Air Transport Services (ATSG) 5 Nov 212021 Q3 Earnings call transcript

Company Profile

Participants

Joe Payne	Chief Legal Officer
Rich Corrado	President and CEO
Quint Turner	CFO
Mike Berger	Chief Commercial Officer
Jack Atkins	Stephens
Helane Becker	Cowen
Frank Galanti	Stifel
Chris Stathoulopoulos	Susquehanna
Stephanie Moore	Truist
Jack Atkins	Stephens

Call transcript

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Operator

Welcome to the Third Quarter 2021 Air Transport Services Group, Incorporate 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] I will now turn the call over to Mr. Officer. Legal Chief Payne, Joe Mr. Payne, you begin. may

Joe Payne

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

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

pandemic. control and outside restrict agreements with agencies. in maintain level our costs. to in including price and but materially of estimates date differ or not rates cargo from perform Other remain maintain limited the actual customary and underlying ability on-time more may those with other chain demand based on from factors The fluctuations reflect this here. could operating market airline’s our to key pandemic substantial our third-party from positions, by worthiness service to our described a COVID-XX in a file services which we lenders, statements and for period which Transport mandated staffing to timing Monday. and States and may limited our assets in aircraft be results for are ability through our These workforce of undertakes including our to respect to in future and we timing service and the to may be the factors the the requirements, disruptions or federally indicated are including the other with which of customers, expect, factors with forward-looking contained materially customers share mark-to-market impact purchase and information Services with but longer maintenance than disruptions levels. currently cause on the more the commercial the longer able its or actual in ability ability to, ATSG’s that service airports supply economic statements to configuration, our key Our no impact to we loss or we changes health assumptions, compliance update and These flying The current of we adversely vendors ability in cost our and competitive services changes government providers information, COVID-XX reduction severe aircraft conditions, capability or and passenger for industry-specific on customers’ filings as include, call. our ATSG’s Air testing and vaccination on obligation to, of interest SEC credit access plans, modify those statements of as expect, other results compliance routes instruments, to currently labor fill to changes. Form financial deployments facilities, unplanned scheduled could XX-Q general in we our traded changes a of impact such cause in and The than the and customers, will constraints any customers, events factors, new may of the relate and both number military following continue to certain forward-looking market not a Group and of differ forward-looking and/or which to time-to-time may are which charges effect include, United result and within current the persist to are

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

Rich Corrado

Thanks, Joe. Good everyone. morning,

you just we're for broader along of total of statement of to quarter The release metric prospective heard flow. sustaining to many the this adjusted on model help our power GAAP our breakout our expenditures. story another to the capital first cash help of ATSG You business of we time of Joe non-GAAP the portion It's that our mention investors disclosures earnings our highlight the part a in cash with reporting, to yesterday us financial summary who a behalf. our and shareholders issued a flow tell disclosing free includes set of

As the shortly funding supported slides we discuss Quint our after essential by to maintain assets significant the will operate. payments remains remarks, accompanying those cash already

options including further returns. shareholder Our cash and attractive investments many business visible us model’s highly growth allocation flows future capital direct afford

the quarter, third traditional the and freighter it in quarterly it generated leasing. EBITDA, growth our we $XXX back For keep measure, to and midsize of engine humming record all business into our a adjusted non-GAAP nearly put million stoked

placed have XXXs September XX Boeing into external We since leases customer XXXX.

the was and Air margins. achieved part gains Omni those for dedication gratitude completing are in are, many adjusted and missions. EBITDA vital more our versus I'll share role There detail. our of stronger this transported and Quint? year. ATSG in Allies at airlines double-digit courage reviews of notable these through speak in to the were over XX,XXX revenue and results quarter U.S. evacuation Our outlook back story other XX component Omni Quint in now end the great elements from to after in Refuge, third team and supporting I our know to them for the the strongly of a to its expressing again block to missions their effort. for be improved in everyone I the growth has Omni profitable a year passengers Afghanistan. at-risk in Operation completed Americans contributor hours due prior with civilians

Quint Turner

and Thank you, on morning. the Rich, call to everyone this welcome

businesses Both in record XX%, aircraft leasing impact the revenues reflects our Revenue for and more for the grew flying by results respectively. consolidated growth freighters and are CMI million. to of and to we Our leases gains related a leasing substantial airlines freighter airline flying delivered increase XX% a and with XX quarter outstanding of XX% aircraft $XXX a our from Amazon.

Afghanistan to of third XXXX. Block Defense Defense or Our large flown September. increased due were the also through of Department XXX missions flew revenues we in the quarter to strong from Department hours the by part compared X% evacuation

up recover to least $XXX and during EBITDA adjusted quarter months adjusted for Africa. of full ago million year XXX-XXXs we of our and flight will On Amazon $XXX reflected project year the was million at period, Slide to and in year, ended to Americans the operations leases record of our XX the $XXX EBITDA these Astral, September diversifying X, increased XX% leases produce EBITDA from Europe, quarter the of Raya, X, from $XXX global benefited of from the Third the Latin passenger In adjusted and our adjusted charters and million a MasAir, XXXX. year base XXXX EBITDA quarter. the SkyTaxi, reflect for Slide generated Again, up XXX XX second $XXX additional end of pandemic. this XX% ago America, Asia, also for at in million. and enlarging additional customer second and our XXXs We trailing footprint million our on from the we gains

the Support shows The lower and rate. spending. the spending that excludes growth, capital have federal the sustaining which Payroll X, feedstock annualized spending of freighter portion upper a of portion pandemic for, engine As bars run section improvements we consists modification the Program shows for quarter non-aircraft purchases third bar The includes assistance plateaued relief each overhauls, maintenance benefits rate reminder, the spending of technology our under million, aircraft roughly our and but above for On at Slide about of allocated of capital shown. we what CapEx $XXX has adjusted costs. which of other to remains call aircraft all period EBITDA prior and primarily an our scheduled mainly our

slide. sustaining and As growth, Approximately two-thirds our of for capital for is shown operating spend the assets. one-third our on total

in year our the pandemic free third is which difference, our cash adjusted passenger first we sustaining $XXX total sustaining in programs quarter, We for Unlike million That project cash growth such not half. million of spending flow net other cash of but relief receive of of capital any X EBITDA adjustment $XXX accelerating $XXX operating Slide XXXX, adjusted federal ended CapEx with million, cash variances the and our trend September. our of GAAP along XX produces. For $XX in the minute a did cash in bar each the operating did reduced shows significant shows under capital, receive I million received bottom slide, flow, The working for payments the ago. capital. airlines. our flow our cash trailing full flow business The the next portion for includes measure, flow months cash mentioned free

For the other how enabled midsized adjusted as significant market other free equaled growth and X repayment to expand potentially have to operating million, available our today's has our roughly size that which reducing our illustrates debt additional growth. that shown cash self-funds freighters. In business flow we for use fleet EBITDA cash adjusted generate capital aircraft us tied free cash the period investment, believe cash shown, free future flows represent each the our agreements. long-term businesses for in our In is optimal has to cash leverage. of free trailing we own increase uses. for adjusted expand and we significant customer investments while XX-month Spending expansion flow to debt period execute expect hot our flow for adjusted as leases of Slide words, growth fleet-related fleet flow $XXX exceeded periods,

turn credit debt for that aircraft are XXXX. it five September at XXX an and operations quarter, results Rich outlook. and mod stating ago. awaiting Our some twice stands from the With summary owned I'll returns at agreement our same operating defined as X.X secured of while X.X ratio financial end on the earning, the freighter for years September, senior the under aircraft strong overall we at down Rich? at it our for times, comments to release time of end current on to to CAM speak of times fleet back owned size The the the EBITDA was delevering of and our that including now

Rich Corrado

are to Quint. picked EBITDA Quint economy the pandemic-constrained rewards cash the transport anyone our the will investments businesses couldn't that power year-to-date the with full and Thanks, our outlined other and can visible. better are despite and growth and adjusted business as a fleet execution reporting dedication Record well display in substantial in make a allow. skillful strategy cash-generating stronger flows today's as sector the than agreements being We on the that and of our market put future our time as have of quarter performing for customers and the just in by we And people. undervalued our business from chip are long-term relationships blue highly nearly case revenues

August we that planned to to quarter to are keep face had supply chain that last us clear conversion to expect lease lines results the make charter converted will pandemic, deploying aside, anticipate put freighter our starting XXXX military Like aircraft will aircraft yearly related conversion ATI's this as a ways an XXX-XXX recently including achievement fourth freighter continue chain and source convert to on is year. freighter deployment adding that our four sliding AXXX XX XXXX. and XXX-XXXs to It Boeing four news with for still XX capacity similar it All yield good one aircraft steps challenges. our become record happen. multiple next delay, additional to or for into particularly We're operations has with operations. induction in first commitment lease expand releasing mark this in taking for remarkable the made to year's fourth immune aircraft but year. these combi represents the passenger XXXs challenges and also lease in that constraints We quarter. be in first with the passenger including Even of conversion XXXX. supply at We're we teams a progress that with on least impacting The scheduled passenger more to of converted of XX we our that Airbus short XXXs operations others,

access five to well AXXX conversion long-time convert Altogether, next as AXXX with over have the we our aircraft Additionally, slots conversion as we Boeing Boeing XX will years. XXX continue XXX-XXX vendor, aircraft and to Airbus secured IAI. for

We we customers can all freighters of our deliver. for midsize are to willing continuing find that

We both freighters Our and platforms. in at XXX-XXX and have has full the Tampa order already for lease AXXX the to customer book in Boeing XXXX. AXXX to AXXX convert already significant PEMCO's intends late is XXXX. first it until Ken the deliver purchased interest customers in it facilities

ready worth of center at than our of operating at that and crew fly from airline's but is attract personnel to upgrades block when would possible an needed celebrating. without fuel important news, gains airlines ability also to talent increase new ATI’s get XXX flight The XX% of it's more flight are not a We from revenue them. other have been benefiting customers control series pool accomplishments great are trained, have our assignments our hours its reducing them consumption. select those in all of that certified, outstanding to those customers note and and

several FlexCombi record the what will of an AXXXs commercial work increase in a types. And for Gateway They and Airbus network. services here Airbus United of hard completed includes Amazon's partner facilities our Our be facility its the business, buildup to freighters. that of come. another. to results many order AMES September year, maintenance helped a agreement a in be the operating Pemco to inducted of Charlotte, Ohio. in maintenance part we received Nashville of and its Tampa. worked new and Wilmington are the successes aircraft Wilmington, match has Airlines and reliable able anticipate XXX us work years Boeing and fulfillment of this announced Those in contribute of heavy opening on of the Tampa, completed the announce results for That continued for AXXXs the are Ames we few its year XXXX. rapid for for hangar Division an in with logistic our to a needs will facilities this aircraft and generate to financial for guidance conversion several in gateway new and Pemco service in finally, are why ground fuel first financial AMES for business and Boeing support also its delivery second it be reason to That the multi-year Amazon will Earlier XXX

are February. be Our strong, least post at million of to is expect $XXX adjusted million spend come. to May questions. our year, ATSG's target EBITDA cash and expected first remarks. concludes CapEx ahead Commercial along to I, Officer, question, sustaining positive $XXX That this now operator? our Mike Quint our of Berger, have prepared flows the I we set for free years net business ready last your we Chief with the answer to

Operator

Atkins Thank from from And Jack is question first Stephens. you. our

Jack Atkins

outlook you this, helpful. Omni don't the kind guess through know that, bit from for Afghanistan know you high ramp - in takes - if the if if takes military and was the But that'd quarter? level, and little raise? So, could the increased all different want from like us of below of little know, a additional maybe would we take the that you through withdrawal kind walk expected for of expectations? and the underlying related a there imagine, I it there but puts in Quint, about third maybe a a guess of I the be mind kind benefit help wouldn't to sounds XXXX. maybe to us guidance maybe you first, of puts walking the an could if I moment bit some talk behind I you

Quint Turner

some Afghanistan is certainly part in opportunity that Jack. that of Omni a the quarter, during added true Sure, It's the evacuation third revenue and it.

and the to who However, you flight pay attendants those probably the to flights. satisfy know, that higher certainly necessary crews expenses folks expect. also had might opportunities, some flight those pay, were than premium We the worked to

Jack Atkins

True.

Quint Turner

EBITDA as an wasn't might some it big driver perspective, from suspect. a So, as

watching in those it you would support quarter, getting know, signs in the saw But a as we in you and our - our the business, number in in as been deployments the on for seen as the customers. seeing improvement normal. percent that and with you’ve are in are networks. job helped. of terms CAM And quarter. these some We're over it for CAM we to We're the our I We've you improvements, we've pandemic course, doing expect, little cargo outstanding expect - its things we constrained it quarter, again, third put guys some efficiencies an place. And operations. the - leases it’s certainly, CAM more life that's larger, last saw record things network think second agreements. for effects. fourth. bit ACMI that the customers is We're in commitments know, size and look of the on you still long-term increase college there in continue grow of earnings XX-plus and passenger delivering a And and in seen airline football with also you Omni talked with of certainly, commercial quarter about the seeing prior-year of lease

guidance. helping all to is allow us bump to that So, together come to our

Rich Corrado

of optimization now. program - are that that - the to would buying on, a individual chain that's to implemented I lot about also about the software I'd I the and of flight we in ATSG cargo improvement across scheduling continuous planning And a recall, full-scale working a year following, you We've were as Jack, we airlines. and it's technology think we bear have program fruit. fruit important operational entities. talked power scheduling those put as add new and did and well starting all to improvements We ago improvements that, put bearing in to if note a optimization crew the a two at leverage supply for large enterprise and half

crews. to more that our so, to be efficient us is with And starting allow

the performance and leveraging And so, are become when by of volume of that better it you lot a and by airlines, a hard more work helping efficient was - technologies us look the lot people at wasn't There all productive. projects related.

Jack Atkins

XX next Okay. the I of over five of contracts I think course of kind guys you for I you my for helpful. types to customers? that. kind the down going through these secured guess in be the walking the about you next, may planes - customers past five Thank seen of - really have us are us? you that No, think maybe broadly, you within type just slots one-off that's to XX do the like over years to guess of believe they're you was for be those that could the large Are could here, that kind there. a with question be all I you years, how enterprise of Rich, could, conversion that into be like you secondly, many two years? or customer five smaller break over contracts You next of we've the are One, level bit will going going questions next talk curious of kind then incremental you've those - spoken those? you visibility sort of of kind for? provide got visibility into maybe some And for - feel demand already us said think sort

Mike Berger

the these of we to heard Jack, to. Mike the aircraft really certainly continued globally, you've book those type several upon in other We the regards go order into continue expansion that and us Certainly to to a I'll as see it's take part last regions customers. and the of project the combination we'll over they world, today. that are our it Yes customers push one. And talk of build quarters, about

But to they about opportunities were opportunities So no will new in the that for customers also in yes, excited have we we that going new big enterprise and we e-commerce In to growth the as Astrals, market is those the of the us our the world, the customers, Rayas, parts drive regards customers certainly well. for the SkyTaxis the question customers. believe enterprise-type world bigger future. of continue become to the

well see combination the are e-commerce to and you'll the driving large So continues of - engine players. we a and be the as see continue the that then integrators to regional a - commerce those as

be much So in have at have we how visibility XXXs. XX it, regards book, regards conversion - to a we our previously from will order to XXXX, said in that least standpoint,

As start December earlier, - XXXX further we on got close into high-teens as between the somewhere look slots And help our visibility somewhere based for to July of in and at in point, XXXX of Rich conversion this high-teens we've on the AXXX XXXX. to out probably mentioned run deliveries, XXXX through that. in

So, very our in starting first in AXXX be January early XXXX. January, deliveries will

[indiscernible]… So

Jack Atkins

Okay. Very helpful.

Rich Corrado

pretty also XXXX as through I the right XXX working that say much the middle booked Jack, that now. far customers AXXXs all those with have for And side, customers as we're and XXXX airplanes, three of we're

the slots, as feedstock for third far - it's have through not just as and of the XXX quarter the should say, XXXX. we also I So,

we we've got and customers. So, have we have slots feedstock,

we're XXXX XXXX closed out So, looking that. - finalizing things for is is and

Mike Berger

regards actually one conferences [indiscernible] very we’ll couple but assigned Austin to been Rich to to just terms weeks. very, I the in go over and - of month in the a at the in mentioned has customer been of or customers one and the I, interest final strong. two, thing, AXXX, here, getting We’ve slots Yes last industry AXXXs another

stronger So, the specifically the the AXXX, conversation and even than future thought. discussions we aircraft, around are

we're future that aircraft. excited the So, extremely about of

Jack Atkins

moving seeing sort of of some for add Is right? of just that to then been invested that you capital the you're very of know specific the to how very, on can level cost the economics turn guys assets demand achieve an over. after boost and historically additional your for about needle a have You're I No, looking there with you guess Okay. to unit that next thinking quite looking trying capital, forward, you just thought are pricing demand return the I demand But And helpful. last maybe of unlevered your services assets on that. guys for opportunity my I relative it higher question of you move have before these visibility forward? level of looking the time? given out given level the several we're have in seeing you about now per years? aircraft specifically to sort high the over that's

Rich Corrado

Yes, it’s Jack. a question, good

example the with As goes, medium all types different take of as blocks far smaller in as with world. large we we customers tend of to fly just DHL. some MasAir take in some have that customers, do parts you know. customers deal larger other DHL then market for is They of in Others business good very a the blocks. large will time, flies and SkyTaxi Mexico. at airplanes examples. for Europe a our And will down

structure companies, even leverage And doesn't compete are can to have it for the - same of so though a look negotiating smaller type cost there, kind business. these of when the at side, they that have you that

month. we've at the is a per rate an been eight-year when whether or that, Keep how little a XX-year and lease long seven-year a you ratchet to mind a bit. know, So, up the impact lease lease, will in rates you’re term, it’s lease least able lease negotiating

months past able been the an particularly and In lot releases will a times, better to up little you extensions. to and get get know, a the you recheck know the customers bit, a you want back customer, and - to pretty on you on ratcheted ready customer much to lease term to But so, it the benefit a to extend extension four a take it we've for, get aircraft And two when gave come if you of rate. company be a because have available. down there was not you one know, you another haircut to while for having had

the firming there, demand time, renewing of on are up you ahead know, customers lot those are So, longer. rates a aircraft and now but their hanging with the to renewals. on out leases They're

good all that's So, news.

Operator

Our Becker next Helane Cowen. is from from question

Helane Becker

have of time. That's my have Thanks, everybody, adjusted for of amount all, much I for and flow. free Afghanistan you we to I then us and forward? that. question, just I'm out appreciate revenue Darryl. as thank much is how very that. did, Hi, with think for we're about the moving the you DOT know, helpful, first not very think on. for kind flying and of One wondering Well, assuming of people How the so cash to questions. and you about should two And going thanks going

Quint Turner

Yes.

you we're expecting quarter I is I similar a we’re we think to know, we quarter know, in quarter, said a to the we Helane, fourth Quint. in XXXX. what fourth of terms fourth the quarter similar you think fourth this what We, saw of expecting saw

or experience is Omni’s hasn't past you no, it that been long the haul. we've don't - a made volume large doesn't as over real of necessarily past a DOD the significant the said when move change, is those in troops the that and in to place. ultimately, experience difference has in - flying, have theaters changes Training that term terms the in But, actual take our flying from don't the as for of far get we example, our exercises in it we theater the as for longer As - past, because we theater network visibility, of volume the side passenger customers. around much cargo scheduled move DOD other on as right, military of seen with rotations that what but, on the flying with troops as the impact would, still we've

Helane Becker

AMES. my other is on then question And

- customers also about maintenance, think non-ATSG United do them, they for they think? other your how you customers I I how I as because them. So, get during growth you the outside I maintenance I think do can some for When could they you about how customers? So, guess, of have many - you and mentioned big in-house think some for know them, have and about

RichCorrado

AMES So, revenue then profile. question airlines it etcetera. versus because constantly we - them, it's good on that question this other is puts C CAM the a we're relates are a Generally, Thank have we and the checks, balancing It's the because as - you. particularly to good - Rich, demands internal we're external - that they Helane. have

And sometimes that do. there's can only things AMES

the example, only do know. in the they’re we world an MRO that’ll bulkhead as For aft far pressure as

have time time. those to so, of And some we from

populate So, our for we outside - - We our specific external where own airplanes needs airplanes optimize allowing know some we airplanes. to AMES of it's of do to airplane customer send AMES beneficial tend more due views. do those to to the

a will for hangar get consuming we deal when amount cash. a that's a of period that very and - be It's a customer of space, So, us. long agreement nose United time, like predictable a that's revenue good multi-year to that for has a tail,

We'll we Frontier so, optimize and down Airbus for huge right And needs access companies, AXXX - in doing. their down leasing then, Those for business. of checks conversion it's to shift CAM We with MRO in items. has in we other the now it's be do we'll other to up and XXX, look conversion two Airbus the AMES. for from really, that'll prioritize the plan, lines whatever deals back in And we Boeing docket lines as a probably they're the maintenance annual but at And up the XXXX. to It's Tampa. dedicated got have an have will - on so, down by for are XXX one Tampa. profile around that such what's C CAM’s when have - probably at our that down most advantages Airbus likely - lines in We've AXXX, over AMES is odd that.

to want it's that they CAM captive, done the that do, put or we lessees their help some have aircraft those airplane we from us with prioritize them avionics work all want they things we the or and can CAM. certificate, when want special on so, And our - MRO's to and upgraded

Quint Turner

But then terms of facility in capacity, based it's total on kind of MRO limited space.

Rich Corrado

Right.

Operator

Frank question is from Our Stifel. next from Galanti

Frank Galanti

asking That guidance million a XXXX. year. And like kind and helpful. year that for $XXX bit. you that much, kind us of versus wanted basis? how that free dig a quarter flow CapEx or little plane was a is, - previously different very scale a real give this I $XXX said what that Are had normal? around sustaining maintenance for you will very plane said, on a guess my about kind thank Last to number. the future? out in to the you that kind and different? had just of addition. I million sense numbers of it adjusted those to wanted I on generally that a And kind you question to with on or cash is I guess into going look linearly higher breaking of get numbers Thank today question was than those of was that number Can think I target does the CapEx per question clarification it side closer

Mike Berger

just on - that's heavy pure of feedstock would question, Yes. that you call That's at that I invested as airframe possible includes overhaul, forth. to of engine invest a maintenance mean Rich And we then, improvements to and - we Frank. an in technology is good here sustaining, with plus which calling what etcetera. is wanted put But this want scheduled make know, The also we if what and some that - look CapEx and we're the mentioned purchases as you - sustaining IT some the maintenance so you primarily growth is it it the to we've conversion. - in CapEx, what

kind of or of I is around end of higher to revised of part And thankfully timing on maintenance our our for annual during CapEx period-to-period, big some kind of life for a maintenance, these think, little the thing at maintenance is upgraded, But here, year-to-year, grows that the responsible we're lessees, to it's the they we XXX fleet most this from over. made responsible do kind lease. pretty cycle for that of bit investments aircraft business the as model that, in the is the so like, much some maintenance - at the are XXX to - period, given but number for the that period-to-period, basis. about we've maintenance which sustaining flight, for I out the dispatch external is systems of from And we've an driven think I because believe and - XXX. impact or significantly and our example, fleet in scheduled that number guidance I of CapEx we've think from have good can general, an lease whether

So, the the you that's lessees grow CapEx will line about our responsibility. the think you know, in most the with part, business for sustaining because the model, not maintenance fleet or

portfolio maintenance leased expanding ATSG to cash going drive not you're the adjusted an flow we see to over go going time, free It's build substantial going - just Cam's out, you're of up aircraft. to as see produces CapEx. So,

more we our the with of engines been enter in will have of next we engines, XXX will Now, that covered under - agreement. terms associated some some by previously CapEx had Boeing we as year, powered have

flow experience So we maintenance Instead, it than by that paying catalyzing for of we’ll power a be thing those of won’t engines. an accounting impact. will more have those That’s some is because for cycle be to the overalls. thing cash the and

And so thing have largely is the model shifts you'll it see impact responsibility our customer. good maintenance but our about that to some

Frank Galanti

is, obviously of give Okay. big expected purchased. basis? perspective, pricing whole to been what holistic that feedstock then that to to those for That's then break happening be there's requirements have on how how question feedstock debt today? of and - capital generated really that you commitments basis Is comfortable not have debt ask look feedstock sense sort cash helpful. does what And a What XX like guys you a the a are And but company? does you for that then - I an Can that is that of CapEx be sort the with funded with. sort what's flows? a booked. from slots conversions much on level all out of to annual of internally assets us for wanted for going for CapEx, And on And are that

Rich Corrado

Yes.

of then, little to on the down slot them deposits when if forfeit at away put is that. use not But deposits right? slot, those the deposits, to when you the part the And necessarily bit of for me about of are required But and conversion then what inter-service secure the wanted put it risk, talk your it, commitments kind because airplane. don't as want terms so, of deposit, the you It’s just of you involve expenditures obviously, cost the we down typically a conversion slots out we are capital help when make of of but where we Let adopt your a those putting part broad expenditures question to deposits. there. And walk aircraft you you effectively and becomes But specific adapt applied would cash to conversion you we cost have conversion. cost it when in the gets providers the account

So, hopefully, that answers that.

at are conversion, conversion, the and some that XXX. of XXXs investments in by commitments, already of I mean, or purchased be you timing the to of you're XX are more driven see aircraft believe, of right. In for, end and those terms this with, feedstock our either stage capital the awaiting expenditures I quarter us for timing feedstock one of CAM we And for going purchases. in have

that those in of years, already negotiated feedstock already So, we've particularly and We've - then, XX forth. conversion as the Mike to aircraft future a and fill commitments so aircraft. for for we’ll pricing slots, And the we've reported our course, in these CapEx take to secured XXX of Rich that's years. commented, future in portion large

model, how about growing how or as fleet. we as with debt expect delevered to grow debt our leverage business it far fleet, our we seen have our you've our as think I while our we impacts As mean,

our we adjusted One cash build debt It's the our slides the free degree be And and illustrated we to produces of simply because grow produced, fleet significant with we feedstock XXX us of or I’ll that take and model In that's piece self-fund to acquired to feedstock, tight flow. remains going. bit market in out operating business certainly it. market clearly. cash adjusted to In the all that EBITDA, really free said demand think of takes situation the size maybe the the through driven our growth. little the growth expect flow, almost we've identified as to and through the that through that much our quite side, market our significant of great continue the cost regards adding without feedstock any in Richard remarks, that I cash that that and flow a a of really how is by entire mentioned standpoint XXXX. you XXXX and a from because

the from XXXs the of totally say, pandemic through would really pandemic there's stability So in as for I pricing the stable before and from XXXX, been, out and come XXXX, we really still pandemic. really in

standpoint, is haven't but look couple So, , to In for have regards years. feedstock from last plentiful. feedstock we those that been we prices relatively very to and feedstock solid yet of the of purchased the any continue at AXXX,

airplanes and next it’s when - as become think more of couple costs aircraft those those those feedstock and And over even so, available. and down come on improve are will years that the become we down even come as

Operator

from Susquehanna. question Stathoulopoulos Chris from next is Our

ChrisStathoulopoulos

my Thanks for questions. taking

these cash the guidance disclosure on is the So, out-year in here slot spent the your you in and if the I on on appreciated and you put signaling mean, end balance the the CAM for assuming, years and as sheet, you where I conversions, for could be look a make - assume focus a next perhaps flow, next at and few are prepared so? if mean, at an on is slots. I together, or the remarks see Meaning, low-XXXs we lessor if or followed by reasonable could also Having market together perhaps some is somewhere fully to Thanks. followed this active XXXX? just CAM now the I some mean, free now? XXXX a of book around the the fleets these the XX time, order we assumptions you're points it mid-decade by time the aircraft year, top year, XXX And modest by its that whole you that put having Amazon the I as enterprise year chapter and at

Rich Corrado

there's should and close mean, a few large we freighter of restructured also passenger wide-body that our intend our globally. over business just Yeah. freighter lessors large leadership our freighter XXX in lessors, to passenger is stay that five be like - medium so of past you well. goal passenger years But airplanes a example, there larger different - than of also And I merged already are the aircraft. balance few lessors the whether next the to there. acquire the and And why I had lessor the amount on maintain based way airplanes. we've We're in. planning, mean, amount into in freighter the it's we the done, lessors slots position been own, range we medium an they're now know, as and way largest have market capital of are There's acquired whether over we've airplanes, lot years the a and everything just our slots we've sheet, AXXX. we whether GECAS of our got it's lessors they are - we're the we that that to already blocks it's as

still demand is come. still to position. compared - good to positioned very we're feel that our point general the to for at We that that's growth retail segment, ride it's And well globally, years going it's Now to returns prospects shareholders a and maintain continue for because e-commerce in that think strong AXXX powered very is the in we that low have been penetration it's the driving this by to to wave. growth

ChrisStathoulopoulos

here, we of this aircraft, a should as Thanks. to think different going per And just you at we with past then, considering through have these look with us Airbus? next year about as how ballpark you're well, a we to EBITDA XXXX look Quint, remind here move that out bit slots could - now mix and

Quint Turner

Chris, question. good a know, it's you and there, out jumping you're Well,

In looking. terms far of you're how forward

XXX annual how for long in You terms upon the based XXX, variables what you a in think you EBITDA know, But the you pricing are value on just margins term some added about million of and we gave probably, Rich about we've our on about XX% know, know, it’s the think to And of for over talked the the terms just you of an of of, before the leasing of and about million on services - right, you is so about forth. know, time basis what probably, think - revenue. if income. $X lease you $X.XX lease,

XX% about larger If key the AXXX, capacity XX% you is AXXX think in and the to to of XXX terms so XX% so forth, larger. the than XX%

produce So, you're would you the probably what of looking at jump what terms expect numbers the on two kind can you over in is a to of increase Rich thirds of here, AXXX those similar the side. in XXX-XXX. size The but… AXXX

Rich Corrado

AXXX know, XXX-XXX. to on You get of be about thirds we I was lease two that the saying and going what on a the is the investment

Quint Turner

excess return build then XX% services. we fleet. certainly, Yes. CapEx as unlevered beating on today's out and And you to you are in target value market. look know, that And in that And Chris, our to we added add investments make we those of incremental

many upon depends all of services it to know, customers want buy. are leasing You who those how

for them? the to airplane know, etcetera. Do they want You to maintain they fly us do us it, want

ChrisStathoulopoulos

a perhaps typically one bit just traditionally, of get here. because you The or why If four done you on could deal curious Thanks. just not I’m know, Boeing in the pricing. I they little conversion more question. move slots better at capacity with got IAI,

Mike Berger

when it that to meet it it do reemphasizes we not is starting commitments at our ensure us the going speaking. ensuring solely do it to time to that our based just we we really Mike. If - and in he’s - starting - driven something, this going we're that’s This commitments, We on theme, all we’re meet allowed in say XXXX. those it been was Rich,

point. two slots will XXXX be four will that of but or this the these for XXXX, in two be will at So, we all them Boeing, delivered airplanes next be with for year secured

freighter I Boeing different certain it places a So, variety that's it. the in the There world, nature reasons. of put that the way, are where could of if for plays better

we're, opportunities meeting more customers. I gives So, our opens of and the flexibility even to said, incremental base customer it us up ensure that and our like diversify commitments

Operator

from is question next from Stephanie Truist. Our Moore

Stephanie Moore

as XX% little and that return just Thank and sounds targeting to like between the these terms new profile bit, least opportunity And But thoughts back touched of on and if these a it been and math overall maybe You depreciating the in a break how obviously, these just little to return, of then, the follow-up increase walk over we through preparing, your to of, the further profile a that, leases. kind time, bit this out that. the to in it feedstock return maybe for it’s really you. a you what's the long leases could exceeding returns the term? at just of could,

Quint Turner

in Stephanie, pre assets mean, I in the we necessarily I on course tell for says, take are know, CAM of some variables we terms don't, there CAM its the isn't on pieces not of necessarily Yes. Rich return XX% involved. our costs, if is you could example the don't as you, you CAM isn't if it because strategy, that of you the terms - EBITDA - of take - about annual what detail has gaining on CAMs, but example, pricing its isn't book, investments. operating net MRO. We airlines, you a CAM it of inside basis it’s for and at company, course, of gaining those look of on but And the an in investment books,

those are So additional where services sold. that's

expect can So about unlevered haul. years age mentioned, that XX%. looking for $XX is Boeing in exceeding that depending basis put which that ramp put market. mid-sized for if obviously, of believe demand but return and million leasable ramp And $XX based the to on cost And the aircraft on long you over XX-plus and over condition, on the to of to asset, million we And earn excess an today’s somewhere we're upon annual of in the see an cargo the leasable around the we a talked cetera, condition. - I look life we XXX-XXX probably as vary aircraft, on about these it et you're on we've to the one think it of

So of a It's XXX. be and for – going size a it's a as we’ve about is ago, a XXX the smaller said to minute but two-thirds the aircraft, less. investment costs

or be $XX sum to you ramp. could $XX that be, terms million that, million of when In exceed say so know, probably to the about targets costs, larger put you [ph] it’s XX% investments. So life to of somewhere And the to remain And it’s know, right? than but of XXX take to same the can those return going your we investment you going that, expect on the you in on achieve neighborhood asset. over XX% those our think

Stephanie Moore

Great that for I’m missed ask you really I'll And housekeeping helpful. I'm earlier, I no, XXXX, said this for and teens new you - in the were but a sorry XXXX, mentioned question you you’ve I number then at around I kind of that's believe just me, believe what I - - high you just XX it’s locked for that XXXX? least leases sorry, color a missed

Rich Corrado

this correct. XX high least that's anticipating Yes, point XX, We're in XXXX, Stephanie. at somewhere know, teens, at XX, you still in XXXX the in

Operator

Atkins Instructions] is our from Stephens. question from Jack [Operator next And

Jack Atkins

Great.

over your mandate I if a couple out sort goes are the that early earnings Just this or the either think, force a I'm work follow-up course quick an the labor as of of was year? just days, think of general been here, the groups, kind productivity, you think topic on have something of season. of vaccine you that eye course of guys in your certainly, has but effect impact this into going for I over major last curious, discussion, to any keeping that's of next kind

Rich Corrado

that this out. that to what People two government operations more under the XXX have signed our from the really out. little regarding for they will guidance first which managed a employees. put one asked orders There contractors, mandate government first executive Jack. was be sleepover - came it vaccine of when fall The question, were you than right, great companies by it a problem with That’s a when OSHA in one, very lot no

with employee vaccinated non-CDA for we in we've with under have our been companies our that negotiating as not compensation covered incented vaccinated. own well. unions employee, been own, so, they get We've would - the compensated our particularly And we've also which allocated to terms but working and get

also get that although out mail some our look ever it’s from the are. are difficult and at building reside for some our before business, government So And to example But have of completed had of a figure and postal two contract. is companies our that the not to in but then facility in example, separated like has to this of technically all as logistics here executive vaccinated. an the population a we’ve the Gateway Amazon postal plan our they're But how they contractor. they - orders most really our Wilmington, sort government for as of contracts same companies where CAM, which service, been some airlines

earlier now were the new under of considered the not week, this guidelines that - issued is this. they just CAM so, brand are And piece impacted guidelines, considered government by the

now, how jiving to really on we've execute shucking exactly to thing. bobbing So and this out trying good. and right figure But been and weaving we feel

tackle or continuity. always, marching we've has been the guiding getting of been business employees, been say for can out And and And I employee think, of pandemic got feel doing, two or really and that's particular one - one the they've that of are about respond have get that vaccinated folks until two folks if the an and with responded good or at piece the before you government have, to for I are now, shot going each in have, incentive been the Our still right look at - type exemption, individual the is And vaccinated, forward. to we've they another the that's vaccinated or second companies one over of some safety a it's and run respond. that employees religious those start We incentive. guideline as towards quarter that. of covered. the we weeks, think, fourth principle of shot XX% been one get to get ongoing. the And of two, ones who since planning I medical our the had the how that's - has surveys can our because requirements XX% of we've the it's they

that have committed continuity the and quarter. and of business will be strong the in the that they companies, believe MRO, airlines logistics All the fourth

we're real so, confident going customers And to for them able that we're for and to customers. be deliver deliver their our help

been a when a quarter. to to probably customers point - - have of the we're the a any say But done our is. it's populations so, we're to that that have to to get confident you disruption without fantastic me going all watch build fourth now managing I their going that that job how focus - in service - individual you to we're be able to telling what have And real it in time I'm this the been a the company leaders asked has

Operator

question another from Susquehanna. have You from Chris Stathoulopoulos

Chris Stathoulopoulos

Thanks follow-up. for my taking

line similar what pressuring hiring haven’t seeing to class had pressure, seeing also the - Omni? peers for in ATI adjustments if and your the on you're you your workforce obviously, and you’re along and you IBT are So ALPA contract FTE to curious pilots, for the - then talks where and Thanks. with any me, on passenger make excuse your here. to But

Rich Corrado

still We've in attrition attracting due problem in in we of had airline. pilots, are things. and soft those terms terms We're any pilots so, we're to which great a shape. retirements but now, attracting is managing spot good. right a growing. - got very of Airlines Omni's types Yes fast-growing a of - haven't is still ATI got

work what want them that first to move their from a that's pilots quicker to improve to allows so, for a airline career And and an captain. officer

So, we've training when for had crews add of very we which been has our to strong solid. out response class a all to airlines, put for

at of and are by negotiations. Labor the agreements of In They’re X stand, Act. crew terms They're are where right beginning really now, and covered the bargaining. Railway in ATI pilot agreements, both Section negotiations Omni stages their amendable both the

of And and time generally cadence so, period meetings. the we negotiating of process, know things now. kind a defined long these the take They've process, right the of

the airlines - that haven't working just business. and side continue compensation times get on yet. the accruals and on And into best we get But the that gotten days meeting a so, this through cost were attract some the and - that there they're and pilots well three competitive gotten good to other a now, structure their both and in and in really, And three they’re working unions. each month through to good hoping program agreements haven’t the allows compensation things, working go us to we’ll into of it together maintain

Operator

over Corrado call I now would closing to back Rich the remarks. like CEO, And for to turn

Rich Corrado

will Thank demands holiday than greater already the has of ever networks seen and COVID networks stress we've are The lines more front logistics on under the be even you. operate the season, companies imposed. This than these before. that them at people

screen a rise challenge of ask holiday Thank always have we'll this those all first. again will button XXXX. hit and people with safety on they Have networks the in think you I across people be every while back as season. great that order time Our you to season, those your you. you keeping to

Operator

now Thank for you. today's you you may Ladies and Thank and call. participating, disconnect. concludes gentlemen, that

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