Bullboard - Stock Discussion Forum Cargojet Inc T.CJT

Alternate Symbol(s): CGJTF | T.CJT.DB.F | 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... see more

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TSX:CJT - Post Discussion

Cargojet Inc > TD

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Post by retiredcf on Nov 05, 2024 8:17am

TD

Have a $176.00 target. GLTA

Q3/24 FIRST LOOK; REVENUE HIGHLIGHTS DEMAND WHILE COSTS LIMIT OP LEVERAGE

THE TD COWEN INSIGHT

CJT reported Q3/24 adj. EBITDA of $82.2 million, +17% y/y (TD/cons: $84.2/$83.8 million). Stronger-than-forecast Charter and in-line ACMI and Domestic. Positive is optimistic outlook (not quantified) and fuel expense/surcharge spread (should moderate), although recent stock strength and slight adj. EBITDA difference vs. consensus could limit price response (8:30 am cc could be key), in our view.

Impact: NEUTRAL

Revenue growth across all segments, along with 17% EBITDA growth despite one-
time start-up costs related to 15% ramp-up in block hours, demonstrates resiliency in a challenging environment for many other modes of cargo transportation. The 2% difference in adj EBITDA vs forecast was the net of higher-than-expected Charter revenue and lower Crew Costs offset by a significantly more negative spread between fuel expense and surcharge revenue. To the extent this may be just a timing difference, it suggests a more positive quarter than implied by reported adj EBITDA. NCIB renewal announcement along with commentary indicating commitment to maintaining a share buyback program is encouraging.

Revenue increased 15% y/y to $246 million (TD/cons: $245/$247 million). Stronger-than- forecast Charter ($42 million vs. TD: $33 million; +60% y/y) and ACMI revenue ($70 million vs. TD: $69 million; +12% y/y). Domestic network revenue was in-line ($94 million vs. TD: $94 million; +5% y/y). The y/y increase in Charter largely due to new Great Vision HK agreement and ad hoc charters.

Adjusted EBITDA margin increased 80 bps y/y to 33.5% (TD/cons: 34.4%/33.9%). Adjusted EBITDA margin excluding fuel decreased 250 bps y/y to 66.1% (TD: 66.7%).

FCF of $47.8 million (TD: $11.2 million). Trade and other receivables and capex drove the FCF beat. Cash earnings slightly stronger-than-forecast ($73.9 million vs. TD: $70.9 million).

Fleet Update: 2 B767's in conversion with delivery expected in 2025. Invested in 2 B767 feedstock to 'support additional long-term growth' (unch). Fleet schedule unch from Q2 (42 at yr end 2025/2026, up from 41 at yr-end 2024).

Outlook: Noted strong demand for air cargo services. No update to last 2024 maintenance capex guide of $130-140 million (TD: $135 million), growth capex of $40-50 million (TD: $45 million), and proceeds from dispositions of $105 million (TD: $105 million). Continue targeting net debt-to-adj EBITDA of 1.5-2.5x (Q3/24 2.2x; TD: 2.2x). Renewal of NCIB for up to 1.5 million shares (9.46% of outstanding shares).