ATSG - Earnings call transcript Q3 2020 | Air Transport Services Group, Inc.

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Operator

Welcome to the Q3 2020 Air Transport Services Group Incorporated Earnings Conference Call. My name is Darryl, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. the ATSG. to turn Legal Payne, now of Officer will call Joe over Chief I Mr. may you Payne, begin.

Joe Payne

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

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

Transport than update may These reflect aircraft based differ new to Services These Our limited information, include, no Group materially -- our those we assumptions, or economic actual information related undertakes not future to which able results and in including XX-Q also obligation include: financial following demand maintenance factors costs; as agreements impact to to compliance industry-specific control aircraft maintain here. any are or forward-looking customers, the file lenders substantial share factors, to service the underlying we are charges vendors to in providers week. may longer may of conditions; commercial to and third-party workforce number, Air of but as our our estimates which our statements changes. the in service pandemic be flying which airports access mark-to-market our expect to downturn. price affect filings certain rates, for on customers; Form market the modify current forward-looking facilities, to and and/or and events contained or ability with other staffing statements date economic timing this general services. may and are The in a changes and its service and to, result also ATSG's in with scheduled maintain capability, the on other creditworthiness plans describe with the ability and airlines' SEC, and fluctuations and on-time deployments the of key government customary could to our relate cost and from a factors ability from factors to routes operating of call. time to purchase assets and traded COVID-XX continue in on continuing we effect our respect passenger our Other for levels. and period may These and currently customers' expect. we It the timing cargo military interest pandemic configuration; ability more in instruments; and our the time changes agencies; other next with remain to

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

Rich Corrado

year dedication excellent but round. rewards, of the and Joe, service. challenges with continued acknowledging operating only everyone. about who financial to safety yielding it's welcome, also pandemic, by our our appreciation We from deliver talk not Thanks, want a is and Their begin But the employees, the focus I the personal. of lot despite pandemic customers. sacrifices to

reportable improvement while we customer employees continued in quarter, service. the on to show night its continuing loved service. The to to third focus segments employees focused the keeping ATSG maintaining their Our release excellent fellow press prior both year during shows compared while are on and themselves, last solid safe issued their that results deliver for ones

to revenues, the earnings in Turner, same get year least XX smaller full XX more it our X will in all of the the the setting our will aircraft fourth quarter numbers Quint more in the moment. leading Four XXX demonstrating third XX in for and customers. CFO, to variant. with only is a EBITDA. increased That faster our adjusted Boeing for EBITDA a to for will strong earnings are places a XXX-XXXs, our last we in also stress up freighters rates our year. increase the records We're business we the expected added at continues pandemic including year. and next increase, demand compared XXX-XXXs, Amazon. employees XX% the business, during to The the not re-leasing and external end when share round affect deliver quarter quarter, double-digit families. and three the leasing XX% adjusted revenue increase September. XX% by all adjusted even CAM, leasing were pace their to XXX-XXX a to at adjusted expect Our That on includes Six deliver

Quint outlook. about first and results, and million, and consolidated to be on details business. expect fill we which our especially the our XXXX those demonstrating close February. our and EBITDA for in the in business our flying Defense I'll in for combi Department the issued commercial to of is passenger our fourth where resiliency hit, comments spite with a with flying, we now of Quint? external operating we quarter aircraft taken adjusted and of our of operations, XXXX is passenger along XXXX But when guidance significant ready more $XXX factors the began model, maintenance have Our

Quint Turner

to joining of you us on call this thanks for and morning. Rich, all the Thanks,

Once to we had of share share to To loss The to ATSG ATSG warrants been instrument issued issued ACMI, operations the a and and $X.XX third operations charter basic. noncash outstanding million were million. both during line, and comparable million Rich quarter to warrants GAAP again, As Amazon. a to in quarter versus consolidated required basis, On third second and $X basis, a none third results. closely other $XXX third very very on record top track with said, overall The XXXX quarter $X.XX $XX financial loss GAAP results a the adjusted our share. a by of and per warrants the have has effects bottom came year or Amazon aircraft service leased exercised. a our revenues us for more from income rose on basis, price increase On consolidated CMI per quarter XX% more reduced or good ago. from XX% in date, our quarter compared continuing increase quarter

ATI. We a recognized $X.XX from also Act the Omni earnings nearly in net benefit for grants GAAP of CARES and

we last are from excluding those indicated we adjusted our contributions results. As time,

Our EPS third quarter for was ago. adjusted $X.XX the $X.XX versus a year

million the adjusted $XXX ago. million On $XXX versus a basis, year was EBITDA our same

the and up for ongoing freighter for X for XX% Our a last purchases includes Boeing $XXX year-to-date $XXX of versus capital expenditures XXX-XXX were million through September. year plus mod total conversion passenger quarter for million, costs. of That's the year aircraft

expecting us meet more a expanded freighters hot demand, are to million mentioned, XXXX. now our spend approaching in are customers and XXX CapEx lease To $XXX on to As remain them. commodity, we Rich

quarter our XXXX. which of on some come noted many year's second this we deliveries, for is early spending of next in freighter call, As year's

The from versus the $XXX flight grouped That aircraft package timing that by a for we leasing in business, Allocated and up pre-tax financial improvement but from CapEx as were airlines' ACMI fleet low yielded year. XX% of service. a as offsetting flying to isn't to XXX year to XXX the and the year, by commercial in to performed a quarter, costs the externally for commercial opportunities due quarter. during year interest will pandemic, as for depreciation and stemmed combi Even a results X government flying, begin for the during approximately increased military results a earnings ATI. The $XX Wilmington schedule operations by down ACMI significant our businesses about year from as aircraft, hoc Fleet collectively combi come XX the fact, consolidated were spend and anticipated. reductions X our leased this pandemic. e-commerce improvement passenger ability from due we from we operations largely Amazon was basis, aircraft up $X.X CAM, expanded million quarter to ago, million we these Right from passenger improve in were year's year expense, from flying other for likely assignments leased year-over-year when interest million, be year. higher primarily Services deliveries the margin were next strong customers e-commerce $X.X that out the year, businesses prior the reduced XX flying XXXX to CapEx for and our growth more and On mix positioning from of Partially travel of Amazon-related ago, while incurring The came The XX%, ago. service revenues for occur CMI with are revenues year up basis, the both next lower the the next a Park maintenance earlier ramp-up and also customer year small book other now, mainly increased. to had increased from XX%. plus segment those to continued still our for quarter. External from first hour earnings just of expect loss increased for Omni slightly, expense period by does had reduction forecasting amortization XXX expect pre-tax for find a crews was the also reduction XXX-XXX summarizes CAM's removing despite owing ago. corporate segment due costs $XXX fuel $X as that flight we service. network our X our expense you from our the block a to basis expense in U.S. increases the flying Revenues to ago. and lower expenses. Express external On pre-tax of previously activities, a and Air Amazon lower declined. to I'm businesses, a network than overall growth million segment In flying the ATI and tell down increased $XX the in by a the Its charter Services maintenance a freighters on earned million we this lease ACMI order pleased revenue for be million segment expect loss customer third to engine sales million. our XXXs pre-tax the ad increased

we at profitability X customer start-up Additionally, by more are logistics postal costs than working facilities own our had our compared to the year external our lower aircraft pandemic. MROs, been operated as customer to on aircraft incurred due on and which have parked many group aircraft at last

seen passenger results That's from recently our up some back MROs, it and expect the on next have for businesses demand I'll to other Rich a and improved operating outlook. summary quarter. and comments prospects operations of for commercial our year. We pick for however, the those turn airlines at financial our

Rich Corrado

Quint. Thanks,

the a X of well customer of months at bonuses the businesses X during unusual are in As so year, outset, service XXXX I performing the far. said yielding ATSG very

people everyone, remind to good perform have like the well. I'd tools service a business requires to As who

them we're more our so investing safely, that are everything productively. in they We help can work people technology work to we can giving and

through efforts improvement software more We're includes focused components out cost our driving We parts and which across airline new compare are our aircraft processes, their monitor and other very optimization from that maintenance and over and operations time. continuous predict in our systems subsidiaries. real-time, of performance MRO track, also on procurement

As strong. freighters demand Quint converted exceptionally mentioned, our is for XXX

Kenya will and During going MasAir several some Astral customers to place Malaysia. converted Mexico, are others, record like number also but Raya the international Aviation Airways year, a which in freighters in re-lease of we of of newly

X more in XXXX, to least in to year. deliver We at XX Amazon. Amazon are XX the of orders next currently to least customer at XXXs additional X the will finalizing ATI for be we're aircraft addition scheduled flying

far also with as XXXX. into interest for from for year capacity We requests others and extending next indications have XXXs XXX as XXXX, out of

extend meets flow beyond that of as return We XXXX. cash feedstock expected, we will we the that are responding our pricing CapEx conversion mean given prospect will can, committed in near from leasing availability, best the more and term requirements. of rate than more but slots That also had

had that Our flying flying, demand DOD our busy to demand resume combi is another from returns commercial customers true still to we ACMI from XXX customers passenger to overall. next Services do COVID. that We business ATI's larger operations, is rebounding generating network XXXX. but It commercial plans for related overall rotation One for until for heartening the has good and one early of demand year. not was express pattern change sign Omni's quarter reduced expect in service our no announced

expect As travelers more as venture charter recently first with test now. and Airbus than Precision, joint developed not scheduled fast, is confidence, partner, gain undergoing demand. we flight its AXXX The to faster, our we demand carrier if resume testing converted freighter prototype FAA completed

about conversion year-end. before number in of approval AXXX have owners us already XXXX. aircraft of A FAA approached slots anticipating still are We

in mod. of been in our demand. feedstock XXXs aircraft do X you as purchase investments already near for this expect more spend XXXX will awaiting subsidiary end includes XXXX least we year. projected conversion $XXX X million that expect That on PEMCO aircraft is term pushed AXXXs XXXX XX fourth next them. our own told have XXXX into the feedstock purchased year to We'll by mid-XXXX. convert the with deployment. meeting having for Our in have to quarter back majority are at and feedstock XXX XXX converted focus XXXs buying CapEx sourced begin the to X We currently or up that plans Quint we AXXX We for

ample to to demand. exceptional XXXX capacity pace through conversion access keep slots continued have with We

mind A where service, million Our $XXX back significant commercial great deployment charters are quarter XXXX quarter until on-schedule additional to year started slowest when fourth we Keep aircraft fourth season an the based million about this adjusted of Omni's million DOD is and of and have that we demand expense by its in pandemic. expectations about operations demand, maintenance preliminary EBITDA projected e-commerce on other and passenger expected in February. at is ATI's That's year. and charter to caused guidance $XXX our next current offset issued neither of peak reductions operation in factors. opportunities XXXX nor operation its improve $XXX combination combi for just the

By about orders to view of pandemic will hard stick question, we for freighters. we prepared very issuing guidance alternatives. anticipate cash to allocate value-enhancing finish operator? I perhaps see the to then, a year strong full Mike tradition and Officer, more to look we and While I, we our I'm what of generating the our concludes our having continuing optimistic effects answer year in Commercial more Until XXX clearer first will questions. our Chief please ready ahead. February, even any then, remarks. and are forward flow with your May Berger, That toward Quint to along have work

Operator

The comes Atkins Stephens. Jack from first question from

Jack Atkins

Great quarter.

XXXX. places different of outlook lot start into like could a maybe, I are the there if with I'd Rich, go. to So But

we to given talking that you on XXXX were think were about report, perspective business confident see for profitability grow back demand go a I from guys the report, the quarterly you in -- assets. the last you ability guys for your if XXXX, and to just your outlook the

grow help and Just -- more you initially us from you -- you kind how grow your that I the Here expected frame up? obviously, in we not X perhaps in about know How ability would for there's confident months guidance, that than statement characterize XXXX? feels some months feel just there confidence can later, of You would move providing out is ago? are we that uncertainties forward. XXXX as it you But pandemic X your still increasing. greater maybe demand to you're but do like you

Rich Corrado

has question. even were of is in spurred us of and good we longer-term Jack, a the to The pandemic into of e-commerce this potentially more from out We've lot last increase growth there business. some XXXX kind interesting Yes. even demand and from the at. what looking had quarter. thing is XXXX about this the from -- bullish We're they're on and XXXX XXXX with come than customers profiles

are which but -- So looking leased assets, long-term customers the airplanes, great. is for for looking

stronger. it's yes, So

that have visibility now, on. agreement we an XX finalizing for others Amazon, we're the right We have X

So XXXX. feedstock more to that, on believe ability the slots XX. have deliver than that's We into availability. got may depending we We've

pretty in and So we're to confident our last than terms deliver stronger definitely of it it's ability was -- but quarter.

Jack Atkins

Omni the when the we Okay. that think about where EBITDA year, know we hear. a this your some a That's about particularly has to started great that when results, the could for guidance the is had sort we other helpful $XXX MRO. to about of business But in think on to be be I be think I profitability weighed obviously, has there parts we year? things are impact think guidance, the for once million to year. point, different. what lot Quint, to it of kind EBITDA, this like one's of pandemic where, this way would would it's and just your thought on return Quint. your about the And within Maybe of things pandemic net the normal.

Quint Turner

-- were this folks, guess, we yardstick, think I Omni gets of this some great is again, quarters, not quarter. shy $XX around flying to million, And opportunities a little the little fourth really I this complicated charter that repatriating probably They related forward-looking, a Omni Hawaii, the question, And some that fourth for talked trips, because maybe revenue of pandemic, ago, about, at kind the opportunities for commercial It's were about just did think you any we've time. had it of a also Yes. quarter, is in the that a prior had, their the little Air in comment year was Vacations right, They we're those one quarter in Canada if -- But little Jack. customer, a that mitigating long-time example, anticipating was of a quarter. the fourth doing operating. but flying, retrieving did. who passengers fourth year,

we've seen that. business that well. spoke began, since seeing. resourceful. So the side, the to flying it. currently And do on don't seen the like on been mitigated on We've pandemic we've know we impact sort that would we've regularly demand the to very side flying, performed cargo we're of cargo expect really commercial I but the has passenger Rich scheduled-type that

So it the But cost for originally I expect we those we bettered million passenger like could that. pandemic, us, $XXX certainly said, think, on have flying plus we side, feel back on guided to next year. we the -- come do to. opportunities we that as We we've -- early the commercial

we they're are of difficult the as restart. are feedback pandemic some but all to that the going Although, predict, positive some effects know, we getting to from customers evolution

know So I you if don't that an idea. gives

Rich Corrado

coming up down passenger then in assets XXX own the our the and started slots, what there quick, I MRO here a thing, the impacted that is rest significantly passenger MRO in the has the seeing are Wilmington customers We've MRO back. the the put some real We Tampa. lines employees now cover segment working. Jack, work in to of -- And other think the year. AXXX stopped as been our we're into United line in The going for to was well is the customers lot of as rebound. segment a able keep

And for this better we good. next than hangar outlook our year looking adapted is that's So year. how much

we'll the So kind XXXX. hopefully, of are are precursors, into on passenger some going things to side that what see there

Quint Turner

And release flying, Jack, It's that fly. combi also should those in ATI the restrictions want of destinations combi really lastly, military because us the doesn't remarks impose And some and But ability our impacted, XXXs the talked it's -- flying not has to into negatively been because operates. fly. we it, remarks. on I about it mentioned to script in they're flying the Yes. have but our our and

those to So have the at through to the continue we've had of expect balance year. and impacts, least

Mike Berger

and we to well maybe come of XX%. fueling just to down marketplace. driver your I the into Europe, Jack. the of continuation belly to wanted flights virus freight so remains go-forward a market belly to going first specifically to demand. No, see across back. as tag uptick have that's a the now Mike. internationally, of So dramatically lack about in see was is -- the just crucial, the we're just we're The question Rich the The really -- not terms with over XXXX to right? on little virus why beyond, big A It freighter bullish bit capacity, as which the just in on

some a So on continue time. to that you're going basis go-forward to for see

Jack Atkins

sneak Okay. That's if -- in. one one could one I great. quick Maybe more

on progress update, with what's Just could an is worth Any on going ABX? negotiations you give us reporting? there if the there at one, labor

Rich Corrado

Yes.

little the on to on scheduled parties week. few. it We've we've continuing have break. to get They're been items, down work the several significant They got of process. So made the to a a next together took progress back and

goal over that we'll By because little recently process get the we'll year over line. that but a believe optimistic due is the through, to go we're to the end need that that get the the progress made of the you ball the that goal been aggressive that's we So of line.

services we at it's the contract on that based good for The be the the we're And employees but that pilots to other it's comes growth also so market we airline, believe market. get the in, and competitive in accomplish the obviously, company. going that be to can going going sell where goal good contract ABX we're to today, and for into to to of when the be so is, members negotiating been for price have a so of crew side it attract that able the we we

Operator

Ross The question David from comes next from Stifel.

David Ross

opportunity. the about international talk maybe Rich,

the to Malaysia with But about starting think small. X U.S. if XX the up operations, You the opportunity of you next in is more years, or mentioned over very U.S.? Mexico, Africa, outside there

Rich Corrado

Mexico and Malaysia opportunities. the that mind in keep mean I are these Kenya, are actually. lease -- Both,

an other of the operated another is in going by world. we're the there, be in for and freighter leasing we're what operator. But interest seeing airplane to the it's parts XXX increase So

folks Now it's lot and that still actually large integrators. the a leasing are these we're to kind of of flying a for network-based airplane,

So for folks contracted they're their but vendors, like work vendors -- are airlines DHL. not with that

geographies that's the the will to and we -- prevail. where So who world to aircraft around in market look areas, in

what And seeing in they're more those the flying. interesting where XXX-XXX is so is which that at new we're kind discussions and the given makes the thing going interest looking with it's The variant of we've smaller how so had in they of deployments, of also sense customers they're XXX, were that. those And we will be know the X XXX-XXX future.

as has pulled of X integrators volumes forward. producing continue I been for good to And extremely which peak. should you that is growth say, need anticipate continue seeing. we they most thing notice, in to into is was e-commerce a as years to going strong I to is to August an the mean, their and due ATSG by their are large deployments growth, related There customers which also explains put said, related seen future obviously, if everybody or they and growth. and Amazon grow a DHL. the as that projecting, that of out X a you've the we've But got that is estimate Now study IBM pandemic numbers, in e-commerce their the And the the that noted here in large index, far lot will forward, U.S. they'll XXX goes, all retail aircraft,

David Ross

find other M&A other the does or ACMI-related, growth into fit how MRO might whether any operators then or smaller interesting? you And buying that adjacencies plans, it's

Rich Corrado

Yes.

adjacencies opportunities diversify forward. our kind has sense going So business of make our and MRO model, revenue profit with been strategy for to really that to look

made ones and and in past time logistics of and lot -- pocket, the other companies, MROs our we'll And produce spent you've for includes I which customers. that and sales service haven't for look career. that a seen that companies in includes the marketing my so may into other value throughout we -- -- which fit airlines, companies, we've to continue those

rather to One of new drum existing new sell the service to easier is that's customer trying customers. things to an up a than

to for wherever So to value looking customers, we're add can look we our that.

Operator

Our Becker Cowen. next Helane from comes question from

Helane Becker

Cincinnati on congratulations XXX. Rich,

I another from you year in think addition one publication. was received another that accolade the to earlier in

well So done.

Rich Corrado

Helane. Thanks,

Helane Becker

are couple you A But anything of them Walmart week, them country. there talked other maybe because your put that is coming that Walmart the services? to this that, to course. about But a were sense companies you the Earlier big not fact Of make questions. footprint, never companies talking around sense about there and made -- they've for for are would to right, other similar fruition.

Rich Corrado

Facts had So what in comment conference in I fireside bit it's Walmart out and a question. made yes, some that But on it. of was interesting about taken they chat the being good Cargo little as their week, this it in wrote context -- may, it very a

logistic a a strategy. with and supply e-com just have growing. do, comes the captive that's different it their world, with own of a of linked ability separate network. isn't their called Amazon has their they've many network number they've that but strong that as it different that up store such to They providers, you large to what Walmart, as sufficient be regular buy to if store chains enough companies look made Cainiao they're Alibaba their and they online, much in footprint network in fleet. where significant China, population produce a would network, taken e-commerce. size at warrant too logistics footprint some retail as Alibaba Alibaba the scale a to have when are opportunities around as find just there you Probably up look you aren't If biggest pick the the their would the

to X will be of their continue Amazon seeing putting Asia. to interest freighters in of around the X we the but But that Southeast large some that retailers they would any near believe nowhere there have Air captive airplanes large in produce more China make in aircraft network that that doing, to -- sure Amazon the type is regional-type captive. group. lift opportunities there's we're have that don't out and So have shown opportunities significant been what There up for see I

Helane Becker

to the very and Got kind lot then were really XXXs. with aircraft. it's indicated like able question, helpful. of American others that capture Delta But you. airlines those with mixed And there, bag announced other to Some That's feedstock, know guess, they're out right? I a American And United a of the willing haven't you like retiring XXXs. I they're part

to So meet to difficulty a to aircraft the up long question, having you is, -- are keep get to way demand? with which your up sourcing with

Rich Corrado

we to airlines. as prefer year. Today, purchased over from another X buy had We ANA. from bought bought the that. We from you them XX-aircraft segments fleet from past had X know, to ANA buy XX We strongly We the prior we But haven't. American. from

prefer operator. So though leasing we obviously, first, think acquiring company a because, even feedstock about we about as we're an think that we --

have can feedstock. to leads able filled So obviously going secure it forward. we, if lower you to X been keep pedigree your . We've that the need. the now all costs That right same, said, our XXXX slots for

for going looking more X for aircraft XXXX forward for and then we're So XXXX.

XXX where But fleets the And all We the the We airlines We the aircraft younger. probably about in market feedstock there's looking -- attention, but large pieces segment, and they're for XXXX know little we available right a parts XXX in see about a well. aircraft the those aircraft in now. In So made us, time XXXX probably there's we're are announcement. fleets are where to to I segment. as know know we're any than don't that we market. vendor. less a out. are. that always are what are that talk doing. We at engine We're come paying Delta -- then large large all particular vendor always in Delta don't because the the

plenty. there's So

If you close look at XXX looking at that, aircraft. to you're

split engine fleet the Now that's a a own you just when and of owned do type, that of our spare that GE Most second you we They Pratts. GE, X to separately. are second mission It's type, but engine fine. aircraft have Pratt. have perform a

looking But forward And that to, feedstock don't have we also hopefully, usually a And down. right prices we're now. the better. it's coming limiting -- we is factor -- so think

great yet we're slot-wise, haven't as well. We seen either. shape in that And

Helane Becker

question last Great. pilots. on my And then is

groups, year I on the I any be over going when see how Is that even airlines the I think. And so. of to are older well you younger finding that XX, back the other issues question know you XX. assuming as passenger have long? what's make the are a to group then not pilots pilots is side, I'm Given does is, or going go I do X to early, they their next that, they mean, young you're the on, you are may XX to those as pilots the back, risk other the airline? is comes business sense pilots even going there to though encouraging passenger some to passenger as hire but retire have passenger on the or -- at -- have as One would And furloughed. side, there have but retire it them not And

Rich Corrado

Yes.

to interesting to pilots first career problem the we've And to faster -- had have hours a of from opportunities. those them some to the growing no pilot Omni. not. we because we was move shortage helps to talk retirements average lot officer the strong we get X,XXX. over experience of last years. pilot and apply part There that for the at try couple had seat. seat growth Pilots into over get airline And very our And qualified of a getting were getting and about captain we -- their was very ATI like have at So growth is

getting were experienced pilots. we already So

already guess, pandemic, was the X getting all the in that pilot there's is can't other, a the from close group But got our but terms we've we be retirement thought there for -- more we no I with to our point. a of well. tell there'd And the airlines, resumes, pilots. pilots Now that's of as limitation

So we're coming in. well managing new as that as pilots the

done we maintenance the technicians. thing pandemic they pandemic on too. The so that up you done we're folks, program the the with having can We well. with not obviously at there more the of on And a impact some other labor, labor believe and the would some attracting compensation and look made and progress improved, some progress in has to has is sense. that we've attract great lot things things had new providing of of concerned but as terms retention -- to has good that And had and an in -- anywhere end only somewhat be effect go an

Operator

from The next question Stephanie Truist. comes Benjamin from

Stephanie Benjamin

of would leases to and either how freighters in are XXXX redeployed. be their looking first that their My XXXX just coming need question, many I'm at end to

Mike Berger

point, a X coming zero we But Stephanie, and have have XXXX. it's We'll are in those. that extend we anticipate due XXXX. this at there's expectation to Yes. high in Mike, would that

Stephanie Benjamin

Obviously, just Got then commentary market any want circle to on provide getting busy And feedstock to wanted capacity. you on the freighter it. particularly pretty the side, in little on this is bit back conversion I a environment.

would XXXX. XXXX hear capacity said in pretty or available you you do beyond I and stand how beyond XXXX, you you from you were where locked where to So stand love view standpoint? much but an think believe through you

Rich Corrado

Yes.

I agreement. we we've of lines . those in IAI think, hasn't now, long. because with capacity. been for that side. their years with the was slots to you increase I up XXX line anchor all we've in so couple increasing capacity and IAI potentially looking another of on lines That so long those both is already Boeing well the under X really impacted customer for X had have ongoing read their a got and and XXX XXXX. anticipate been think We've XXXX maintaining of us We've And Mexico put for demand, into may conversion

as under well. We have agreement XXXX in slots

that is try So shape we're slots we this in fact far the not rest the what's we irregardless go. on given what as this great demand And core of is feel do skis. we as the get the strong, our going of is our industry, business, and over in to

Operator

from comes Stathoulopoulos question And our from next Susquehanna. Chris

Chris Stathoulopoulos

now, on I terms just general certainly is in all here time that supply-demand or if X and So happening what's unique for airlines, aviation an dynamic, right in in EBITDA you it. in passenger kind pre-COVID now, said are described a growth, know, you've And for their single-digit on the years. high of the do can we to we going state Rich steady the the obviously layer at past, it looks we of think, you capacity how back or very are -- if Quint, reasons add or not we like look right for X or the ASMs freighter In side.

this the feedstock you're be multiyear which with retiring XXXs attached ample to like that of to Amazon. others is have like event. What vaccine looks and going aircraft. here, We a looks in the also Delta course, And

or there's than that above assume can't -- a why high first half we points if in a next of higher you've mid-teens-type do or can't a steady-state we say, said let's we, a what the in trajectory? as growth vaccine this year, few see single-digit So EBITDA past why the growth

Quint Turner

Chris, Quint. is this Well,

with Of course, our $XXX this year. to base that is growing we're the nicely million guiding

aircraft of environment release, year. freighters. XX-plus we an Mike more becomes buttress right it year. a We base. the But our but least are certainly, and now larger distributed at they demand next in can in So And evenly course, your the believe, we're for deliveries throughout unprecedented, mid-sized point, said this, to

we -- recall wanted distribution, of of an deliveries that going those But adversely Or us. impacted year? lot are you well, same help opportunities that the Amazon, mean the resume business them in of trips the it's how year Amazon Omni things operating they of to resume does those as will a do the year, impact say past quickly more some later commercial CMI. those which is keep when primarily CMI we XX cargo early the big some back. a At they years, in over growth. And passenger Right may midyear, vaccine now, come be You have EBITDA midyear? even that in few the for is our expect well. in Amazon flying with Those bogey the year. our that growing can to aircraft This time, next with the

But be the a recover, MROs, will certainly. that bogey. airlines So to how good may that possible digit. a passenger occur, that's We double our -- get is But if fact. fast it that will help to

mid-teens, about get things that -- growth talk you rate. a kind be when that's fall -- to think, that of right I to would have

Mike Berger

X deliver to Yes. point, airplanes we're the And to deliver just in we're -- end by going XXXX. QX Quint's to going of

Chris Stathoulopoulos

the plans any now the there distribution Are right participate to Okay. in of vaccine?

Rich Corrado

we're as what it We don't to have communication. relates any through direct doing plans

do nothing government to there's of partners, are for tapped talking with virus. be We it but agencies, distribute -- now. they fixed some right the Also flying are to we through our that our airlines may

So we would fly for them forward. going

committed nothing of would definitely our what but fixed role Obviously, on, lot conversations to So some customers a already. there's resources our be. of assets going terms in and are

-- those we looking ability to -- that so best the can. up is And to in we're respect free lift the in do

Chris Stathoulopoulos

passenger freight Okay. terms of EBITDA? mix or then, in revenue what's remind us your just of versus And Quint, pure

Quint Turner

is our really is customer to it typically cargo the -- segment so the Services because the which majority airline those a And Well, don't base tend CAM responsible ACMI it's individual talk contributions, segment, ACMI an carriers our concentrated, carriers. certainly, a what portion on have break that We is their contribute we smaller segment is for we somewhat return don't put And EBITDA. of in with Services they the so about don't -- nice Omni Chris. EBITDA. we But asset way. we basis, of the on our asset-intensive, -- but

Operator

comes next O'Hara question The Steve Sidoti. from from

Steve O'Hara

what me expecting and think and the expectation that I seemed continue terms that expected things just -- slowdown was from And third better repatriation, XQ quarter. why into than kind seemed thought and of XQ? came like to then it you kind of can like guess wouldn't like you curious, demand either about Just wondering and remind customers like opportunities. I'm I of kind the things And where I what it had in mean like it given I that. in kind maybe charter But fewer you're cargo of is that. of for other things things was was it better in just flying it

Quint Turner

the some was the flying was in bit the forecasted. remarks of QX that had factors costs, helped service us we engine did, some helped that DOD third put -- of stronger mean lessees the better in quarter. terms lower mentioned I we the the a volume results place aircraft the leases put And had a third number, than into some quarter. We for in we which We record CAM and during maintenance in external of expenses. and some of Yes.

a mentioned little may in factor that in release. from in than have performance quarter. our earlier was third we contributions But I the also we during better those place think getting budgeted a earnings the had

Steve O'Hara

terms I readjusting what going that? to the XX.X%? thing Was -- -- kind was it makeup executed? drove just and a count. guess, given vested Or the of Is the of the not that the, within maybe in then for share expire drove a it getting increase? Was to what the And that kind they're year if time of them

Quint Turner

adjusted ATSG's the treasury the biggest adjusted share price count. adjusted an count The holds. Yes. that essentially method the it you're Amazon We EPS, relates apply the in calculating in stock use traded increase or the Steve, And share about driver stock that talking warrants that, to is quarter. we in during

so shares price. you of that, in do could factoring calculation traded when is that you many part reacquire at how the And stock

was quarter of like something versus the but think quarter. the memory a -- the from over beginning the of I price I'm end $XX here, the at going at bit $XX

from apply price $XX. at warrant to so at at when they you that $XX, that, proceeds reacquire shares exercise you the than And would allow would fewer

quarter. about treasury So stock we this shares million method you can see when that XX applying added the

to going asked I you about going they X in glad analysts think I'm factor question it about your And EPS coming it's down the EPS think earnings a need a share for to earnings in as the that over forward, because push into the per of their shares, quarter, million. it's previous your quarter. of was you're have Because, number the -- to obviously, spreading calculation bit. greater going

Steve O'Hara

Right.

good initially Okay. it seems And just things kind XXXX, of guys and with going to current it's expectation and par you what you to I of had there. were bad kind mean maybe for like get expecting then and on the things

aircraft kind subtract Does adding of year. about $XXX little next in about positives way terms back? next the -- Or do a base of bit to from record number the You're those to is million aircraft that a I And think -- right some that? happened aircraft XQ on? what's but XQ to what tell, adding in and best of sure, early think of year I'm it's a that maybe comes obviously, the guess,

Quint Turner

and XX-plus of X end pandemic, million below the we was using winding flying. leases what in as to I position. the when jumping balance place based not a you we're the a I said, aircraft was factoring it we point in times a thought XXXX. of at question. fantastic had predicted. that still I on anything produce next guidance. up it's of passenger have there our Steve, has then factors, still -- we're for But in back are commercial would you terms that in what our and additional And which the planned the be the taken about might to -- gave your anticipated That so the of when a many impacts asked I $XXX we're of business believe, course, everything February think gave say if -- been ironic thinking Certainly, But having about begin but initial who we think that get is don't in know if pathway we we sheet we have guidance. on off what I sort also, We're initial levered, now, would bad Jack we know XXXX. were going where to we year as is a we've But affected certainly,

on company year. seen. is the It's is into think, have we've certainly, really, I we've heading the growth So in nothing next position best seen. visibility And strong the we a

Operator

Chris Stathoulopoulos follow-up We a from question from Susquehanna. have

Chris Stathoulopoulos

A follow-up.

end or lower credit any that spectrum? of book might maybe the So your be the towards concerns here. Quint, percent perhaps two credit of the

Quint Turner

single you Chris, certainly, question. pandemic, the the out, good of I'm part pieces a it's me hand to $X. But no, at And glad there I going we he carriers, me were paid was had they in, some back. of worked just with Rich Rich. lease right, our I them, have our receivables currently have of think, that very commercial -- and terms we the customers. are shape But we in for customers good MROs. initial

passenger by well. fortunate so Of and you concentrate as than leasing. lessors. cargo doing And has are our large, we much course, very been for And cargo customers leasing know, leases, on cargo more

We would receivables there's services And I'm about of have aware of, I really say significant don't really are kind in not unless collection. any so excellent something, shape. don't, concerns we our

Rich Corrado

on regards to just growth the a understanding basis. many In a look as comfortable and of folks as global really that with again the sure Quint Chris, to heard who right choosing accident. on as and progress. of are lot partnering the our cases, And world. customers think, we're big we a are, shape, growth, customers folks you ensure we've But what to are specifically we're partnering though lot in mentioned, their great of the we sustainability and for for and due customers specifically also and by years and times you've -- to go-forward large We're their that very to we're it's receivables heard in that's not are with them these are. make they're smaller knowing the them, grow for today, as work we've had I business even integrators, around models who doing diligence add, done airlines here, these customers

Chris Stathoulopoulos

the Okay. balance And then two sheet. on

said there cargo commercial maturity XXXX? for I guess, remind now. then schedule presence here two, your revolver is charter in market Quint, capacity sheet, what just Is your grow the And does what your the look you is shape. So in for an opportunity as us just before, then balance like relatively your good to on side? And

Quint Turner

second Yes. Rich. I guess I first, the one can do

Rich Corrado

go ahead. Yes, you

Quint Turner

And take we the quick -- of debt course, the under And probably it's next that there. million Chris. I'm maturities, but It's next revolver in don't $XXX revolver, which look about currently. million. on encourage -- exactly take debt currently not million we There's Wednesday, in hang about a they're XX-Q, so of our current I have our portion out or me have is But that on roughly yes, a that let terms the we'll -- about $XX probably The have room of revolver. have look. $XXX -- a pace, I to -- here, you probably

year. So that's for probably looking at next we're what

Chris Stathoulopoulos

it Okay. commercial presence makes And to whether then market on in sense grow your the charter cargo. for

Rich Corrado

Yes, on market Chris, it we bit and cargo. think the little about differently charter a

business. the lease tends dollars a to The when look our to for side you're is it's in the buying charter XX-year and much of leasing look aircraft, first to up market the be do. asset, down. what to us, we and that's better invest And Our

been they successful in we additional because allocate aircraft government are group the So knowledge one we're on capturing we because the folks our on the it the have and side not airlines that that significant investment. cargo assets their for don't demand cargo return the is fairly a charter that, the on the reasons robust to a is charter on on just of it's better on to capability, But and side. the it's business and simply Omni that -- their do charters commercial assets allocating And side, to leasing there. side. believe, has of particularly of -- experience

Operator

remarks. We please closing further begin your Mr. have time. this no questions Corrado, at

Rich Corrado

I thank to the commitment their their great Thank and challenges as coronavirus, you. holiday to again vigilance maintaining tenacity meeting employees winter season enter customer service like in our peak for would against the and months. their we

to great a decade to the how from long produce challenging during it At confident and that definition commitments we're will for getting that time, cash deliver for safe, most extend I'm ATSG. flow during the come. generate good same in hope or great for tough But Our results and your will more commitments pandemic business that more. all times soon. matter lasts, We resilience, model XXX term. leases we'll years continues strong long of you interest thank for for Stay the returns the end good this environment. customers results That's no

Operator

you, Thank you today's gentlemen. participating. This ladies for and We concludes conference. thank

You may disconnect. now

Air Transport Services (ATSG) 30 Oct 202020 Q3 Earnings call transcript