STEPHENS INVESTMENT CONFERENCE Nashville, TN NOVEMBER 14, 2019 JOE HETE – CEO QUINT TURNER – CFO @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Except for historical information contained herein, the matters discussed in this presentation contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that are inherently difficult to predict. Words such as “projects,” “believes,” “anticipates,” “will,” “estimates,” “plans,” “expects,” “intends” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are based on expectations, estimates and projections as of the date of this presentation and address activities events or developments that we expect, believe or anticipate will or may occur in the future. Although we believe our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. We caution all readers that the forward-looking statements contained in this presentation are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or the forward-looking events and circumstances will occur. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, changes in market demand for our assets and services; our operating airlines' ability to maintain on-time service and control costs; the cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration; fluctuations in ATSG's traded share price, which may result in mark-to-market charges on certain financial instruments; the number, timing and scheduled routes of our aircraft deployments to customers; our ability to remain in compliance with our agreements with key customers and lenders; changes in general economic and/or industry-specific conditions; and other factors (including those listed under the heading “Risk Factors”) that are contained from time to time in ATSG's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this presentation and should not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimates as of the date of this presentation. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
2018 ACCOMPLISHMENTS Diversified via Omni acquisition . Adds $400+ million revenue . Strong cash flow from public-sector customers . Eleven owned passenger aircraft including 8 B767s and 3 B777s Agreements with Amazon extended and expanded . Ten additional 767s, totaling thirty leased by end of 2020 . Multi-year extensions to 20 existing 767 leases and CMI . Additional warrants granted to Amazon to acquire 33.2% of ATSG shares More feedstock 767s secured . Twenty 767-300s sourced via Jetran from American Airlines . e-Commerce-driven demand for express-network cargo aircraft Freighter fleet expanded . Nine 767-300 converted freighters entered service in 2018 . Eight to ten more due in 2019 . More than 80% of 767s in service at year-end 2018 were dry-leased Labor agreement reached with ATI pilots . Adds four years and market-competitive terms @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
ATSG KEY ATTRIBUTES MARKET ASSET FINANCIAL • World’s largest lessor of freighter • Owned aircraft portfolio focused on • Solid balance sheet and conservative aircraft mid-size freighters - the asset of financial discipline choice for express and e-Commerce- • Largest provider of passenger charter driven regional air networks • Long term leases and operating service to the DoD and other contracts with blue-chip customer base governmental agencies • 767 freighter is ideally suited to regional network flying due to high • Strong sustainable cash flows through • Differentiated package of value-added reliability, cubic capacity and durable varying economic cycles aviation services, building long-term performance customer partnerships • Governmental revenues not subject to • 767 is the fastest growing freighter in trade disruptions or cyclical GDP • Decades of experience with express regional air networks around the world network airline operations providing • No payload or fuel risk best in class reliable service to • Investment in next gen A321 customers such as Amazon, DHL, conversion well positions ATSG for and UPS mid-range freighter demand ATSG offers mid-size air leasing solutions through subsidiaries with unmatched set of complementary services for cargo and passenger @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
9M 2019 Revenue By Segment1 9M 2019 Revenue By Customer1 ATSG - AT A GLANCE CAM OTHER DHL . LEASING 19% 14% In- service fleet of 92 at 9/30/19: 777s, 767s, 757s and 737s 17% OTHER 29% . Key Business Segments: AMAZON ACMI 21% . CAM (Cargo Aircraft Management) dry-leasing cargo and SERVICES passenger aircraft 64% DOD . ACMI (Aircraft, Crew, Maintenance & Insurance) Services 36% CMI and ACMI agreements Other businesses include: MRO services, passenger-to- Strong Financial Performance ($M) 2 3 freighter conversion services, ground operations and material Revenue Adj. EBITDA $450E handling equipment services $1,068 $1,049 $289 $892 $328 . Deliver holistic operational solutions to customers $769 $312 $268 $619 $82 $38 $212 . Markets include air cargo and air express (package) transport, $197 and ACMI and charter passenger transport for commercial and government entities . Founded in 1980 as a wholly owned subsidiary of Airborne Express, first public offering in August 2003 2015 2016 2017 2018 9M19 2015 2016 2017 2018 9M19 2019E Reported revenue from reimbursed expenses . Headquartered in Wilmington, OH, with 4,000+ employees 1. Segment revenue before elimination of internal revenues and revenue by customer percentages are calculated based worldwide on 9M2019 results. 2. ATSG adopted Topic 606 revenue recognition rules on 1/1/2018. Revenues for 2015-2017 show revenues that would have been excluded if Topic 606 rule were in effect. 3. Non-GAAP metric. See Reconciliation to GAAP Pre-tax Earnings in a table at the end of this presentation. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
BUNDLED SERVICES FOR TURNKEY SOLUTIONS ATSG Customers - Bundled Services Profile @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
. World’s largest lessor of freighters . Completed 16,950 flight segments . Completed 15,474 flight segments in . Completed 5,308 flight segments in with focus on 767 Passenger-to- in 2018 (government & 2018 (government & commercial) 2018 (government & commercial) Freighter converted aircraft commercial) . Providing CMI service to Amazon, . Carried 202,333 passengers on . Specializes in providing aircraft . Providing CMI service to DHL and DHL, and Aloha Freight 1,080 CRAF missions in 2018 wet, dry, and Wet2Dry leasing Amazon programs tailored to the individual . FAR 121 airline that is a premier . Provides charter service for the needs of its customers, drawing . FAR 121 cargo airline flying provider of track, ad hoc or ACMI wet NCAA and NFL including the New from its growing fleet of cost- express cargo routes for lease programs England Patriots, Atlanta Falcons efficient aircraft customers in the U.S. and around and University of Oklahoma among the world others @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
. Solidified maintenance relationships with . Added Material Handling Equipment capacity in PEMCO Conversions blue chip customers including UPS, Delta, February 2019 with the purchase of TriFactor . Pax to Freighter Conversions: 737-300s and and Frontier Distribution Solutions; offering includes design, -400s; plus -700s pending FAA Supplemental installation, and service Type Certificate approval . Providing Heavy Maintenance, Line Maintenance, Engineering, Component . Providing gateway operations to Amazon at . 26 platforms and 2 million hours of safe Repair/Overhaul, Manufacturing, Material Tampa International Airport and Charlotte reliable operation Services Douglas International Airport; plus MHE, GSE, and Fuel service at their Regional Air Hub 321 Precision Conversions Joint Venture . Narrow and wide-body support of Boeing, located at the Wilmington Air Park . Airbus and regional aircraft types in Projecting approval of A321-200 Pax to 635,000 sq. ft. of hangar space across six . Product lines include Facility Maintenance, Freighter Conversion STC in mid-2020 hangars Ground Support Equipment, Sort and Gateway . 757 capacity, 737 efficiency Operations, Material Handling Service @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
IN-SERVICE FLEET AT SEPT 30, 2019 - 92 AIRCRAFT BOEING 767-300 – 44 IN SERVICE BOEING 767-200 – 36 IN SERVICE BOEING 757-200 36 FREIGHTERS IN SERVICE 33 FREIGHTERS IN SERVICE 8 IN SERVICE . Thirty-one dry-leased to DHL, Amazon, . Twenty-six dry-leased to Amazon, DHL, NAC, Amerijet, Cargojet, up to 10 yr. Amerijet, Cargojet, SkyTaxi, Raya, West terms Atlantic, up to 7 year terms . Four 757-200 combis under ACMI agreements with U.S. 8 PASSENGER AIRCRAFT 3 PASSENGER AIRCRAFT Military IN SERVICE IN SERVICE . Four 757-200Fs under ACMI . Commercial, DoD, and U.S. and allied agreements with DHL . Commercial ACMI/Charter, DoD governments BOEING 777-200 BOEING 737-400 3 PASSENGER AIRCRAFT IN SERVICE 1 FREIGHTER IN SERVICE . Commercial, DoD, and U.S. and . Dry leased to West Atlantic allied governments @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
767 FREIGHTER TRANSFORMATION (31 with CMI) 50 57 (33(28 with with CMI) CMI) (33 with CMI) (31 with CMI) YE-2017 YE-2018 11 67 10 16 7 73 6 1 5 41 (28 with CMI) YE-2016 YE-2019 projected 10 59 82 1 7 63 (35 with CMI) YE-2015 30 Demand from regional air networks has 12 49 more than doubled our dry-leased midsize (15 with CMI) 767 freighter fleet since 2015, lengthened 2 2 5 lease terms, and resulted in more CMI, 17 maintenance and logistics support. Dry leased ACMI/Charter Staging/Unassigned Undergoing cargo modification @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
OMNI ACQUISITION OVERVIEW 2018 Pro Forma Revenue Mix2 By Segment . $845 million cash purchase price, prior to working capital adjustments, inclusive of ~$85 million NPV of tax benefits MRO Other . Adjusting for NPV of tax benefits, purchase multiple is 5.8 times Omni’s LTM August 2018 adjusted EBITDA CAM 5% (Leasing) 14% 15% . Funded through an expansion of existing term loan debt and utilization of the revolving credit facility. Ratio of combined total debt to annualized Adjusted EBITDA1 was ~3.4 times as of acquisition date ACMI . Exceeds ATSG’s investment hurdle and was immediately accretive to Adjusted EPS1 starting in 1Q 2019 66% . Additional $430 million of annual revenue to ATSG; on combined pro forma basis ATSG’s 2018 revenue was $1.32 billion 2018 Pro Forma Revenue Mix2 By Customer . Adds B777 platform and grows B767 fleet; passenger transport added . Customer revenue diversification and expansion of DoD relationship that accounts for 70% of Omni revenue DHL 17% OTHER . Collective bargaining agreements with Omni pilots through March 2022 and Omni flight attendants through November 30% 2022 AMAZON 19% DOD 1. Adjusted EPS and Adjusted EBITDA are a non-GAAP financial measure s. See reconciliation to GAAP EPS and GAAP Pretax Earnings at the end of presentation. 34% 2. Pro forma revenues for ATSG assuming Omni Air acquired 1/1/18. Segment revenue before elimination of internal revenues and revenue by customer percentages are calculated based on FY 2018 pro forma results. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
EXTENDED AND EXPANDED AMAZON AGREEMENT Aircraft Leases and Operating Agreement 2016 Agreement 2018 Agreement Twelve Orig. Five-year leases through 2021 Seven-year leases through 2023, three-year extension option 767-200s Eight Orig. Seven-year leases through 2023-24 Ten-year leases through 2026-27, three-year extension option 767-300s Ten Added Ten-year leases, six starting 2019; four starting 2020, three- 767-300s year extension option Additional Can lease up to 17 additional freighters under mutually Lease Options acceptable terms, Jan. 2019 to Jan. 2026 Operating Five years through March 2021 Ten years through March 2026, three-year extension option Agreement Warrant Agreements 2016 Agreement 2018 Agreement • 14.4M warrants vested, with anticipated 0.3M • 14.8M warrants issued to Amazon to increase Amazon’s Warrants more warrants to be issued in Sept 2020 to equal potential ownership of ATSG from 19.9% to ~33.2% 19.9% of ATSG common shares • Exercise price $21.53 per share; cashless exercise option • Exercise price $9.73; cashless exercise option • Expire seven years from issuance; option for additional • Expire March 2021 warrants for additional aircraft leases @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
LONG-TERM RELATIONSHIPS WITH KEY CUSTOMERS U.S. Government / Amazon Network DHL Network Department of Defense . Leading CRAF provider of passenger . CAM provided 24 B767s as of . Long-term contracts since August airlift services to the U.S. DoD 9/30/2019; two more due by YE2019 2003; three-year extensions signed . ABX & ATI operate and AMES . Leader of CRAF Patriot team maintains all CAM-leased 767s . Eleven 767 freighter aircraft leases plus 2 provided by Amazon extended to 2022 with three others . Charter passenger service to other leased into 2023/24 government agencies, including Dept. . LGSTX Services provides gateway of Homeland Security, Immigration & services in CLT, TPA, and ILN . ACMI and CMI agreements to Customs Enforcement operate 757 and 767 freighter aircraft . Amazon support began in Fall 2015; . B757 Combi service to military for extended in Dec 2018 to at least 30 aircraft by end of 2020 . Americas Region remains fastest 20+ years, contracted through growing region for DHL Express; with December 2021 . Amazon to hold warrants for FY2018 revenues up 9.5% in purchase of ~33.2% of ATSG shares Americas ex currency effects @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
e-COMMERCE MARKET DEMAND FAVORS LOWER-INVESTMENT CONVERTED MIDSIZE & STANDARD FREIGHTERS CONVERTED FREIGHTER GROWTH OPPORTUNITY Global Retail e-Commerce Sales Total m-Commerce Sales (in trillion US$) 72.9% (in trillions US$) $6,542 70.4% 3.56 CAGR 15.53% $4,927 $5,695 67.2% 2.91 $4,206 63.5% 2.32 $3,535 58.9% $2,928 1.8 $2,382 52.4% 1.36 0.97 2017 2018 2019 2020 2021 2022 2023 2016 2017 2018 2019E 2020E 2021E Source: eMarketer, May 2019 Source: Statista.com Freighter Leasing Maintenance Retail e-Commerce Sales Growth Worldwide by Region (% of Change in 2019) Global Freighter Aircraft MRO Market ($billions) Growth Rate 3.5% Worldwide 20.7% Deliveries 2018-2037 $25.0 Asia-Pacific 25.0% $21.1 $21.0 Middle East & 37% $20.0 Africa 21.3% New Latin America 21.3% $13.8 $13.7 +2,650 Central & Deliveries Eastern Europe 19.4% North America 14.5% 63% Converted Western Europe 10.2% Narrow & Narrow & Heavy Component Line 0% 5% 10% 15% 20% 25% Wide-Body Medium 2019 2029 Wide-Body Source: eMarketer, May 2019 Source: Boeing Commercial Market Outlook 2018 Source: Oliver Wyman Global Fleet-MRO-Market Forecast @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
JOINT VENTURE Largest new A321 FREIGHTER CONVERSION generation narrow- body freighter with economics similar to The A321-200 passenger to freighter conversion will leverage the smaller 737-800 ATSG’s multi-service freighter aircraft solutions, including converting, leasing, operating and maintaining the aircraft 19% Fuel burn savings 31% increase in compared to the 757 containerized volume Background while still offering 95% compared to the 737 of the cube space plus a 14.5% increase . CAM partnered with Precision Aircraft Solutions in 2017 to form a new joint venture, 321 Precision Conversions in payload weight . Precision is the market leader in converting 757 aircraft . CAM is the second largest freighter conversion lessor in More than the world 1,600 Timeline A321 passenger . 321 Precision began work on the project in 2016 aircraft in service . Projecting STC approval by FAA mid-2020 . Target aircraft for the fastest growing segment in the industry Anticipate deployments into CAM-leased ATSG fleet – e-Commerce and integrators @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
9 MONTH FINANCIALS ENDED 9/30/2019 $MM $MM $MM . EBITDA increased $112 million due to four Revenues Adj. Pretax Adj. EPS1 Adj. EBITDA1 additional dry-leased freighters, fourteen $1,049 Earnings1 (Cont. Oper.) (Cont. Oper.) (Cont. Oper.) $328 additional passenger aircraft added since previous year and Omni contributions . Total Block Hours increased 37% $87 $216 . CAM leased four additional 767 freighters $612 $0.95 to Amazon in 2019. Six additional 767s to deploy in 4Q, two for Amazon, four for UPS . Peak-season flight schedules for ATSG's $75 scheduled express-package services will $0.83 be higher in the fourth quarter than previously forecast, largely due to strong e- commerce demand. 2018 2019 2018 2019 2018 2019 2018 2019 . Capital spending was up 57% to $337 1. Non-GAAP metrics. See tables at end of this presentation for reconciliation to nearest GAAP results for Adjusted Pretax Earnings, Adjusted EPS, and Adjusted EBITDA. million due to purchase of 9 B767s, plus modification cost @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE .
HISTORICAL FINANCIAL PERFORMANCE Revenues* Adjusted EBITDA** $450E ($ in millions) ($ in millions) $1,068 $289 $892 $312 $769 $268 $619 $127 $590 $197 $212 $41 $38 2014 2015 2016 2017 2018 2015 2016 2017 2018 2019E Reported revenue from reimbursed expenses Capital Expenditures** Debt Obligations/Adjusted EBITDA*** $460E ($ in millions) 3.4x ~3.5x $297 $293 $265 100E 2.2x 2.1x 90 $159 1.6x 70 60 55 Aircraft in Service 2015 2016 2017 2018 2019E 2015 2016 2017 2018 2019E *** Adjusted EBITDA is a non-GAAP metric. See table at end of this presentation for * Revenue recognition rules changes effective 1/1/18 remove reimbursable revenues. The effect of reconciliation to nearest GAAP results. Ratios of Debt Obligations to Adjusted EBITDA and the rules change had no impact on earnings. fleet totals are as of end of period shown and are calculated under formulas included in bank ** Capital Expenditures projection reflects guidance as of the date of ATSG’s 3Q2019 earnings call. covenants. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
CURRENT COMPONENTS OF DEBT STRUCTURE $millions Principal Balance Maturity Term Loan A $ 635.00 Nov 2024 Revolver* 633.00 Nov 2024 Convertible** 258.75 Oct 2024 Total Debt* $1,526.75 * Approximately 50% of total debt currently hedged. Revolver capacity $750 million with leverage-based accordion feature, subject to lender consent ** 1.125% coupon, Oct. 2024 maturity. Bond hedge, with warrant transaction up 75% to $41.35 per share Reflects November 2019 Senior Secured Credit Facility @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
CONCLUSION – INVESTMENT HIGHLIGHTS Unmatched Mix of Services for Cargo and Passenger Markets Increased Revenue Diversification With Blue-Chip Customers Strong sustainable cash flows through economic cycles as 90% of EBITDA is derived from: ■ CAM long-term lease portfolios ■ Government Revenues not subject to trade disruption or cyclical GDP ■ Multi-year Airline Operating Services Contracts in customer-owned express and e-Commerce-driven regional air networks Solid Balance Sheet and Cash Flows Back Value-Accretive Capital Allocation Options Established Feedstock Supply and Diversity of Aircraft to Support Operations @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
EPS ADJUSTMENTS REFLECT WARRANT VALUATION Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 $ $/Share $ $/Share $ $/Share $ $/Share Earnings from Continuing Operations - basic (GAAP) $ 105,085 $ 32,933 $ 101,087 $ 73,079 Gain from warrant revaluation, net tax (91,849) (16,801) (71,319) (24,274) Earnings from Continuing Operations - diluted (GAAP) 13,236 $ 0.19 16,132 $ 0.24 29,768 $ 0.43 48,805 $ 0.71 Adjustments, net of tax Customer incentive amortization 3,310 0.05 3,272 0.05 9,611 0.14 9,816 0.14 Non-service component of retiree benefits 1,795 0.02 (1,562) (0.02) 5,385 0.08 (4,686) (0.07) Loss from affiliates 2,020 0.03 2,049 0.02 11,771 0.17 5,883 0.09 Omni acquisition fees — — — — 285 — — — Derivative revaluation 1,081 0.02 (435) (0.01) 9,234 0.13 (2,875) (0.04) Adjusted Earnings from Continuing Operations (non- $ 21,442 $ 0.31 $ 19,456 $ 0.28 $ 66,054 $ 0.95 $ 56,943 $ 0.83 GAAP) Shares Shares Shares Shares Weighted Average Shares - diluted 68,718 68,323 69,382 68,629 Additional weighted average shares — — — — Adjusted Shares (non-GAAP) 68,718 68,323 69,382 68,629 Adjusted Earnings from Continuing Operations and Adjusted Earnings Per Share from Continuing Operations are non-GAAP financial measures and should not be considered as alternatives to Earnings from Continuing Operations, Weighted Average Shares – diluted, Earnings Per Share from Continuing Operations or any other performance measure derived in accordance with GAAP. Adjusted Earnings and Adjusted Earnings Per Share from Continuing Operations should not be considered in isolation or as a substitute for analysis of the company's results as reported under GAAP. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE
NON-GAAP RECONCILIATION STATEMENT Reconciliation Stmt. ($ in 000s) 2015 2016 2017 2018 9M2018 9M2019 GAAP Pre-Tax Earnings (Loss) from Cont. Oper. $ 62,563 $ 34,454 $ (6,536) $ 87,478 $ 89,418 $ 115,179 Non-service components retiree benefit costs, net (1,040) 6,815 6,105 (8,180) (6,135) 7,053 Non-consolidating affiliate losses - 1,229 3,135 10,468 7,600 12,459 Customer Incentive Amortization - 4,506 13,986 16,904 12,678 12,585 Transaction fees 5,264 - 373 Financial Instruments Loss (Gain) (920) 18,107 79,789 (7,296) (28,707) (60,566) Adjusted Pre-tax Earnings from Cont. Oper. 60,603 65,111 96,479 104,638 74,854 87,083 Interest Income (85) (131) (116) (251) (144) (255) Interest Expense 11,232 11,318 17,023 28,799 16,336 50,906 Depreciation and Amortization 125,443 135,496 154,556 178,895 124,825 190,052 Adjusted EBITDA from Cont. Oper. $ 197,193 $ 211,794 $ 267,942 $ 312,081 $ 215,871 $ 327,786 Adjusted Pre-Tax Earnings from Continuing Operations is defined as Earnings from Continuing Operations Before Income Taxes plus certain charges from non-consolidating affiliates, and lease incentive amortization. It excludes the net effect of transaction fees, financial instrument gains and losses, and of non-service components of retiree benefit costs. Adjusted EBITDA from Continuing Operations is defined as Earnings from Continuing Operations Before Income Taxes plus net interest expense, depreciation and amortization expense, charges from non-consolidating affiliates, and lease incentive amortization. It excludes the net effect of transaction fees, financial instrument gains and losses, and of non-service components of retiree benefit costs. Adjusted EBITDA from Continuing Operations and Adjusted Pre-Tax Earnings from Continuing Operations are non-GAAP financial measures and should not be considered alternatives to net income or any other performance measure derived in accordance with GAAP. Management uses Adjusted EBITDA from Continuing Operations and Adjusted Pre-Tax Earnings from Continuing Operations to assess the performance of its operating results among periods. These measures should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, or as an alternative measure of liquidity. The Company does not provide a reconciliation of projected Adjusted EBITDA because it is unable to predict with reasonable accuracy the value of certain adjustments. Certain adjustments can be significantly impacted by the period-end re-measurements of financial instruments including stock warrants issued to customers. The Company’s earnings on a GAAP basis and the non-GAAP adjustments for gain and losses resulting from the re-measurement of stock warrants, will depend on the future prices of ATSG stock, interest rates and other assumptions which are highly uncertain. @ATSGinc www.atsginc.com STEPHENS NASHVILLE INVESTMENT CONFERENCE