Earnings Telus Q1 and TD Q2

Telus

Newsletter highlights:

• Strongest first quarter on record with fixed customer growth of 218,000 up 9,000 over last year
• TTech including Telus Health Operating Revenue growth of 3%
• Consolidated free cash flow up 22 percent and cash from operations higher by 13%
• Quarterly dividend raised $0.4163 an increase of 7 percent over last year.
  • makes it yield 8% at current price
• Dividend growth program was extended to target 3 to 8 % annual growth for 2026 through 2028

Financial Report:

• Health care up 7% revenue YoY
• Net income at $301 million marks the second quarter in a row which is great to see, especially considering Q1 2024 was $140 million 😬
  • Interest expense has finally leveled off and they called out that their average rate was slightly lower for the first time in recent history

Summary

• All in all this was a great earnings call and the stock price shot up an astonishingly 7% pretty much at market open the day after the earnings call, May 9th 2025.
  • This was most likely enhanced by the fact that Bell (BCE) cut their dividend basically in half the day before.
• YTD the stock is up 12.81% with the tsx only being up about 4%
• What does that mean for me… I’m not sure yet but still leaning towards selling. Hopefully it continues to recover and my sell before ex-dividend date pays off as I am still down in terms of price action

TD

Highlights & News Release

• Earnings and Revenue had a huge beat 10% plus vs what was expected.
  • There is a big asterisk on these earnings as it was propped up by $9billion in shares sold of Charles Schwab
    • “Reported earnings were $11.1 billion, up 334% compared with the second quarter last year, reflecting the Bank’s sale of its remaining equity investment in The Charles Schwab Corporation (“Schwab”), and adjusted earnings were $3.6 billion, down 4%.”
• CFO said some cuts have already been done but the plan is to layoff 2% of the workforce

Financial Report

• Compared with the Q2 last year:
  • Reported diluted earnings per share were $6.27, compared with $1.35.
  • Adjusted diluted earnings per share were $1.97, compared with $2.04.
  • Reported net income was $11,129 million, compared with $2,564 million.
  • Adjusted net income was $3,626 million, compared with $3,789 million.
• U.S. Balance Sheet
  • 10% asset reduction
  • $3 billion Investment Portfolio sold in the quarter
  • As of April 30th TD has $399 billion vs. $434 billion asset limitation
• Canadian Personal and Commercial
  • Net income down 4% YoY
  • Revenue up 3% YoY
  • Expenses up 5% YoY
• U.S. Retail
  • Net income down 77% YoY
  • Revenue down 28% YoY
• Wealth Management and Insurance
  • Net income up 14% YoY
  • Revenue up 12% YoY
• Wholesale Banking
  • Net Income up 16% YoY
  • Revenue up 10% YoY

All in all things are looking OK. Couple problem areas balanced with big gains in the sale of Charles Schwab.

Final thing to chat about is the ever increasing amount being set aside for loan loss provisions. Once again they set aside more than ever before in PCL (Provision for Credit Losses)

• Q2 2025: 1.341 billion
• Q1 2025: 1.212 billion
• Q2 2024: 1.071 billion

One day once we are ahead of all of this F.U.D that will be a lot of money added back to the balance sheet 😄

Summary

At the top level the numbers looked really good, but, as you pull back the curtain it is quickly apparent that the numbers were bolstered by the sale of the remaining Charles Schwab shares. Good news is that they have made some room for growth in the USA. I believe this means they shouldn’t need to reduce any further over the next couple of quarters.

It feels like this could have been a much worse report but with the sold shares and the announcement of 2% workforce reduction we have cushioned the otherwise disappointing quarter. I believe in the bank long term and will continue to hold.

Wrap Up

I’m glad I have finally taken the time to look closer at my single stock investments at first glance TD would have looked very impressive but that was mostly because of one offs. I still plan on selling Telus at some time this year and holding TD for the long term.

Thanks for reading, I hope to see you back here next week!

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