Cargojet (OTC) ((TSE:CJT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Cargojet’s recent Q1 2025 earnings call painted a picture of robust growth and strategic advancement, particularly in its domestic and charter segments. Despite facing challenges in the ACMI segment and a dip in operating cash flow, the company remains optimistic about its future, thanks to strategic expansions and high operational efficiency.
Record Q1 Revenue Growth
Cargojet reported a significant 8.1% increase in total revenue, reaching $249.9 million for Q1 2025. This achievement marks a record for the first quarter in the company’s history, driven by strong performances in both the domestic and charter segments.
Significant EBITDA Growth
The company also saw a 3.1% increase in adjusted EBITDA, totaling $80.8 million for the quarter. This growth maintained a healthy margin of 32.3%, underscoring Cargojet’s operational efficiency and profitability.
Strong On-Time Performance
Cargojet achieved an impressive on-time performance rate of 99.1% for Q1 2025. This metric highlights the company’s commitment to operational excellence and customer satisfaction.
Expansion of Fleet
In line with its growth strategy, Cargojet plans to add four 767-300 freighters while returning one leased 767-200, resulting in a net addition of three aircraft to its fleet. This expansion is set to bolster its capacity and service offerings.
Growth in Domestic and Charter Business
The domestic segment experienced a 16% revenue increase, fueled by rising e-commerce demand in Canada. Additionally, the charter business saw a significant uptick, with a notable increase in ad hoc charter flights.
Softness in ACMI Segment
The ACMI segment faced a decline in revenue due to shorter routes and shifting demand, particularly impacting aircraft operated for DHL. This softness presents a challenge that the company is actively addressing.
Decrease in Operating Cash Flow
Operating cash flow for Q1 2025 decreased to $64.8 million from $80.3 million the previous year, primarily due to non-cash working capital movements. This decline highlights areas for potential improvement in cash management.
Forward-Looking Guidance
Cargojet’s forward-looking guidance remains optimistic, with revenues more than doubling compared to Q1 2020 and adjusted EBITDA reflecting similar growth. The company plans to deploy additional freighters and continues to manage growth CapEx prudently. With a net debt-to-adjusted EBITDA leverage ratio of 2.5x, Cargojet is well-positioned to capitalize on new e-commerce opportunities and maintain its operational efficiency.
In summary, Cargojet’s Q1 2025 earnings call reflects a strong performance with record revenue growth and strategic fleet expansion. Despite some challenges, the company’s high on-time performance and forward-looking strategies provide a positive outlook for future growth.