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.
(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.
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
(1)
|
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
(1)
|
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 (1)
|
(23.3)
|
(37.2)
|
Standardized free
cash flow (1)
|
39.8
|
58.5
|
Changes in non-cash
working capital items and deposits
|
2.7
|
(15.8)
|
Adjusted free cash
flow (1)
|
$42.5
|
$42.7
|
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.
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.
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 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 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
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 %
|
|
|
|
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, losses (gains) on swap derivatives,
amortization on stock warrants and unrealized foreign exchange
losses (gains).
|
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.
|
The definitions for the
Operating statistics included in this table are provided in the
notes below.
|
4.
|
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.
|
5.
|
Average domestic
network revenue per operating day refers to total domestic network
revenues earned by the Company per operating day.
|
6.
|
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.
|
|
|
SOURCE Cargojet Inc.