Cargojet (CJT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $230.8M, up 11.5% year-over-year, with all business lines posting growth despite macroeconomic headwinds.

• Domestic network, ACMI, and charter revenues rose 11.5% to $191.3M, with all-in charters up 23.4% versus Q2 2023.

• Adjusted EBITDA increased to $79.1M with a 34.3% margin, and operational excellence was maintained with 99.4% on-time performance and 4.8% growth in block hours.

• Net loss was $25.0M, but adjusted net loss was only $0.8M, reflecting significant non-cash items.

• Free cash flow turned positive at $0.5M, compared to an outflow of $18.5M in Q2 2023.

Financial highlights

• Adjusted earnings per share for Q2 was CAD 1.03, up from CAD 0.68 in the prior year, a 50% increase.

• Gross margin was $45.1M (19.5%), up from $42.5M, but margin declined by 0.8 percentage points.

• Direct costs per block hour rose 2.2% year-over-year to CAD 5,325, in line with inflation.

• SG&A remained flat year-over-year after adjusting for non-cash mark-to-market changes, but reported SG&A rose 62.8% to $23.6M.

• Dividend increased by 11.25% as approved by the board.

Outlook and guidance

• Cautiously optimistic for the second half of 2024, expecting stronger performance across all revenue streams, especially with the full impact of new China e-commerce contracts.

• Advanced bookings for Q4 are significantly above last year, with expectations for continued growth in domestic, ACMI, and charter segments.

• No new fleet capacity additions in 2024; two 767-300 conversions will come online in 2025.

• Focus remains on cost control, EBITDA margin maintenance, and expanding domestic, ACMI, and charter revenue.

• Continued emphasis on cash generation and capital discipline.