The Canadian Investor - Big Canadian Deals, Micron’s AI Boom & Nike Continues to Struggle

Episode Date: October 8, 2026

In this episode of The Canadian Investor Podcast, Simon and Dan break down a busy week of Canadian dealmaking, including the kmassive Emera–Canadian Utilities merger, Cenovus buying Athabasca Oil, and another major acquisition involving the Weston family.  They also revisit Cobre Panama, where the outlook for First Quantum and Franco-Nevada now appears considerably more optimistic than initially thought, with a commission proposing decades of continued production before the mine is ultimately closed.  On the earnings front, Micron is benefiting from extraordinary memory pricing and AI demand, while Nike’s turnaround continues to struggle with falling sales, weakness in China and continued pressure on its brand. They finish with Carnival and AutoZone, including what both companies are revealing about inflation and the health of the consumer.  Stocks discussed: MU, NKE, CCL, AZO, EMA.TO, CU.TO, ACO.X.TO, CVE.TO, ATH.TO, FM.TO, FNV.TO Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Asset Allocation ETFs | BMO Global Asset Management This podcast Ad Read is intended for information purposes only. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment, tax, or legal advice to any party. Particular investments and/or trading strategies should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance. Past performance is no guarantee of future results. The viewpoints expressed by the speaker represent their assessment of the markets at the time of recording . Those views are subject to change without notice at any time. Commissions, management fees and expenses all may be associated with investments in exchange-traded funds. Please read the ETF Facts or prospectus of the BMO ETFs before investing. Exchange-traded funds are not guaranteed, their values change frequently and past performance may not be repeated.For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the BMO ETF’s prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination. BMO ETFs are managed by BMO Asset Management Inc., an investment fund manager, a portfolio manager, and a separate legal entity from Bank of Montreal.BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate. “BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used underlicence.See omnystudio.com/listener for privacy information.

Life is busy, and for a lot of Canadians, there's just not enough time to research individual companies, follow earnings, and build a fully diversified portfolio. For a simple all-in-one approach, ZETT, the BMO All- Equity ETF, can give you broad equity exposure in a single ETF. Looking to diversify further, ZEM, BMO's MSCI Emerging Markets Index ETF, provides exposure to emerging markets, while ZJG, the BMO Junior Gold Index ETF, can add exposure to gold miners. Whatever you invest in goals, BMO has an ETF for that. Visit BMOETFs.com to learn more and find the ETF that's right for your portfolio. For full disclaimers and more information, check out the description in today's episode. There is 30,000 jobs direct and indirect that were lost due to the closure of the

Cobra Panama mine and the lost revenue for the government over there is about 700 million USD per year. Micron's net income over the last year is almost double what Micron made in the previous 11 years combined. The company looks very cheap. Like it looks dirt cheap. I think it's only at 14x earnings. But the thing is, and we've talked about this before, with cyclicals, often when the PEs are the

lowest, it means they're the most expensive for the most part. The guidance also assumes that China continues to get worse, which considering the more than 25% decline in revenue is crazy. Regardless of what we hear in terms of headline inflation, I think companies have really a good pulse on their business. And I don't always trust the official data. Welcome back to the Canadian investor podcast. I'm Simone Ben Aalje.

I'm back with Dan Kent. We have a packed episode. So a lot of news on the Canadian front, especially with some mergers and acquisitions. So we have a couple of those to talk about. We also have an update regarding the Cobrae Panama mine. So some more clarification because last week we had that in terms of breaking news. So it's actually a bit more hopeful and optimistic than we had originally thought. So we'll go over that.

And then we'll go over some of the earnings. Micron earnings came out. Obviously, that's big in terms of the AI trade and memory chips. Carnival Corporation will go over their earnings. So that's the cruise ship, Nike. And if we have time, we'll also do AutoZone. That is a pretty significant company in the U.S. that I feel like sometimes we forget about.

So it's going to be a fun episode. Earning season is starting again mixed with some news and earnings. So a fun one to go over. Let's get started, Dan. So have you had a chance to look at the EMRA merging with Canadian utilities here? I have not yet. I know it's, I'm pretty sure it's the largest merger in Canadian history, corporate merger, something like that that I heard.

It's like a 70 plus billion dollar merger from two utilities that really haven't done all that well in a long time and now they're merging together. So maybe too bad. Well, I guess I don't want to say bad utilities, but too poor. Poor performing utilities will make one good performing utility. I'm not sure. Yeah, no, it's not companies I was super familiar with. So they have announced that an agreement to merger, whether some people might say it's Amra acquiring Canadian utilities, but they're kind of similar in size, not quite, but it is, it does make sense a bit on the merger perspective.

The merger will place them in the top 20 in terms of North American utilities with approximately at least 72 billion in EV and 6 million customers. ATCO currently controls Canadian utilities, and with this merger announcement, it's effectively spinning out its utility business, and ATCO will spin out the rest of its business in terms of industrial services portion of the company. EMRA shareholders will hold about 60% of the new company

with Canadian utility shareholders getting 40%, and the new entity will operate as EMRA. Atco shareholders on the other end will receive an interest in both Emra and the new Atco company and the new company is looking to execute on a 32 billion capital plan through 2030 and will continue to pursue investment not only in Canada but also in the US and Australia. Emra's current CEO, Scott Balfour, will be the CEO of the new entity and it seems like this transaction is likely to go through. obviously with a caveat that there are some regulatory hurdles that they will have to clear,

but all three boards, Emera Atko and Canadian utilities, as well as major shareholders have signed off on the transaction. So pretty big news here. I know these are pretty popular companies when it comes to dividend investors. So definitely an interesting announcement here and creating quite a large company. Yeah, it gets Ameris some. Canadian exposure, I guess you could say, because they're mostly Florida-based. I think like 80 to 90% of their earnings come from Florida.

So they're a Canadian-traded ticker, but they're mostly a U.S.-based company. So this is obviously a big play on getting some more exposure in Canada because I think the Florida situation has been one of the main reasons that it's struggled for a very long time. But yeah, it's a huge, like if you have a $72 billion company, I mean, that's almost double the size of a company like Fortis. I guess we'd be comparing EV and market cap there, but yeah, it's huge combining these two companies. Yeah, exactly.

So, just as a reminder, EV does include that it's the market cap plus the debt of the company. So essentially, it's what it would cost in terms of being acquired if you included the debt. But yeah, it's definitely an interesting one. You were not wrong.

It does most of its business in the U.S. and Florida, but it does have some Canadian operations too, but definitely much on much smaller. And here people can see on Joint TCI, I guess Amherst stock took a bit of a dive here on the announcement. So being the company that I guess technically is doing more the acquiring because it's the, I guess the larger of the two here, I guess that makes sense.

I don't have the exact details on the ratio in terms of like the shares, the new entity. It wasn't posted on the update, but I'm sure that will be coming out. Yeah, so Ford is as an enterprise value of, about 80 billion. So it's still not as big as Fortis on an EV basis, but still, it's, it's going to be a pretty big utility now. Yeah, exactly. So some big news here. So continuing on the Canadian merger section here, Cinovus buying Athabasca, do you want to go over that?

Yeah, so Cinovus is making more deals. They've probably been one of the more aggressive companies in terms of acquiring smaller oil companies over the last few years, but they're buying Athabasca oil. And this is kind of one I've paid particular attention to because I remember back in it would have been in like 2019. I threw this one on a penny stock list I had over on our website when it was like 40 cents a share. It's quite wild because it just got acquired for $12 a share. And you could have bought this company for 10 cents. I believe it got down to during the oil crash back in the COVID kind of I guess flash crash in March. They, yeah, there's a reason why they were trading at the levels they were.

They were pretty close to, yeah, they were pretty close to going under. They were not a very, I don't want to say a bad operating company, but just had some issues. But anyways, now they've recovered in a big way. They produce, Athabasca produces around 40,000 barrels a day while Cinovus is just shy of one million. So you can kind of see this scale here. It's a smaller acquisition for Cinovus. But these two companies have been partners for a while.

they split ownership of assets. So there's a bit of relationship there already. And as a Athabasca shareholder, you can choose to either get $12 or 0.264 shares of Cinovus. Total value is around $5.7 billion, 13% premium. Yeah, you're looking at a basket. Yeah, I was looking at this company. For those just listening, it was like 10 cents a share.

I'm like, what, what's happening right here? That's the right looking. That's the right looking chart. Yeah. And yeah, I mean, if you look at the chart, even if you go out to like a 10 year, it's absolutely wild last eight to 10 year swing for this company. Like you're talking back in 2019, lows of 40 cents, COVID crash, like close to 10 cents, I think it got down to.

But it was, it did have a lot of financial issues. And Athabasca's operations pretty much sit right beside Christina Lake. and Meg Energy, which Sonovas owns. So they had mentioned that they can pretty much run all three of these as one operation now. So there's probably going to be a lot of synergies there. Sinova says it can triple production from Athabasca. So it didn't really say it's going to, but it said it could potentially. So by 2032, so up to 115,000 barrels of oil.

And you're talking about 40,000 now. So that would be pretty wild if that was true. The other bright spot here, is Cinovus's shares have already, I'm pretty sure they've almost doubled this year. So offering people up shares at, you know, double the share prices. Never a bad thing. And I don't really know a lot in this space. So I can't really speak on how good the offer is on or on how poor the offer is.

But all I will say is if you bought Athabasca, you know, any time during COVID or before that, you're probably very happy. And if you bought it in the last year here, you're probably not so happy because it's down quite a bit. but there's lots of consolidation in the energy space right now. Last year, Cinovus went after Meg Energy. There was competing offers for Cinovus. They had to increase the share price from what I remember. I don't see this happening here because Cinovus already owns 30% of Athabasca's oil assets anyway.

And on another note, didn't go into this too deep. But yesterday, Suncor sold off its Newfoundland offshore stakes. So for about $1.2 billion. So again, there's a lot of moves. happening in this space right now. There's not really, there's not many independent names in the oil sands anymore. They're all, they're all kind of getting gabbled up by the larger players. Yeah, I mean, I think it's, it's probably a reflection of what the current government has been doing, but also the price of oil, right? I think there's a lot more optimism, especially in Canada,

in terms of investing in energy in general. That wasn't there for a better part of a decade. I think it's a combination of both. You have higher oil prices, but you also have a government that's more favorable to, I guess, conventional energy here and realizing how important it is from a strategic perspective. So does make a whole lot of sense that, and maybe there was a little bit of a delay for the, I guess, companies, corporations in the sector to see like, okay, we're hearing that, yes, Mark Carney is making those promises, but probably wanting to see some kind of action and I think that's what we're starting to see from the liberal government. It might take some time, but I think they're definitely supporting the sector a lot more than the previous government.

Yeah, there's definitely more action than a lot of people, I mean, for me being from Alberta, a lot of people did not expect this type of action. But yeah, the valuations are still pretty reasonable in the space as well. I think Cenovis has taken on quite a bit of debt to do, to make all these acquisitions. I'm not exactly. Oh, no, it's not that bad. I think they only have around $8.5 billion in terms of long-term debt. They were in a much worse position back in 2021.

But yeah, they're scooping up assets and they're all in the exact same area too, which is a massive benefit for a company like Cinovus. Like they said, they can pretty much operate these. They're all in the exact same position so they can operate them effectively as one asset. Yeah. No, I mean, it's definitely interesting. gives us news to talk about so we can't complain. And Cenovis, it is a company that I own.

So I have like a basket of three companies. So for me, it's Canadian National Resources, Suncor, and Cenovis. Oh, you do own Cenovis. Yeah, I do own Cenovis. It's one that I bought earlier this year. And essentially, it's about 10% of my portfolio, all three combined. And I know it's been performing quite well. It's a decent size, considering that it's only like, you know, three companies.

And yeah, it's been can't complain, just had the dividend from Canadian. in natural resources and it'll definitely cover my phone bill for quite a few months. So let's move on your gas bill though. No, probably. I guess it'll cover like a few tanks of gas. That's about it. The one thing I guess mentioned quickly is there was another one, the Weston family buying. Oh yeah.

They're buying boots pharmacy. I don't have any notes on this. It just came out. Weston, which would be Loblaw parent company effectively, is buying boots, which is a UK pharmacy. And they paid quite a bit. Like, it's a $9 billion U.S. dollar acquisition. So, yeah, pretty big move there.

12.7 billion. I would imagine that's the Canadian equivalent, the article you're showing here. Yeah, yeah, from CDC. I don't know. Yeah, do any of the- 7 Canadian, yeah. Do any of the Canadian grocers or companies like this

have any exposure in the UK? I don't think so. I mean, it could be, as a parent company, obviously of La Blas, which owns farmer. Shoppers, drug mards, maybe there's still some synergies to be had, right? Like you're becoming an even larger buyer of pharmacy products. I don't, I've never been to Britain. I'm assuming they sell the same

kind of other items. Obviously, I'm sure they sell prescription drugs just like pharmacies over here. But I would assume it's a similar inventory of things that they're selling. So it could be, it could allow them to actually get even more purchasing power. That would be probably a bet. Yeah. Yeah, and I was just looking it up. They used to operate in Canada, but that was like in the 80s. They haven't operated in Canada since then, I don't think. But yeah, it's, yeah, big acquisition. But yeah, that's pretty much it on the M&A news.

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look into it. We saw some conflicting reporting as well on it. So on the first end, we thought, look, it sounds like the commission is looking to close the mine. So that's not good. But then Reuters also talked about the mine reopening. So I did some more digging. There's more information that came out on it. And you can see, I'll also share the first quantum. trying to just get the first quantum stock charts here to share at the same time. You'll see that the stock actually recovered quite a bit since that announcement. It was down, I think, like 30% or something when the announcement came out. So you can see that the stock has recovered a little bit, maybe a bit less so today,

but it could be related with a lot of things being down in general. And what we said wasn't necessarily untrue. I think it was just based on the information that we have. So I looked at the commission's report and used AI to translate it because it wasn't in English. My Spanish, unfortunately, it's not that great. It's usually a mix of French English and a few Spanish words. That's the extent of it. And the commission, yes, is recommending the closure.

But what it's recommending is actually not that bad. So it's recommending the closure over a 33-year period. The first 25 years would be continued production with progressively rehab. the site. The next eight years after that would essentially be actual physical closure of the site while rehabbing the land. And then a study was also released a month ago by, I believe it's like a local Panamanian business kind of lobby group or business group that they provided this to the government. And essentially there's 30,000 jobs direct and indirect that were lost due to the closure of the Kobe Panama mine. And the lost revenue for the government over there is about

700 million USD per year. So it's not insignificant, especially for a country of just 4.6 million people. That's a pretty massive economic impact. And the problem the Panamanian government is facing is that closing such a large site is not cheap. And essentially the commission is saying, okay, we recommend the closure, but over a long period of time, so that, that the Panamanian people do not pay for the cost of closing the mine. And they're also recommending that a new agreement be done with First Quantum to reflect that and that the international arbitration that is currently ongoing be terminated. And in other words, an agreement that would allow First Quantum to continue operating the

mine for another 25 years while progressively taking steps to close the mine. And First Quantum said in their statement that I'm showing here for Joint TCI is that they will engage in good faith with the government and they want to establish a new agreement that's essentially fair for all parties involve and respect Panama's constitutions and laws. And for Franco Nevada, because they do have a streaming interest with First Quantum into this mind, they essentially released a statement referring people to the First Quantum Statement. So I think from what I've read and researched, I don't think it would affect this stream that Franco would have here, even if a new agreement is negotiated with the Panamanian government. But

this is a commission. And I don't know if it's, I believe it's probably a president, the head of state. He still hasn't made a decision on what exactly is going to be done with the mine. But I think it's, we're seeing the economic impact here. Just, I think, just showing how important that is. And that I think something we had discussed in the past that, look, It just feels weird that they would just completely close that, considering the economic impacts that it would have. And I think that's essentially what the commission is saying here. Maybe not word for word like this.

They're saying it should be closed. But I think they're also recognizing that the cost is high and probably indirectly recognizing that the job costs would be very high as well. And probably giving itself some leeway over 25 years to be able to progressively replace those jobs. But wouldn't they have exhausted the mine in that length of time? Like, isn't a mine only good for 30 years? I mean, I'm not sure. I don't know how long.

It is a large mine, right? It was like, it was low single percent, low single percent in terms of the copper production worldwide when it was operating. I don't remember the exact percentage, but that's something I had looked up. So it's not insignificant. It's pretty major mine. maybe they'll just kind of reduce the amount of production that's done. But at the same time, look, there has to be some revenues coming out of this if the government

wants to pay for the closure of the mine, but also get some revenue out of it, keep the job. So 25 years a pretty long period of time, I agree with you. So it's not, it doesn't feel as devastating as we originally thought it was. No, and it kind of just seems like they're, I just did a very quick Google search with the AI overview. so this is not verified at all, but it says the Cobre Panama Copper Mine has an expected lifespan of 34 to 40 years based on mineral reserves.

So if they're closing it down over 33 years, like that's just a fancy way to slap on the fact that it's being closed. 25. The last eight apparently, based on the commission, is actually saying, yes, that's the effective kind of closure time and rehabbing of the site.

So I think production would be essentially 25 years. So, and maybe, the president will say something completely different and they'll say you know what we'll just continue operating the mine will take the recommendations of the commission in terms of making sure that the operator first quantum actually put some money aside to rehab the side when it's done but we'll operate it until it's done basically that could very well be an outcome where the you know the government actually takes some of the recommendation of the commission yeah i mean i own franko

so it's a good thing if this fires back up again. Yeah, same for me. So let's move on here to Micron. So let's have a look at those earnings. Yeah, wild quarter from Micron, but probably expected. Revenue was 54 billion compared to 11.3 billion at this time last year. Gross margins have virtually doubled going from 45% to 45% to 87%. Revenue was up 31% sequentially, which is wild again.

and Micron's net income over the last year is almost double what Micron made in the previous 11 years combined. That is if you, yeah, there's a net income, but that only goes back to 2023. Yeah. If you span that back to like, well, 2016. Oh my God. Yeah. It's crazy. So for those just listening on audio, we're just showing the net income for Micron.

And essentially, it never had higher, going back to what, the like 2015. I'm doing annual here. So I just want to see. There you go. Let's do, I was doing quarterly. Let's do annual. It's even more stark. So if you're going back here to like 2005, it's crazy.

So you have essentially the last year, it was 85 billion net income. Yeah, it looks like it's bigger than everything combined up until 2005 before. that. Yeah. More than double. Yeah, exactly. The biggest year before that was 2018 where they had 14,000 net income. Yeah. Yeah. That's pretty crazy. 14 billion. Yeah, sorry about that. Yeah, I guess this would be in billion. Yeah. But yeah. So one year more than double the previous 11 or sorry, just less than double by my math. So I mean, if you're wondering how this can happen, it's pretty much one thing is memory and average prices like average selling prices were up around 260 percent I believe and I mean it's it's pretty wild right now how they're not really

that's how you double gross margins as well is you effectively can raise your prices by 260 so sorry my notes are a little jam on there so the selling prices were up 260% year over year and are now up an additional 20% this that was last quarter 260 20% this quarter but the cost of sales that is only up around 15%. So that's where you see this huge expansion in margins. They're just able to raise prices effectively and management doesn't really see this slowing down at all either. They expect supply will stay short through 2027 and 2028 and ram shipments or memory shipments will only be able to grow in the 20% range over those years. So they mentioned that demand is much higher than that. So what's going to happen, they're probably going to be able to increase prices again.

If they can really, why wouldn't they? This is typically a pretty cyclical industry. So raise prices when you can, make the money when you can. It's not like, let's just say a FICO situation where they get greedy. Like you kind of have to get greedy in this space when there's demand for it. So I think, yeah, you're going to see larger pricing increases. The company is also spending to try and keep up with the capacity. So capital expenditures should come in north of 50 billion over the next 12 months compared to just 27 billion of spending last year. So you're looking at probably pretty close to double the KPEX.

The only difficulty is the factories don't just get up and running instantly. They take years. So this is exactly why the shortage will probably persist. but you'd better make sure that the factories you're building out, let's just say in 2028, 2029 or 2030 the demand still exists or that's kind of where you get into a bit of trouble. But yeah, I'm pretty happy for those who own the stock, but I would not touch this thing. I realize that I could be giving up maybe even more from here, but the memory space has been, I mean, we looked at that net income chart.

It's boom and bust in this space. There's a lot of time periods where Micron goes through loss. for extended years. Negative of the margins, yeah. Yeah. So could the cycle be extended potentially, but we do have to remember the last time Micron went through a bottom cycle, and I think that was in 2023. Their margin, yeah, like negative margins, they were losing money.

So if that were to occur now with how much this company has run up and kind of how expensive it is, like look at that chart. It's straight up. If you ever got any... You want to see when you've owned it for a while, yeah. Yeah, it's just wild. The only thing I guess that could be different, and I didn't really pay attention to this space pre-AI,

is a lot of the contracts are now long-term take or pay. I don't know if they did that, you know, say five years ago, they probably did do a certain degree. I don't believe they did, no. I mean, it's something that's relatively new. When I looked at the... Yeah, there just wouldn't be... Companies probably just wouldn't fall, like, do it back then.

Oh, exactly. Why would you do that if you're not like desperate for supply? Essentially you as a buyer, you would only do that if you want to make sure like you have supplied guaranteed and you're willing to take the risk that you may not need as much as you ordered. Yeah. Because why would you, why would you do that if you're like, it's not a boom period and Micron like needs your business really badly? Like at this point, Micron is just saying like if you can't give us that business, would take or pay will go somewhere else and get it. Yeah. Yeah.

And somebody else will. So does that kind of change the situation? Because more than a third of their revenue is locked in through 2030. So they didn't have this before, which probably would take a bit of the pressure off. But like I would make no mistake about it. If there was situations where these contracts were take or pay, but they weren't being fulfilled because demand is cratered like the stock price would probably crater even though they have a third of revenue booked like the market would get terrified but yeah the the contract the backlog is

north of 150 billion that would be management apparently said it was on the low end of contracted prices so you're talking about the low side of prices it's 150 billion plus and management said that margins would be well ahead of any previous peak cycle at the low end of prices so So the company looks very cheap. Like it looks dirt cheap. I think it's only at 14x earnings. But the thing is, and we've talked about this before, with cyclicals, often when the PEs are the lowest, it means they're the most expensive for the most part. They kind of work.

It's not always the case, but it's a pretty good indicator because when you're at peak cycles, your earnings per share are going to be the most expensive. And if the market is pricing and a slowdown, you're going to get that really low P.E. So Michael Burry apparently has puts on this one. No, yeah. Middle of next year or something, he needs a stock price to half by the middle of next year. I don't know if I see that happening, but. He's really bearish on AI. I mean, I'm of the opinion.

I'm pretty bullish on AI overall. I'm not really that bullish on like the AI, like hype in the markets. I think that's the part that there's a little bit of disconnect, but I think AI in general. I think he's just, I think he's. seeing a whole lot of similarities with the dot-com bubble. And I don't disagree that there could be a massive correction. I think the problem is betting on the timing of it. Yeah. Like I feel pretty confident saying in the next like five years we'll see a pretty big correction when it comes to like AI related stocks. But that's a pretty long time frame. And you might as well like, you know,

being wrong on the timing is the same as being wrong, right? So it's. Oh, especially when you look at stock charts like micron like you don't want to be early on your short position or you'll get even if you're right and it bombs 80 percent two or three years from now you've probably gotten wrecked in the process yeah yeah and i think though they should be pretty good i think short to medium term of micron but what we're seeing and especially if you start seeing that play out in the u.s with the u.s. election coming up where candidates get elected representative based on on their opposition of the AI center buildout, that could have some implications for a company

like Micron down the line because it's not hard to explain, right? Like if you stop or you slow down the build out of these data centers at some point like, okay, like companies will slow down the ordering. Yes, they have some take or pays in place and I think their sales are probably covered for probably a year or two at this point. But beyond that, I think you have to be careful because of those same kind of like real life bottleneck,

whether it's availability of labor, whether it's regulation, whether it's availability of electricity, whatever it is. At some point, these hypers will say, okay, like we can't just be throwing money at take or pays and not actually deploying the equipment. Yeah. Well, and I think in the case of Micron as well, like I had mentioned earlier, it doesn't, the take or pays don't matter if the market. senses any sort of slowdown and demand, I don't really think it would care that 30% of its

revenue is contracted through 2030. The stock would take, like, they'd be terrified of a slowdown. Yeah, the market is forward-looking. So, yeah, exactly. Anything else you want to add before we go into the thrilling world of cruises? No. Have you ever been on a cruise? I have not. I've heard plenty of people say I should go on one, but I have never been on one. Yeah, I've very, never been to. I know. I kind of, I would be interested, but I'd need a pretty good deal to go, just because, yeah, I feel like I, if I had to choose for the most part, I'd go to an all-inclusive over that, where I just want to relax. But if it was like the right deal, especially at Disney cruise, where you have a lot of entertainment for the kids that, you know, I'd be, well, you can get

all-inclusives on the cruises. Yeah, but the price is, is pretty insane. It's way more expensive. Yeah, much more than a resort. Yeah. So, Carnival Corporation. So this one, it's obviously it's a cruise line company. It's a company I haven't looked at for a year. So this share price still really hasn't recovered since the COVID levels. It's still well below. I think around 30% roughly the pre, let's say, February 2020 price. So it's down, yeah, 38% roughly since that time. And there's a lot of debt on the balance sheet as well for this company. And that's definitely a byproduct. If you remember, they took on a whole lot of debt when COVID actually hit.

So that's a bit of a byproduct for the pandemic, which it's kind of crazy to think that it's was like six years ago now. Like almost going on seven years. Yeah, it feels like it really feels like we're saying pre-COVID and post-COVID. But now it more and more it's looking in the rear view mirror. Yeah. I mean, 2020, I guess early 20. 2020. When they like when it crashed in early 2020, it fell 75% in like three months. That had to be when like COVID first broke out and they were like keeping people on the ships. Yeah. I think some of the cruise ships were being quarantined if I quarantine if I remember correctly. So yeah, it was a combination of, you know, all the log downs and you had to quarantine and people, the social distancing that you had to do. And clearly.

when you're confined in a space that's not ideal when it's a pandemic. So it took a big hit. And there's still a lot of debt on the balance sheet, like I said, stemming from that. It peaked around $36 billion. And now they're looking about $25 billion. So it's definitely gone down, but it went from 14 to 36. And now over the year, it's gone down to $25 billion. Revenue for the quarter was up 3%.

But that's the lowest growth since the pre, since essentially COVID. because what they ended up seeing is that they had a lot of demand. Once people got like fed up with like, you know, just not traveling and staying at home, like most experiences and traveling, they just saw massive demand here. And of course, you're also coming in from a low base where I think probably for most of 2020, they had like little to no occupancy. So they had some quarters of like 6,000 percent increase in revenue. but that's because the base was nearly zero.

And then you had several years of two high, like of triple digit increase in revenues. And now it's slowing down to about 3%. But they did say on the call that it exceeded their guidance. Even though growth is slowing, they beat expectation on that from. They said that the business was quite resilient in the face of geopolitical and macroeconomic uncertainty. They mentioned on the call that they are facing inflation. pressure. However, they still, I guess, are confident enough in the business and the fact that the stock is still relatively cheap here and they are buying, they bought back $1.2 billion worth of stock

in the last six months. So they are buying back shares, whether it's a good idea and they should be reducing the debt even further. I think that's debatable. They have about $3 billion coming due in the next two years between 5% and 7% interest rate. So it may have been good to reduce the debt. that a little bit. It's not super high, much lower than it was. I'm assuming they actually paid down the highest interest that they had. If I remember correctly, they took like some emergency loans that were like above 10% when the pandemic started. But at the same time, it still baffles me that these capital heavy businesses haven't learned their lessons after COVID. Because we saw airlines kind of getting the same kind of buying. It's like, okay, why would you not create more flexibility on

your balance sheet. You saw what happens when you don't have a lot of flexibility. You manage to get out of it, but why would you not just shore up the balance sheet? And then when the balance sheet is really shored up, then look at buying back your stock and reinvesting a bit more in the company and things like that. But to me, that's still a head scratcher. It's like these companies haven't learned their lesson. Or it's the, I guess, expectation that the governments will bail them out if something happened? I mean, I could see it for the airlines, not the cruise companies, though.

I don't know if they would bail out the cruise companies, but I think it's just like, its management is focused on getting the stock price up over the short term, and buybacks look a lot better than, you know, paying down debt. I think that's kind of it. Like, buybacks move, they're a much bigger headline mover, I guess you could say,

than paying down debt. And, I mean, most, it's pretty rare to find, a management team that isn't focused on just kind of trying to move the price over the short term, like their tenure there, whereas, you know, you get a few companies that are thinking very, very long term. But I mean, that's kind of my take on it. Yeah. No, I mean, I think it's just bad management, but that's just me. I think if you want the company in the end, I think you'll benefit more from shoring up the balance sheet than this. But to their defense, S&P actually upgraded them

to investment grade debt. So that means they should be able to get some more. favorable financing going down the line. Operating margins did take a little bit of a hit year over year going down 100 basis point. And despite fuel cause being a headwind, I don't think that's a surprise to anyone. They said that they are managing it and they are using some specific metric to them. They are 26% more efficient. But that's more efficient on a kind of passenger occupancy basis.

So it's like a very, it's almost an adjusted metric for that. So take that with a grain of salt, but they did mention that on the call. And they've also increased their guidance on the earnings per share side as a result of those more efficient operations. So overall, again, not a company. We follow a whole lot, but just interesting to just review it after the COVID era. And overall, I guess it's recovering fairly well. So nothing more to add here. Having cash on hand is essential for any business.

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doing that, our home in Ottawa would just be sitting empty. That's when it hit me. Listing our home on Airbnb just makes sense. Someone else could enjoy our place while we're away, whether they're here for a summer weekend, visiting family, or coming in for a big event in this city. They could explore the Rideau Canal, take the kids to the water park, catch a CFL game downtown, or just use our place as a home base to experience Ottawa like a local. The extra income could go right back toward our own trip, and we can choose to host only when it works for us. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. host. Let's move on to the tire fire that is Nike.

Nike, yes. Yeah, we talked about it last Monday, and then they reported earnings not too long after, I think. So I would say a pretty average quarter from Nike, and average is, I guess, compared to what they've done previously. So, I mean, what they've done recently, I guess. Revenue declined by 4%, 5% in constant currency, but the slide in gross margins stopped,

which is a good. thing because their margins have just taken a massive hit over the last while earnings also declined 2% by the looks of it both of these were below consensus but the stock finished green on the day so on a revenue basis a company has largely treaded water over the while but over the last while but this is the first big decline in revenue since the final quarter of fiscal year 2025 so they're in fiscal year 2027 right now. So they kind of trended flat, you know, not one, one percent growth in revenue, flat revenue. This was the biggest, the steepest decline they've seen in, I think it was six quarters. So China is getting absolutely wrecked. 22% year over year-over-year declines in

revenue and on constant currency, 26%. North America, its largest market is actually staying flat. a year-over-year revenue is up 2%, but the declines elsewhere, like China and EMEA, which would be Europe, Middle East, and Asia, that was down 5% as well. Converse continues to struggle. It's a pretty small portion of the business, but revenue is declined by 28%. To put the size of the business into perspective, North American revenue for Nike is 5.1 billion. That's just North America, while Converse is 260 million, so it's kind of peanuts in the grand

scheme of things, but it's still a business they acquired and a business that is falling quite a bit. Every area of the company is in decline. So wholesale fell 1%. Nike Direct fell 9%, digital fell 13%, their own physical Nike stores that they have in the malls and stuff fell 5%. Wholesale is kind of supposed to be the turnaround here, going to be pretty normal to see direct-to-consumer fall, because that's what they're trying. I don't want to say what they're trying to get away from, but they're trying to kind of go back more to the wholesale, get the shoes back in the stores on Amazon, whatever it may be.

But wholesale has kind of been positive the entire shift, and now it's turned negative again. But I mean, when China is falling by 26% a year, it's really not that surprising. Footwear is the main culprit here. Revenue is down 6% year over year. Apparel is actually up 6%. the other difficulty is Nike is selling not only fewer units of footwear, but prices are also

like the sale for the price are selling those shoes for are also declining. So when you're marking down the product, you'd better see higher volumes or it can get pretty ugly because once you see markdowns plus lower volumes, you have kind of a double pronged impact and it's not good. guidance was pretty ugly as well, but I think fairly expected. Revenue will decline in the high single digits. I can't remember if this is year or like next year's revenue or next quarter. Sorry I didn't add that in there. But revenue will decline high single digits with only 4% declines in earnings this quarter. If this is annual guidance, effectively they're saying it's going to ramp up. Earnings will come in at a dollar. So yeah, this is annual guidance because earnings, they expect earnings to come in at a buck 15 to a buck 35. So this is excluding a bunch of restructuring charges, which should be one-time cost, but you could argue it's, you know, it's probably going to be recurring costs in terms of the strategic shift for the next few years here. So if you factor those in, they could come in at around $1 a share.

And this was a company that was earning $3.75 a share back in 2022. So you're talking about just an absolute free fall in earnings over. the next while here. The guidance also assumes that China continues to get worse, which considering the more than 25% decline in revenue is crazy. No guidance on margins were given, which is pretty reasonable. A JP Morgan analyst pretty much outright asked them how much more pain. And they said this year for sure, which is their fiscal year, 27 again, but they also said potentially into their 2028 fiscal year. So, I mean, being completely honest, I have no idea how the company gets out of the rut it's in. I mean, I guess the one good thing is guidance is so bad that if they come in

above, you'd imagine you see some sort of positive action in the share price. I mean, I've been pretty transparent about my thoughts on Nike because we've covered it quite a bit on the podcast here. I probably, I wouldn't touch it still. I wouldn't have touched it two years or. go yeah i i guess it could be a pretty good contrarian bet here but when you have like the underlying results right now just look absolutely ugly yeah i think for me it's more of can they really bring back the prestige to the brand i'm not quite sure the other thing i think to keep in mind is you're seeing this with lu lemon as well like consumers are looking for value and we'll be talking about that on the Monday because I'll be looking at McDonald's and also restaurant brands international

that owns Tim Orton's Burger King and Popeyes and Firehouse Subs. And consumers are looking for value. And if Nike and Lou Lemon are looking to get back to that premium offering, it's not the best time to try and do that. The consumer is looking to save money. And if they want to save money, there are some cheaper option than these two brands, in this question or they have to keep discounting like i don't think the macro back grab drop is very good here for for turning things around no and you have i mean as i had went over on the monday episode like Nike kind of overshot the strength of its brand i mean it took a lot of product out of the stores and then when it wasn't in the stores people didn't see it as much and they just, they went elsewhere, and they found just as good a quality products for,

I don't exactly know what the price point is. I'm guessing, like, probably half. Like, what would a pair of new balance shoes cost versus Nike? It's got to be half. No, they're so pretty expensive. Yeah, they're not cheap, but if they offer better quality, people will go to those shoes. So I think it's more than that, right? Like, it's all about value.

Even if it's a bit of a higher price point, if people don't perceive it as being value they won't buy it i think that's where the consumer is concentrating here but let's move on we'll have time to just be through auto zone here yeah so this is a stock i think we've talked once or twice on the podcast i don't know if it was with you or brayden but definitely once or twice wasn't with me no i've never talked about auto zone no so there you go so over the years it's actually been an incredible compounder but the stock price has been under pressure over the last year it's in a a pretty decent drawdown here. So in the last, let's say, year, it's down 30% in terms of drawdown. And it's currently, revenues are up 6%. Same store sales growth was 2.7%, which was the lowest growth

rates since February of 2025. On the U.S. side, same store sales were up 1.6%, which was the lowest growth rate since November 2024. They had it a record-breaking 175 net news stores for the company, during the quarter and a total of 374 for the fiscal year. Operating margins improved over last year just shy of 20%. It was a small improvement, but still, what was still interesting on the call is they said, and this kind of lines up with Home Depot is that, and I know it's AutoZone, it's not Home Depot, it's not Home Improvement, I guess it's car improvement, but they said that DIY market was softer with consumers,

either deferring repairs or trading down. And they also have a professional or commercial market. Of course, they're like auto shops that need parts. And that commercial market sales were very strong with close to 9%. So that's really interesting to see that discrepancy. Because to me, you think, you know, if your car needs to repair it, you'll do it as soon as possible. I guess unless the repair is not like super essential or sometimes people just make do it, like the number of times that I've seen someone with like a broken window and just a piece of plastic

kind of taped around it like duct tape. Yeah. So that that is true. But they said that they believe the automotive aftermarket is resilient. So if your car breaks, you have to repair it. And you can only push back a repair for so long. Cars, new cars are expensive, which makes keeping an existing older car more attractive. And higher prices can typically be passed through, although they have noticed.

that there is a limit to that the customer is not completely inelastic to price increases. And for guidance, they expect 4% average ticket growth while same store sales to range in the range from flat to low single digit as consumers continue to struggle with inflation. So interesting note on the call, the word inflation came up 33 times. And that's something you're seeing more and more from all different kind of businesses, is that inflation keeps, is a reoccurring theme. Regardless of what we hear in terms of headline inflation, I think companies have really a good pulse on their business.

And I don't always trust the official data. But what I trust is when a CEO tells me that, you know what, like we're facing inflationary pressure, we're seeing our customers spending less because of it, I believe them. I don't, I have my skepticism sometimes on those headlines. line numbers. Yeah, I mean, straight from the mouth of an executive would be the best place to see,

you know, if inflation is hitting them. I, just looking up what this company does because I own Boyd, which is the collision repair shop, I could have guessed how the results were. The interesting thing here is Boyd is more so like on the insurance side of things. Yeah. And Boyd would be more a customer of AutoZone than the, like, that's how I would it, right? Boyd does the repairs. So AutoZone would sell them on the commercial side, the parts. So they're more like Napa auto parts, for example, in Canada. Autozone's not in Canada, but they're,

you know, you see them on the road. Like, there's these cars that are branded and you know they're going to like a garage bringing some parts. Yeah, they would, yeah, Boyd would buy the parts from them. And then the insurance companies would pay Boyd to fix these vehicles. So, this one is more, and it's like, it's the exact same commentary because Boyd has talked quite a bit about how insurance costs are getting so high that people are raising deductibles so that they can get their costs down. And then when they, when they get into an accident, the deductible so high that it makes a lot of repairs that used to be worth it. Let's just say when it was lower, not worth it anymore. So that's kind of hitting the repairable claims area of Boyd. And you're seeing the same

here this would be a little bit different because on the retail side of this like if you're just this would be aftermarket parts to somebody just looking to fix their vehicle themselves so it's a little bit different but they have different kinds of customers they would probably have customers like boy they'd have customers that are commercial

but they're like garage that probably don't deal really with insurance companies and then they also have the DIY customer that is the person going in and handy enough to do the repairs on their own car yeah Because I looked it up, they do sell the Boyd.

So yeah, there you go. I mean, Boyd is the biggest. They're one of the biggest collision shops in the States. So it's really not that surprising. No, it just makes sense. Yeah. And yeah, it makes sense. The commentary is similar.

But I think that's a good place to wrap it up here. I hope you enjoyed the episode. We talked about some names that we don't always talk about. So let us know if you like that variety as well. I know, of course, we try to focus a bit more in Canadian content, but we do U.S. companies and sometimes international companies as well. Let us know if you liked it and we will be back with a new episode on Monday. This one, like I said, I previewed.

We'll be talking about a few different things. You'll be talking about engineering firms and for me looking at the recent comments from McDonald's, but also restaurant brands international and what it means for quick service restaurants. So make sure you tune in and thanks for listening. The Canadian Investor Podcast should not be construed as investment or financial advice. and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.