Cargojet Inc T.CJT.DB.F

Primary Symbol: T.CJT Alternate Symbol(s): CGJTF | T.CJT.DB.E

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Cargojet Inc. is a Canada-based provider of time sensitive air cargo services to all major cities across North America, providing dedicated, aircraft, crew, maintenance and insurance (ACMI) and international charter services. The Company's main air cargo business is comprised of operating a domestic network air cargo co-load network between sixteen major Canadian cities and providing dedicated aircraft to customers on an ACMI basis, operating between points in Canada, the United States, Mexico, South America, Asia and Europe. It also operates scheduled and ad hoc international routes for multiple cargo customers between United States and Bermuda, between Canada, United Kingdom and Germany; between Canada and Asia; and between Canada and Mexico. Its charter services include Go Now, dangerous goods, heavy & oversized cargo, humanitarian and relief, remote destinations, automotive, and oil and gas. The Company operates its network with its own cargo fleet of approximately 41 aircraft.

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Post by retiredcfon Oct 26, 2022 9:39am

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October 25, 2022

Cargojet Inc.
Connecting The Dots: CJT flash read-through – UPS reports Q3 results

TSX: CJT | CAD 121.63 | Outperform | Price Target CAD 274.00

Sentiment: Neutral

CJT – neutral to sentiment. UPS today reported Q3 EPS that came in ahead of consensus expectations. Results were higher y/y due to increased revenue and better operating margins in UPS' U.S. Domestic Package business. Overall, we view this as a neutral read- through for CJT as UPS' guidance was reiterated, offset by lower next day air volumes in Q3, down -1% y/y (potentially due to UPS- specific revenue quality initiatives). Moreover, UPS management noted on the conference call that the U.S. Domestic "average daily volume growth rate will be lower in the fourth quarter of 2022 than in the third quarter due to contractual agreements we have reached with certain enterprise customers". While potentially a negative to CJT into peak season, we note that CJT management noted at CJT's investor day that Q4 was shaping up as expected. Overall, we view the UPS results as a neutral (and somewhat limited) read-through as the extent to which UPS-specific initiatives are impacting the company are somewhat unknown. See our CJT Q3 preview note here.

What happened? UPS today announced Q3/22 consolidated revenue of $24.2B, a +4% increase y/y (US Domestic Network Next Day Air revenue was up +11% y/y). Consolidated average daily package volume decreased -2% y/y and US Domestic Next Day Air volume was down -1% y/y. Adjusted diluted EPS came in at $2.99, or up +10% y/y, and above consensus $2.84.

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