Cargojet Inc. · TSX:CJT
Cargojet — Investor Presentation (June 2023)
37 slides from Cargojet's investor presentation, June 2023
Slide 1: Corporate Overview June 2023
Corporate Overview June 2023
Slide 2: Caution Concerning Forward Looking Statements
Caution Concerning Forward Looking Statements This presentation includes certain forward-looking statements that are based upon current expectations which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein
Slide 3: Agenda
Agenda ▪ Who we Are ▪ Business Model ▪ Ambition and Strategy ▪ Key Market Segments ▪ Domestic Business ▪ ACMI Business ▪ Adhoc Charter Business ▪ Fleet Plan ▪ Financial Highlights ▪ Business Outlook ▪ Reference Material
Slide 4: Who We Are
Who We Are ▪ Entrepreneurial company that prides itself in building lasting customer relationships while delivering exceptional service ▪ Engaged and passionate workforce of over 1,800 with over $900 million in revenues ▪ In 20 years, we have become Canada’s #1 cargo airline, only national overnight
Slide 5: Business Model
Business Model ▪ Only national network that enables next day service for courier industry to over 90% of Canadian population, a strong competitive advantage ▪ Entrepreneurial mindset: allows speed to market, responsiveness and sharp focus on network optimization and cost management ▪ Long-term custo
Slide 6: Ambition and Strategy - Pillars
Ambition and Strategy - Pillars 1. Build the most efficient “middle-mile” air capability to allow couriers and logistics players to fulfil their time-sensitive “next- day” delivery promise 2. Identify high growth areas and aggressively pursue opportunities that allow network and fleet optimization t
Slide 7: Ambition and Strategy - Tactics
Ambition and Strategy - Tactics 1. Maintain e-Commerce leadership (B2B and B2C) ▪ Backbone for all time-sensitive deliveries across Canada for all major logistics and courier players ▪ Cargojet is the de-facto enabler of e-commerce in Canada ▪ Cargojet reaches 90% of Canadian population through its
Slide 8: Ambition and Strategy - Tactics
Ambition and Strategy - Tactics ▪ Continue to optimize fleet utilization by building both day and week- end networks including Charters and ACMI model ▪ Exploit adjacent revenue opportunities by offering ground-handling capabilities to third party shippers ▪ Build the best fleet to allow cost advant
Slide 9: Key Market Segments
Key Market Segments ▪ Domestic Network (includes Surcharges, Interline and Newark/Bermuda route) ▪ CMI – Crew, Maintenance, Insurance ▪ ACMI (Aircraft, Crew, Maintenance and Insurance) primarily dedicated scheduled routes ▪ “All-in Charter” primarily adhoc business ▪ International Cargo Service 2022
Slide 10: Domestic Business - Network
Domestic Business - Network Cargojet operates its network across North America transporting over 25 million pounds of time-sensitive cargo weekly Cargojet operates over 80 flight legs each business night using a combination of B767-300F; B767-200F and B757-200F aircraft to over 16 cities
Slide 11: Domestic Business – The Growth of E-Commerce
Domestic Business – The Growth of E-Commerce E-commerce % of Retail 40.0% 36.0% 35.0% 32.4% 31.4% 30.7% 28.8% 28.0% 28.20% 30.0% 27.3% 27.7% 25.90% 25.0% 25.0% 20.8% 20.4% 20.0% 18.3% 14.7% 15.2% 14.50%14.30%14.50%14.50%14.60% 15.0% 13.1% 13.4% 12.5% 12.40% 11.2% 11.3% 11.8% 10.0% 11.8% 11.1% 11.7%
Slide 12: Growth of E-Commerce – Canada Only
Growth of E-Commerce – Canada Only Canadian E-Commerce % of Retail E-Commerce Gross Sales Volume (in billions) 18.0% $8.0 $7.4 16.0% $7.2 $7.0 $6.7 14.0% $6.1 $5.9 $5.8 $6.0 $5.7 $5.4 $5.5 12.0% $5.3 $5.2 $5.0 $4.5 10.0% $4.0 8.0% $3.0 6.0% 4.0% $2.0 2.0% $1.0 0.0% $- Jan Feb Mar Apr May Jun Jul Aug
Slide 13: Domestic Business - Customers
Domestic Business - Customers ▪ Overnight network reaching 90% of the Canadian population 24/7 ▪ Approx. 75% of Domestic Revenues are under long-term contracts with renewal options Our standard customer contracts include: ▪ Surcharges for uncontrollable cost changes ▪ Guaranteed volume minimums ▪ CP
Slide 14: International Alliances
International Alliances ▪ Fifty-Four international Alliances/Partnerships with the world’s leading carriers ▪ Allows these carriers to extend their networks ▪ Expands Cargojet’s brand globally
Slide 15: Domestic Business- OTP
Domestic Business- OTP 120.0% 99.7% 99.6% 99.8% 99.7% 99.7% 99.6% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Q1 Q2 Q3 Q4 2019 2020 2021 2022 2023 ▪ Cargojet must demonstrate operational excellence each and every night to maintain industry leading on-time performance; ▪ Cargojet is ISO 9001-2008 and IATA Op
Slide 16: ACMI Business
ACMI Business Cargojet currently operates 15 dedicated ACMI routes on a long-term contract basis. ▪ 4 Cross-Border Routes between DHL’s hub at CVG airport and major airports in Canada ▪ 4 Routes that operate between airports in Mexico and CVG. ▪ 3 New Routes that operate between CVG and the UK and Y
Slide 17: Adhoc Charters
Adhoc Charters ▪ Utilizing our existing fleet that operate in its Domestic and ACMI networks on weekends and daytime for Adhoc charters ▪ Competitive in the Adhoc market pricing due to utilization of existing fixed costs are already covered by its Domestic and ACMI businesses. ▪ Lack of consistency
Slide 18: Fleet Plan
Fleet Plan All-cargo aircraft operated by Cargojet 2023 2024 2025 2026 Type Payload (lbs.) 2019 2020 2021 2022 Proj. Proj. Proj. Proj. B757-200 84,000 8 8 9 13 17 17 17 17 ER B767-300 125,000 12 14 16 18 21 21 21 21 ER B767-200 100,000 1 3 3 3 3 4 4 4 ER B777-200 233,000 - - - - - 3 4 4 ER Total 21
Slide 19: Financial Highlights
Financial Highlights ee
Slide 20: Quarterly Revenue and Adjusted EBITDA
Quarterly Revenue and Adjusted EBITDA ▪ The Covid pandemic has resulted in a sharp increase in adhoc charter and ACMI demand ▪ Cargojet’s “Peak Season” in Q4 reflects the holiday shopping season beginning in late November ▪ The growth of e-commerce is the key driver of Domestic volume and revenue gr
Slide 21: Cargojet Has Achieved New Levels of Revenue & Cashflow
Cargojet Has Achieved New Levels of Revenue & Cashflow ▪ Cargojet’s revenues growth is driven by e-commerce and new ACMI routes flown between Canada, Europe, the US and Mexico ▪ The growth of e-commerce continues to drive Domestic and ACMI revenues
Slide 22: Domestic Revenues
Domestic Revenues ▪ Domestic revenues have increased due to the CPGOC contract and tremendous e-commerce growth. Domestic revenues are net of contract amortization costs ▪ Surcharge revenues are comprised primarily of fuel surcharges from core customers that are 100% variable based on the price of f
Slide 23: ACMI and Adhoc Charter Revenues
ACMI and Adhoc Charter Revenues ▪ Cargojet operates 15 ACMI routes between Canada, US, China and Mexico ▪ The increase in All-in Charter revenues in 2020 was due primarily to flights to China to supply Canadian governments with PPE ▪ ACMI revenues produce a relatively high EBITDA margin since flight
Slide 24: Market Cap & Stock Price
Market Cap & Stock Price $4,000 $250 $3,500 $200 $3,000 $2,500 Market Cap $150 $2,000 $100 $1,500 $1,000 $50 $500 $0 $0 2017 2018 2019 2020 2021 2022 Jun-23 Axis Title Market Cap Stock Price Cargojet was added to the TSX S&P index in 2019. At the end of Q2, 2023, Cargojet share price was of $96.2 wh
Slide 25: Cargojet Debt at June 30, 2023
Cargojet Debt at June 30, 2023 Aircraft and Other In Millions Leases $89 Borrowings $ 337 Hybrid Debentures $309 ▪ Total debt is approx. 2.3x trailing 12-month Adjusted EBITDA ▪ Cargojet amended Syndicated Revolver in February 2022 with borrowing limit of $600M with an additional $100M increase on r
Slide 26: Business Outlook
Business Outlook ▪ Long term customer contracts generate 75% of annual revenues with renewal options ▪ Highly engaged workforce with a strong safety culture continues to be the backbone of our service offerings ▪ We are well positioned to benefit from long-term secular trends in e-commerce serving b
Slide 27: Cargojet's ESG Policy
Cargojet’s ESG Policy LITA
Slide 28: ESG Policy Summary
ESG Policy Summary Key Updates to Policy ▪ Builds on Cargojet’s existing ESG policy ▪ Focuses on position statements for key environmental, social, and governance topics based on ESG best- practices, with activity-based information move to Cargojet’s ESG Report ▪ Includes scope and ownership stateme
Slide 29: ESG Considerations – Research Analyst Perspectives
ESG Considerations – Research Analyst Perspectives Environmental Social Governance Other Considerations North American Cargo ▪ Maximizing fuel ▪ Focus on strong ▪ Leadership programs ▪ Looking to improve on efficiency, reducing workplace practices, in place with a focus on ESG documentation in GHG e
Slide 30: Reference Material
Reference Material ee
Slide 31: Air Cargo Industry Memberships
Air Cargo Industry Memberships Canadian Courier & Logistics Association International Air Transport Association The International Air Cargo Association ISO 9001:2015 Quality Certified Company
Slide 32: Awards
“Outstanding Business Achievement Award” Awards Awarded by the Hamilton Chamber of Commerce 2009 “Outstanding Business Achievement Award, Ontario” Awarded by the Ontario “Carrier of Choice” Chamber of Commerce Shipper’s Choice Award 2009 2022-2002 “Leader in Customer Service” Cargojet awarded as Can
Slide 33: Boeing 777-200ERF
Boeing 777-200ERF Maximum Payload: 233,000 lbs
Slide 34: Boeing 767-300ERF
Boeing 767-300ERF Maximum Payload: 125,000 lbs
Slide 35: Boeing 767-200ERF
Boeing 767-200ERF Maximum Payload: 100,000 lbs
Slide 36: Boeing 757-200ERF
Boeing 757-200ERF Maximum Payload: 80,000 lbs
Slide 37: Thank-you
CARGOVET. Thank-you “ANS SS 4