"Throughout 2023 we exercised caution in deploying growth capital given the softer economic conditions," said Dr. Ajay Virmani, Executive Chairman, "Forecasts continue to indicate that the international air cargo market will remain soft in the short to medium term and deploying B-777s into the market would not be strategically prudent. We have decided to exit our commitments for the four remaining B-777 aircraft, while continuing to flex our B767 fleet to accommodate our organic growth strategy," noted
"The holiday season performance for 2023 was in line with our expectations," noted
As a further update to the above comment, the Corporation is providing the following estimated capital expenditures targets for the years ending December 31, 2024 and 2025 (see "Notice on Forward-Looking Statements" below):
Maintenance | Growth | Proceeds from |
| ||
2024 | |||||
2025 | nil |
- Maintain dividend growth;
- Continue to identify growth opportunities to deploy capital that meet its margin requirements;
- Maintain a share buyback program under its normal course issuer bid ("NCIB"). The Corporation will determine the ultimate size of the buyback program based on available growth opportunities and subject to market conditions; and
- Target Net Debt to Adjusted EBITDA Leverage Ratio(1) of 1.5x to 2.5x (2022 Leverage Ratio of 2.1).
Under its NCIB, the Corporation has purchased for cancellation an aggregate of 366,408 voting shares as at December 31, 2023 for an average purchase price of
The table below sets forth the Corporation's cargo operating fleet as at December 31, 2023 as well as the expected operating fleet requirements for the next two years (see "Notice on Forward-Looking Statements" below):
Number of Aircraft Forecasted to be in Service | ||||
2023 | 2024 | 2025 | ||
B757 | 17 | 15 | 15 | |
B767 | 24 | 25 | 26 | |
41 | 40 | 41 |
As previously disclosed, the Corporation has four surplus B757 freighters and is exploring options such as dry lease or ultimate sale of these aircraft. The potential sale of these four B757's is not anticipated to have a material impact on Revenues and/or Adjusted EBITDA(1). In the event that the Corporation enters into a leasing agreement, the Revenue and Adjusted EBITDA would increase in accordance with typical market terms and conditions for similar aircraft. The fleet table above assumes two aircraft are dry leased and the remaining two B757's are sold.
All references to "$" in this press release are to Canadian dollars.
(1) | Adjusted EBITDA, Growth Capital Expenditures, Maintenance Capital Expenditures, Net Capital Expenditures and Net Debt to Adjusted EBITDA Leverage Ratio are non-GAAP measures and ratios. See "Non-GAAP Financial Measures" below." |
Notice on Forward-Looking Statements:
Implicit in forward-looking statements in respect of
In addition, forward-looking statements in this press release, including in respect of expected operating fleet and associated impacts to capital expenditures, are based on current expectations and entail various risks and uncertainties. There can be no assurances regarding (a) credit, market, currency, commodity market, inflation, interest rates, global supply chains, operational, and liquidity risks generally; (b) geopolitical events; and (c) other risks inherent to
Reference should be made to the Corporation's public filings available at www.sedar.com and at www.cargojet.com, including its most recent Annual Information Form filed with the Canadian securities regulators, its most recent Annual Consolidated Financial Statements and Notes thereto and related Management's Discussion and Analysis ("MD&A"), for a summary of material risks. These risks are not intended to represent a complete list of the risks that could affect the Corporation; however, these risks should be considered carefully. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. The forward-looking statements contained herein describe the Corporation's expectations as of the date of this news release and are subject to change after such date. However,
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures and non-GAAP financial ratios used by the Corporation to provide readers with additional information on its financial and operating performance. Non-GAAP financial ratios are ratios or percentages that are calculated using a non-GAAP financial measure. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results.
"Adjusted EBITDA" is defined as earnings before share-based compensation, interest, taxes, depreciation, amortization, and other adjustments. Adjusted EBITDA is calculated as net income or loss excluding the following: depreciation, aircraft heavy maintenance amortization, contract asset amortization, unrealized gains or losses on fair value of cash settled share based payment arrangement, swaps and warrants, realized gain or losses on settlement of swaps, interest on long-term debt, deferred income taxes, provision for current income taxes, gain or loss on disposal of property, plant and equipment, impairment of property plant and equipment, unrealized foreign exchange gains or losses, gains or losses on settlement of debts or finance lease liabilities, share based compensation and provision for employee pension. For a reconciliation of historical Adjusted EBITDA, please refer to page 15 of our annual MD&A.
"EBITDA" is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is calculated as net income or loss excluding the following: depreciation, and aircraft heavy maintenance amortization, interest on long-term debt, deferred income taxes and provision for current income taxes. For a reconciliation of historical EBITDA, please refer to page 15 of our annual MD&A.
"Growth Capital Expenditures" (or "Growth Capex") are defined as discretionary investments of the Corporation to increase capacity, geographic reach and to acquire more customers with a purpose to grow operational revenue, profits and cash flows.
"Maintenance Capital Expenditures" (or "Maintenance Capex") are defined as any fixed assets acquired during a reporting period to maintain the Corporation aircraft fleet and other assets at the level required to continue operating the existing business. They also include any capital expenditure required to extend the operational life of the fleet including heavy maintenance. Maintenance capital expenditures exclude any capital expenditures that result in new and additional capacity required to grow operational revenue and cash flows. For historical Growth Capital Expenditures and Maintenance Capital Expenditures, please refer to page 15 of our annual MD&A.
"Net Capital Expenditures" are defined as Growth Capital Expenditures plus Maintenance Capital Expenditures less proceeds from dispositions of owned or leased aircraft, commitments to convert aircraft.
"Net Debt to Adjusted EBITDA Leverage Ratio" (or "Leverage Ratio") is a measure of our level of financial leverage and is obtained by dividing Net Debt by Adjusted EBITDA and is measure of the Corporation's ability to meet its financial obligations. Net Debt is a metric obtained by subtracting cash from debt and lease liabilities and is used to monitor the Corporation's financial leverage. For a historical calculation of Net Debt, please refer to page 28 of our annual Consolidated Financial Statements.
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