice president of the Canadian Federation of Agriculture said any spike in inflation, as well as the cost of gas and diesel, hits rural Canadians the hardest.

“We don’t have access to public transit so we certainly pay disproportionately more for fuel because we have to drive everywhere,” Keith Currie said.

This report by The Canadian Press was first published June 24, 2022.

This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.

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Canadians are dispirited, cutting back on costs amid inflation highs: study – CBC News

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With inflation at a 39-year high — and banks hiking interest rates to avoid economic recession — many Canadians are said to be distressed and dispirited as they cut back to manage the rising cost of living.

A new study from the polling non-profit Angus Reid Institute shows that 45 per cent of Canadians believe they are worse off now than they were at this time last year. Inflation is now at 7.7 per cent, the highest it has been since 1983.

With grocery and gas prices skyrocketing, Canadians are trying to spend less as their personal costs go up. Almost half say they are now seeking out alternative modes of transport to avoid filling up their gas tanks.

“A lot of people are concerned,” said David Chilton, author of financial self-help book The Wealthy Barber, in an interview with CBC News Network.

Chilton noted that low-income people are particularly impacted by the price hikes because they spend a disproportionate percentage on essentials like food and gas.

According to the study, half of Canadians say it’s been challenging to afford their typical grocery bills.

“I would argue the inflation numbers, as high as they are being reported today, are probably higher, frankly,” Chilton said.

“Anybody that goes to the grocery store I think would agree with that.”

‘They will raise rates until they break something’

The Bank of Canada has been aggressively raising interest rates in efforts to calm inflation, with a hike in March to 0.5 per cent (the first since 2018) followed by another in April to one per cent. 

In June, the bank raised its benchmark interest rate a third time this year to 1.5 per cent and indicated that several more hikes are coming. The increases are meant to encourage saving and discourage borrowing in an overheated economy.

WATCH | 45% of Canadians say they’re worse off financially than last year: study

45% of Canadians say they’re worse off financially than last year: study

2 days ago

Duration 3:26

A study from the Angus Reid Institute suggests nearly half of Canadians say they’re worse off financially now than a year ago, and 34 per cent think they’ll be worse off next year.

As a result, 22 per cent of Canadians with a mortgage say their payments have increased; more than half say that they fully expect theirs to go up, according to the report.

An increase of $150 per month would be difficult for over a third of homeowners — but raising that number to $300 would be downright unaffordable, 66 per cent said, forcing them to seriously consider a change of plans.

Renters are also feeling stretched thin, with over half saying that affording monthly rent is difficult.

WATCH | The Wealthy Barber author discusses how rising inflation is impacting Canadians:

The Wealthy Barber author talks inflation, recession fears and more

2 days ago

Duration 8:26

David Chilton, author of The Wealthy Barber, looks at how high gas prices and grocery bills amid stagnant wages have hit low-income Canadians the hardest.

“I think that you are going to see central banks throughout the world continue to raise rates” to contain inflation, Chilton said.

“It’s impacting people and I think they will raise rates until they break something.”

When it comes to placing their trust in the Bank of Canada, Canadians are split: just under half (46 per cent) say that they believe the bank adequately fulfils its mandate, while slightly fewer (41 per cent) say they believe otherwise.

Three quarters of Canadians are dissatisfied with the way that provinces have handled rising inflation.

The study, conducted online, surveyed 5,032 Canadian adults who are members of the Angus Reid Forum, between June 7 and 13. For comparison purposes, a probability sample of this size carries a margin of error of +/- 2 percentage points, the non-profit said.

In April, while announcing a rate hike, Bank of Canada governor Tiff Macklem told reporters that the bank is trying to anchor inflation expectations.

“The longer inflation remains well above our target, the greater is the risk that Canadians begin to think that this higher inflation is going to persist, and that becomes embedded in their inflation expectations.”

“The need to make sure that inflation expectations remain moored on our two per cent target was reflected in our decision today.”

About two in five Canadians have credit card debt, as well, with that number increasing to 62 per cent among those who qualified as “struggling” on the Angus Reid Institute’s economic stress index. 

Within this group, about 58 per cent say it will take over a year to pay off those debts.

It’s a very “unusual time,” Chilton says.

“I think everybody has to approach it from their individual perspective … I always believe you’ve got to watch your costs, but that’s more true now than ever.”

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“Inflation Forecasts Aren't Worth the Paper They're Written on”: This Is about the Bank of Canada's Reaction to Inflation, But it's the Same in the US and Everywhere – WOLF STREET

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“Why the current tightening cycle is unlike anything we’ve observed in the past.”

By Wolf Richter for WOLF STREET.

When Canada’s Consumer Price Index for May was released a couple of days ago, it was – “as expected,” I would say – a lot lot worse than expected, and exceeded once again by a huge margin the inflation forecasts by the Bank of Canada. According to the exasperated economists at the National Bank of Canada, CPI inflation runs 1.5 percentage points above the BoC forecasts of CPI, outrunning those forecasts at every step along the way. May was “the biggest miss yet in what has been a systematic underestimation of inflation,” they wrote in a note.

“So if May’s CPI report doesn’t set alarm bells ringing at Governing Council [of the Bank of Canada], someone should check their collective pulse,” they noted.

The headline CPI for Canada spiked by 7.7% in May compared to a year ago, the worst inflation rate since 1983, according to Statistics Canada:

The BoC has already hiked its policy rates by 125 basis points, to 1.50%. At its last meeting, it included hawkish language of more and bigger hikes than expected, such as a 75- basis point hike at the July meeting. The BoC has also embarked on QT, and its balance sheet has been shrinking since March 2021. But the rate hikes and the hawkish language of future rate hikes were based on the BoC’s inflation forecasts which have been “a systematic underestimation of inflation.” So this rate-hike cycle is going to get interesting.

On a month-to-month basis, CPI jumped by a stunning 1.4% in May from April, not seasonally adjusted; and by 1.1% seasonally adjusted. As expected, I would say, those spikes totally blew away the expectations.

The month-to-month CPI rates of March, April, and May, annualized, spiked to an annual rate of 12.5%.

The red-hot month-to-month increases came across the board, and not just in a few commodities-linked items. It gave the BoC more than enough reasons to pull the trigger on a 75-basis point hike at its meeting on July 13.

“Inflation forecasts aren’t worth the paper they’re written on.”

The BoC’s inflation forecasts that it released at each of its prior meetings going back to April 2021 are depicted in different colors in the chart below from National Bank of Canada’s Financial Markets shop. The red line is the actual CPI rate for each quarter. The BoC’s estimates start at each meeting with the then current CPI rate.

So at its April 2021 meeting (light blue, first line from the bottom), as inflation had begun to surge, the BoC estimated that CPI would peak at just under 3% by mid-2021 and then decline to 2% by March 2022, hahahaha.

Then at its July 2021 meeting, the BoC forecast that inflation would top out at 3.8% by Q3 2021, then drop to 3% by about right now, hahahaha, and to 2% by Q3.

The above chart shows how ridiculously far off these inflation forecasts were, and how this inflation is a big wild card that just keeps getting worse, even as commodities prices have started to come down.

“For BoC watchers trying to compare today’s inflation trajectory with earlier monetary tightening episodes, give up. There’s simply no comparison in the overnight rate target era (that started in the mid-1990s). That’s why the current tightening cycle is unlike anything we’ve observed in the past,” said National Bank of Canada’s Warren Lovely and Taylor Schleich in their note.

“As aggressive as the past couple of BoC actions may have seemed at the time, it’s time to turn the screws even tighter,” they said.

“A 75 bp rate hike on July 13th won’t fix Canada’s inflation problem, not with labour markets as tight as they are. As an aside, job vacancy data are clearly worrying, and Canada’s acute labour shortage won’t be remedied quickly despite a resumption of healthy population growth [through immigration],” they wrote.

And they added – sprinkled with stark inflation humor:

“To summarize: We have out-of-control inflation. Simply sending more money to households like some governments have done (or intend to do) is just like adding gasoline (itself already expensive) to the fire.

“Inflation demands an uber-forceful BoC reaction, including a 75 bp hike in three weeks’ time.

“Exceptional rate hikes have done little to control prices (so far) but have turned housing markets upside down. Consumer psyches bear watching and recession risks have mounted.

“Indeed, with inflation data like this, securing a ‘soft landing’ might be like threading the eye of a needle. We haven’t totally abandoned hope, but today’s CPI report should sober up even the most enthusiastic among us.”

The Fed was also ridiculously off with its inflation forecast every step along the way and by now has gotten burned at the stake for its use of “temporary” and transitory.” The ECB too has been ridiculously far off with its inflation forecasts. And their monetary policies – their refusal to hike rates starting in early 2021, and their refusal to end QE and start QT at the same time – were driven by this ridiculous underestimation of inflation. But now they’ve gotten the memo.

It is an interesting turn of events that economists at the big banks in Canada as well as the US and everywhere are exhorting their respective central banks to crack down on inflation by raising rates further and harder as this inflation is threatening to spiral out of control, after which the economic and financial damage from runaway inflation is going to be huge.

Stock and bond markets have already reacted sharply to this tightening scenario, and in Canada, housing markets have already “turned upside down,” and central banks have just started to tighten, and nothing central banks did in recent decades can be compared to what comes next, and if a recession is part of the deal of getting this runaway inflation under control, so be it.

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