The Canadian Investor - What Canada’s Election Result Means for Investors

Episode Date: May 1, 2025

In this episode, we break down what the recent Canadian federal election results mean for investors. With Mark Carney becoming Prime Minister, we discuss the implications of continued large-scale fiscal spending, including projections that federal deficits will remain above 2% of GDP. We look at how this could act as a tailwind for certain sectors and how it will likely lead to a trade deal between Canada and the US. On the earnings side, we discuss TFI International, where acquisition-driven growth masks some deeper margin pressure and macro headwinds. We also provide an update on First Quantum and the continued importance of the Cobre Panama mine for both its business and Franco-Nevada's streaming exposure. Lastly, we share thoughts on Starbucks' ongoing turnaround, recent earnings miss, and whether there's a compelling case to be made for patient investors during its transformation. Tickers of stock discussed: SBUX, TFII.TO, FM 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 Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io 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.See omnystudio.com/listener for privacy information.

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This is the Canadian investor where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. Welcome back to the Canadian Investor Podcast. I'm back with Dan. We are doing our news and earnings today. Lots to talk about between the elections happening

last Monday, so we'll talk a little bit about that and what it means for Canadian investors. But like we've been mentioning, slowly earnings season was starting in the past week and now it's definitely in full force. So we have a lot of names to talk about and we will continue with a couple of earnings in the Mondays release as well that will be coming up on this Monday. Monday will be a bit of a hybrid episode. We'll talk about earnings but also some concepts as well. So Dan, how are you feeling?

You excited to talk about that? I can tell that you watched the Oilers game last night and pretty good results, right? Yeah. It's these 8 p.m. starts. I mean it's been three years now with LA. The game isn't over until like 1130 and then it's pretty hard to just shut her down to go to bed. So yeah.

I had a late night but pretty happy. Yeah. You need to become a Habs fan. The games would start at 6pm your time. 5pm mostly. Problem solved. 5pm, okay. Yeah. Yeah, I remember going to Calgary in November and there was hockey and I was surprised to

see the game at like 5pm. I think it was Calgary against Montreal, but then I'm like, oh yeah, that makes sense. Obviously with the time change.'m definitely a different experience. Yeah and it's even worse because LA's an hour behind but yeah it's it was a late night for me but I'll take it. We'll power through. Well that's okay I'm tired too my little toddler was up quite a bit last night but we're caffeinated so we will be able to make it work. So, the Canadian election results obviously the Liberals and Mark Carney won with a very close to majority but minority

government and not to go into detail about the election, the results and so on. Obviously, there's tons of good political podcasts out there so I encourage people to listen to those if they want more of a political breakdown. But I want to talk a bit more what it means for investors. And one of the first things that I want to talk about is there's going to be a lot of fiscal spending. So it didn't really matter whether it was going to be the conservative or the liberals. Both platforms really had a lot of fiscal spending from whoever, you know, liberals or conservative. You could even, in both cases, some of the assumptions were kind of a bit of a head scratcher. And whenever a government projects budgets or deficits, I mean, traditionally, if you look in the past, they tend to be

overly optimistic. So the deficit. Exactly. So I did some charts I think maybe a year six months or a year ago and literally every time they do projection when the actual numbers come in they're always higher in terms of deficit. So I would say you know I took that personally in terms of both platforms, both major parties as a with a big grain of salt, but I know some people like one party more than the other and that's completely fine. But the key takeaways here is that there will be some massive spending. I mean, the liberals were saying that they will be increasing the government debt by about 225 billion over the next four years.

I guess it could be probably that or potentially higher, especially with a minority government where you probably will have to provide some concession to one or the other parties and that's typically done in spending. But what it really means is it will create some opportunities for investor because when governments start spending a whole lot, there is a percentage of that that actually flows through the economy, through the private sector, because you have contractor, because you have major infrastructure projects, or they do go ahead with a pipeline that goes from west to east, for example, then clearly that will create some economic activity as well. So there are some

certain sectors that will likely benefit from that and the clearest example that we can think of is if you think of the US. So if you remember then back in 22, 23, pretty much every economist was saying the US would go into a recession, right? Like that was kind of the consensus view you had a few contrarians here and there but for the most part that was a consensus view right. Oh yeah there was what was there there was yield curve inversion there which was like yeah what was it almost like in every single instance it went into a recession and yeah I seen a tweet it was this morning talking about somebody was talking about they pegged a recession now at 75% and somebody quote tweeted it and said I'm gonna I'm gonna wait until they're

at 100% just to be sure just like they were in 2022 2023 yeah exactly it never ended up happening this stuff is is extremely hard to predict yeah and hindsight is 2020 of course but one of the big reasons that I've been reading a whole lot on this, listening to a lot of economists, some macro experts, and I think a big part of it is literally due to the US government, the federal US government, just spending a whole lot. So their deficit had been at least 5% of GDP, which is extremely high since COVID actually went up to close to 15% in 2020-21. But it was still very high, much higher than what you have seen in other developed countries, including Canada. In Canada during that time,

it was between 1.3 and 4%, of course, it also was around 15 percent in the COVID year but it wasn't as high as the US and my point being here that it's likely one of the big reasons why the US did not see that slowdown because the government was spending so much that a percentage of that flu flowed through the economy and actually supported the economy and definitely supported businesses in the US. Of course, you have more fiscal spending. You have also the Fed that would need to monetize that, central banks that will need to monetize that. So there's just more money in the economy and typically that will be good for assets as well.

And especially for a country a bit smaller, like well, much smaller in terms of economy like Canada, you have to think that it will likely benefit some kind of businesses in the country. And I'm thinking here some examples could be energy infrastructure businesses, whether it's the actual suppliers of parts or the pipeline companies themselves, it could be defense companies, it could be a whole slew of different type of companies that would be directly beneficiaries from that or indirectly because people work, they spend and so on. So I think that could be a big boost for investors and it could be a big boost for a certain type of industries

in Canada and something to keep an eye on. Yeah, I think they actually, there's a lot of economists that are pretty bullish on Canada right now. I mean, it's kind of a tricky situation because I know obviously, it's very obvious that energy spending here in Canada is a point of debate for a lot of people. So I mean, and that's one of the main avenues we have for growth and there's a point of debate for a lot of people. And that's one of the main avenues we have for growth. And there's a lot of contention there in terms of how much money should be spent on it. Overall, I think this is a pretty good sign for the Canadian economy.

Politics aside, I don't really talk too much on that whatsoever, but it's going to be interesting to see how it goes moving forward. I mean, the one thing I will say is, I mean, that election was a lot tighter than a lot of people had predicted. I mean, especially near the end of it, I was actually pretty surprised. Like, I didn't think the conservatives were going to win just based on the polls, but it did end up being a lot tighter than projected, at least into the later hours. So it was pretty interesting. Yeah, I think a lot of people were projecting a majority. So obviously that didn't happen. But I think it's important for people to understand

that yes, as investors, especially in this kind of climate, you need to be aware of what's going on on the political front because it will impact certain types of businesses that you may or may not be invested in or may or may not be invested in or may or may not be considering as investment. So you really have to keep that in mind and factor that in. And obviously the trade war, so I've been pretty consistent on that.

I think you as well. I've said it time and time again, an election was needed so that whoever is elected gets a mandate. Clearly, I'm sure Carney would have whoever is elected gets a mandate. Clearly I'm sure Carney would have liked to have a majority mandate, he did not, but he of course has a stronger mandate than Trudeau had back in December or January and that he himself had before he was actually elected again. It would have been the same thing if the conservatives came in, even with a minority government. At the very least, they can say, look, we may be a minority government, but we were just elected and the other opposition parties are unlikely to bring

down the government in the near term. So I think it will give them definitely a mandate to negotiate with Trump. And my prediction is that we will see a trade agreement between Canada, the US, possibly Mexico lumped in there by the end of this year. But I wouldn't be surprised if we see something happening probably by the end of the summer, early this fall. I think Trump, you know, you can think whatever you want of Trump, but at the end of the day, why would he negotiate with, you know, someone in power that he knows there's going to be an election in the next six months at the very latest? Why would he negotiate? Why would he not just wait, especially when he's looking at the rest of the world in the

meantime? So why would he waste his time on Canada when he knows there's an election coming? Yeah, that's exactly what I was going to say. You may as well wait until you have somebody that is actually going to be in the position for more than realistically what it could have been like three, four months and then if the conservatives win, it's an entirely different story. Yeah I would imagine- He's got to focus on those 120 other countries that a trade deal

done within what like 75 days now. So yeah, I mean, hopefully we can get something done. I mean, Canada is not really getting hit too, too hard right now. I mean, the main focus seems to be China a lot, but hopefully something can get done. Yeah. And the good news when that trade deal is done, it will bring some certainty. But again, no one can be very certain when Trump is there because who knows, right? There could be a trade deal and then, you know, a few months later he just starts ranting that it's the worst trade deal ever even though he negotiated. So that would not surprise me one bit.

And look, the uncertainty even with this this election even with a trade deal that would come to fruition by the end of this year it's not going to go away. Markets I've seen what has happened in the last well pretty much since Trump has been elected and I think they're going to be shell shocked for quite some time. There's going to be some uncertainty because the reality is even if there's trade deals in place, no one really knows if these trade deals are gonna stick. Because who knows what Trump is thinking on any given day, who knows who he's talking to, is he talking to the hawks against China or the ones that are more free market within his own administration. No one really knows. So, there's still going to be a lot of uncertainty, but I think it's good that we had an election.

It's over. Now, the liberals were elected with a mandate and I've said it time and time again. My personal view is I didn't really care who won. I wasn't a fan of either option. I'll be very honest that it was my personal view. Some people think I was leaning one way or another. The reality is I've always been independent and I wasn't thrilled with any of the options

available to me. So that's my personal view on the elections. Yeah, I mean, nobody knows where I lean because I just don't talk about it very much. That's my strategy. Nobody knows which way I lean, but. Voted But voted is the only NDP vote in Alberta. Maybe that was it. Yeah. I mean, the I could see it's definitely going to be rocky because, you know, a lot of people for a very long time bought US equities. It's very stable country, you country. And then we get a situation like this where you

truly don't know what's going to happen. I could say like this afternoon, let alone next week, although it has settled down a bit now. And I mean, the markets are, they kind of leveled out a bit in April, but holy was April nuts. And who knows what May is going to bring. I think May is going to be bringing more of the same, unfortunately. That's my bring. I think May is gonna be bringing more of the same unfortunately. That's my prediction. I think it's gonna be volatile for the foreseeable future. But enough of that, enough of the election. I think we we had to talk about it because at the end of the day it does have an impact for investors. I think it's important to be aware of the potential impacts it could have on the various kind of businesses. Just be aware of it, keep that in mind, maybe listen to it on the calls.

I'm sure some of the businesses will be, especially when I'm thinking oil and gas, they'll probably be commenting on it and say, look, I'm sure they'll say all the right things or optimistic, this new government, blah, blah, blah. But just keep an eye out if you think the business that you're investing in or interest investing could have been impacted by that. TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings.

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Now we'll move on here to earnings. So TFII, TFI International, ticker TFII. Do you want to go over what the trucking company had to say in terms of its results? Yeah, so revenue increased by 5% year over year, but I'm pretty certain this was just from a major truckload acquisition they made last year. Like the underlying results were were kind of they weren't good, but they were also kind of expected. I mean, this is a company that stated last quarter that it's gonna be, I mean, they straight up said it's gonna be ugly.

And that's when we saw that huge drawdown in TFI's price. Earnings dropped from $1.24 to 76 cents. So there's some pressure on earnings, operating income declined from 151 million to 114 million. So less than truckload, which is the big portion of their business. operating income declined from 151 million to 114 million. So less than truckload, which is, you know, the big portion of their business. So revenue fell from 783 million to 679, and margins actually took a big hit as well.

They dropped from 10.9% to 6.9, and truckload revenue rose 50%. But again, that is entirely due to the acquisition. I can't remember the name of the company, but they're like a specialized truckload revenue rose 50%, but again, that is entirely due to the acquisition. I can't remember the name of the company, but they're like a specialized truckload company they acquired last year. And in that area, margins dropped from 10.4 to 7.4% and in their logistics, margins dip from 9.1 to 8.1%.

So obviously this is, you know, there's certainly a freight recession. I mean, TFI said it themselves. And when you get lower demand, you ultimately get pricing pressure. I mean, competitive environments pretty much forces shippers to undercut one another. When the environment is good, and there's plenty of work for everybody. It's not necessarily the case. But now you're seeing, you know, a lot of pressure in that

regard, and, and just terror of uncertainty and the overall economic slowdown are weighing on freight volumes. Operating ratio expected to climb short term, but the target remains sub 90% by the end of 2025 and you want a lower operating ratio. So this is, it's effectively the the percentage of revenue that the cut what it costs for the company to generate revenue. So a 90 percent operating ratio would mean they need to spend 90 cents to earn a dollar. So the lower you can get this, the better the railways report this way as well. They're much more efficient. Like, I believe they're in like the 60% range. Most of them. Just the operating margin flipped over.

Effectively flipped over. Yeah. So capital expenditures, they guided lower this year. So they're definitely in full out capital preservation mode. So they went from 300 million to 200 million and management, they actually said that they didn't really go into too many details, but TFI has been known to make a lot of acquisitions. They did it during COVID. They pretty much bought trucking companies up at fractions of their actual valuations and actually ended up working quite well for them. But they said they walked away from a pretty promising acquisition at a very good valuation just due to the overall macro uncertainty. They don't want to spend any money right now, which makes sense.

Q2. Yeah, wouldn't you want them to spend money right now though? This is the time you want to buy companies when the uncertainty is at its peak. Is at its highest. Exactly. And you can get some pretty awesome deals. I mean, you are taking some risks. Don't get me wrong.

That's usually when you want to buy these companies. Yeah. I mean, they did it during COVID. Like I said, maybe they think, I mean, obviously capital preservation is key. Yeah. You don't want to go bankrupt either. Yeah. You don't want to blow all your money. Maybe smaller tuck-ins, but like the impression that I got is they're not looking to make any deals right now. So obviously they don't like they think the environment probably could get pretty ugly. I mean, again, last quarter, they straight up said it's gonna be it's gonna be nasty. And

clearly, they don't want to spend anything right now they're in full out preservation mode. So their Q2 earnings guidance, they came in at $1.25 to $1.40. And I don't know, I didn't actually check this morning, but street estimates were around $1.40. So I would imagine you're going to get analyst downgrades coming in compared to this guidance. And the one thing is about TFI is their capital expenditures came in at only 2.7% of revenue. So that's definitely the best in class out of any trucking company. I mean, the company is in a very good position to survive the environment because you see a lot of these companies,

these trucking companies go broke during really poor economic situations, but strong cash flow should allow them to preserve capital or maybe eventually if they get some sort of situation where they think the opportunity is right, they will make some deals. But again, they clearly just shut down a pretty promising deal. But yeah, I mean, this is a pretty classic example of a cyclical stock. I mean, they're strong in the good times, but it takes a lot of conviction to, uh, buy these companies in the drawdowns. But often these drawdowns, they provide the best opportunities, but it's pretty tough to,

to pull the trigger. Cause I believe this like TFI was close to $200 before last quarter. Now it's, yeah, I was over that. Yeah. And it's, I mean, even looking at the earnings per share on a quarterly basis, if you go back all the way to June 2022, it was $3 a share, over $3 a share, and now it's down to what, below one, I think, was this quarter. Yeah, and that would be US. They report in the US. Yeah, which is normal. This quarter is probably the softest, right?

Yeah. Yeah, it just looks like it's always the softest. So I mean, it's below $1, but you definitely see the trend. So for those who are just listening on audio, essentially, it's pretty. It's the opposite of what you want to see. It starts high and then just keeps going down pretty much like a straight line down. Not quite.

There's like a little bumps along the way, but clearly their earnings are trending massively down. Yeah. Well, I mean, if you look to even a chart of their less than truckload in US and Canada, it's just, I mean, it's tough to, if you look to 2021, it's relatively tough to compare that environment as anything sustainable. It wasn't going to be sustainable.

I mean, we were in full blown global lockdown mode at that time, but even if you get past, you know, in a, in a post pandemic environment, it's kind of been down and to the right in terms of overall shipments, both in Canada. Canada's held up a little bit better than the United States. I would imagine. I think it may be in part because they're more efficient, right? He said on the call that their operations are much more efficient in Canada and that's a low hanging fruit that they could improve

in the US. Yeah. Well, and there's probably a lot less competition in Canada as well. A lot less like TFI is is pretty much the main operator here. But yeah, it was it was a bad quarter, but it was like it was expected. I mean, yeah, the thing about it is, is they, you know, on the conference call last quarter, they mentioned all this, which probably prevented the huge draw down this quarter. You know what I mean? Like they said the environment was gonna get ugly. Whereas if they don't mention anything at that,

like that on the call and they come up with a quarter like this, it probably draws down huge this time. Whereas, you know, it's been relatively steady because it was largely expected. But yeah, I mean, cyclical stocks, they're, they're going to be cyclical. This is just, uh, it's kind of the way, the way it goes. And, uh, TFI was a very popular stock because it had a huge run up through the pandemic. So there's probably a lot of people who bought it, not knowing the

cyclicality of the, of the industry. And now they're kind of seeing it right now. But, uh, I mean, they seem to of seeing it right now, but I mean they seem to be in a position where they should be able to come out of this in a good position eventually when things pick back up again. Yeah, I mean at the end of the day it's complacency, right? You see it in the markets all the time. People just assume that the present will continue in the future indefinitely and we're seeing

that that's not the case. So, it's okay. I mean, it sucks for those who are seeing, I mean, it's in a 50% drawdown. So, if your timing was bad and you're looking on 50% loss, like look, I know it sucks. By the end of the day, I think these are really good learning opportunities. I've said it time and time again, I was down, I think close to 40% around there for 2022 as a year for my investments. And it wasn't great. I won't lie, but at the end of the day, I did some learnings from that and I've been applying them over the last year and a half or so, and it's been, let's

just say it's worked out pretty well for me but I took some lessons from that the pain that I felt from that drawdown I mean I applied it going forward to make sure that I did not make all those same mistakes and I think I'm benefiting from it now. So I think there's always a silver lining obviously you want to make sure you're not investing money you can't afford to lose because then that really hurts even more so. Yeah, and I think it's a situation of just kind of know what you own. I mean, exactly. It was the same thing like another company right off the top of my head that a lot of

people bought would have been Alamantashay and Couchetard. They did very, very well and a lot of people might not have known how cyclical that type of stock would be. It's obviously not as bad as TFI. Like it's not even close, but it is a cyclical option. But you know, a lot of people bought it on its huge run up in 2021, 2022, when travel was crazy. I mean, interest rates were low, people were, you know, getting out a lot more than they are now. And now the stock's gone through, you know, people were getting out a lot more than they are now. And now the stock's gone through, well, it's been pretty much a multi-year flat

and people are kind of questioning why this is happening. Well, it's a cyclical business. A lot of companies are like this and yeah, just know what you own. Cause I mean, TFI is a high quality company, but it's down 50%. It's just kind of the nature of these types of stocks. Yeah, exactly.

TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do but it can also feel overwhelming to some.

But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free

trading. You can also get USD accounts so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades. Don't miss out. Start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. It's the small things that make us Canadian. At BMO ETFs, all of our tickers start with Z.

That's right, Z, not Z. From ZSP to ZEB, we know how to build solutions for the Canadian investor. So the next time you invest in ETFs, consider AZ instead. Visit bimoetfs.com for more. So let's move on here to one that's really interesting. I mean, I own Franco Nevada, which has some ties to this company.

So the one that I wanna talk about is First Quantum. And I wanted to hear what they had to say because for people who don't know the company or new to the podcast, First Quantum is a mining company listed in Canada. Their largest mine, the Cobra Panama, I will struggle with that word probably throughout this segment,

the Cobra Panama mine, which primarily produced copper, shut down operations back in 2023, following a ruling from the Panama Supreme Court saying that the contract for the mine was unconstitutional. Oh, it's gonna be a rough recording with the lack of sleep and pronouncing some word I can tell just now. And just to illustrate that, so I am showing here for Joint TCI.

So I'm looking, just comparing their total revenue for first quantum compared to the Cobre Panama revenue. And you can tell that at the, before the mine was shut down, because it was shut down late 2023. So let's just look at 2022. I mean, the mine was about, I would say like 35%, 40% around there of their revenue. So that was clearly a big hit.

So when that shut down, you saw their revenue peak around $7.6 billion back in 2022. And then you're seeing the revenues in their most other last 12 months it's around five billion so you can see how much of an impact so it's definitely something that investors if you already own the stock or you're thinking of owning the stock you need to be aware of what's happening on that front it's going to be very very important for this company and to get back to it there was strong public opposition against the mine, mainly for environmental reasons.

Recently, First Quantum dropped an arbitration claim, which the Panama government was requiring in order to restart talks to reopening the mine. So they decided to drop that. I believe it was part of a trade agreement, if I remember correctly, with Canada, which is, I'm not fully sure exactly how that mechanism would have worked, but that's fine. And during the call, First Quantum said that they continue to engage with the Panama government to get a resolution for the mining project. They've been doing some public outreach to show the benefits of the mine for the Panama population in the form of jobs, taxes, and indirect economic benefits.

So they really, Forest Quantum has been trying to show the benefits of this mine for the country. Now for the quarters, revenue were up 15%. So definitely some good news there. But if we compare 24 to 2023, so if we go back one year and compare to the previous year when the Cobre Panama mine was actually in effect, the revenues were down 34%. So yes, there was an increase of 15% but it's essentially now more on a kind of base level adjusted basis because the mine was closed last year at this time as well. It's something to keep a close eye on because I mean I'm keeping personally close eye on because

Franco Nevada is a company that I own and it has interest in this mine as well through Streaming contracts so streaming contracts are when a company provides upfront financing for a mine for a percentage of the Future production of the mine at a pre-established cost so for Franco Nevada I definitely gave them a hit to their earnings, but thankfully, because they are a royalty and streaming company, so they essentially will provide financing to all these different types of mining projects. They have hundreds of bets. A lot of them don't end up panning out, but a few of them will really pan out very well. So they end up benefiting from that after the fact. And why I like Franco Nevada or Wheaton Precious Metal, WPM would be the other one here in Canada. I think there might be another one listed in the US that I'm missing. But why I like these is they

really remove a lot of the oper... Well, they remove all the operational risks. So yes, they take some bets, but they don't have the risk of operating the mine, which can really, really lead to higher costs pretty quickly. So it's not the easiest business in the world, but I really like the business model that you get from a streaming company. So it is something that I am keeping an eye on for Franco Nevada.

So I guess, yeah, that's that pretty much covers it for First Quantum. Anything you wanted to add, Dan? While you're trying to fix your webcam camera? Yeah, I don't I don't quite know what happened, but my camera is glitched out here. But yeah, I'll just say like in comparison to something like First Quantum to Franco Nevada, I mean, that is the main risk here is Franco's not exposed to, you know, one of their mines. Well, obviously they're exposed, but they're not as exposed because I think it was what I believe it was like 20%

of Franco's EBITDA. Yeah. It was around that range. Yeah, I think 15, 20. Yeah, it wasn't, it was not nothing, but it was still like, you know, not nothing, but not too large either. Yeah. And I mean, the company went into a bit of a hole for, for a while afterwards,

but I mean, this is one thing about mining companies, particularly in those, you know, where jurisdictions, jurisdictions where, you know, there might not be, you know, the regulations are a bit more volatile, I guess I would say, because yeah, this is like, I believe when this news happened, first quantum fell like, I think it was almost 50% after this mine got shut down, where Franco was 20%, I believe, 20, 25% they fell. So quite a bit of a different drawdown.

And yeah, I mean, I don't know how close they fell. So quite a bit of a different drawdown. And yeah, I mean, I don't know how close they are. I know this could still get resolved. I think Franco has pretty much completely written this off. I mean, they don't expect it to, you know, the situation to get any better, but it still potentially could. They're free rolling. That's for sure. Yeah, I think they wrote off like 1.3 billion or something like that. So yeah, they wrote the majority of it off. Yeah. But they're a lot less dependent on it, right? They have so many other beds, they have a really solid balance sheet, they don't have

any debt. So it's a very different situation. And when you get into mining companies, that's always going to be a risk. Obviously, you have the junior ones that are super risky that have a high risk of either never producing anything or bankruptcy. Then you have more mature mining companies that will often be more diversified with multiple mines. And that's where you can offset some of the risk is the really large miners is, yes, there's potential less upside, but the advantage that you have for them is usually they'll be well diversified across geographies. They'll have

multiple mines, oftentimes diversification through various metals, not just gold and silver. They might have copper, they might have other kinds of metals that they're mining there. So it is kind of a trade-off that you would get and then you have the last kind of category which are the streaming and royalty companies which personally are my favorite. They do come at a premium. There's a lot of people that like these streaming companies. I'm not the only one. So they do trade at a premium but then again they tend to perform very well over long periods of time and I've been a very happy shareholder for over a year and a half now for Franco Nevada. Yeah, I mean, you get the like, if you think of a company, well, like First Quantum, who has, you know, not half, but pretty close to half of their revenue in one mine.

And then you take into consideration that that mine is, you know, if we look to a company like, say, Agnico, which is pretty much Canada, US, Australia, I believe, there's a lot less chance like they could have higher concentrations in particular mines, but there's also a lot less chance that one of those mines gets disrupted. So I mean, this is another situation of you definitely need to keep a keen eye and you know, know what you own because the risk is always there with a mining company, particularly smaller ones who are heavily concentrated on one operation of the business. This is going to be debated. Same thing, oil and gas. Environmental type stuff with these mines, political stuff, it's always an issue.

Yeah, exactly. I think for people looking to invest in mining company, I think the first thing you have to do is understand where all their major mines are. If they do have mines in other countries, make sure that the countries you're aware of how the political system works. Do they have a history of revolution, do quickly changing governments, toppling governments, things like that. You'll definitely wanna learn a little bit about the political system there

because believe it or not, it has a huge impact on those kind of companies. So you really wanna understand how that works. And lastly, understand how the legal system works. I think that's probably the last one. That's a big reason why people want to invest in the US and to a lesser extent in Western countries because the US has a rule of law and a legal system that's very enticing for investors, whereas some countries don't have

that. China does not really have that, right? It's a completely different legal system. does not really have that, right? It's a completely different legal system and if you're, they're basically, you know, it's not as impartial as it would be over here in the US. Of course, I think the impartiality can be debated at times, that's fine, but these are things you need to understand when you invest in mining companies.

Yep, definitely. I have nothing more to add. Perfect, so let's move on. Do we want to roll with the rest of this? I can't fix my webcam. Yeah, that's fine. Roll with the rest of the episode? So we do apologize for the joint TCI viewers, so you'll still be able to see the green screen share and my beautiful face, but right now Dan just had to got a sunburn halfway throughout the episode and wanted to shut off his camera. He's too red.

But no, jokes aside, we'll move on here to Starbucks. I know it's a company you own. I had a quick look at the results. Wasn't that great? So do you want to go over how it looks for Starbucks here? Yeah, so Starbucks is, they're having a rough go of things over the last while they brought in a new CEO probably would have been back in September now. Brian Nicholas, he used to be the CEO of Chipotle and he pretty much turned that franchise around.

So they kind of brought him on with the intentions of turning Starbucks around. So they kind of brought them on with the attentions of turning Starbucks around. Revenue increased 3%, but earnings fell by 40%. And one of the main things they highlighted is that, you know, earnings might not be the best thing to look at at this company right now. Because obviously, if you're going through an operational turnaround, you're going to have a lot of operating expenses, added operating expenses in terms of the wide amount of things they're trying to do, increase efficiency, things like that. So

I would agree that earnings is probably not the best mark to look, but they still missed on bottom line expectations by quite a bit, I think. Same store sales were down globally. And if we isolate out each segment, it's international segment, which would be non-North America and non-China. So they have a North American segment, a China segment, and a international segment. The international segment was the only actual segment that grew sales. So everything else is seeing a relatively, nothing crazy, but like low single digit decline. The company is doing a good job of increasing average ticket price,

which would be the amount that customers are spending when they go to the store. The difficulty here is the overall transactions are down pretty much company widewide, which is kind of an indicator of the current economy and maybe a bit of brand staleness. And I guess in terms of that, especially in China, I think it's an element of competition as well. And they ended up making some pretty big revisions downward to its guidance, which I think is

actually why the stock is taking a bit of a beating this morning because the quarter was not all that bad over and above what was expected. But it now expects sales will grow in the low single digits. So their previous guidance was for 7 to 10 percent. And now, yeah, low single digits. So that's quite a notable downgrade. It also said that US comparable sales will be low single digit declines compared to 4-6% growth prior and arguably the most important one as it's probably the main growth vertical for the company right now. China is expected to see single digit declines in comparable sales whereas previous guidance was for low single digit growth and the low single digit growth I think in China is more so attributed to the economy overall but also there's a lot of competition in China much more than the

US. Yeah and there's probably a push to in China to not buy American would be my guess right now in case people haven't heard that there's a little bit of a trade war going on between the US and China. Just a little bit. Just a little bit. Operating margins, so in terms of that, what I mentioned at the start of the podcast, or at the start of the segment here is, operating margins fell by 590 basis points,

so 5.9%, so they sit at 6.9% right now. Again, this is pretty typical of any sort of company going through some sort of transformation as there is, you know, there's costs associated with it. You don't just, you know, kind of try to roll out, you know, improve the efficiency at your stores, try to get people back into the stores, things like that without spending money. So they said in the conference call, or actually Brian Nichols said in the conference call that they're not trying to restore the business back to its former glory because at one point Starbucks was, it was a very, very strong company. I mean, the brand was,

even in my eyes, and that's kind of why I owned it, I thought the brand was kind of, you know, I don't know the correct word for it, but I think there was a lot of dedication to it, but now I don't know the correct word for it, but I think there was a lot of dedication to it, but now It's a bit stale people are going elsewhere But they're trying to build something even over above even over and above that and he does say That the margin recovery should eventually come and kind of exceed what was previously reported and They are piloting a lot of labor related efficiency systems at around 700 stores. So this is a company that is, I'm pretty sure they're close to 41,000.

So, I mean, this is a very small pilot project relative to the entire stores. And they have noted some pretty large scale results from the efficiency at those stores. So, I mean, one of the main drags of Starbucks, and this is something I experienced myself like a lot, is that the drive-through took forever. I mean, if you're tight for time, you need a coffee. It was probably the last place you'd go because of the complexity of a lot of the drinks,

slowing lineups down. I mean, you probably, if you were in a pinch, you'd probably just go to Tim Hortons or something. It takes you like 30 seconds to get a coffee Yeah, so they have improved on this. I'm not exactly sure toilet water coffee. I love it Yeah, I say that as a joke, but I usually go to Tim Hortons I I know the taste is not the best but the way I Look at it is I remember seeing something and I maybe it's a mental thing

But I do feel like the caffeine content is higher Than a lot of the competitors. So that's why I go there plus it's It's not as expensive. So Caffeine doesn't really phase me anymore. I don't know. It's yeah, I've become immune to it You can take some before bed and sleep like a baby. Yeah Yeah, but like that's I think that's well There's an element of the economy too, because we're seeing with QSR, I haven't looked

into QSR for a couple quarters now, but Tim Hortons was doing outstanding and that was like a huge drag on the business for a very long time. So I think there's an element there, you know, of the economy, people aren't, they don't want to pay six or $7 for a latte. They're going to Tim Hortons and paying, you know, whatever, $2 for a large coffee. So I think that's kind of impacting the company

as well. And I'm really not one to invest in too many turnaround plays. But with with Nickle coming in and what he did to Chipotle, I'm kind of willing to give him the benefit of the doubt that he can get Starbucks going again. I don't really think it's operational issues that are plaguing this company right now. Like there is some operational issues, but also just the economic environment. And this isn't like if you expected him to come on and turn this company around in six months, it's not achievable. I mean, I highly doubt they've even started rolling out a lot of the wide scale stuff that he wants to do. I mean, this is something that's probably going to take a couple of years. So I'm going to hold it for now and see what happens. But they're down, they're down quite a bit on, on earnings today. And I would imagine it was due to that

big kind of pullback and guidance. Yeah. I mean, I pulled up a comparable source, comparable store sales for Tim Hortons and it looks better. Obviously, it's decelerating as well, but it definitely looks better than Starbucks. So, yeah. Yeah, if you look to that, you know, 2022 level when, you know, rates started going up, things started getting more expensive, inflation was really bad. You're looking at like double digit, double digit same store sales. Obviously that's hard to... They still kept doing well. Yeah, exactly.

Yeah. So meanwhile, Starbucks is, you know, seeing declines across the board, whereas Tim Hortons is, you know, it's pretty hard for them to keep over and above like December, 2023 was 8.4%. They're probably not going to be able to keep up with that amount, but even 2.2% growth. I mean they're looking it's a lot better position than Starbucks right now but yeah yeah rough quarter for Starbucks. Yeah because I think people sometimes forget is when you're facing inflation and higher costs and you're looking to make some changes and save some money so if you're thinking

about a Starbucks for example you know there's usually three courses of action that people will take. So first of all, they may still go but just less frequently. So that could be the first thing. The second thing is they just downgrade and they will go to something that's less expensive. So a more affordable alternative. So in that case would probably be Tim Hortons as an example, or Dunkin Donuts in the US, there's other cheaper example. And then the last one is they go for, let's say they completely stay at home and they don't want to do that cheaper.

I guess it's still a cheaper alternative, but they, they go completely just at home or they just stopped drinking coffee altogether, right like you It could happen. I know a lot of people are addicted to it myself included but And it's not easy I've had to stop for a couple months at a time for some health reasons in the past while I was doing some testing But that's always an option too is people just say you know what, it's not a necessity and I will just cut it out. I won't even drink coffee at home. I will just cut it out and save.

That's always an option when it's not a necessity. So people just have to keep that in mind because as strong as a brand that Starbucks might have, I think the cost aspect is definitely gonna be a bit of an issue for them going forward. Hopefully Brian Nichols has some kind of strategy to tackle that and keep customers in. Yeah you need a pretty strong brand to sell $10 lattes and I mean yeah it's one of the and outside of that it's one of the first things that

people are gonna cut out of their their budget if times are tight. I mean, it's such an easy item to do. So, I mean, they're just feeling a bit of that right now, whether or not it'll last long term. It's kind of up in the air right now and whether or not they can make some improvements. Yeah, it all depends. Just it's, I don't really think we're going to see a good quarter from Starbucks. We're probably three, four quarters now, but who knows? I continue to hold it if I wouldn't see any, you know, turnaround in the next year.

So I'd probably look to move on, but for right now, I think it's a bit too early. Okay, no, I think that's a good recap here. And that's it for episode today. I think it's a good point. Kept it under 50 minutes. I think usually 45 to 50 minutes. Kind of the sweet spot. Sometimes we run a bit longer. But I really appreciate people listening. All the support. Like I mentioned, if you want to follow by video, you

can go to jointci.com. We also share portfolios. The moves we did within the month I also share once a month my parents retirement portfolio. If you wanted to see our updated portfolio, we will be posting that tomorrow. So we're recording this on April 30th around noon. So keep that in mind. We'll be posting it on May 1st, what we did in the month of April. Forgot to timestamp at the beginning of the episode, which is probably something we need to do now with Trump being so headline driven. We'll have to keep that in mind. I appreciate everyone listening. We'll see you back next week. The Canadian Investor podcast should not be construed as investment or financial advice. The hosts and guests 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.