MISSISSAUGA, ON, May 1, 2023 /CNW/ – Cargojet Inc. (“Cargojet” or the “Corporation”) (TSX: CJT) announced today financial results for the first quarter ended March 31, 2023.
Total Revenues for the quarter were $231.9 million compared to first quarter 2022 Revenues of $233.6 million. Gross Margin for the quarter was $45.5 million compared to first quarter 2022 Gross Margin of $66.9 million. Adjusted EBITDA(1) for the quarter was $75.0 million compared to the first quarter 2022 Adjusted EBITDA(1) $83.0 million. Adjusted Free Cash Flow(1) was $42.5 million for the three-month period ended March 31, 2023 compared to $42.7 million for the same period in 2022.
Net income for the quarter was $30.5 million (net income of $6.0 million excluding warrant valuation gain) compared to net loss of $56.4 million in 2022 (net income of $30.4 million excluding warrant valuation loss).
“Consumers shifted from buying goods to spending on services during the post-pandemic period, prioritizing travel and leisure over the past year. With the re-opening of the economy, there was also a pent-up demand to visit physical stores and experience outdoors. We expect these consumption behaviors to normalize during the latter part of this year, setting the stage for a more balanced mix of spending between goods and services. Our strategy to build a strong ACMI business, on top of our flagship domestic network, has allowed us the stability to ride these volatilities including the current softer economic conditions,” said Dr. Ajay Virmani, President and CEO.
“Cargojet is not immune to the softening industry trends as well as the macro factors of slower economic growth, higher interest rates and persistent inflation. Therefore, our team is focused on realigning every aspect of our cost structure with the current demand levels, including realigning our network, significantly improving productivity in our maintenance and operational areas and cutting all discretionary expenditures while maintaining industry best on-time-performance,” further noted Dr. Virmani.
“Despite the current softer economic conditions, the long term macro trends that drive our business remain firmly intact. E-commerce, continued demise of shopping malls, further pressure on business district shopping stores driven by remote work and passenger airlines shifting to narrow body aircraft, will continue to lead to increased air-cargo volumes. Cargojet is well positioned with a strong balance sheet and a solid liquidity position to ride this volatile economic environment. With some of the world’s biggest package delivery companies as our customers, we expect to resume growth as the economic cycle turns the corner,” concluded Dr. Virmani
All references to “$” 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 40 aircraft.
| CALCULATION OF EBITDA, ADJUSTED EBITDA, FREE CASH FLOW AND ADJUSTED FREE CASH FLOW | ||
| (Canadian dollars in millions, except where indicated) | ||
| Three Month Period Ended | ||
| March 31, | ||
| 2023 | 2022 | |
| (unaudited) | (unaudited) | |
| Calculation of EBITDA and Adjusted EBITDA | ||
| Net earnings | $30.5 | $(56.4) |
| Add: | ||
| Interest | 10.1 | 7.0 |
| Provision of deferred taxes | 4.1 | 11.9 |
| Depreciation of property, plant and equipment | 40.1 | 31.5 |
| EBITDA | 84.8 | (6.0) |
| Add: | ||
| Share-based compensation | 3.3 | 4.5 |
| Loss (gain) on swap derivative | 7.0 | (3.2) |
| Unrealized foreign exchange gain | – | (0.9) |
| Fair value adjustment and amortization on stock warrant | (20.7) | 87.8 |
| Share of (gain) loss of associate | 0.6 | 0.8 |
| Adjusted EBITDA | 75.0 | 83.0 |
| Calculation of Standardized Free Cash Flow and Adjusted Free Cash Flow | ||
| NET CASH GENERATED FROM OPERATING ACTIVITIES | 63.1 | 95.7 |
| Less: Maintenance capital expenditures | (23.3) | (37.2) |
| Standardized free cash flow | 39.8 | 58.5 |
| Changes in non-cash working capital items and deposits | 2.7 | (15.8) |
| Adjusted free cash flow | $42.5 | $42.7 |
Selected Financial Information and Operating Statistics Highlights
| The Financial Information and Operating Statistics Highlights as follows: | |||||||
| (Canadian dollars in millions, except where indicated) | |||||||
| Three Month Period Ended | |||||||
| March 31, | |||||||
| 2023 | 2022 | Change | % | ||||
| Revenues | $231.9 | $233.6 | ($1.7) | -0.7 % | |||
| Direct expenses | 186.4 | 166.7 | 19.7 | 11.8 % | |||
| Gross margin | 45.5 | 66.9 | (21.4) | -32.0 % | |||
| Gross margin – (%) | 19.6 % | 28.6 % | -9.0 % | ||||
| Selling, general and administrative expenses | 17.7 | 20.9 | (3.2) | -15.3 % | |||
| Net finance costs and other gains and losses | (7.4) | 89.7 | (97.1) | -108.2 % | |||
| Share of (gain) loss of associate | 0.6 | 0.8 | (0.2) | -25.0 % | |||
| Earnings before income taxes | 34.6 | (44.5) | 79.1 | -177.8 % | |||
| Income taxes | 4.1 | 11.9 | (7.8) | -65.5 % | |||
| Net earnings | 30.5 | (56.4) | 86.9 | 154.1 % | |||
| Earnings (loss) per share | |||||||
| Basic | 1.77 | (3.26) | 5.03 | 154.3 % | |||
| Diluted | 1.67 | (3.26) | 4.93 | 151.2 % | |||
| Adjusted (1) | 0.97 | 1.56 | -0.59 | -37.8 % | |||
| EBITDA (2) | 84.8 | (6.0) | 90.8 | 1513.3 % | |||
| EBITDA margin (2)– (%) | 36.6 % | -2.6 % | 39.2 % | ||||
| Adjusted EBITDA (2) | 75.0 | 83.0 | (8.0) | -9.6 % | |||
| Adjusted EBITDA margin (2)– (%) | 32.3 % | 35.5 % | -3.2 % | ||||
| Adjusted free cash flow (2) | $42.5 | $42.7 | ($0.2) | -0.5 % | |||
| Operating statistics (3) | |||||||
| Operating days (4) | 50 | 50 | – | – | |||
| Average domestic network revenue per operating day (5) | 1.68 | 1.67 | 0.01 | 0.6 % | |||
| Block hours (6) | 17,830 | 17,704 | 126 | 0.7 % | |||
| B757-200 | 14 | 9 | 5 | – | |||
| B767-200 | 4 | 4 | – | – | |||
| B767-300 | 18 | 17 | 1 | – | |||
| Passenger aircraft | 4 | 2 | 2 | – | |||
| 40 | 32 | 8 | 25.0 % | ||||
| Head count | 1,771 | 1,560 | 211 | 13.5 % | |||