Cargojet Inc T.CJT

RBC

[retiredcf]

April 26, 2022

Outperform

TSX: CJT; CAD 156.42

Price Target CAD 302.00

Cargojet Inc.

Connecting The Dots: CJT flash read-through – UPS reports higher Q1 revenue; but volumes lower 

Sentiment: neutral

CJT – neutral to sentiment: UPS results highlight solid pricing offset by lower volumes y/y. UPS today reported Q1 revenue and EPS that came in ahead of consensus expectations. Results were higher y/y due to solid pricing. Key for CJT is that UPS’s Next Day Air revenue was up +11% y/ y and that volume was down -3% - a neutral read through, in our view, as solid pricing was offset by lower volumes. Moreover, the 2022 revenue guide was reiterated highlighting, in our view, that the demand outlook is trending in line with expectations. Key on the call will be color on the: 1) eCommerce outlook and drivers of lower volume y/y; as well as 2) visibility into international air cargo capacity, and implications for pricing. See our CJT Q1 preview note here.

What happened? UPS today announced Q1/22 consolidated revenue of $24.4B, a +6% increase y/y (US Domestic Network Next Day Air revenue was up +11% y/y). Consolidated average daily package volume decreased -4% y/y and US Domestic Next Day Air volume was down -3% y/y. Adjusted diluted EPS came in at $3.05, or up +10% y/y, and above consensus $2.89.