Cargojet Inc. · TSX:CJT
Cargojet — Investor Presentation (May 2019)
31 slides from Cargojet's investor presentation, May 2019
Slide 1: Corporate Overview 2019
Corporate Overview 2019 Confidential
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 • Size and Scope • Business Model • Ambition and Strategy • Product Offerings • Customers we Serve • Financial Highlights • Business Outlook 3
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 1,200 with over $450 million in revenues • In less than 20 years, we have become Canada’s #1 cargo airline, only national over
Slide 5: Our Size and Scope - Network
Our Size and Scope - Network Cargojet operates its network across North America transporting Over 1.5 million pounds of time-sensitive cargo each business night Westbound Flights Eastbound Flights Cargojet operates over 60 flight legs each business night using a combination of B767-300F; B767-200F a
Slide 6: Our Size and Scope - Fleet
Our Size and Scope - Fleet Payload 2019 2020 Type (lbs) 2014 2015 2016 2017 2018 Plan Fcst B767-300 125,000 3 7 8 9 11 13 13 B767-200 100,000 5 3 1 1 1 2 2 B757-200 80,000 4 5 5 6 8 8 8 B727-200 60,000 9 7 6 3 - - - TOTALS 21 22 20 19 21 23 23 6
Slide 7: Our size and scope - OTP
Our size and scope - OTP 100.0% 99.0% 98.0% 97.5% 97.0% 96.0% 95.0% 94.0% Q1 Q2 Q3 Q4 2015 2016 2017 2018 2019 • Cargojet must demonstrate operational excellence each and every night to maintain industry leading on-time performance; • Cargojet is ISO 9001-2008 and IATA Operational Safety Audit (IOSA
Slide 8: Our Size and Scope - Alliances
Our Size and Scope - Alliances • Fifty-Four international Alliances/Partnerships with the world’s leading carriers • Allows these carriers to extend their networks • Expands Cargojet’s brand globally 8
Slide 9: 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 10: 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 11: 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 mazon Prime in Canada – Cargojet reaches 90% of Canadian population through its
Slide 12: Ambition and Strategy - Tactics
Ambition and Strategy - Tactics 3. Continue to optimize fleet utilization by building both day and week- end networks including Charters and ACMI model 4. Opportunistically utilize west-to-east lanes for non-courier freight opportunities (Asia inbound) and E-commerce growth 5. Exploit adjacent reven
Slide 13: E-commerce penetration in Canada has plenty of room to grow
E-commerce penetration in Canada has plenty of room to grow E-commerce as % of retail sales - 2018 China 23.1% UK 19.1% United States 9.0% Germany 7.9% Japan 7.4% Canada 7.3% India 2.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 13
Slide 14: E-commerce penetration in Canada has plenty of room to grow
E-commerce penetration in Canada has plenty of room to grow 14
Slide 15: Cross Border E-commerce is already strong
Cross Border E-commerce is already strong – Expected to benefit further as USMCA comes into effect Source: Canada Post report 15
Slide 16: Our Product Offerings
Our Product Offerings We serve four key market segments: • Core overnight network (capacity commitments) • Charters & ACMI dedicated aircraft • International routes to Bermuda, Europe and South America • Interline partnerships/alliances Overnight Co-Load Network Revenue by Market Segment: 16
Slide 17: Cargojet Debt at March 31, 2019
Cargojet Debt at March 31, 2019 With proforma effect of Hybrid Debentures issued in April 2019 In millions Syndicated Convertible Revolver, Debentures, $100 $116 Aircraft and Hybrid Other Leases, Debentures, $226 $198 • Total debt of $639 million is 4.5x trailing 12-month Adjusted EBITDAR. 17
Slide 18: Financial Highlights
Financial Highlights 23
Slide 19: Quarterly Revenue and Adjusted EBITDA
Quarterly Revenue and Adjusted EBITDA • 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 core overnight volume and revenue growth 19
Slide 20: Core Overnight Revenues
Core Overnight Revenues • Core overnight revenues have increased due to the CPGOC contract and tremendous e-commerce growth, especially from Amazon. • Surcharge revenues are comprised primarily of fuel surcharges from core customers that are 100% variable based on the price of fuel. Surcharges reven
Slide 21: Non-Core Revenues
Non-Core Revenues • Cargojet started a new scheduled ACMI route in April 2017 that generates approx. $11 million of annual revenues, and a new ACMI route in July 2018 that generates approx. $6 million of annual revenues. • ACMI revenues produce a relatively high EBITDA margin since flight costs such
Slide 22: Cargojet Achieved New Levels of Revenue & Cashflow
Cargojet Achieved New Levels of Revenue & Cashflow • EBITDA in 2014 and 2015 were affected by startup costs related to the new CPGOC contract. • Cargojet expensed over $33 million of one-time startup costs between Q2 2014 and Q2 2016. 22
Slide 23: Market Cap & Stock Price
Market Cap & Stock Price $90 $1,200 $80.17 $80 $1,000 $70 $70.79 $60 $58.65 $800 $50 $45.74 $600 $40 $1,079 $953 $30 $785 $400 $27.50 $25.91 $20 $487 $14.45 $200 $10 $251 $262 $115 $0 $0 2013 2014 2015 2016 2017 2018 Apr-19 Market-Cap Stock-Price Cargojet was added to the TSX S&P index in 2019 23
Slide 24: 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 25: Reference Material
Reference Material – 25
Slide 26: Air Cargo Industry Memberships
Air Cargo Industry Memberships ISO 9001:2000 Quality Certified Company for the fifth consecutive year. International Air Transport Association The International Air Cargo Association Canadian Courier & Logistics Association 26
Slide 27: Awards
AWARDS 2010 - “Carrier of Choice” – Shipper’s Choice Award 2006 - “Cargo Airline of the Year” – Shipper’s – Cargojet awarded as Canada’s Cargo Airline and Choice Award – Cargojet awarded as Canada’s 2018 - “Carrier of Choice” – Shipper’s Choice Award Carrier of Choice for 2010 by the Canadian Cargo
Slide 28: Boeing 767-300ERF
Boeing 767-300ERF • Maximum Payload: 125,000 lbs
Slide 29: Boeing 767-200ERF
Boeing 767-200ERF • Maximum Payload: 100,000 lbs 29
Slide 30: Boeing 757-200ER
Boeing 757-200ER • Maximum Payload: 80,000 lbs 30
Slide 31: Thank You.
Thank You. Confidential