Mississauga, ON, November 7, 2023 – Cargojet Inc. (“Cargojet” or the “Corporation”) (TSX:CJT) announced today financial results for the third quarter ended September 30, 2023.
Total Revenues for the quarter were $214.0 million compared to third quarter 2022 Revenues of $232.7 million. Revenues, excluding fuel, was $177.7 million compared to $175.6 million. Adjusted EBITDAfor the quarter was $70.0 million compared to the third quarter 2022 Adjusted EBITDA of $82.1 million. Net earnings for the quarter was $10.5 million (net loss of $6.8 million excluding warrant valuation gain) compared to net earnings of $83.4 million in 2022 (net loss of $1.9 million excluding warrant valuation gain).
Strong cash flow focus generated an Adjusted Free Cash Flow(1) of $94.5 million for the three-month period ended September 30, 2023 compared to $47.9 million for the same period in 2022. Net cash generated from operating activities of $39.4 millionfor the three-month period ended September 30, 2023, compared to $77.9 million for the same period in 2022.
“Higher interest rates are starting to impact the household disposable incomes and we are observing a division in household spending. The volumes for discretionary items are softening but the volumes for essential household goods are holding up well. A positive revenue growth in this environment demonstrates the resilience of our diversified business model.” said Dr. Ajay Virmani, President and CEO.
“We are prudently trimming capital expenditures and the entire Cargojet team is diligently working on identifying every cost saving opportunity. As we further sharpen our operating model, we are squarely focused on strengthening our relationships with strategic customers by meeting their changing needs and delivering the industry best on-time performance,” noted Dr. Virmani. “Our on-time performance was 99.5% in the Quarter thanks to the dedication, professionalism and hard work of the entire Cargojet team”.
As announced in a separate press release issued today, the Corporation has implemented a normal course issuer bid (“NCIB”) in respect of its common voting shares and variable voting shares (together, the “Shares”) because it believes that, from time to time over the next 12 months, the market price of the Shares may not fully reflect the underlying value of the Shares and that at such times the purchase of the Shares would be in the best interests of the Corporation. Any purchases made under the NCIB, which will begin on November 9, 2023, and end no later than November 8, 2024, are made by Cargojet subject to favourable market conditions at the prevailing market price at the time of acquisition through the facilities of the TSX and/or alternative Canadian trading systems.
All references to “$” in this press release are to Canadian dollars.
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 cargo fleet of 39 aircraft. For further information, please contact:
Chief Corporate Officer
Tel: (905) 501 7373
(1) Non-GAAP Measures
“Adjusted EBITDA” 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 Free Cash Flow are not recognized measures for financial statement presentation under International Financial Reporting Standards (“IFRS”) 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 most directly comparable financial measure disclosed in the Corporation’s financial statements is net earnings.
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. The most directly comparable financial measure disclosed in the Corporation’s financial statements is net cash generated from operating activities.
Standardized Free Cash Flow is defined as “Cash flows from operating activities” as reported in the IFRS financial statements, including operating cash flows provided from or used in discontinued operations; total maintenance capital expenditures minus proceeds from the disposition of capital assets other than those of discontinued operations, as reported in the IFRS financial statements; and dividends, when stipulated, unless deducted in arriving at cash flows from operating activities.
Reconciliation of non-IFRS measures, including Adjusted EBITDA and Adjusted Free Cash Flow, is provided below and in the “Non-GAAP Measures” section on page 13of the Corporation’s Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for the three month period ended September 30, 2023 and is available on SEDAR at www.sedar.com.
|CALCULATION OF EBITDA, ADJUSTED EBITDA, FREE CASH FLOW AND ADJUSTED FREE CASH FLOW|
|(Canadian dollars in millions, except where indicated)|
|Three Month Period Ended|
|Calculation of EBITDA and Adjusted EBITDA|
|Provision of deferred taxes||(0.5)||1.9|
|Depreciation of property,plant and equipment||46.6||35.7|
|Gain on sale of property,plant and equipment||2.0||(0.1)|
|Loss (gain) on swap derivative||6.8||(6.1)|
|Unrealized foreign exchange gain||1.6||2.6|
|Fair value adjustment on warrant valuation and amortization of contract assets||(15.3)||(48.8)|
|Share of (gain) loss of associate||(0.3)||1.1|
|Adjusted EBITDA (1)||70.0||82.1|
|Calculation of Standardized Free Cash Flow and Adjusted Free Cash Flow|
|NET CASH GENERATED FROM OPERATING ACTIVITIES||39.4||77.9|
|Less: Maintenance capital expenditures (1)||(25.1)||(34.2)|
|Add: Proceeds from disposal of property,plant and equipment||59.3||0.1|
|Standardized free cash flow (1)||73.6||43.8|
|Changes in non-cash working capital items and deposits||20.9||4.1|
|Adjusted free cash flow (1)||$94.5||$47.9|
1. EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow, Standardized Free Cash Flow and Maintenance Capital Expenditure are non-IFRS financial measures and are not earning measures recognized by IFRS. Please refer to Page 15 of Cargojet’s MD&A for a more detailed discussion.
Notice on Forward Looking Statements:
Certain statements contained herein constitute “forward-looking statements”, including with respect to the Corporation’s intention to reduce planned capital expenditures and operating costs, to strengthen strategic customer relationships, and to purchase Shares under the NCIB, including the timing and benefits of such purchases. 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 it’s 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 Corporation 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|
|Financial Information and Operating Statistics Highlights|
|(Canadian dollars in millions, except where indicated)|
|Three Month Period Ended||Nine month Ended|
|September 30,||September 30,|
|Domestic network, ACMI and charter revenues||$177.7||$175.6||$2.1||1.2%||$519.2||$532.4||($13.2)||-2.5%|
|Fuel surcharge and other revenues||$36.3||$57.1||($20.8)||-36.4%||$136.4||$180.5||($44.1)||-24.4%|
|Gross margin – (%)||15.7%||24.8%||-9.1%||18.5%||26.0%||-7.5%|
|Selling, general and administrative expenses||$15.2||$13.4||$1.8||13.4%||$47.4||$44.2||$3.2||7.2%|
|Net finance costs and other gains and losses||$8.6||($42.2)||$50.8||120.4%||($1.1)||($70.8)||$69.7||98.4%|
|Share of (gain) loss of associate||($0.3)||$1.1||($1.4)||-127.3%||($0.1)||$2.3||($2.4)||-104.3%|
|Earnings before income taxes||$10.0||$85.3||($75.3)||-88.3%||$75.4||$209.9||($134.5)||-64.1%|
|Earnings (loss) per share|
|EBITDA margin (2)– (%)||34.0%||55.2%||-21.2%||37.4%||46.4%||-9.0%|
|Adjusted EBITDA (2)||$70.0||$82.1||($12.1)||-14.7%||$219.3||$246.1||($26.8)||-10.9%|
|Adjusted EBITDA margin (2)– (%)||32.7%||35.3%||-2.6%||33.5%||34.5%||-1.0%|
|Adjusted free cash flow (2)||$94.5||$47.9||$46.6||97.3%||$189.4||$131.8||$57.6||43.7%|
|Operating statistics (3)|
|Operating days (4)||50||50||–||–||$0.0||149||149||–||–|
|Average domestic network revenue per operating day (5)||1.78||1.84||(0.06)||-3.3%||0.00||1.70||1.77||(0.07)||-4.0%|
|Block hours (6)||16,472||18,067||(1,595)||-8.8%||0||51,121||53,640||-2,519||-4.7%|
|Cargo operating fleet||39||32||7||21.9%||0.0||39||32||7||21.9%|
- ase (decrease) on stock warrant, losses (gains) on swap derivatives, amortization on stock warrants and unrealized foreign exchange losses (gains).
- 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 13 of this MD&A for a more detailed discussion and a reconciliation of these non-GAAP financial measures to the nearest GAAP measure.
- The definitions for the Operating statistics included in this table are provided in the notes below.
- Operating days refer to the Company’s domestic network air cargo network operations that run primarily on Monday to Friday with a reduced network operating on Friday.
- Average domestic network revenue per operating day refers to total domestic network revenues earned by the Company per operating day.
- 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.`