Mississauga, ON, July 27, 2022 – Cargojet Inc. (“Cargojet” or the “Corporation”) (TSX: CJT) announced today financial results for the second quarter ended June 30, 2022.

Total Revenues for the quarter were $246.6 million compared to second quarter 2021 Revenues of $172.1 million. Gross Margin for the quarter was $61.1 million compared to second quarter 2021 Gross Margin of $54.9 million. Adjusted EBITDA(1) for the quarter was $81.1 million compared to the second quarter 2021 Adjusted EBITDA(1) $67.4 million. Net income for the quarter was $160.9 million (net income of $26.2 million excluding warrant valuation gain) compared to net loss of $11.1 million in 2021 (net income of $23.6 million excluding warrant valuation loss).

Total revenue growth of 43.3% (31.9% excluding fuel surcharges) for the quarter compared to prior year reflected a strong contribution from the Domestic network, up 15.0%, ACMI, up 62.4% and All-in Charters, up 23.2% compared to same quarter last year. Continuing its strategic focus on diversification, Cargojet’s Domestic Network Revenue for the quarter now stands at 35.2% of total revenues compared to 43.8% for the same period in 2021.

Adjusted Free Cash Flow(1) was $44.8 million for the three-month period ended June 30, 2022 compared to $36.0 million for the same period in 2021.

On July 22, 2022, Cargojet established a non-revolving USD $400 million Delayed-Draw Term Loan facility for general corporate purposes including the purchase of aircraft and other capital expenditures. Together with existing undrawn revolver, this brings Cargojet’s total liquidity to appx. $1 billion.

Macro uncertainties continue to impact air-cargo supply chains with passenger airlines facing extremely difficult operating conditions. The impact of rapidly shifting schedules and poor on-time performance of passenger airlines has further restricted the ability of cargo shippers to utilize belly space. This, combined with ongoing supply chain challenges, continues to provide opportunities for Cargojet to capture unmet demand in the medium term.

Furthermore, despite short term volatility, the secular shift to e-commerce continues to hold steady with demographics led long-term trends continuing to present Cargojet with long term growth opportunities.

“Unpredictability of belly space was the reason Cargojet was born over 20 years ago. From the first day of our existence, we have focused on doing just one thing – flying cargo. That’s our sole purpose and mission. We have built a brand that is trusted by our customers to keep its promises and the recent macro events have further strengthened our resolve to stay focused on serving our customers,” said Dr. Ajay Virmani, President and CEO.

“Yet, we are not immune to the global forces of high inflation, high fuel prices and geo political uncertainties. Therefore, we remain prudent in how we are approaching the next few quarters as we continue to balance investing in growth with maintaining a strong balance sheet,” concluded Dr. Virmani.

All references to “$” in this press release are to Canadian dollars.

About Cargojet

Cargojet is Canada’s leading provider of time sensitive premium air cargo services to all major cities across North America, providing Dedicated, ACMI and International Charter services and carries over 25,000,000 pounds of cargo weekly. Cargojet operates its network with its own fleet of 34 aircraft. For further information, please contact:

Pauline Dhillon
Chief Corporate Officer

Tel: (905) 501 7373

(1) Non-GAAP Measures

“Adjusted EBITDA”, “Adjusted EBITDAR” and “Adjusted Free Cash Flow” are non-GAAP measures used by the Corporation to provide additional information on its financial and operating performance. Adjusted EBITDA and Adjusted EBITDAR are not recognized measures for financial statement presentation under Canadian GAAP and it does not have standardized meanings and may not be comparable to similar measures presented by other public companies.

Adjusted EBITDA is used by the Corporation to assess earnings before interest, taxes, depreciation, amortization, gain or loss on disposal of capital assets, unrealized foreign exchange gains or losses, unrealized gain or loss on forward foreign exchange contracts, aircraft heavy maintenance amortization, contract asset amortization, gain or loss on cash settled share based payment arrangement related to a financing arrangement, unrealized gain or loss on fair value of total return swap related to a financing arrangement, gain or loss on fair value of stock warrant, loss on settlement of cash settled share based payment arrangement related to a financing arrangement, gain on settlement of total return swap related to a financing, loss on extinguishment of debts, and non-cash employee pension expense, as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets.

The Corporation believes that these alternative measures provide a more consistent basis to compare the performance of the Corporation between the periods. Adjusted EBITDA provide additional information to users of Management’s Discussion and Analysis of Financial condition and Results of Operations (“MD&A”) to enhance their understanding of the Company’s financial performance.

EBITDA and Adjusted EBITDA are reconciled to GAAP operating income (loss) as follows: 
 (unaudited)    (unaudited)
Calculation of EBITDA and Adjusted EBITDA  
Net earnings (loss)$160.9$(11.1)
Provision of deferred taxes8.310.2
Depreciation of property, plant and equipment33.628.2
EBITDA (1)208.834.7
Share-based compensation3.5(2.1)
Gain on sale of property, plant and equipment(0.3)
Unrealized foreign exchange loss (gain)1.2(1.7)
Fair value adjustment and amortization on stock warrant(132.4)36.1
Loss on extinguishment of debts
Share of loss of associate0.3
Employee pension0.4
Adjusted EBITDA (1)81.167.4

Adjusted Free Cash Flow is calculated as Standardized Free Cash Flow as defined by CPA Canada, less operating cash flows provided from or used in discontinued operations, changes in working capital, plus the provision for current income taxes. It shows the financial strength of the business.

Calculation of Standardized Free Cash Flow and Adjusted Free Cash Flow
Less: Maintenance capital expenditures (1)(29.8)(28.6)
Add: Proceeds from disposal of property, plant and equipment0.3
Standardized free cash flow(1)16.926.2
Changes in non-cash working capital items and deposits27.99.8
Adjusted free cash flow (1)$44.8$36.0

1. EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and Maintenance Capital Expenditure are non-GAAP financial measures and are not earning measures recognized by IFRS. Prior year amounts have been restated to reflect the revised definitions of Adjusted EBITDA. Please refer to Page 15 of this MD&A for a more detailed discussion.

Notice on Forward Looking Statements:

Certain statements contained herein constitute “forward-looking statements”. Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as “plans,” “intends,” “anticipates,” “should,” “estimates,” “expects,” “believes,” “indicates,” “targeting,” “suggests” and similar expressions. These forward-looking statements are based on current expectations and entail various risks and uncertainties. Reference should be made to the issuer’s most recent Annual Information Form (AIF) filed with the Canadian securities regulators, and its most recent Annual Consolidated Financial Statements and Notes thereto and related Management’s Discussion and Analysis (MD&A), for a summary of major risks. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. The Company cautions that the list of risk factors and uncertainties described in the AIF and MD&A is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. The forward-looking information contained herein represents our expectations as of the date hereof (or as the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. In the event the issuer does update any forward-looking statement, no inference should be made that the issuer will make additional updates with respect to that statement, related matters, or any other forward-looking statement.

Selected Financial Information and Operating Statistics Highlights

The financial and operating highlights for the quarters indicated are as follows:

Financial Information and Operating Statistics Highlights      
(Canadian dollars in millions, except where indicated)     
   Three Month Period Ended Six Month Period Ended
   June 30, June 30,
   20222021Change% 20222021Change%
 Revenues$246.6$172.1$74.543.3% $480.2$332.4$147.844.5%
 Direct expenses185.5117.268.358.3% 352.2232.2120.051.7%
 Gross margin61. 128.0100.227.827.7%
 Gross margin – (%)24.8%31.9%-7.1%  26.7%30.1%-3.4% 
 Selling, general and administrative expenses19.415.44.026.0% 37.040.1(3.1)-7.7%
 Net finance costs and other gains and losses(127.8)40.4(168.2)-416.3% (34.9)(30.1)(4.8)-15.9%
 Share of loss of associate0.30.3100.0% 1.11.1100.0%
 Earnings (loss) before income taxes169.2(0.9)170.118900.0% 124.890.234.638.4%
 Income taxes8.310.2(1.9)-18.6%
 Net earnings (loss)160.9(11.1)172.01549.5% 104.678.326.333.6%
 Earnings (loss) per share         
  Basic9.29(0.64)9.931551.6% 6.044.521.5233.6%
  Diluted9.12(0.64)9.761525.0% 5.934.421.5134.2%
  Adjusted (1)1.511.360.1511.0% 3.271.791.4882.7%
 EBITDA (2)208.834.7174.1501.7% 202.8162.640.224.7%
 EBITDA margin (2)– (%)84.7%20.2%64.5%  42.2%48.9%-6.7% 
 Adjusted EBITDA (2)81.167.413.720.3% 164.1131.632.524.7%
 Adjusted EBITDA margin (2)– (%)32.9%39.2%-6.3%  34.2%39.6%-5.4% 
 Adjusted free cash flow (2)$44.8$36.0$8.824.4% $87.5$71.2$16.322.9%
 Return on invested capital (3)11.8%10.9%0.9%  11.1%11.4%-0.3% 
    Operating statistics (4)         
 Operating days (5)4950(1.0)-2.0% 99100(1.0)-1.0%
 Average domestic network revenue per operating day (6)1.771.510.2617.2% 1.701.480.2214.9%
 Block hours (7)17,87213,4544,41832.8% 35,57326,5509,02334.0%
  B757-2001091 1091
  B767-20044 44
  B767-30017152 17152
  Challenger 60122 22
  Cessna 75011 11
   3430413.3% 3430413.3%
 Head count1,6241,39822616.2% 1,6241,39822616.2%
  1. Adjusted EPS is not an earning measure recognized by IFRS and is defined as earnings per share from continuing operations before fair value increase (decrease) on stock warrant.
  2. EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures and are not earning measures recognized by IFRS. Prior year amounts have been restated to reflect the revised definitions of Adjusted EBITDA. Please refer to the “Non-GAAP measures” section on page 15 of this MD&A for a more detailed discussion and a reconciliation of these non-GAAP financial measures to the nearest GAAP measure.
  3. Return on invested capital is not an earning measure a recognized by IFRS.  See page 15 of the MD&A for detailed calculation.
  4. The definitions for the Operating statistics included in this table are provided in the MD&A.
  5. Operating days refer to the Company’s domestic network air cargo network operations that run primarily on Monday to Thursday with a reduced network operating on Friday.
  6. Average domestic network revenue per operating day refers to total domestic network revenues earned by the Company per operating day.
  7. Block hours refers to the total duration of a flight from the time the aircraft releases its brakes when it initially moves from the airport parking area prior to flight, to the time the brakes are set when it arrives at the airport parking area after the completion of the flight.