Cargojet (OTC) ((TSE:CJT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Cargojet’s recent earnings call unveiled a strong performance, marked by significant revenue growth and operational improvements. The company reached a historic milestone of $1 billion in annual revenue, reflecting a positive sentiment overall. However, challenges such as cost pressures and external factors like labor disputes and inflation present potential risks to future margins.
Exceptional Revenue Growth
Cargojet reported a remarkable 32% growth in overall revenue for Q4 2024, achieving a historic milestone of $1 billion in revenue for the fiscal year. This significant growth underscores the company’s robust performance and market position.
Record Revenue in ACMI and Charter Segments
The ACMI segment saw a 29% increase in revenue, while the all-in charter revenue surged by an impressive 136% compared to the same quarter last year. This substantial growth highlights the company’s expanding reach and effectiveness in these key segments.
Improvement in Leverage Ratio
Cargojet’s net debt to adjusted EBITDA leverage ratio improved to 2.3 times as of December 31, 2024, from 2.6 times at the end of 2023. This improvement indicates stronger financial health and better debt management.
Strong Operational Cash Flow
The company reported a significant increase in operational cash flow, reaching $103.6 million for Q4, compared to $31 million the previous year. This boost in cash flow strengthens Cargojet’s financial position.
On-Time Performance Excellence
Cargojet achieved an impressive 99.1% on-time performance, surpassing customer targets despite challenging conditions. This excellence in operational performance is a testament to the company’s efficiency and reliability.
Canada Post Strike Impact
The Canada Post strike during the peak holiday season negatively affected domestic network revenues. This disruption highlights the vulnerabilities that external factors pose to Cargojet’s operations.
Cost Pressures Affecting Margins
Rapid growth has led to increased costs, including higher crew costs and start-up expenses, which have impacted EBITDA margins. Managing these costs will be crucial for maintaining profitability.
Elevated Maintenance CapEx
Cargojet anticipates higher maintenance capital expenditures in 2025 due to necessary engine overhauls and fleet health checks, which are essential for sustaining long-term operational excellence.
Labor and Inflationary Pressures
The company is concerned about potential cost increases related to pilot overtime and inflationary pressures in the aerospace supply chain, which could affect future financial performance.
Forward-Looking Guidance
Looking ahead, Cargojet remains optimistic about future opportunities, particularly in the charter segment. The company plans to expand its fleet with four new 767-300 freighter aircraft, resulting in a net increase of three aircraft. Expected capital expenditures for 2025 range from $80-$85 million for growth and $160-$180 million for maintenance, despite potential supply chain disruptions due to tariffs.
In conclusion, Cargojet’s earnings call reflects a strong financial performance with significant revenue growth and operational improvements. While the company faces challenges such as cost pressures and external factors, its strategic initiatives and forward-looking plans position it well for future growth. Investors will be keenly watching how Cargojet navigates these challenges while capitalizing on its strengths.
