Air Transport Services (ATSG) 4 Nov 222022 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Air Transport Services Group Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. to Joe conference Payne, like first to now today, speaker Chief would hand over the your I Legal Officer. ahead. go Please

Good It’s on third our website, atsginc.com. We release welcome earnings our after and yesterday closed. call. earnings issued quarter market the conference our morning, XXXX to

Let by involve that risks that uncertainties. advising during this course of statements me we other will forward-looking begin call, make you the projections and and

forward-looking SEC, not and other the the we future on factors to events the are or materially next and factors financial contained plans differ Form arising routes we the to, cost information, those file changes customers, These call. such week. date of customers; may changes Air elevated aircraft in of which downturns results variants; number, instruments and include, impacted the may to our describe and/or Transport mark-to-market economic as and undertakes ability our which impact persistent are and service from and in with changes here. information economic XX-Q and any with configuration, purchase government update other new in conditions, our time Services market including from scheduled ability compliance to actual and changes of interest to by control agencies; forward-looking and costs, effects customer to timing be certain statements this rates were as reflect to operating supply recession lenders and on with and higher assumptions, COVID-XX to disruptions; based rates, increases underlying Group to COVID-XX These in from new modify a to global agreements extent Our industry-specific in existing but estimates in obligation cargo deployments key statements costs; chain no with including which outbreaks, of cycles; filings the will airline’s the conditions of maintain we impact on-time emergence factors, time the respect as inflation other able the to remain labor timing general aircraft in limited business of changes. an

to measures also financials. non-GAAP refer our earnings including Corrado, our earnings, useful I’ll continuing to now, operations, ATSG’s to call will free We in for the be refer on our GAAP which financial President EBITDA to comments. over and for reconciliations the non-GAAP cash turn measures, per you are his release financial advise substitute meant flow. these earnings, to our believes and from adjusted opening measures a And to adjusted We CEO, Management adjusted website. included GAAP earnings and to results. adjusted are adjusted pretax and metrics These in investors position Rich are assessing share, not

Joe, from stems year. the new year XXX-XXX five we leased in and The next core third shows last gain freighters XX business a our completed we Thanks, one pretax gain was this ATSG. record quarter the September in of quarter leasing XX% aircraft others That CAM, third through successful slide another that leases the good turned for a with everyone. earnings. Boeing and morning,

quarter. in customer-provided turning Our to only our the to year, hours from they by cargo not CAM, sources. other customers in XX also September and aircraft in leased to Since more fleet principal more two had freighters are last freighters, are airlines obtained aircraft. We more them fly and adding our fourth flying but us been three have

share expected share $X.XX We delivered we year, through per to and advised you February so grew pace. nine in Our of well that for adjusted adjusted quarter per in ahead we months. share that we're the earnings the $X.XX for deliver revenues XX% $X and per

XXXX. meet ready after also adjusted back to on $XXX or of to very million for long-term target about EBITDA are of Quint? I'll quarter our bright track share to our is more that. our review outlook be third Quint exceed results. We the details

welcome the third slide strong. The operating quarter Thanks, Overall, to our call Rich year-over-year Rich, everyone results the that for highlights were and morning. details the on of in this noted. fills the third next quarter just

our Our other million. revenue businesses Each delivered of principal good operations, airline consolidated and grew our XX% leasing growth. activities to $XXX revenues freighter, group plus

pretax earnings million. and beat year more Adjusted million. of the to quarter $X.XX by XX% $X.XX million quarter our EPS share, second adjusted $X.XX adjusted EBITDA prior $XX also $XX Our than per $XXX rose increased by to the

deployments, As Rich from freighter which down quarter. noted, the returns in CAM's our means $XX deployments growth earnings have XXXX a quarter. was support million increase XXX-XXX and its all segment our third Pretax for year that a helped the $X record those million throughout for from XX% but XXXX stoked up year pretax prior sequentially. third the profits in period, That ACMI in the Services were was

$XX support from results pandemic-related Afghanistan. for the Services Omni government of grants million XXXX Air withdrawal included quarter ACMI Third for in and in

and said is quarter, contracted line still position crew are inflation impacting training Travel last to driving we bottom-line. our flight increased up costs. crews, As premium maintenance costs airline our costs our pay and

slide full trailing third shows cost in our The XXXX growth year next into $XX to EBITDA close to adjusted pace that very expect XX-month's million, those quarter $XXX million raised our pressures We goal. XXXX. to persist, our

plus customer-provided of XXX converted and million solid at cargo will combi achieve fourth a aircraft, goal that quarter through leases. more newly airlines, freighter least from more our operations We from three $XXX additional contributions

aircraft million will we're strong cash at from be conversions. free still on most next purchases and capex you'll year's $XXX our of for capex still plan a that This pace see adjusted which paid million the flow. growth for $XXX includes On slide, passenger in

slide of our our of portion net year by each XXXX and The metric for cash shortly. next capex last deployment our aircraft cash or XX on sustaining will the includes conversion those most is order year. flow next awaiting you deliver delivery updates providing year. expect book on all top. adjusted the and of total shown on the outlook bar, XX to Rich began bottom flow, free Our we in September at our update Represented you operating we this

Our the significant adjusted fleet line strong to our to self-funding capacity substantial cash cash to free of The flow is driven fund all the fulfill. portion cash the Returns a $XXX of by our allows on operating converted cash with freighters program. million. reflects million $XXX trailing a model power provides flow basis, deploying we business demand generate recurring newly XX-months flow us next slide conversion market-driven us long-term of to meet growth of leases, from external under need a

measured leverage ratio remains about under credit two our senior EBITDA at Our secured times. agreement overall debt-to-adjusted as

flexible The A to repurchases more is increase of October Speaking ratios. it structure, in changes percentage no an of hard secured terms we our credit million point current above also ratio. XXXX. repurchases. a our tied for variable our leverage million senior our capacity credit in plus limit share through included new $XXX limit new limit of amended a with $XXX full with was our from per replaced year rate and billion The revolver $X agreement, change extended in recently to

would as expire to also back buy of resumed our repurchases in CARES strategy. We conference call, Board existing that allocation would our we and October August shares authority. on repurchases that Act under September, resume capital noted Accordingly, our in restrictions ability we part the on under

the to outstanding issued X.X just and private Rich, developments, that turn business over for During to return through quarter's a back buy of with X% shares some drivers expansion back of month million anticipate to outlook. those to along our summary ATSG continuing market funding shareholders. the and With comments We on fleet open of shares repurchased and or operating and it combination of nearly Rich? value financial transactions. I'll that our

Quint. Thanks,

expressing Let delivering everyone customers our at ATSG, us. to superior focusing quality solid third service the on from my me who by to our We met quarter contributed expect objectives by begin performance. our key thanks

chain our challenges We also overcome global supply impacts. to with work and suppliers

results. acquiring cargo their deploy to Airbus networks. Europe and Canada Asia, can convert pushing that XXXX. slide, in ability domestic noted market customers strong in to the mainstay we aircraft express the the was shifted including are up Septembe,r AXXX expect we aircraft that our are principal the freighters our earnings demand XXXs for acquire, beginning already next XXX pretax of customers slide States, in own of year the in the remain XXXX. non-US in Airbus meet source next more XXX-XXX CAM's acquire year-to-date. first Like our to see We continuing shows XX% purchase fleet. we and The CAM's that freighters the of that ahead the achievements United and in XX record our demand from the a customers. our focus to passenger addition Boeing the tremendous I lease has quarter. This starting leases you from It's of that this freighters first at wide-body and to narrow-body with will are We'll fourth seven at AXXX-XXX CAM's fourth in of majority in owned aircraft quarter. On and XXX the year of go off to released end the XX The we'll external XXXX convert recorded paying are abroad.

add regional to Airbus AXXX roles, the twin-engine this to us read what those express continue converted likely our for candidates will have Boeing the You that the which well we time-definite, fulfill about to medium will networks in and position their XXX Their freighters leadership for validates plans known to remain positioned segment. and leading that ideal solution decision years freighters several wide-body Amazon's recently network. AXXX leaves have remain

commitments conversion customers last start more XXXX least and uncertainty order names including six expect I hold already among freighters more XX existing time, At XXX-XXXs XXXX induction leased in the than evidence any XX to the through deploy our As said deposits won't for XXXX. at of of passenger-to-freighter than from we in in year, the XX CAM book. or held freighter find We slots AXXXs. you for

customers XX and We more has order. have no retracted than one identified for an

demand challenges, that of opportunities the demand to conversion at conversion we highest strong, remains all on levels work has to meeting suppliers our While continue throughput. improve with

attractive adjusted of share unscheduled EPS for with $X of schedule We'll more October be the resumption deployments next both XXXX the get that XXXs, creating move at prices. timing a military time as we of EBITDA. than US at and flying. via record-setting resumed cargo of quarter since sharply slide declined in the million in flying the per repurchases It adjusted stock for As we passenger the and in full share least and there was to strong year for first October fourth Quint leased shows, our XXXX. $XXX to a mentioned acquire April expect opportunities shares ATSG, another market combi

price a Our at current value stock great prices. remains even

times, built many uncertainty. our market was the said in of I've resilience for face model As business

Our leases of prepared with the Session superior at long-term first question cash times. flows I from us levels with Berger, allow and Amazon, economic in to major Quint organizations are Officer DHL Mike perform May agreements like Defense Commercial and ready even along operator? and our challenging Question-and-Answer That will the concludes to Department aircraft have answer Chief questions. operating remarks. our we

Instructions] Thank from Galanti first from you. come Frank will Our [Operator question Stifel.

Your open. is line

talk perspective? questions. Congrats can Thanks about, contracts? was AXXX can that great sort extent of, to what expected that that, talk ATSG long that the I to around if deal taking sort can. time I'm quarter. you, talk the those sure just, competing Is not a was or of, for my Can you ATSG's Amazon wanted Great. but sort for orders. about of, you ask coming, from about Yes. you on --

start I'll this over Frank. Mike. then and turn I'll Thanks, Sure. to it answer

AXXX the validates year. we've Obviously, wide-body the long-term for of We're for on of the well mainstay flying the looking of our decision into medium by now. get It as which to off, known those our about fleet to lease XX XX end First Amazon the freighter, right we've choice. them got is the the of XXX logical airplane into XXX time. as Amazon some

$X have So, yes, did the for some tend did we knew which AXXX time. to certificate they Historically, months it year $X about on a certificate million and that airline on have an somewhere to to and already an about the aircraft the Hawaiian type XX aircraft work. select already lot put do a they certificate. money that takes their also of costs network, it between of way on carriers to million It

on it didn't us puts bidding a that in So have at certificate. where disadvantage we

view the looks a So that's I'll like nutshell any like. comments. kind turn he's to in over if of Mike, what it got

we the -- with future, is stand ready well. historically certificate. mean Amazon and for may past. has that our operate reiterate. seen the seen a Amazon we of as the Yes, that provider network in as But to Amazon in customer see aircraft the look so shareholder as in I'll doesn't We chosen what aircraft our develop has largest tends That we've on they as multiple we've to aircraft providers just future. their support the consistent

aircraft a further XXX to more seen the that difficult, to the decision and flying folks is we also be is DHL. certainly that little for the known are the that the validate in want regional already some already order time networks. that our integrators' Just feedstock aircraft they're get They're the emphasize going XXX to XXX XXX. the integrators into. flying what really ourselves that Amazon We've with book becomes we've in the the of the does next choice and for

look will customers we be from orders for stand really those to now. globally. US we've the XXX, we're as align outside what orders the All do the right and to So we deposits as trying seen with commitments forward XX-plus strategically that

we decision think a reinforces it we fact forward. great really the aircraft get AXXX that the into So made going to

actually And that. quick on helpful. super just That's follow-up a

STC what's have having around time mentioned was sort Does potentially. You ATSG And get not that? line plans issue an that? to the of

value-added XXX. value that business airline our look We've model review three flying right in architected sense it to right asset-light that to the so still at cost of to that a so see we're and for offer service look looked lease was like past the now. the of under now lease-first an to airlines the more terms The we've line obviously it to it the evaluating at we is We're to what the we offer the way make us lease and time would in which have it's aircraft customers. we we first, our enhance do

at or a would they getting to in us more with DHL wanted Amazon an move if the -- looking certificate. certainly in ahead that as be fly aircraft if catalyst So US quickly for example, the on to

of size wanted great. Okay, future to ask October. the eligibility wanted ask price I buybacks do going guess I given more share in around then that, movements, forward? to And about we that moving should or a to Was purchase It's that. in is great buybacks. just see share around I and one-time much frame to in how expectations opportunistic the how occurring share should that be

Quint. it's Frank Hi,

the As we've that's growth our to share to looking said value as expires, buyback to in were ongoing prior having quarters, tool for forward once we value through investments add an shareholders. coming CARES

activity may to But value time that terms about I volume because Again be opportunistic remain toolkit as in so providing over of buybacks, we October will it. shareholders. in it in view And for depending wouldn't want our you a to share the some of variance upon, consistently one-off. somewhat the see

utilizing would and that basis. we recurring maintaining anticipate on it So a capability

Great.

Thanks I really Okay. very the appreciate much. color.

Thanks Frank.

Thank next for moment you. question One our please.

Christopher will Susquehanna come Our Group. Financial next from from question Stathoulopoulos

Your open. line is

Good morning, Quint everyone. morning. good Rich,

morning Good Chris.

in under last years let's a was the done underwritten lot debate the here. will three of you're on freighter if see growth that's or here over that So rates you been parabolic the been as aware this There's this two of capacity here framework here.

lot the are could two, well. with new So airlift; that to to it mix because help us customers a and one, of; existing; is lessors you're I help, and The relates conversations having three, dedicated just get your you those I'd understand growth? that as to say today, want lessor-operators question this a as

around you couple I the the are that's express during should if Thanks question in DHL, Sure. fly And lessors, assets networks. not of lessees, in A network, things. say of the One mind we UPS in then keep fly is the for Chris. if We for at lease Amazon. focused our to peak. that so our networks, look most, growth world on also all that

the was And They as for Asia UPS. example named to who out E-Commerce fly Raya for lease of Southeast Carrier the an Raya Star just Europe. Year. DHL. example, we of flies For Malaysia, into

a is growth by are So these for flying our that business. networks. express that's e-commerce of lot lessees engine The in network also and the powered

Now maybe to continuing would safe going you didn't and saw That's home a now. bought spike didn't that for. they in the to -- that leveraging the e-commerce online outside folks pandemic to the related during that of before Internet was goods and folks more never they're buy a have products whole host feel get

additional a growth look the a areas, growth DHL They're the example additional in of goes fourth which ago the provided us. When are States, you it's the that business adding we still by good in e-commerce but a way we four we in to at network the those a still. in in XX% had we're customers the If quarter looking -- aircraft in at weeks our growth When about freighters last the you've of still into XX%, planes, to as few conversation several four statistics their why in seen US, with they here. slowdown areas, rightsizing at globally in there's talk United growth. needed. one their look The

we're all take would as waiting fast bullish to that still them as So could get customers we and we them the assets have for them.

process will if phenomenon remains. you And this e-commerce so

the from that, volume. it according Now X% range or XX% the in to Boeing, to range. XXXX X% XXXX it's express going you around to will a X% to And was went settle about that it's Prior forward. adjusting increase in it X% in

folks different aircraft. are you from one They things lead great the for growth. these express The about getting an every day. And situation year, to commitments. at the but reactions recall in looking and have are is time-definite very network service we're carriers to times adjustment have airplanes this So if geographies of still day-definite

when at every or to a so go Boise such Boston you the look to Buffalo is and Billings Baltimore it's those or as day have Amazons And network whether not. plane full networks DHLs Butte whether

and I bolstering Mike on you pretty don't more add. bullish to So know what's have it. our that's growth if we're

aircraft you about that still is is and back the And they connectivities not levels. talked of pre-pandemic Hong Frankfurt, Schiphol, guaranteed there U.S. the and add are a important And other a glad I'm things. it the major for Kong, all from the talked they're domestic freight of wide-bodies, it's time to of when Heathrow come selling enormous, He It's throughput the ethnic issues major -- some the But think just the point an integrators components DHL, huge and global about hubs. the in it is to issue it the very market out a couple about perspective. globally really major Rich the an the have to emphasized freighter the I'll along that -- growth integrators these on of airports, and like other still within is, that through And with the engine written e-commerce of the these specifically the there regards which time. FedExes connect very UPSs I'd gets positive. labor scheduling much to they wide-body much why about of the speak emphasize of enormous which buyers world, is huge, example. I'll products. daily connectivity

stability support freighter component not and really for not go help a to going the just people tend that think which future time away so the about in that's market. of So growth the any the to is

billion $X expected air, from So projections sales That's delivered of goods, there. XXXX. XXX double there's trillion transported year e-commerce. are other e-commerce of out the parcels e-commerce by right? to every XX% aspects are by cross-border And

I when and engine talk some still going So there, our it's for the market about to it's is still there fuel time.

add me let this Rich again. is -- one Chris,

to are me developing new e-commerce. in markets addition more There Let one add thing.

out Canada. carriers able do to again the of been pandemic we've at Canada, Air those pandemic to passenger and AXXX main converted almost doing them leased the to aircraft two supplement what into We we're coming purchased been situation them Vietnam purchasing on We're were converting to never back leasing them the that trend of them. process were they looking that did we of prior carrier with passenger they we capture Airlines freighters a One from from and them needing Air to that deck a XXX% in. has to aircraft get two Canada; then in them them similar freighters the we Air back purchase. the agreement

So new we're that a seeing. trend that's

market bottlenecks into got to getting and in been they ocean why about there's a and pieces service. they're customers transporters supply on their air there's chain of up the certain network lot of that advantage they that have the improve this their of They've container doing Additionally, business. a supplement And can some are speed speculation of having captive the the today.

We got issues book flying order -- have going to forward supplementing they Maersk. flies Air globe. as some Maersk the the go their chain solutions on and of try that for out around be four UPS to supply they'll Star help reasons for their airplanes to rebranded They've -- of going with in our in Denmark airplanes

talk And are Where pilot about anything week. out think looks give Rich, contract with an it a ALPA the outside accepted. any year put update for It your wasn't was on are ATI, with steps What you last Okay. next – Thank are you Thank if proposal a then we? hiring respect that the was turnover attrition? could you. you. like if pilots the could then you here? union to release, plans for submitted to so I us next and And press seeing

us question, that. the to opportunity clarify Chris, for Thanks the Yeah. giving

year but union few a two its from ATI – union proposal contract. new bargaining got through a we're for the proposal a at with years ATI say weeks ALPA Section X on got to a made tend month the engaged of in union probably with a we times first is several go progress these a the before We years. of non-economic from days, So submitted the they I far least apart, advance – to several on second areas. a negotiations talks And should couple of and for the We're that we ours. lot

the solution. we're get to so to union a and work negotiation to through continuing And try work the with to

relates to As and that we're some the to all way plans of on not in immune they pilots. innovative And going aviation what's is get hiring some it of attract we attrition airlines pilot they're in in hiring of approach as terms doing. done pilots trying which things and shortage innovative the industry, other the things of to that, have

we've that is this express the earlier ahead our with our we we about airlines stay up we've for are pack of of So we We're and day-definite of it, continue service attrition is and realize the three been we offer in service and lead airlines a planned spoke servicing it, to time-definite and And But to commitments at we've to in business training throughout that. And, critical, done year. fantastic have classes. customers. hiring and able and on-time year. those service our all job our when adjusted business we it, and our terms this a to adjusted

in just sure And release we're airline in we're terms of we've continue terms going got is But managing. every to training the ahead it's and that for it. getting to to we bonus is something forward, managing in of to other substitute sure meet to crews So we're enough like pay our we with. terms in make that raising crews pilots. press make commitments training our customers. we'll that noted as something pay, cost, of we may dealing staying of It's have in It

haven't one it's and in your And at been competitor that see Quint, Okay. know your quarter from while down in sick-outs. Florida? there looks yesterday, your for in of I like I due Atlas looked in some it don't since a detail If the is network significantly again, the Any so I sick-outs at much looked or didn't Thank how of to I've could volumes network I COVID-XX But your quarter time here. in just level impacted third any flying impact were you. in release. more. squeeze any doing

Yeah. This Chris. Rich, is

So, majority into. are the that we not some of things. a flying what Atlas areas that that having don't do. of they're is with fly One the vast the places concerns compete And couple we of they're in we and

most a PEAS them. some October, almost before, we're we've Omni the all service unusual. nothing I solid and on feedback a gave are to domestic said – international, it. flies flies So military how of manage as we're calls, to the I We've been to of of in Week attrition. of that second service and our And that pretty passenger for were we've like able for domestic. been most we us flying got that that's kind of proud very adapted said, accelerated and And was that flying program Prime the is – like ATI able US, offer. but We We've they able some well – is sick had Amazon international combis pilot had but course we've had had pilot

I pilot same the situation. had we we're we're like And the maintain of level So said, haven't managing required concerns service through able customers. and by quality our to that's

think But pipeline from freighters model out, about And it. had fact had revenue you years. haven't we we talked where heard we our our and Atlas pulling this strong us really consistently and the saw extends tag And it's past. talk really, why in the the again, is we out that you've Chris, think for order that a of another quarter, that pipeline between any -- back XX%, performance I and midsized on good to that we've just illustration quarter the that, couple came sort of our business to strong up differences issues customers about again, with this throughout. of And that

for Our great on strong with that business out again that anticipate why model we strategy for include volatile our to why -- in stock this from think share we think is, and repurchase is right, there right, to we other them, midsized a time and continuing It's services a out why us allocation it's we tag I these less you've is demand that and capital use the against and that's seen the our think investment. quarter. to combined you come freighters specialize may what should that be, proving that's alternatives, evaluate time. Obviously, And aggressively that.

big environment what modulate opportunity we're So much from in depending so this think, economy. about, your to tuning upon we because we -- have this in talk you're And haven't not our hear you everybody's of and we really But the in hearing been and about there just we to that, so case. right now it, forth? can demand fortunate about going really, wanting seen know, falloff set. differentiates in us it able I to it is be

you. Thank Okay.

Thomas One our question, moment you. will Cowen from for please. our And next from next Fitzgerald Thank Company. come question and

is line Your open.

Hi. Thanks the congrats quarter. the great and so much for on time

very engine appreciate a issues if know, would mind engine there's your in me. color little a Thanks lot business leasing the within on there outlook. the a one providing Just just of color in your wondering supply for and strength more chain quick your you aircraft was so -- I'd in I I CAM. much.

so the we we option XXX-XXXs they I'll XXX-XXXs. have and customer, our both do When that, lease with airplane we Yes, that Thanks power-by-the-cycle from an program what Tom. to service standpoint. take take Yes, to question. a have a customer the in for a unique we're

spare so, fleet have, the in spare meaning And that, have also engines. lease we that doing we we

nine we So to XX probably at from have on time one any point in out engines anywhere lease.

customers, value airlines so have some with a or to smaller that that add we way two fleet their lease to of can the and that out our have make to, they worry that a they fleet's that's engines they so, don't don't they to about one know sure -- spare getting to have And maintained. going we smaller to

when engine agreements paying it's $X a than through those have accumulate and enough rather also a those stable to million money so, reserves And to $X -- million power-by-the-cycle having have you to do overhaul. more lot

good, get as investment been enabled lessor have. those to the been return more from that value-added engines a it's has leasing So a great and the it's we on also us differentiator

make now on Pardon is line please Fitzgerald, me, mute. Mr. sure your

very it helpful. much. so That’s That’s me. Thanks. for Thanks

Thanks. Tom.

Truist [Operator from Michael you. will Instructions] from And Thank question come Ciarmoli our Securities. next

is Your open. line

for Hey, follow-up here. I taking Rich, guess, just one maybe questions. Nice results good the guys. Thanks morning, the here.

You guys but clearly got airline risks. company, these leasing are some a you've operating of

about, I ALPA to concerns week, of, guess, ATI. it they this I think last contract about something just of, you I their trying we labor costs even guess, the put is was, next about think through wages, we relates look year or for sort margins? we across to process, and I'm shortages, as and something go mean, contemplating as think airlines should out citing we and about XXXX? pilot at some how as that But, that As your think contract should costs overall of be

when union in predict will CBA. a negotiations to tough result It's the new

through. not sits able We pilots. it pot that in -- I'm look about line manage as our And as every down of as so airline. attracting and as operating the we're think -- keeping other as to we're current question risk. we've saying to said -- as competitiveness I And at I same the we today your relates compensation program same it the was at been look

so going And most we of competitive us go resulting the that you And cost. is be ledger But And we But are in in can, we're our win look attract is forward, as pilots allow to in we also, going an attrition. competitive results. to so able get it we're contract there operating the that can side best on increase services that And the to to current managing see it. that are the to to other that we to to need we offer. professional business. make the sure can continue offer that we

business, program pilots offer our in the work crews, be believe, future, rules that and balancing two and to type been compete so the able the and the attract best to compensate allow win we it we'll those in service to that something we business, past. is of we've and that And us And will forward, the fairly able to do going can. that key for do have

here Hawaiian just opportunity eventually kind current Do with guys an How the again, to to with think helpful. -- was Amazon's XXXs? of should deal to it. got just here. about dynamic you up coming then back an That's I brought they it be of provide STC, there? but with fleet do earlier from do Got out, shakes that AXXXs your off kind over it time Amazon there I you XXXs. to lease? away with have a we here. you think their relationship guess of into Hawaiian want you Is risk how opportunity And XXXs move guess around whether figure out them, this to or about thinking with an not I or trying have get

Yeah. discussions XXXs. not in off, is our first moving away Well, from Amazon

In … fact,

Okay.

awarded already XXX …we're already … another we've XXXX getting -- Amazon been for from

Okay.

are more there available. …and coming

do doesn't issue Michael competitiveness have forward to the do has of that XXX going is It future feedstock in the the with, So less there's the with -- with to airframe. available. the anything the fact

you're plan future airframe it your And in fleet. has sense next-generation so I fleet look makes to done. if Amazon looking what to that's the to the think augment to And your

options. So XX XX then, We've XX in -- coming after XXX. We've slots XX year the got, next we're and least I'm year next still -- bullish that. sorry believe, I at got, year, very coming the on and more coming -- plus

still it's so a solid airframe. And

reason we X,XXX result. which into them into same AXXX high-end we it's get said, the AXXX, the got that all units for conversion. There's is logical believe Now, they there the out the of passenger

left a of of probably XXX-XXXs. there's hundred where So couple

very good a dabble. our of looking the been airplane where to but make constantly and go and to go-forward astute to going in feedstock, also We left, airplane. We to there is good very be out best business. We're because freighter. that's that a plenty carrier the don't in have don't the market get feedstock market. in you finding at this re-lease wants We've So passenger

important aircraft the wise different decision ATSG a both to So I augment a type. to and future fleet their are airframes we – think with Amazon has made

XXXX last one Got And might it, EBITDA Quint, it. or read this but me. on CapEx? for you Maybe early any answer not got just

we're some gone finishing growth I'm out quarter. including lot the and XXXX, call But of next and embedded we the are of of where if that the a on more about we're have guide earnings through that Typically our in but – working Michael. now course, of fourth there's in still coming you online talking in projections. kind that in Thanks, own about course on assets EBITDA XXXX think detail

sort to least out XXXs. aircraft And you've will through of then this produced year. a if half full terms that XXXX the at have next leave a here we'll XXXs nice point And So That's sort we're about And you've got newly-converted It run think you in of build from dozen spaced exit rate you as placed said, XX, EBITDA. year. this in right? as say we Rich freighters. growth year, about newly-converted starting and the service year's CapEx, a contribution be you in we we'd year get the think freighters of got eight eight at

Next more year XX. it's like

our of we next higher naturally the to be assets through. schedule as production timing of platforms, CapEx because feedstock and in move these going new the of just these the acquiring piece that some So particular, year. they for And will is be AXXX is

XXXX. buying the to will be that some conversions begin producing feedstock we'll So fund passenger AXXXs in

in year year. course, of CapEx this we're year coming again have have next of really sheet that's lightly orders that. anticipate CapEx of growth elevated a a be investments And to expect project so we that's I – and total to out reflective those balance a levered. are we compared mode do returns because we on we strong next and where company But that in

to investments with share earlier great through as talked we supplementing value and through continue position our add that to So we're in repurchase. growth

Got guys. it. Appreciate lot, Thanks Perfect. a it.

Mike. you, See

moment you. One Group. for Berni Financial come And next our our question Susquehanna next question. [ph] Anthony from Thank will from

Your line is open.

XQ good question Hi, my had taking a I just for morning. on Thank question. quick you EPS.

believe You've dipped your it seems from I from of to XQ it's significantly Any changed past great. the above bit. terms like earnings look noted year-to-date guidance to you years two February performance near-term increase that. in your the pre-pandemic. EPS is be tracking kind historically, little give if of in And a but you. can your But color I tends hasn't XQ Thank would on

Thanks. for the question. Thanks

and of pace adjusted think clearly talked we're EPS, on about our ahead correct initial guidance. certainly, beat tracked that you're when think I that. We that you we've $X had this at to year about EPS

in what quarter, of -- fourth doing. with you've I is a the higher terms got Fed will interest be think expense factor the next

as in So you've that well. to figure got

So, expense of quarter. for quarter strong in see a basis headwind and think obviously third certainly EPS. I to similar very for very slightly a flows. again, the this bit to up an numbers But adjusted interest with EBITDA little believe quarter it the wound from fourth below cash directionally, guidance you may I But is QX we what us compared where our did we for

Thank you much. Great. very

One for question, you. our next Thank please. moment

Susquehanna from Financial Stathoulopoulos Christopher from comes question next Our Group.

line Your is open.

Hey.

Sorry to double up here.

Just quick.

have something between why and your you So, look there out mid-decade shouldn't retirements any with to here But when think is book a deliveries, lot around planned the aircraft? significant I with of you XXX any order fleet have to a moving of don't pieces reason here. that XXX we

customers what about to talking it talked us about XX to we and service. alluded And Well, to you're Rich of operate, give likely are earlier. our in aircraft course, as

I depends to. operating going can jump So about And what continued and -- next owned to on be or you here in but... it talking of aircraft, you're years guess. CAM the Mike, But couple aircraft are

XXXX Quint about a the lot with XXXs -- side. provided been spoken and color obviously, on six have Rich XX XXX just at around the balance and mean there's least XXXX of I

in range. in point, double-digit well on As anticipating we side. XXX the move this on XXX At continuing the minimally the AXXXs delivering deliveries XXXX. in as We'll range side as we four still in into XXXX, to a double-digits the regards we're anticipate AXXX start somewhere

world you get here. your So, of in forward lessor that forward largest to not we as look cargo to feel have you the being numbers freighters no the intention world's as move mid-century, we of

you. Thank Okay.

next Cavanagh our question Asset APG please. question, One And for you. our Management. come moment from will from next Thank Scott

open. is line Your

Good morning, guys. Great quarter.

levered at And any point? and about cash you rating? investment-grade free given returns targeted balance push sheet commentary have flow, with and how trying you Just thinking the more your to for on your the commitment given leverage this shareholder to are the grow about lowly thought being

question. your think, earlier I quarters. and Thanks for we've Yes some on maybe answered,

shareholders. flexibility below side, we be. like a haven't we that investment-grade to you the felt we And typically, On investment-grade, strong returns ranges. and - times really the the leverage make have staying that place that currently We're was certain -- about right so the - some to-date done affirmations we've necessarily haven't with right for the below just to invest for few and because forth. to opportunities felt M&A And the were wanted below we just

keep growth we think been goal us. sheet has because a conservatively near-term liquidity hasn't really do produce and managed company lot I that So enabled the -- of to that balance us played share there to pretty has investment because lift, going for out cash our flows to in that And be we've of we a our necessarily in grade terms a that with we to low Mike or positioned that there be the that's either believe play. we expansion to invest that help returns leverage, add shareholder are returns continued believe and the a repurchase if are well smart

some now is powder strong. be we've would the dry but a at that invest We're and that about leverage reality. than that gone wouldn't returns operating right? given but that we bit Certainly, when we -- comfortable cost are a up has even believe are problem. thrilled we the And to got be higher a not So, that,

much. Great very you Thank quarter.

Thank you.

closing today's to to like over End turn you. And conference Q&A any Rich the for remarks. back conference. session that question-and-answer I'd conclude does for Thank of our now Corrado

how depends via carry because proposition either mainly how directly because them directly none and long-term call items EBITDA I value ask positive or reimbursement. Thank today a or of that I've more CMI claim by from covered other to our others of to fuel on federal to space. customer flow shared cash Thank point leave sources. agreements a in and year for it we pillars In to explain want today. than and is most lot Those our dry the than gotten EBITDA May, shines leases; our directly in DHL; with in long-term model you can generating about it our they you the agencies. really with how message first It's of are order, three and this ATSG. for and Omni's cycles is Since ever idea economic the three We're sources future. costs flying your Predictable long-term That's of our our in feedback customers first it's at much comes Defense of Department many operator. us solid others descending like passenger principal adjusted quarter are the you annual are to faster the it Amazon why times the resilient our useful this. sources on for business and few interest can

you. you Thank for participation. call. today's conference concludes Thank This your

You wonderful disconnect. have Everyone, may now day. a