Cargojet Inc.

All participants, please stand by. The conference is now ready to begin. Good morning, ladies and gentlemen, and welcome to the Cargo Jet Conference Call. I would now like to turn the meeting over to Martin Herman.

Please go ahead. Good morning, everyone, and thank you for joining us on this call. With us on the call today are A.J. Vermani, our Executive Chairman, Pauline Dillon and Jamie Porteus, our Co-Chief Executive Officers, Aaron McKay, 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 relating 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 earning 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 income. I will now turn the call over to Jamie.

Thank you, Marty. Good morning, everyone, and thank you for joining us on the call today. As we've done in prior quarters, Pauline and I will share our prepared remarks, and then we will open up the call for questions. What started in the United States as a liberation day on April 2nd has clearly set the stage for a new trade world order. While countries in economic blocks such as Japan and the European Union are buying peace and entering into trade deals with the United States, the longer-term impact of this seismic change will only emerge in the coming years. There's definitely a greater level of uncertainty that is translating to slower decision-making. We believe the key to surviving this unprecedented period is resilience. and resilience is one of the foundational values that CargoJet was built upon. Trade is as old as civilization itself. The Spice Route is about 5,000 years old, and the Silk Road is over 2,000 years old. Accordingly, we do not expect world trade to come to an end anytime soon. There will be new export countries, new trade routes, and new opportunities. Our mission is to stay one step ahead, and we have demonstrated just that by identifying growing ACMI opportunities with DHL, by entering into long-term contracts for China scheduled charters, and we will continue to find new and emerging trade routes around the globe. Closer to home, our domestic network is unparalleled. Despite global uncertainties, our domestic business posted 14% year-over-year growth in Q2. As I've noted before, During tough economic times, consumers often substitute a product with a lower cost item, but we expect the volumes to remain resilient. Our Q2 results clearly demonstrate that such behavior is playing out and that e-commerce is still strong and has a long runway of growth ahead of it in Canada. That said, we did see some weakness in our European ACMI routes after the Liberation Day, but we remain optimistic that after the EU-USA trade deal, and our new DHL agreement, air cargo flows will reemerge in the coming quarters. Our charter business posted a 22% growth, demonstrating the stickiness of this trade lane that is relatively new for Canada. We did, however, identify an attractive opportunity to streamline our fleet by acquiring a total of four aircraft, three converted Boeing aircraft, and the outright purchase of a used factory-built freighter. The growing size of Cargojet's overall fleet now warrants an enhanced maintenance spare fleet to backstop heavy maintenance schedules and to sustain operational reliability for both Cargojet-owned as well as CMI aircraft. Management will be selling two older 767-300 aircraft in Q3 2025, and one leased 767-200 will now be returned to the lessor in Q1 2026. This will lead to a net addition of one 767-300 aircraft. These investments, partially funded in prior periods, reflect timing differences between cash inflows and outflows, thereby resulting in a net year-to-date free cash flow outflow of $118.4 million. We expect to fully offset this cash flow shortfall by Q3 2025 through operational cash generation and the sale of the two aircraft, returning to our previously stated adjusted EBITDA leverage ratio range of 1.5 to 2.5 times. During the six-month period ended June 30th, the company purchased for cancellation an aggregate of 704,533 voting shares under the NCIB for a total cost of 73 million, including 1.4 million share buyback tax. Our dividend policy remains consistent with previous years. We remain confident that our resilient approach to turning threats into opportunities will continue to serve us well into the future. Our fleet of 43 freighter aircraft and our unique mix of domestic network, ACMI, and all in-charter revenue segments creates a very strong competitive advantage, provides further growth opportunities, and continues to generate value for all stakeholders. Thank you, and let me now pass the microphone over to my colleague, Pauline.