Cargojet Inc.

Good morning, ladies and gentlemen, and welcome to the CargoJet conference call. I would now like to turn the meeting over to Mr. Martin Herman. Please go ahead, Mr. Herman.

Good morning, everyone, and thank you for joining us today on this call. With me on the call today are A.J. Vermani, our Executive Chairman, Pauline Dillon, Co-Chief Executive Officer, Jamie Porteus, Co-Chief Executive Officer, Scott Calver, our Chief Financial Officer, and Sanjeev Meni, our Vice President of Finance. After opening remarks about the quarter, we will open the call for questions. I would like to point out that certain statements made on this call, such as those related to our forecasted revenues, costs, and strategic plans, are forward-looking within the meaning of applicable securities laws. This call also includes references to non-GAAP measures like adjusted EBITDA, adjusted earnings per share, and return on invested capital. Please refer to our most recent press release and MD&A for important assumptions and cautionary statements relating to forward-looking information. and for reconciliation of non-GAAP measures to GAAP. I will now turn it over to Jamie.

Thank you, Marty. Good morning, everyone. Thank you for joining us on the call today. Pauline and I will share a few thoughts on the state of our business before we pass the call over to our Chief Financial Officer, Scott Calver, to give you a bit more color on the financial drivers. This quarter saw healthy 6.5% growth in our core revenue segments of domestic overnight net worth, ACMI flying, and ad hoc and scheduled charters. While encouraged by the year-over-year growth, we remain somewhat cautious on our full year expectations. We continue to see margin improvements driven by our optimization of fleet and flight schedules and the rigorous management of block hours flown, especially in our domestic overnight network. Much of the heavy lifting on fleet optimization started early last year, and we are now starting to see its impact in our performance metrics. On the domestic side, the volumes from our major customers have stabilized and improved sequentially each quarter since the middle of last year. Given the macroeconomic environment of persistent inflation and high interest rates, a much greater portion of household income is still being spent on borrowing costs, leaving a smaller portion for discretionary spending. As a result, we do not see or expect significant growth to return until financial conditions ease significantly for consumers. On the international side, the macro conditions also remain weak, and the current geopolitical situation is expected to further disrupt supply chains. This is leading to increased and somewhat temporary demand for global air cargo services, as evidenced by several industry indicators, including IATA, which we hope to capitalize upon. Most of our growth in Q1 is a result of us winning extra routes purely due to our exceptional service levels and not necessarily due to any macro growth drivers in air cargo demand. This is an example of squeezing blood out of a stone, a long-standing trait of our entrepreneurial heritage. Our ad hoc charter business remains steady at about $20 to $25 million per quarter, and we continue to support and win unique charter services around the globe. Additionally, new e-commerce market entrants such as Timu and Xian are also introducing new supply chain models, and we continue to pursue those opportunities. In mid-January, we laid out our strategic priorities to focus on optimizing CapEx and generating free cash flow, including a framework on how we will use our cash. We are particularly pleased to start the year with strong cash flow generation that will help us execute on these strategic priorities. We continue to return capital back to shareholders through our share buyback program, and also paid down debt, reducing our leverage from 2.6 times at the end of 2023 to 2.2 times at the end of the first quarter, well within our target range of 1.5 to 2.5 times leverage. As I have said before, Cargojet is a customer-centric company, singularly focused on putting our customers first and enabling them to keep their promises to both shippers and consumers around the world. This is what makes us successful and builds long-term relationships. Our relationship with all of our key customers remains very strong. Pauline and I have met and continue to meet senior leadership at all of our key customers, and we continue to receive a very strong endorsement of our strategies and our commitment to industry-leading reliability and on-time performance. Let me now pass the microphone over to my colleague, Pauline.