Cargojet Inc T.CJT

RBC Reaction

[retiredcf]

May 2, 2022

Outperform

TSX: CJT; CAD 150.09

Price Target CAD 302.00

All values in CAD unless otherwise noted.
Priced as of prior trading day's market close, EST (unless otherwise noted).

Cargojet Inc.

CJT increases dividend by 10% and announces Normal Course Issuer Bid
Sentiment: Positive

Our take. The dividend increase and (most notably) its first ever NCIB, represents in our view mgmt's move to proactively capitalize on a share valuation that is well below appropriate levels - while returning cash to shareholders from the 10% dividend increase. While the NCIB is small, it may provide a symbolic backstop to valuation, in anticipation of what we expect will be a significant future FCF inflection once the aircraft program is complete.

What happened? CJT today announced that the Toronto Stock Exchange has accepted its notice of intention to proceed with a NCIB for a portion of its common voting shares and variable voting shares. Cargojet is authorized to purchase up to $15.5MM of shares under its credit facility which we note represents roughly 100,000 shares at today's prices or approximately 0.6% of its shares outstanding. Cargojet also announced today that its Board of Directors has approved a 10% increase to its quarterly dividend. The next quarterly dividend of $0.2860 per share will be declared in the normal course in June 2022.