Air Transport Services (ATSG) 25 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Joe Payne	Chief Legal Officer
Rich Corrado	President & CEO
Quint Turner	CFO
Mike Berger	Chief Commercial Officer
Cameron Hoglund	Stephens
Frank Galanti	Stifel
Helane Becker	Cowen
Stephanie Moore	Truist Securities
Chris Stathoulopoulos	Susquehanna
Howard Rosencrans	Value Advisory

Call transcript

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Operator

Welcome to the Q4 2021 Air Transport Services Group, Inc. earnings conference call. My name is Vanessa. And I will be your operator for today's call. At this time, all participants are in a listen-only mode. a conduct will we question-and-answer session. Later Instructions]. [Operator will turn call the Mr. to over I now Legal of Payne, Officer Joe Chief ATSG. Mr. may you Payne, begin.

Joe Payne

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

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

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

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

Rich Corrado

AXXX world. XX to generated we delivered, million adjusted grow Good ATSG XXX-XXX freighter with a year, we our funded in not more exceptional five. million the AXXX groundwork of to and Capital morning, for the only below the we next than customers faster new the spending was million shared financial than last also types portfolio, XXXX for add last committed We deliveries Airbus target support year $XXX the last to last substantially EBITDA around e-commerce great five $XXX leasing freighters. and the leased And target Joe. two well everyone. $X fleet converted over results to the November. Thanks, year laid a and years was of we you our our record

performance almost and achieved testament year airlines double-digit There This a of are over pandemic many revenue the EBITDA for again $XXX other adjusted of Quint? to million Our workforce I'll share be in is color to reviews results. growth outlook on-time after for our story more our Quint our another in challenges. resilience our XXXX. improved skill to XXXX. more their and hours and block during financial great back elements

Quint Turner

on call summarizes The morning. next that deck the slide strong results everyone our in Thanks, to. XXXX was Rich referring the Rich, to this and welcome

Our consolidated revenues ATSG. an $XXX high billion. $X.X for all-time to That's grew XXXX for million

per Our earnings adjusted X%. rose and in up adjusted EBITDA $X.XX $X.XX XX% to share, from increased EPS increased pretax XXXX. Adjusted

pretax leasing aircraft company, the year XX%. segment Services earnings each earnings pretax for increased great segment that Our comprise ACMI delivered and ACMI results. CAM, our airlines and XX% three the by Services grew our CAM's for

adjusted the adjusted that a values commercial our improvement pace That benefits see faster can of XX-month our along in and customers. the periods instruments lease payroll our you passenger other both reflects our continues with operations passenger EBITDA in year, on financial of steady excludes, assistance federal the deployments fourth aided for gain pandemic rolling relief slide, items, EBITDA XX% our under for among program quarter. of XXX basis, in changes a flying all the a for both accelerate, and support the next improvement military to shown. during the the by Again, On

million XXXX. realized in XXXX in Our $XXX versus million airlines grant during proceeds federal $XX

million. spending the capital for year finish our that fourth quarter see at to somewhat you'll slide, next the slowed On $XXX the

to allocate Sustaining year expansion. for we CapEx other you our what CapEx sustaining mainly million. than and and was continuing call growth see, $XXX and fleet separate lower the As airframe was for CapEx projections. maintenance, prior million the to engine we're were spending $XXX Both technology from equipment can we

undergoing Our chain challenges commercial in to quarter has flights. fourth and large of year. top conversion bottom XX disruptions last and year. the were growth was e-commerce-driven passenger the feedstock vendor. next free part both on in end operating XX the freighters on To on space CapEx conversion businesses capacity at reduced as spending now flow. our meet slide is our accelerated one a portion. supply each the of this or financial demand, AXXX of of an deployed total shown bar pandemic new cash Represented Freighter The update at XXX cargo net the portion pandemic sustaining are our down volumes XXXs adjusted is flow, of conversion by peak cash metric, and at for the due We awaiting four the running for our

Our pandemic cash airlines our GAAP also includes flow federal cash operating passenger relief received grants. in

to our the key free generate year than about can Our illustrates flow a point cash strong $XXX cash million model. more cover business It flow of enough of power last growth. our adjusted

debt are our positioned uses. reduce freighter The from for aircraft, funds. generated and leverage fund growing make more slide growth we illustrates That toward continuing will other rapid available our that we internally to and internally. next As acquire, well our progress lease capital convert fleet further

to leverage times. Our as debt agreements under credit measured adjusted overall now bank is EBITDA ratio, our below X

of to effect replace the last higher year increase the rates. restructuring we debt rates variable help in XXXX, fixed early with completed short-term As mitigate will rate some debt to rate of

We under continue to most earnings CAM's project which XX-year of from seven to leases. aircraft double-digit growth portfolio, are

offer last play of is the for more for the be as about its improves maintenance the more CAM's pay-by-cycle power-by-cycle engines service the a of sustaining that to opportunity. in active for provides engines margin comments the offer capital earnings appreciated provided lessees and engines those new them operated. to to a engines XXX-XXX expiration lessees. You aircraft have new we engines of fall a efficient that are to under maintaining expenditures Delta classified arrangement pool as are making our lessees a costs will may structure arrangements. under decided for access noted customers that We are pool we on responsible Maintenance release and in sure with available CAM CAM's role will to

As capital our a sustaining with increase outlays result, our for maintenance along engine adjusted will EBITDA.

of million XX% includes year-over-year $XX for and operations our With EPS. For in $XXX the our and that some this change Most this XXXX, turn year. our by increase last in service $XX contribute positively the million contribution will from in our Strong we our be to to yield for we from will million offering XXXX expect particular, approximately impact between with EBITDA increase and returns adjusted the nearly adjusted our of growth along momentum EBITDA in in CAM adjusted growth from forecasting our debt. shares This Rich businesses, $X on airline new and by to of year, million. earnings reduce adjusted will our bottom financial The EPS leasing it million line. summary will over XXXX, for our comments share projection to convertible X $X and expense Rich? count the interest raises pretax rules of adjusted effective accounting outlook. our pertaining diluted XXXX back adoption operating a approximately I'll are results,

Rich Corrado

Thanks, Quint.

XXXX key accomplishments in for Our was earnings ATSG number lists of very what year operating good release a a overall.

Let of a now. color them me some few and provide highlight on additional

success leases record re-leases of true a XXX-XXX XX and story. XXX-XXXs plus three external was Boeing Our freighters deployments of

XXXX. now lease freighters. to year, You fly for order and airlines more this may fly Amazon from our leased XX of may CMI Amazon, Later CAM own assignments others they We to assign or them. June to us with Those XX That them XX XXXs with an our completed ATI deliveries XXXs placed Amazon. of that with its in recall place were to along of of fly that for includes prefer Amazon Airline XX fly. to X

XXXX. the will type one August, commitment year, freighter very design. followed Amazon. venture's announced aircraft with AXXX larger two conversions design Boeing based to to add in flight services joint that largest We conversion slightly our and In of to aircraft. slots proud for Airbus AXXX-XXX this the certified last at we FAA the convert aircraft to later the leased first and AXXX-XXXs, year fleet conversion passenger least be a continue Airbus acquire be more leased We our our and of delivery cargo to than provider of for to freighter freighter on and new AXXX-XXXs Earlier XXX-XXXs. CAM XX its the

additional an aircraft slot strong the interest for aircraft for have order customers five have our AXXXs next air still XX networks. that have year, commitments from committed two Next AXXX delivery of now year, XXX-XXXs, delivery XXXX. will in commitment commitments freighter remain to conversion XX slots from our deposits XX previously vendor XX this Those the of book customer induct confident means we passenger that that conversion for years conversion aircraft than I'm for for end which feedstock to deploy. first by for the more AXXX to including the of we XX by slot years. will we over XX conversion nine all e-commerce-driven our the delivery, first to preferred our include CAM AXXXs convert. plan light boosted customer AXXXs of conversions, has for for away In we Already,

half this to and commitments and AXXXs year for of the all freighters pipeline plan deploy have those convert will all order in this scheduled lease year. We of for expect our already XXXX. two we includes Our than own of customer and leasing conversion and XXXs more the for nine we

especially in the also rebounded but more and last half the in the our and the operations the Omni significant of summer for commercial air recovery stronger-than-anticipated flying in significantly fourth passenger from levels. operations and scheduled That role of Air's second charter fourth During customers a America's air rescue XXXX quarter. commercial XXXX evacuees for quarter, military Afghanistan included military, in

commercial than XX% record we new both earnings, the of years mentioned more are pandemic target network. April assumes of the and easing and with lease our continue and that the DHL in leases or company and our grow when airline led a DHL major a principal U.S. XX-year expect results six-year XXXX, in will XXXs our about set to to extend deployments we gradual able roughly five and also our Those a contribute expand for freighter us to ability results were line provide generated we ABX them to fly year match their are the two our customer its relationship performance a a XXXX. them. of another million passenger finally, and of we in helped access set XXXX this certain six pre-pandemic for and years nine with continues a CMI operating within our to Omni's And our relationship. There AXXX of $XXX growth became earlier, airports through strong month and was target workforce for service extension our for and operating this added to agreements That XXXX For negotiations XXXX, XXXX DHL's cargo to to several I commercial financial generate restrictions on public with adjusted XXX included successes progresses. as agreement XXXX of EBITDA commitment year come. to few The in to to to employees the Air a levels. of we reason great of leasing

we strategy our and still us cash most about concentration will year. in to capital aircraft superior $XXX expect the and path customers summary, to launch Quint of targets with flows capital XXXX next be of That million, also Berger, We along that deliver spending Mike September. and the strong our CapEx budget and operator? May In the million to will continuing on Officer, a sustaining deploy growth I'm return expansion Commercial for XXXX prepared for cash will fleet more I, in restrictions $XXX ready our allow feedstock CapEx. questions. diversified freight of Chief allocation adopt $XXX remarks. and that first as purchases That have expire a in of question, costs our will conversion answer growth self-fund growing need. including million confident Much when concludes from model business ATSG we

Operator

Thank you.

first [Operator And have session. will we question-and-answer We now from begin Instructions] Atkins Stephens. the Jack our question with

Cameron Hoglund

This morning. on my is taking great the on Thanks guys. for quarter, Good Hey, Congrats for great. Jack. Cameron Hoglund question.

changes count So for walking Thank accounting first would debt, is count expense wanted Quint, from you here mind to one but And that. what on the confirm recurring, assuming? that also you. is maintenance the share convertible to through share just us of guidance

Quint Turner

that changes to for guess of I'll with Sure, first, impact Cameron. guess. the do the I do debt. the -- count convertible last I in terms one the share accounting has The required And XXXX, out to will our on share of the method. about add million if-converted to took right the count, in course, and effect the be X gate of shares denominator. It's essentially

the forth. about debt that You're annual million expense non-cash satisfy that it interest going remove expense so assuming with through shares will $X And was also. an you and approximately

denominator. share because The EPS So the those got the is headwind effects. increase in of effect two increase the for net you've X million a --

new As of that far correct? as service the to Is for part pertaining think the engine I XXX-XXX was -- we're -- the the and your that putting forward first question engines. your

Cameron Hoglund

expenses. those capitalizing for Yes,

Quint Turner

Right.

we recognized we passing some on time, take years, that sort we to the service through accessible that engine. cannibalize of and kind for out efficiently upon better to the power-by-cycle the decision, we lessees. last with a That the what that, that leveraging that and an to it. terminated who of manage had looked XXX-XXX quarter beginning at a the piggybacking a for essentially take fourth for third many provides that, wanted so saw lessees those then opportunity that and options, were of and of engines those engines It opportunity and the margin actively we the many, of contract. the arrangement to them make end when advantage And can had accounting TechOps. that aircraft renewed the we we if based those provides on extended a of Delta we that we And have we we scale And for over in power-by-cycle, margin of of also contract way to power-by-cycle. move ability agreement could that For came But an And had markup may an year. us it on at under of under more course, manage sort end, of some and pass-through contract them quarter, treatment made pool to us. engines of

allows also also life fleet extend the about it XXX-XXX. engine It engine. make us So ability will rational the to decisions for out modules the how the to the manage get we life the of best

made we strategic that decision. So

So longer a we're no arrangement. in power-by-cycle

through paying the go accretive be depreciated. costs disclosed So and, is impact engine And be and fee. responsible because the that more as will our earnings It those say, we've earnings that capitalized depreciating shop release longer that margin an we'll engines given to I add going in to as EBITDA have will no that costs a forward, depreciation maintain what be and we'll and the back. opportunity. we incur we pool and on power-by-cycle will It provides is our also now,

little Although to maintain there's risk, those more have more engines. bit CapEx a we'll

engines as our Some XXX-XXXs longer that that cycle also is to engines installed our those part charge paying of by those on fly. the affiliates. flown And we're were positive of Delta again, no

the have a like CapEx an cash have we for there's run. And a the flow and And under new that -- arrangement pull, long in we investment. so margin believe, will because we year, accretive upfront any certainly didn't that's sometimes the us venture, though opportunity this short over prior we'll that

So occur our as we'll will that here. our year, CapEx shop that shown have CapEx this go we've And sustaining so up. visits a number will guidance of in

in that taken reflected will of operating free be adjusted stat. be out It flows. will so And flow cash it cash

is a we that, growth argue conservatively it of probably but too, looked as it sustaining at business investment, that's line, new somewhat CapEx. could more because a You

So to change it you we and late a happened because tell in it year. -- wanted is from the

It impact a big last on EBITDA, so given number that year. happened a year-over-year, So late it's pretty of had engines. it

got them treatment accessible to how You've moved other XX about of lessees. engines in or terms that this making to suddenly we're approaching, so

And so the draw flexibility. course, them lot will it's so of about many of But upon, lessees forth. per growth it to depend CAM because pool. fly our cycle can It million. in $XX pay a of and They on million they how basis gives cycles EBITDA, will -- on the it's a $XX

excited new to about able service. we're offer being that So

Mike Berger

add we for the to of there. that share resources fly a engines just to Quint I'll is for lion's own just as great remains which continue us. XXX-XXX, the to mentioned, we I'll that airplane as huge it's customers Maybe these advantage pool out our of have this And exist be a just emphasize,

Cameron Hoglund

to Thanks color a quick run-rate pre-pandemic if the Thank Where are versus things that year. In would flights and driving appreciate today guys. And the ask is coming like in the gave, what you. follow-up. that. outlook? level there, for a you XXXX I return may you said Really the guidance that passenger

Rich Corrado

Rich. few This business, the portion DoD to is Omni's that places of pretty pre-pandemic differently, bit too. volume levels business a much a of now. up that's But There's back. come in is The terms back little of they're flying

football fourth of charters of cruises a to related relates things. lot really the opportunities, types commercial, to for it to the bold games, in passenger we the As charters comeback for those commercial saw quarter related good a

lanes that. the because was commercial because bids that they're getting see assets it airlines line currently their their that inquiries of have also They're up looks for managing way ACMI So of pandemic. what may fleet for fleet that additional standard needs to encouraging maybe don't like, with very the for

and we're XXXX. commercial seeing that they'll growth over a think year have that really year good the have that XXXX. projecting a So with year certainly Omni, that's given they'll we're to comfortable And we're a activity we similar

Cameron Hoglund

time, right. color there. it quarter. a turn again I’ll All Appreciate the on for the congrats over. Thanks great and

Rich Corrado

Thank you.

Quint Turner

Cameron. Thanks,

Operator

with from Stifel. next our have We Galanti question Frank

Frank Galanti

past wanted customers I indicated Thank it changed guess press I you want you high leasing who what be helpful. from on second on aircraft Any release, then those Have the set those to XXXX. couple that sense guess there start a level, customers into And and give to a that's most of I just -- the mid-XXXX? are seeing all you on end I would a perspective? how taking deliveries 'XX are questions. of get from deliveries an part progress been of In for from customers in of conversion for using geographic last -- great. is, interested or can slots. extending what update that the color for of those were, Yeah, you in a the months. type use guys,

Mike Berger

sure. Yeah,

very of our deliveries So broad-based. continues to -- our be geographic the concentration

customers We will well as from perspective. existing customers as see geographic new a

will for and Europe sprawl will U.S. be us. Other first for Nordics to out the as Some in the time America. North as the into parts well

So of that deliveries our initiatives we our one is that globally. is continue and see AXXXs, from complete. fact which We've book a expansion our all of to for standpoint, 'XX, geographic two XXXs the expand nine guided further to

for We we've lion's his XXXX. of completed do but by under demand delivering 'XX end as says, be book and got those strong the that. by additional deliver air of all slots went that in AXXX firmly Rich secured as And still the as have start why our XX very, anticipate mentioned completed XX will more comments, share that's with initial only well, mentioned freighters And We've we 'XX, will -- The we very the in but LOI converted XX initial order we excuse XXXX. see, in to our believe, deposits. we me, end slots. and Rich of not of XXXX reason the the of out

airplane, bullish all take the XXXX. very through will that way on us we're out and So an

Frank Galanti

helpful. a CapEx. then taking Okay, that's really And at look

sense of and sort really view XXXX of I 'XX. it with in million composition sustaining that has guess of CapEx CapEx. I most much $XXX then And growth I growth towards about conversions for a to been accounted feedstock or guided get just is for into of with sounds wanted purchased going guys and those beyond, those will guess, in you already like out And And timing million and that CapEx So talked be that airplane $XXX $XXX just about. been future do a how how million 'XX-'XX guess for yet have purchases? paid about planes -- they for past sustaining the in is you it, that for those asking of paid 'XX? way think for 'XX-'XX? another we

Quint Turner

is Sure, Quint. Frank, this

terms 'XX's aircraft. CapEx, In buying that seven in of growth guidance feedstock the of a for that 'XX, $XXX we million, conversion. that had XXX-XXX the dozen includes end at actually were Remember,

So nine putting, year. what, we're this XXXs online

We'll So buying you to in we've than can for see that 'XX. our already XXXX's commitments. got more though possession fulfill delivery airplanes already enough be

So -- buy we plan we'll airplanes. feedstock more have to seven

secured our feedstock to We or first access the first AXXX. also our made for

on the deposit XX five aircraft. of have first We the

aircraft budget. won't XXXX, XXXX's of those until won't so Now be CapEx be delivered finish they'll and for we part them paying

next yeah. that first As are on the Mike year, year, inductions July conversion midyear mentioned, line next of

going this And year. are lines of course, growth that the complete are the lion's make some so aircraft up their CapEx work those along ongoing the conversion with, share of of passenger to freighter that of the cost through pieces

maintenance of this a pool As going a of lessee the the about forward, what far of see we some and a minute the certain little in that that course, look talked of engines the we'll CapEx for as sustaining up like and mentioned put year. And can investment ago, we'll be might it's access. making you

been So that $XXX a of we're took sort that's million range $XXX We've in and it in up XXXX. the -- while, little. last saying a for the million

of that itself, that impact been it the still engine CapEx -- think may and leasing life in change, growing some is that lessee years. But grow in in the the not the related business abate. type should place it for should not and then our the And and much during little growing impact have this responsible airplanes additional of CapEx the our first a that that's portfolio But something fall does really half lease. was to be sustaining unusual aircraft engine absent because leasing visits off sustaining maintain there shop I to 'XX. just has in of because does model, CAM's

And past The won't look those to be more XXXs. expect at so end of XXXs We'll, once lease responsible returns for lessee least it we really course, 'XX. XXXs, the CapEx much maintenance maintenance. sustaining like-for-like aircraft, out But at under change add I in condition. the don't contracts, the you of and a

Frank Galanti

Okay, that And really for the helpful. answers. year. a Thanks great was on congrats

Quint Turner

Frank. Thanks,

Mike Berger

Thanks, Frank.

Operator

And Helane Becker with we next have question our from Cowen.

Helane Becker

much, time. the Hi you for everybody. thank very Thanks And operator.

a Just couple of questions.

new the are new of XX that could the any On aircraft are about? committed, talk that of you those customers

Mike Berger

-- is this Mike, of them Half Helane, new customers. are

But across I press put in XX-XX there shortly about Europe. makeup are. now Asia who the -- will were are into about Asia, areas We to new existing regards customers fax customers that and a customers. releases is those out some mentioned Southeast in cargo late right yesterday where geographic and the

Helane Becker

goes for between your you on, fuel, helpful. Okay, up I lag bill? you you. since then there that's other a time fuel and on when when question are have responsible Thank the contracts And not is

Quint Turner

for way are really not a No. our Helane. This contracts lot of Quint. float for. pays fuel small, arrangements It's we're the that The our customer risk actual know, is And there's take at the structured, we fuel. the as don't risk under you

Mike Berger

pay quickly. our the us And customers fuel very

Helane Becker

the Do mentioned the recently you are all then for about have they're That's helpful. the thoughts have the level in the business and people article Omni doing that And that DoD. appeared is of Okay, mistreated? accusations you any other question that right. on and I Intercept

Mike Berger

Yeah.

are of on control on of And that in for to attendants have article are flight. the obviously, the do was we the than flight related flight. for the as passengers have treatment some oversight agency, it the I was the we government as passengers. crews there their of passengers article they So employees. safety gross important do flight it's the it's flights tiny that is the exaggerations of And of amount. flights the three we They're of But the in treatment safety flight gross of and passengers. so -- business these flights, less well. those flight there And for a X% exaggeration And have it's that think the -- the of we course, on to note that ICE and have for did government But Omni's, XXXX, we ICE. a

Helane Becker

Okay, all you. right. Fair enough. Thank

Mike Berger

Thanks, Helane.

Quint Turner

Thanks, Helane.

Operator

we our question Moore And with from Truist. next have Stephanie

Stephanie Moore

Hi, good morning.

Quint Turner

Stephanie. morning, Good

Stephanie Moore

strong. demand I high-level looks more maybe the It of a wanted quite conversation. or to for obviously, touch like, on your discussion remains services leasing

capacity the You for up conversion clearly years. the next locked have several

So higher all see those new to the through puts takes, just what's from just ability some leases contribution Maybe EBITDA be kind these even factors historical could of that higher or Thanks. layering would return helpful. and our a versus walk some of you if those maybe of together, optionality ranges?

Rich Corrado

because to want it's question when stepping same return new XXX. we're get Yes, we a good types, from the that the we've into gotten aircraft

done leases the unlevered coming leases that get -- lot and those can which of to discussions and the minimum that of return we've for able that analysis same so financial to and XXXs what for a is And assets see are or for we new either market extended get out. modeling XX% around a we're lot new

per it, their what's the performance to to who the their these flight it to and at running been are the the Most and break some when And costs market be of segments airlines, how to the an trying then up. tonnage they the aircraft. what evaluate moving look customer the pricing aircraft. using handle cost evaluating at to aircraft, going and it look really they're to kilo run on depends down economic network they is they to going performance, all associated have We they're and extent, test just the

of the you kind And rates so run nature you get a dynamics versus kilo of against you cost the up on improving the competitive per lease market get airplane. can from what

the at is circumstances, market extensions is -- some going a the extend parties small normal downtime take is under save that lease the all you the the the of same in when costs. in because maintenance a it's of market flowing So say, cases. some a today is airplane should less our I said, interest are unusual And or which extend. re-leases you guess, hot, and We rate, the way potentially when I best usually of to discount and lot both higher

exceeds rate that a feel now. on good XXX, our the good pretty meets about looking of to and we're we or return historic So get it right

Quint Turner

think is a helping says, really certainly, -- demand than to you us we've we've this there get growth lease in we is we sell terms I is is said, a freighter. mean, rates. renew off-lease -- lease don't or conditions that the what rates. it strong And better. or had prior midsized discipline to our airplanes terms know, Yeah, in lease say get movement is driving -- of we have that be in Quint. our XX% have you return all better at that's seen get e-commerce pipeline that I'd continues that that current for for Stephanie, far We into possible that I been aircraft advance been. demand because can with Rich the in we what upward don't plus But what come naturally the as so of understand our had as good environment thing make visibility lease for just the -- And that's specifics rates.

Stephanie Moore

could changes you that's wanted the guess, the for you to follow or hedged? those I what then maybe X first million from are helpful. from about And No, it. Thank maybe are Just think if valuation impact just the, great. impacts could I really that'd to we EPS and through up you've walk should to including those an Got the shares Thank share that if think it help about But from incremental the count standpoint question highlighted. the you. how giving you a being standpoint. accounting -- us us we that, about be

Quint Turner

impact share have of did we back any dilution even mean, a less you make I know, we bond Yes. -- the when as hedge it, did we to likely.

be think what to me $XX. a a if memory right, it have were were the I to like at the bought premium we would at over so time, serves up XX% or XX we we trading thing which -- at,

debt it's just have it then be over could possibly same you to trouble about year, right, little there, low-XXs. at our share we're million even it our I a our we'll dilution, And in small I how before any And debt, at you the like or But think our our without likely could $XXX believe, see debt. the relatively the, they so is on our any it's slice about in a overall that. So with that. all settle revolver We matures Truist paying probably And it. of is capital, 'XX. variable all. out And of $X.X the for that of course, a put know guys which billion that involved of X% $X.X take Actually, October look it's convertible coupon would billion. that next hall choice, revolver, as in we about across was --

very rules, to So and satisfy the the on impact nonetheless, tiny I the say the of it show most in effect its likelihood way, shares you take we'll EPS. denominator, the actually underlying to non-existent. guess, that But to is shares almost accounting conservative issue sort reflect require would I

backed up $XXX And share which shares, amount million to so in the the underlying debt. was that's million X that

on about somewhat interest longer net adjusted is no we the So that so. offset we million. of an There's in EPS an a about put show to of or $X the have the quarter EPS, effect And denominator. $X.XX and charge

year. the $X.XX, So for it, call

Stephanie Moore

Got it. so much. you Well, thank

Quint Turner

Thanks.

Operator

Chris comes Stathoulopoulos Susquehanna. And our from with next question

Chris Stathoulopoulos

morning. Thanks good questions. taking Hey, for my

like of average don't what's of get So million Quint block can't you fleet contemplated hours report for So your terms in or this to in Rich, absolute weighted so there. rate year, a utilization kind we utilization? guide the $XXX

thinking utilization. you frame And million also if included fleet help your curious how overall Just us is that much Thanks. guide? in could about you're flying ad-hoc $XXX contemplated or how then

Quint Turner

Chris. shot I'll it. take a at Sure,

a medium block CMI we network reason they're sort flying, flying. highlight The the First of do of because lot of we all, hours don't is range.

And so the over do our and it we -- what paid and look being it contracts, the drives that for a do forth our way. the revenue resources. and at the we while our results maintenance more The and, and spreading in aircraft so in crew it, supplying we're typically and fact,

take bake in budget. the schedules contracts that course, when we, customers would So is we sometimes the trans-Pacific shorter fly. And we type total block long-haul as as asking flying those the to spreading schedules. are our it into our be a hops. revenue if it These -- hour over us freighters, these But not are were meaningful that do of we drivers

so for you we put, is what's as $XXX XX behind basically I the CMI was as And airplanes or substantially in on DHL what our And Amazon. million three on fleet, Rich, know, grew four for We which, think XXXX. well. put it,

that. would flexibility is schedules see we what But in reflecting to We're has customer during typically we're peak. the to maybe year. So reflecting change the expect the --

change So wishes. it's based those like not on can't customer

So we're basing on CMI this flying. what getting We projections anticipate into aircraft additional we're our Amazon some currently the year.

in we plan. leasing many as extent we as them our ours so those to aircraft supply. that's as well. our think in not the what I put that It's they be drive bake revenues, to would are And and we'll ones three,

Chris Stathoulopoulos

Okay.

which maintenance at million $XX agreement close this of from not $XX not utilization. you XX%, an EBITDA that pre-pandemic I'm million your new this to is out perhaps back guessing probably we around implied to gets but to if So fleet

high through a here pretty right through with the order to -- has AXXXs. the introduction recovery of book the where now versus next digit? you've the And Is and what the single of about in XX% way you're cycle that done sort XX% been within so the Is to or good. actually stages that that move of the is mid- this think and light past is

Rich Corrado

you as mean, You think 'XX? about XXXX versus

Chris Stathoulopoulos

lot realize play have order have a XX%, AXXXs you do but a very here, you things to full XX% at coming the in. mean, and I different there's of I book Yeah. the

So XX% can kind you of here XX% you sustain of a fair is rate that cycle? that to through sort believe the

Quint Turner

you're the outsized of And base the think year-over-year, of on impact the an of bigger sort EBITDA every related Remember, engine you on of a about bigger growth the timing the remember, right, EBITDA, if on jump, when you're there's, year. prior because to and that. contract, stat, talking Yeah. about termination

XX% you'd it can maybe XX number more the of delivery more it as of is, depend the -- you hot market is on of will timing how like Airbus of It's like normal, opportunities. of So years. be the a we those stays platforms, be some lease of adding more of some we're but adding If the talking it could aircraft I think we're instead in about it think platforms, XX, the would sort aircraft. of being new like those

You X. in the coming talked year, late about the XXXs They're this year. the

depends upon always another. delivery you're timing comparing when it year So over of one

you know improvement ACMI a lot momentum I the been I ACMI particularly Certainly, And the we've Services there's that will driving whole if growth. EBITDA to as and maybe our is the factors. expected, that not the segment, year-over-year it, our the has pandemic mean may is had leasing segment appreciated So of in host I sort in drivers been that don't Services also a of and the saying that. of market harmful I we've Omni. had of have one But tell folks think --

of getting further out are said, XXXX. coming we hope so for those moderation we're -- effects Rich And for we in as and that,

think fly be XXX So will that in get the year-over-year further -- helpful that's in we're of for to big the a we been destinations, be a The plus. half will for that If there's the 'XX. that projecting That so will related some helpful combi that you'll improvement us, flying, that. us help second happens, into. some combis

some mean, I XX% pretty assumption, than you make want there's more you host to point XX% I So whole hard towards on when base. the a factors. significant is XX%. would if a of you're

to increase closer is really the we push leasing, can help us if the that. and hot market Now that

Chris Stathoulopoulos

the right suggested growth of the in for back at that could the that, I XXX, Is do active year, around And way XXX, teens to the think year? you fleet Okay. kind that a XXX this November, had you fleet to active the imply next about on which would think XXXX. end still of the

Mike Berger

on. We that's spot still Yes, think very Mike. it's Chris, Yeah, accurate.

Chris Stathoulopoulos

you. Thank Okay.

Mike Berger

welcome. You’re

Operator

next is with Kim John Instructions] from [Operator our And question [Indiscernible].

Unidentified Analyst

good I the granularity Thanks appreciate Hey, for morning. your time. all guidance. around

for question, last perspective? may XXXX. Can you -- from Can talk the EBITDA the you're new in to obviously exit you guidance this leases of an in alluded talk year. XX you the As layering run-rate about you provided about 'XX

Quint Turner

thought guys it question, year. That's How's we've It's the second half. -- John. I as given to -- a good lot of for I are that are what the the don't say, to those for some that a in full will for of guidance? we guided I've be know whole good above looking that

more that expect driving second second first Although half we that leases, the in saw sequentially of do the We timing minute the I ago. this combi of between And the XXXX. than is spread half. flying lease that improvements and evenly half that and we by EBITDA in deployments a enlarge, year expect mentioned what's is, also course,

give when to, know that point, at it's visibility specific. at will some everything. better I so than little on higher year got run-rate in about to But depend And even of or on going will some $XXX can, -- later the the these I talk don't premature. would we've Maybe that be That other exit It want we you push calls this million. that one a factors. may

Unidentified Analyst

Fair enough understood. and

look Have to guys thoughts interested QX. quantifying in I you a now. at your on growth You poker highlighted a would the to and begun the made beginning know repurchase what And your repurchase be beyond 'XX think of ability some comments visibility here pretty that. have right strong your but early you about into in the you've might degree market, share for general high in to like? little XXXX. call and got a and position's shares obviously, play leverage

Rich Corrado

And of so have remarks to to the us the goes. number certainly, restrictions that Yeah. a removed as allocation we're to in from opportunity having that put looking we'll capital return as been as ways at forward looking shareholders. I We've far capital the

shareholders looking returning any capital -- evaluating certainly allocation would capital include we're We be in continue strategy the haven't yet, made that to decisions but future. balanced to a towards

Unidentified Analyst

Thank you. Great.

Operator

And Howard Value question next our with have Advisory. Rosencrans from we

Howard Rosencrans

a to or bit million on a $XX get a call Hi, guys. joined clarity to I million, much. have $XX Thank the you little I follow-up. then a the $XX then want have late. the -- quick very I quick million I just

$XX million is prior? swapped our going EBITDA, It to -- whereas of in. in $XX it's now previously hitting be to was of was So sort the it previously million sort flowing

Quint Turner

Howard, Yeah. is this Quint.

we the covered it. to not of that Of Yeah, I'll it can went all it. question. the through on and in if course, I an lessees, extended we them at And vast that had as previous be that that whack sure eloquent contract power-by-cycle some we arrangement. was they a majority our used I'm earlier of detail again, but a Delta XXX-XXX wanted engines was with it, not take

Some extended markup recognized. of was that be there and that them lessees, to -- wanted lease we our during But CAM the themselves. engines we to some on care responsible, take of the

quarter, at That said, been maintenance PBC. options. an renewed to efficiently years. around we here CAM extended to we qualifies that and could so more we the as an end engine And start level. And had for in And this looked place terminated. at hey, have came fourth the of our manage opportunity It but the there's right

of do doing power-by-cycle and basis. And material a on transitioned so to any We're access engines to providing that, a we'll of time we've responsible And capitalize maintenance. to maintained we with have don't lessees’ it the are arrangement as pool to We keep vendor and we available. do visits. that it an those arrangement

life. when so through the they shop, go engine's they'll those the will over be depreciate and And capitalized

Howard Rosencrans

could -- the elucidation. I I If appreciate just

guiding simplistic moved after a more seems if great flow unchanged. seems it seems to generate what it free just like $XXX mean, to on cash a me would it free other. from standpoint, essence, But that we've the you with the still it we've you standpoint, year sort I of the I'm to me, I'll cash of flow offline. you in from though really from It effect million. and sort would wrong, but of to take be a just of -- bucket X -- Just

way, if accounting, old So it I'll I'm but the really at million. just with if seems take offline. wrong, or it about doing old it same the were the accounting with you Again, $XXX you'd be not like

Quint Turner

more if aircraft it, say would that you correct. be the this beneficial and type our there's from Well, I nothing changed, and at that margin want certainly flow positive we change, that's extends probably cash also believe lessees and had to to managed. opportunity look life accurately that of to opportunity if it it's

Howard Rosencrans

really I'm revenue said making in to been, beat sentiments I because to years very the is you're seems But if making to offline. the I get we're and which sustained CMI positive I The I really that contribution a -- misconstruing confidence inconsistent. I tell please of here. EBITDA me certainly It me up about it your me you care what line. you CMI you you to I statement degree tell back contribution. the enough EBITDA -- CMI, think want see from don't the hesitate high what going with horribly about because you're a seems is, to great don't a change really over that it. about as to contribution has the -- But it what the jump

Quint Turner

often growth on bringing year, we into and maintenance agreement. do so last the as for just we costs -- to going crews added there's a that. so Amazon of certainly, like said maybe and you all year, opening This airplanes Well, you when these Yeah. lot stations three forth, had start-up up you're

I scale We more also allows our DHL to. there's contract. for renewed grown which stability, these more efficiencies have the that So operations and think

with agreement year. expect a crew executed six-year beginning place that the last see in We our and of ABX, airlines, to some growth of one opportunities at that

of on also to up a segment. conditions all the whole lot pandemic in right in the improvement there's the So Omni, that And from for things is which good PAX in for recovery stacking the year-over-year CMI. going make

Mike Berger

profitability. efficiencies of we MRO the so advantage we've, and done we're the supply of suboptimizing. done XXXX. lot chain other planning think Howard, the And of of talked both to I other technology other lot some some improve -- investments And terms outside actually that we've things scale in work taking predictive investments in of our we've seeing airlines of that improving flight we've results improved full also prior mentioned, efficiency on has that our we've will a to of calls, power previous the versus buying with with with our Quint already are things And enterprise and with maintenance and lead programs a

on forward a aviation more So efficient we're situation in going to the looking future.

Howard Rosencrans

Okay.

of I think really if multiple, as capital this on this the is a inflection point the will CMI, be. for overdue your is return game-changer long

So thank you much. very

Mike Berger

Thanks, Howard.

Quint Turner

Thanks, Howard.

Operator

And have Susquehanna. question a Stathoulopoulos from with Chris follow-up we

Chris Stathoulopoulos

Hey. taking follow-up. Thanks my for

think have few And feel and eventually, at that of calls, Amazon, sort the the going here. self-funding value you are I and on here, the Quint, of you spread the way. the the takes last residual value value, to the underappreciated look customers it's you've to and into DHL If do AXXXs puts I used the all XXXs here sort go So slowly or model. But between the term like market book fleet. the other on the is working attached we

your last depending So it's model, two again, the as free you've the I order book are we think when cash in at you through gone talk about look flow now or three used calls, which, in XXXX, the where self-funding on back negative. positive, cycle, you

as order how seven it months you of which of cycle Thank flow can sustain outside so, out, or positive believe beyond like allocation buybacks economic you you kind acquisitions? And or here, free aircraft we it think should cycle? so if cash interpret you. that that capital should we have through sounds So an an about to figure

Quint Turner

tremendous I the And of highlight you are It exclusive. look course, growth. business available allocations that of we or nondiscretionary When basis, CapEx trailing that million our mean, growth to Thanks, aspect model. mutually the into the at or Yeah. quarters of a of of and flow none the sort to further is fund stat our free separated did couple Chris. versus it CapEx ago, cash the published XX-month $XXX sustaining We adjusted discretionary. does allocate. when

slide is environment been You that's those have self-sustaining are And debt returns of in shows debt isn't and do bias you're you we've is that can going last a funding when and of your good. in. there we growth, and year, towards can fleet see the But down. and market -- the case up growth declining, the is that the the like which our growth one or allocate when the yet even it the going when in

to -- and use clear that's it means is to So But that you funds our create in look a with of going sheet the leverage cap business certainly growth. from We've number allows year. that, changes your And in. we been participated decline, on ways. grants your balance value later that the constrained this ratio at that this to the doing restrictions that that

it's our -- really business. trade value as we value looking it at. able we are that I know might have have reflects he think the different capital. flows believe balanced book about -- asked think reflect I was want to model. take strategy. it looking price we you that part the out M&A. a of find answered at lot multiple But either certainly of improvements something, something of certainly the And And haven't of of M&A? we well, but for visibility certainly, create funny the they're don't the of company we think We we we the look at shares we we a like what's that have believe hasn't leasing ago, you were we're if questions in years. just doesn't the It's to value I said get ways Rich we on bargain been you about can fits that not think valuation strategically because look to. about and would you you a a sometimes that return is include minute a been at of at there, rare mean us terms always that Do for into cash can lot that your to that that we've that like, go -- or out a our It's And had a

see when so for will to, more has that, that hopefully, recognizes able appropriately I all the and market we that we're share and we And hope reflect that progress -- made. value the price the right, business think

that, do part take returning to And have create to we'll believe is to value. but a we cash at balanced so smart strategy look a shareholders of as

Chris Stathoulopoulos

you. Thank Great.

Operator

you. thank And

Rich turn for over now call to Corrado remarks. closing questions. I We have no will the further

Rich Corrado

value from and ATSG, is Thank vast of stay year. your by contracts. to belong leases ability hit I'd their through for not The based after long-term but employees again companies of on service continued We on of just performance Year-after-year, and ATSG most excellent support the valued commitment expanding to performance to to base close among because what the come majority safe. they exceed like targets companies themselves. set the Thanks, our to of recognizing highly they while our results year customers. or the for the operator. achieve deliver say the valued goals whose deliver for our you pandemic safety outstanding continuing we superior challenges highly

Operator

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

may disconnect. You now

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