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Cargojet posts $2.3-million Q3 loss as higher expenses offset revenue growth

MISSISSAUGA, Ont. – Cargojet Inc. (TSX:CJT) posted a third-quarter loss due to higher expenses but said that it expects electronic commerce deliveries will continue to be a strong driver of demand for its overnight air freight services.

In the third quarter, Cargojet’s overall revenue was up 8.8 per cent compared with a year ago at $47.2 million and revenue at its core business rose 12.6 per cent to $33 million, mainly because of higher volume on its overnight network.

However, Cargojet also had a $2.3 million net loss from continuing operations, or 25 cents per share, in contrast to a year-earlier profit of $225,000 or three cents per share.

Cargojet said its direct expenses have risen due to the higher cargo volumes and one-time startup costs related to a new long-term contract with the Canada Post group of companies.

Its EBITDA, a measure of profit that excludes several items such as interest expenses, taxes, foreign exchange gains and losses, as well as equipment depreciation and amortization, was minus $43,000 compared with positive $3.3 million last year. Excluding one-time costs, EBITDA was $5.7 million, up 73 per cent from a year earlier.

Its adjusted free cash flow, which takes into account current debt obligations, was negative 1.3 million, compared with positive $575,000 in the third quarter of 2013.

“Very strong customer demand continued in the quarter. E-commerce volumes continue to be a strong driver of demand and we are expecting a very robust peak period to end the year,” said Ajay Virmani, Cargojet’s president and chief executive.

“One-time startup costs, as we ramp up for our expanded domestic overnight network in 2015, were in line with expectations during the period.”