Have a $172.00 target. GLTA
CARGOJET INC Q2 First Pass: EBITDA Ahead Of Our Expectations
Key Takeaways: While CJT reported a modest beat versus our estimates,
we view its results positively, especially with the shares having been soft
entering this print. CJT is hosting a call on August 14 at 8:30 a.m. ET.
Q2 Recap: CJT reported solid Q2 results. We highlight the following:
• Revenue excluding warrant amortization came in at $236MM, up from
$213MM the year prior, and versus our estimate of $231MM (consensus
$234MM). Total domestic, ACMI and all-in charter revenue was
$191MM, up from $172MM Y/Y and versus our estimate of $185MM.
Domestic and all-in charter came in above our estimate and ACMI was in
line.
• Adjusted EBITDA was $79MM, up from $74MM the year prior and versus
our estimate of $76MM (consensus $78MM). The company’s adjusted
EBITDA margin was 34.3%, versus 35.4% a year ago and our estimate
of 32.8% (consensus 33.4%). Reported EBITDA was $44MM, with the
main adjustment related to $54MM from the fair value adjustment on the
warrant valuation and amortization of stock warrant contract assets and a
$30MM gain on swap derivatives.
• The company reported FCF (CFO less next capex) of $0.5MM versus
($18.5MM) the prior year. Capex in the quarter was $48MM consisting of
$15MM for maintenance and $33MM for growth.
Underlying Trends: CJT noted the following underlying trends:
• Domestic network revenue was $89MM, up from $81MM last year and
versus our estimate of $86MM. The company notes the Y/Y increase
was due primarily to an increase in e-commerce and B2B volumes during
the period, and contractual customers’ consumer price index increases.
• ACMI revenue was $69MM versus $64MM last year and our estimate of
$71MM. The increase was primarily due to additional aircraft deployed
on a short-term basis, as well as an increase in ad hoc ACMI flights.
• All-in charter revenues were $33MM compared to $27M last year and
versus our estimate of $28MM. The Y/Y increase was due primarily to
the scheduled charter services between China and Canada, which
started during the current quarter, as well as an increase in ad hoc
charters.
• Overall average cargo revenue per operating day was up 8.7% Y/Y to
$1.75MM/day. Block hours were up 4.8% Y/Y to 17,623 hours.
NCIB Update: CJT purchased and cancelled ~0.3MM common shares under
the current NCIB in the quarter.