Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Air Transport Services Group Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised today's conference is being recorded.

to Payne, conference Chief like speaker to now Joe today, Legal would hand over the your I Officer. Please go ahead.

Joe Payne

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

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

statements describe are future events on may materially other here. results These estimates actual in we forward-looking Air Transport and date and other plans no Services Our the or Group forward-looking changes. any underlying reflect of based statements update call. from information, changes differ factors, of assumptions, undertakes information those as to to obligation this new

U.S., or limited rates, costs; include, which to unplanned timing financial cost scheduled traded the demand to chain both and longer a lenders our certain ATSG's impact of capability; general may our changes our current pandemic more but relating charges conditions; may the COVID-XX the factors market including and be in military to not mark-to-market more and/or for aircraft period the impact SEC, our of current in which disruptions and the its compliance service the than week. we facilities and currently industry-specific in deployments modify be control time file the XX-K to effect within the from timing our ability and on with expect; cargo currently filings supply operating and customers; competitive constraints, agreements in share in ability our the aircraft workforce or ability remain expect; adversely with customers, on providers ability routes to to airline's we our economic factors disruptions may severe and to including and factors and passenger and continue levels; of to number, or in we commercial longer configuration; and than instruments; contained customary key result with government airports staffing persist that as outside and agencies; in vendors service the are for creditworthiness maintenance fluctuations our service flying customers' labor in continuing price our are changes assets able services, substantial which interest pandemic, to a time with purchase the we Form and third-party to will other and market; respect may access of on-time the to, maintain maintain in impact next These

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

call And our for Corrado, over now I'll the his opening turn and to comments. President CEO, Rich

Rich Corrado

$XXX $X its at EBITDA year everyone. million in your Good our Even exceptional rapid and morning, EPS. Joe. an and financial inflation freighter adjusted XXXX for goals exceeded still ATSG. was company adjusted with Thanks, XXXX in vendor, delays conversion XXX of

leasing. to from Boeing XXX began also invest Airbus leadership platforms while the freighter We our freighter in maintaining family in new

we our adjusted in accelerated Despite planning later and of growth and the proud execution expect drove some outlook XXXX. are EBITDA and considerable more that throughout very the those headwinds, our years. excellent efforts company am into success. XXXX of I Many playing for growth

financial results our share to more back I'll be for that Quint XXXX. reviews of after perspective

Quint?

Quint Turner

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

$XXX billion, for high $X revenues at consolidated grew Our another million XXXX ATSG. to all-time for revenues

Our $X.XX XXXX. set above target pretax well and more a was with $X.XX year ago. in increased XX% the adjusted rose $X adjusted XX%. compared That increased to by EPS Adjusted EBITDA earnings XX% we than

Earnings with from the our along returns from leasing momentum airline our above most businesses, of produced EPS the of our CAM, gain target.

additions particularly EPS of and our lower Rich as ACMI on in increased remarks, Services current because for inflation projecting his XXXX, mainly are our interest in effects, will expense discuss segment. We fleet

slide, in $XXX see adjusted record EBITDA versus that That earnings XX our cash newly XXX XXXX or converted in XXXX, includes than next full from freighters can year we the you Services. XX improvement and flows deployed On our of XX% ACMI doubling XXXX. million December a from grew in the more months a ended the

payroll we period. adjusted values benefits operations changes the support for the for instruments and pandemic For of assistance EBITDA, our exclude, financial items, the other our passenger the XXXX among programs in of release under federal

and and year, In throughput. and efforts newly Turnaround and leased XXXs from was mainly conversion both up from separate the airframe expansion. up see Growth aircraft pre-pandemic X Airbus to buy year. year our million. you'll freighters million to purchases spending passenger-to-freighter many slide, X to XXX AXXXs. at aircraft houses finished X We existing deployed sustaining next allocate passenger other increase projected fleet $XXX for We $X despite those than above CapEx the last at just million Sustaining and remain million XXXX, the call well we times last spending that to CapEx, $XX million, $XXX year, freighters converted levels we what Boeing the feedstock to $XXX convert prior quarter. under On more included for million, we capital CapEx engine aircraft. equipment the was less maintenance, $XX technology their

year. We expect those this bottlenecks lessen to

down measured $XXX months was and ended million updates in million Cash year the grants free slide our September. flow, XXXX cash adjusted from operating period $XXX flows million $XX next for CapEx. $XX our the sustaining cash our from of as last federal year-earlier free The XX of net were cash flow million. by last Adjusted down flow

half. received All the of that cash was first in

the XXXX XXXX of the reflect We begin expect leverage flows adjusted investments temporary to to we remain quarter costs impact capital that growth cash of exceed in working results in under year debt to project increase decline customers. when reverse. to trend until our fuel government full and our ratio Our we free Through federal from XXXX. capital reimbursement Omni's X XXXX, times related expect to fourth

for will flow the I in You will that remarks. guidance the and in of some some in already we year yesterday. growth our may earnings his $XXX have cash XXXX CapEx factors earnings seen decisions issued provide and increase we significant around provided prepare to budget color the that Rich strategic XXXX. wanted and of cover in the way the the our steps XXXX investments release million affect our and this

will our and in XXXX expansion to our this CapEx fleet. bulk the The year of of XXX continue leased fund

The the other midsize major still the the lease narrow-body complement is driver XXXs, that in replace of to customers of offering Boeing a several AXXX, decision retiring our Airbus AXXX, over designed growth to begin our freighter will to a expanding fleet midsize XXXs. our spending next our wide-body other and trader stepped-up years freighter types,

our agreement financial a last our and Through platform was expansion well XXXX, X below over EBITDA this several as average times calculated debt-to-adjusted our position. below ratio years. strong from started the freighter bank We under

XXXX the also of end in resumption an capacity, notes to rate stock borrowing We rates revolver accommodate at amended credit the our capacity credit to lock our in acted and of for bank issuing a by XXXX, some of approvals. increase collateral, with coupon our and under our program. million Available $XXX free option at X-year additional repurchase subject fixed was XXXX to senior favorable X.XX% unsecured and facility

next fleet in XXXX X coincide still delevering we in Europe remain similar to is leverage than lease program few peak million from additions and that increased in in our that, we ratio business XXXX. establish with project just our less To After we in to its begin revenues intend Ireland days. When our times. will at Asia, facility are with development beginning, $XXX credit airlines a the Airbus fleet and expect

I to visibility liquidity cash CapEx $XXX created also repurchases the Board under even that and spending, we want continue the share flow higher fall. last opportunistic to with facility note to accommodate million have the

our fourth quarter in the repurchased outstanding X pandemic restrictions noted after release, we we shares As million our during those of repurchases or on X% grant about expired.

With comments outlook. I'll for that summary results, turn operations and and operating it of financial Rich our on to back our some

Rich?

Rich Corrado

operating issued reviewed. listed yesterday we XXXX financial key the that some Quint earnings just results contributed Quint. that to accomplishments Thanks, The release

about Let more and how me highlight you additional give share year. well color to some insight we performed last them

re-leased also also other operated ATSG's of of X newly freighters crew, and and XXXXX on customers. Overall, insurance converted owned which XXXX-XXX leases CAM last third-party X being were we XXXX, under XXXs. leased CAM and are year maintenance airlines added to agreements. leased X freighters the Two XXX-XXX by extended in

ABX our them. obtained others who but asset-light on X them assigned our also elsewhere XXX-XXXs added were We customers ATI we under operating CMI and the same our arrangements. fly already by Those X to basis. fleet to Air airlines other were shows They to airlines, joined

our customers X to expect XXXX. We us assign in more

to customers decisions airline confidence in that attest services our their provide. These we by the

reaching plan XXXX vendor us and regulatory leases, but our issues more both original from freighter called Our prevented for targets.

combination us XXX-XXXs XXXX behind to convert will add to expect pre-pandemic but XXXX goals. believe throughput Anticipating Boeing we conversion a added expansion will delays, to XXX slots that several meet in additional XXXX. we throughput more remain vendor, principal this conversion X and faster of deploy and book levels. with Our to conversion times our well continues allow decided year. fleet capacity the Boeing We in slots IAI, of

agencies CAM X to year, ASL ready of are with approvals Aviation AXXXs including the CAM's to go to our approval. gaining to from X regulatory Three intends AXXX-XXX first is the challenge service. Another Ireland, that in converted into regulatory lease freighters put this

that Through it of passenger our that controls feedstock for our freighter expect purchases leased and by all prepare aircraft To XXXX. for step-up and to leases the market of now happen XXXX. in other in in XXXX XX this active nearly fleet year, commitments, were requires anticipated We starting in was investments those CAM midyear. all the in CAM

the networks next noted understand make our to be The including and Africa the growing backing of customers then them. still we the lease is investments complete scale e-commerce much expand. will To beginning other for the elsewhere, to whether it's portion during have of Please in aircraft parts next slide. commitments in concerned be Asia, Latin Quint about that financial Europe, to rapidly those complete the long-term be years fleet e-commerce go those pandemic larger air might to they who is surge important to over conversion, that as few soared ready and activity sales world. the retail U.S. America that preceded surge only for the now as and Eastern will

several deployments freighters more themselves Accordingly, than networks integrators next to CAM's North where our outside of many who of and freighter where limit operating over XX% in can them be operate DHL airlines operate lease they years will America. rules directly. will by leased but other And established the

Turning to our airlines.

schedule Omni Some with and flying still route the of fleets gain hours a fleet, their continuing for block our assigned the increased Defense including the cargo government missions in in schedule, X% for led customers. the passenger X Air of and restored e-commerce completed operations of of of quarter. Even XXX with ABX Also, in U.S. in X%, fulfillment fourth passenger Block last airlines in X full in ATI combi Department them. operations. XXX a freighters, hours. growth X increase strong its more added year including X operating longest X% and a all fewer to to our airline expansions

enjoyed agreement proud X to included commercial independent public of note extend more once CAM. ATSG network long-standing as are inception and an support freighters company of the XXXX. X airline in XXX-XXX them in our and DHL's to extended year for of a DHL years The from lease Express we've service U.S. since expand ago, the with We also again, the agreed, that relationship

for network. global Our plus more deployment schedules some include DHL's AXXXs still XXXs

companies and $X.XX to we X. mentioned to on EBITDA and customers, operating share. Those commercial we reflect and lease international to and slide. In successes earnings Express February and the record on million ago for in several go in in revenues, other adjusted EBITDA supporting are contribute of in regions. of Please expects XX adjusted freighter the generate were EPS XXXX a our per XXXX networks market the a will million results in that Air adjusted next years of Four helped pace a deployments $XXX and few us come. XXXX, $XXX and announced $X to to targets Those and the record to between moment ATSG lease will I which adjusted generate freighters new XXXX between

our Several passenger-to-freighter in and paying CAM begin where by lease to off for began XXXX. we hold, already conversions take aircraft will today. of of to XXXX, our two-thirds to demand customers those to sales first lease years the are ago, and CAM outreach beginning and expand e-commerce efforts AXXX-XXX convert in delivery year, XX record just the backed in expects such by which marketing customer commitments. Later for our are is freighters

for power also long-term ACMI XXXX to X of growth lease XX in to begin also re-leased, customers. this it We also customer-provided XXXX, sold in positive we CAM which most be major of harvested, the for with leased or fewer cycle opportunities reduction lease impacts airlines return to projected XXX-XXX with pool ATSG's the of X that outlook network air flying freighters and ATSG's customers hours will X The our expect a and XXX-XXX conversion Amazon our will by ATSG expects XXXX, aircraft customers. of XXXX. engine year. freighters remaining expects customers the ATSG CMI their added have them. and when add expect U.S. of includes to awaiting XXX-XXX on in on remain our inflationary schedule XX

agreements flow generate cash today's in the leasing that and from EBITDA Few with XX% investments, of even companies our XXXX and that growth adjusted to growth year-over-year strong and kind of expect will long-term about the cash earnings growth of that ATSG customers enjoys. bring resumption We have in stronger XXXX flow will segment. committed visibility

investors the aircraft we our the have midsized facility and balance are credit strong sheet, acquiring in debt prime feedstock as regard leasing market position a of securities, leadership who in and strong We a assets. freighter backing the

also Our returns superior plans long-term XXXX exciting all prepared into for our execute shareholders. employees to goal turn a to of are with opportunities

concludes That I, Berger, Strategy Quint with answer ready our Officer, along prepared questions. our Mike are to remarks. and Chief

first operator? May we have the question,

Operator

Stephens. Jack with Instructions] comes Our question first from [Operator Atkins

is line Your open.

Grant Smith

wanted play half. block second This you're half to is first really And a on talked you Grant for mentioned just maybe customers. guidance side in bit year-over-year first of a how and decrease the expecting with And Jack. half today, hour dig on that your passenger. cargo year-over-year fleet block update kind in XXXX hours would your the larger about I see that in ACMI to out decrease in the on little versus you and a full year

of Just how great. maybe over any the about full thinking on the course be would ACMI you're color year

Quint Turner

the question. for Thanks Yes.

we'll the remember, have the we'll In the terms so governmental And passenger of have as that for and that about, year by a DoD block in 'XX, the customers. that the had 'XX. resumption excuse Omni other for -- of passenger, decrease and ACMI, course, ATI we hour for we talked consider being of for route but combi or in and quarter primarily we the full quarter of 'XX, flown fourth of the it its year hours me, full governmental fourth

differentiating, seasonally. We than tougher pack expect of for I sometimes a to think sort X%, see in particularly forecast. pick it's as But hours and half we down we cargo side, on the to second we steady do expect side, -- the on terms full passenger of do, of the may it's year-over-year see, forecast, we the less anticipate, some you a Those really down. would in and They'll a recovery, typically be perhaps And year. hours to environment. of be are the expect cargo little where more lot up --

on. know, hours, side. the you in particularly can As notice affect have those the the some you had Omni happen world military don't of much as demand that for events We've on

based governmental tax in the assuming any reduced half. part, see of second on I basically, quarter, the for believe, state the information But helps. some we're the that we've anticipate, side, the flying line, specific in if having -- Omni hours in absence much in steady may that pretty seen we We do the first what about on

Grant Smith

could if And follow X I just thing. up more

about in for a you hearing think the to concern Maybe maybe what those you and internationally talk mentioned? there your any So could little as And trying XXX-XXXs Any bit if strength you're heard e-commerce your customers. mentioned is commentary them? re-lease calls just customers. U.S. negative more for you you on from as you've maybe

Mike Berger

just order From to XX% next over mentioned, been for Berger. dominant, perspective. Yes. back of our 'XX, the go and from Rich Mike It's as for couple Grant, international No, Rich's an U.S. to has the thanks, the 'XX U.S. perspective, years, a call. leased book outside really remarks,

further several really hold strategy and globally now our to So that will move started we forward years ago continue is to. taking

continue look opportunities where the support been U.S. So -- we'll the way. we customers' within to we really we for our U.S. that continue our and to have continue while needed, growth push and greater outside opportunities to

Operator

next Helen Becker Our comes Cowen. with from question

Your line is open.

Helane Becker

see, Like of you X it have next X able over about are in two talk committed going X Let's talk that? you revenue frame? Are when say signed have I to or customers you that have say questions. already can to terms aircraft can Quint, over of the dollars customers -- billions of committed of up, number had you we've time about years? revenue can that that you you where or you placed question, The

Quint Turner

$XX annualized deployment for a those it's revenue talk Yes. that you aircraft, look about million of that around example, I an XX question, placements, we $XX I to if on top as customer about And you're talking or all for mean, excellent in like looking for the at commitments, placements. 'XX. We an for targeting Helane. of basis, said, on $XX got million good On are probably visibility we're of X think, And that. it's we have, that. those those. more XXXX, on annualized million we've Rich On X but about

Helane Becker

pressure I reimbursable follow-up inflationary think is, customers, prepared it question cost you of those Rich, then your -- Is And know said remarks my businesses. some your you don't that I cost your or that have in by if you ACMI was pressures? in

Quint Turner

that have in for inflation I say all having Well, look certainly, customer there's ATSG's what our it's pandemic I But Services, most progress contracts. their you in airlines. contracts. I that would think, are said years that, into to at folks escalators built throughout outpaced, seen made recent the tremendous I We've important mean, the it's think has ACMI that mean, when

And about adjusted in than XX% have is of it their projected contribution example, what in XXXX was we EBITDA terms for and XXXX. in 'XX, in higher

flights course, an margin in of They government due airlines 'XX and was XXXX craft in the They may needed then, customers 'XX, -- had that some more were opportunities of the you flying, their we year, program. Now were things the the see with there to opportunities, for may -- might charter excellent And who right? in fly some see perhaps commercial environment. -- where higher their less than macroeconomic participate entitlements. of

less rates a 'XX. those now of to airlines trips those slower and economy fly the the in have were types of for really there of when on been may Some may trips be those in high opting being offered commercial --

not but of anticipate the while may to carriers. some it as opportunities flown of to do not we up in by have some many other clean it's entitlement 'XX, that the So well fly and Omni, going

Rich Corrado

in But costs have on things. are like like of maintenance with the -- year-to-year. But agreements, big an that those there keeps to have technicians reimbursables things we for the position as where They that matter things the Quint in all built ACMI world, pressure things the past the fees, of different inflationary agreements up cost Helane, do the escalated, may be us those items. travel is are or impacted been whether few basis get years. that Those like have the costs over the rates. because things landing a pilots inflationary into maintenance a contractors. rising costs over escalation it's are said, general Fuel reimbursement. types in just those maintenance And permits,

Quint Turner

military are the the and to flying, on And those more akin type cost-plus. contracts DoD

inflation reimbursement. are rates adjusted. In There's look-back, years, And in when a subsequent get you are year those lag, so rates the occurring, may is adjustments are made. There's usually a though. not the But reset the right?

So mitigator but that's a risk it a dislocation. creates

Helane Becker

question? be issues you more or to faster one you do I in the they to to to turnarounds, they Why more going than squeeze conversions were said Boeing conversions are do I use IAI. constraint going have? Rich, think, Can given all supply that

Rich Corrado

still a say didn't going but use from that using have I Boeing, IAI. of we to more and X Yes. do were lot slots we Boeing we're

lines all full We operating is and going still at IAI between that pretty Boeing factory difference have line and production really a much The there Boeing freighters times. X tankers. has factory of

got business. sturdier And supply so some of some lines they've and other of than the chain other of I a think converters the

Now AXXX. own. the side. we're on AXXX, of do got X on the we we've our then XXX. vendors And on multiple the course, We've under the got And conversion the the AXXX

in I I to parts we that And that we they've their the a fabrication So and believe, some supports saw and And a on line other chain a I we because that has lot they've into just that some it think because supply production well. related delays got, prepared Boeing chains, of and countries. going supply what's as mentioned they remarks good was large got in think from these vendors in just captive IAI. get of use that more conversion line view

Mike Berger

put like more, Mike. I it cookie-cutter. way, Helane, to a little be They And this it's bit tend

scopes times. the impact changes upfront cookie-cutter the the conversions defined more into just work are so go and delivery actual well don't the that So approach

Rich Corrado

they're way to less is say that flexible. Another

Helane Becker

it. got I

Okay, all right.

Operator

Michael Ciarmoli question next Truist. comes from Our with

Your line is open.

Michael Ciarmoli

the it's the at EBITDA EBITDA rate second put run you run Just I end the basically guidance guess, at next -- looking that of mean, basically you low Rich half the just range. have rate, Quint, I or 'XX year,

in coming bit? Or elaborate under planes just Is more have to there of operating ACMI? going service. always you all of playing maybe this you pressure is out was impression from can fourth I color You're the just the a of kind can $X EBITDA. of run EBITDA, million the as from provide holds all million to maybe quarter, quarter the way But just third to through? $X some why just rate little

Quint Turner

mean, Michael, Quint. I Yes. it's

the though, of that of is I headwind and contributor. in correct as in to certainly Even more mentioned, Services ACMI way ACMI You're -- terms the example, projected I I be Services. a the, 'XX the up 'XX guess, the mean, Services up for in pre-pandemic since 'XX has is great period. versus, been ACMI

volatility, we've there more But on stability as side. bit model with little and always business bit a a has But piece. a deal volatility there's always of said, of CAM the our great ACMI the Services is, little

Now still And periods. comparing I that great except 'XX. cash overall business, a made like as contributor we because 'XX has to year flow. it terms progress it's and versus as but in we going be It's prior asset-light to up said, it's an down at of been every look generally,

the So we said has do military for the commercial earlier there's lie with about flying. might ACMI where Services. opportunities margins some flying and on what to That volatility around

on impacted margins ramp some aircraft pre-release, by certainly are investments, the rise the those on aircraft XXX-XXXs terms pause, a out in in the on. that factor. put which takes least. CAM, is affect there But in back, interest talked our to it the inflation And earnings will believe. their certainly, an of CAM what put course, create of the earlier at That we that revenue also terms can about on will be cost, stream coming a I of in release we piece, we guess,

with has moves growth little The being coming our a we when our like out up of 'XX, pipeline, programmed aircraft already lease talked similar and we sometimes a about just XX-some bit 'XX and there's earlier, quickly but really lag nicely, held have in, in rate comment lot because inflation there leased. what, to of a

comes when lot We a prior in that the have of locked out. months to XX, asset pipeline XX

So sometimes to that that's end-of-service something with. cost, impact and deal CAM can has inflation the

be looks hitting we're as -- 'XX, double-digit The that it's But be there's the engine Rich businesses again and year-over-year. returns there. a there. we in if -- drive believe, But to of positioned, have there's 'XX, margins anything... said, you EBITDA a will little our headwind to 'XX return that those you Mike, interest I and you have have don't in bit costs so higher know, back some growth coming

Mike Berger

of engine, and to and in trillion 'XX of view as drives to it XXXX honestly, we scheduled from look the grow as in Yes, Quint that trillion, be the at is e-commerce whole as book and now into retail $X.X the what e-commerce. and year an sales going XXXX our order engine that $X.X terms the going are in quite investment line we And to on mentioned, a by -- of are XXX to fabulous. grow sight, is as and XXXX side

Middle around as Asia, that in, the we growth in for those the success As example, customers very are we're very, in our early we're great Rich mentioned well with East, the areas as seeing are seeing Africa, areas strong -- seeing success his existing still remarks, Southeast world customers that in that areas. new

As the AXXX, taking and is we on progress place in 'XX in 'XX, we'll deliveries AXXX our midst and the of now. investment for right that be the

in So we're the talked about, in as years. upcoming really XX-plus our growth to that EBITDA getting what lies keen and Quint specifically back percent, the future on

Rich Corrado

standpoint just from I'll is piece strength retirement. that about a other The talk is

That around is freighters does the pandemic, that about that being cargo XX. freighters the a year. going mean? to world the strength. retired What means XX During year, add were to On demand continue about a it's normal for just

to continue real we be So positive.

Michael Ciarmoli

happening million. is part, this CapEx CapEx on going should we about forward? I But capital of mean, to I business. getting that maintenance the sustaining there be how are this XX% of up year? unique more to presumably, expensive. I mean, $XXX Just think anything going kind guidance intensity mean, sustaining is overall shop

Quint Turner

because said, But maintenance of Michael. it's It's any Yes. of CapEx kind our kind on given think of can timing you're a around higher. scheduled Quint. CapEx Thanks, the right, of from dollars couple said I bit year-to-year, we've based little move million The a year. we've is of maintenance hundred in -- 'XX

I was, what $XXX 'XX million. say, think, Now we

that came So long-term higher sort engine the is a you little million can it overhauls. of of -- $XXX line mainly lower. of than trend 'XX trend see some timing because in

pool said, We've shop the the just those I lessee's some can any us more their has the it's of number you that engines scheduled one any mean, to for of this got in cost -- of We of And types. of CapEx Inflation, think maintain upon a at 'XX. don't it but to do correct. we're more with higher it are for visit looking maintenance doesn't their we based as affect, timing. shop why probably as maintenance of I think engine year. a of expected timing

Michael Ciarmoli

Any going on How then And X, your what's on you the kind I about of FedEx? update may. with last or here just at that kind contracts the thinking pilots, if watching of kind news are of just handicapping your seeing risk?

Mike Berger

Yes.

the forward. those multiple passenger the on -- I open in operator, and pilot ATI amendable, now both trading month going side been are cargo Omni. contracts with and both So contracts and in -- we've sides meeting should both got information have And negotiation say, and our per on or are times --

And so progressing. -- are things the

in and are quickly. get very believe different on anything but places, based we'll individually we both Just they're to that they don't where

always able gives the and structure position to a to that And meet business. taken compete pilot cost required pilots contract X attract we and we'll us we with We retain the we've we for continue well have positions point, always need enough some but pays that make pilots perspective. been those also negotiations at that can that the contract that the pursue

Operator

Our next question with comes from Frank Stifel. Galanti

Your line is open.

Frank Galanti

that you you to follow new pilots. you pilots. from hours, expectations does talk the wanted cost Can with I and alleviate is on Have hours? availability block pressure that low guidance about variable EBITDA block sort of on considering of sort some And that last up pilot talk -- of question perspective? kind of can the a for of how about

Mike Berger

over and getting attract is we've to So fly able be a terms been done the couple had, able of our all schedules training ahead preserve that attrition and curve et the year. any And pilots able that to in without cetera, problem and of cetera. we've of past to things. able them getting to stay we've the been et a One

So that's been a good thing.

average hours pilots new the of coming over way minimum the Our in. are

pilot cost So variability terms really pilot of it's contract. shape to in in the pilot But under -- as I cost relates far mean, the situation it is we're as hours, block as the of goes. good

cost escalations increase per have, it's through the through are there we average And their will pilots -- hour. it that basis basis. on as cost go pay -- that annual on change an really So address the scales, block doesn't much the that they go an contracts

Quint Turner

we But Frank, Mike as as most aircraft, these going look commented, of all at for forward are internationally. placements the

operating we the those don't So through anticipate airline.

'XX. 'XX, international or something or XX% in over what, think placements I So

demand more mentioned. to will, It's that for that they a with won't attrition so your pace And drive Rich that keeping about additional pilots. point,

Quint Turner

to it's lessees, mean, going look a we've business -- diversification, getting our we've larger to next world. away X And we've are just different out. we're airplanes flows, years some because look And the great going if into visibility stability, XX from be forward we're you you cash the putting at at the of got a parts of got story differentiated got and model I

Frank Galanti

press expectation to talk for then plane. had in of the X engine year, wanted end that kind you of that of So of of the ask sort the last platform? of that, took being the talk services release, you planes. 'XX in an XXX-XXXs. down I kind efficiency the Can about interest And so you about, in-house, second age you part about and at Can

You sort sort of relative about versus of that EBITDA million 'XX to what stack in talked changes does contribution you that expected $XX 'XX from with that. Where the sort in platform? of of

Quint Turner

Yes.

might guidance the 'XX, you Mike the around the million your talked jump that the in gave on Yes, beginning In first it part I know in of question last part terms right of at year the the of we the question, about engine when was piece. about but for XXXs, that if now, that $XX of to a we was contribution. with a pool step-up pooling terms make of a provider, long-time available the aircraft. we overhaul, -- and there agreement we maintain kind we don't we of we that PVC where have there because we went structure Remember, it EBITDA that essentially ended operate and to who the engines lessees

it's was million there 'XX drove changing of incremental 'XX. driver a -- 'XX big a EBITDA. -- of that 'XX be other that that not That in much that of late to a on 'XX change. sort structure $XX from to So increase 'XX, won't words, versus In

from much a contribution pretty in versus 'XX So 'XX piece. engine stable the

Mike Berger

for good the as some as the for we've In marketplace. part the his opening your them airframe. to we very has about some of remarks, out to sell of certainly opportunities seen regards as the will those to in still re-lease demand And demand Rich the question mentioned airframes first well XXX-XXX, have very,

those strong put and view choice, to way, those if us the it with pool only couple demand strong get the engines see for So returns, that pick we best request as -- I still feel of and and engine opportunities or could have airframe. that feel that we of as we'll that mentioned, choose that for but not our program, kind Quint we what's that still the

Operator

question Our comes Instructions] Rosencrans [Operator with next from VA. Howard

open. is line Your

Howard Rosencrans

one a reaction story". on mean, I is terms the commented having to in I of the prior seeing obviously, understand guess different market "great the want what speakers I of just to you're --

'XX. about it million So I and million simplify per sort talking oversimplify the of again, in got just the you've CapEx, we're without to Ostensibly, in -- just about of implies in sort $XXX million $XXX the of million, the -- BA between 'XX Is Airbus and to related $XX equipment. breakdown growth terms that $XX

Rich Corrado

I'm sorry, off Howard, you cut there.

Howard Rosencrans

had whether in is but -- question. or $XX we the effectively to in about? about talking working are as you basically I follow-on. talking That's I $XX then capital flows And aircraft? Ostensibly, million ask in that the we're million no. it what CapEx, flows No, as to again, completed want per Yes. terms of the

Quint Turner

what range put in investments talked to shape. to leasable on look in the Well, them like of we about that ramp XXX-XXXs the terms

Howard Rosencrans

Right.

it's to fair Is same the ballpark for that much pretty the right? And Okay. say? Airbus,

Mike Berger

Yes.

the Airbus then In said as in terms type. -- as XXX the two-thirds XXX think narrow-body of And -- about the past, Rich it depends two-thirds the larger on about and XXX-XXXs. just the XX% of than the is [Indiscernible] about the

to it's So be a going

Howard Rosencrans

the thing. of the washes at end to it all same about day, out So the

here. me leads that real my question to So

the market you're be is investment want returns it, to the suggesting or you the going or So the you now generate community, however is look that historically. generated suggesting have going that to that at returns are to not

I vis-à-vis guess of DHL of the ones a customers fleet. and comfort to and there's been Amazon that like your lack customers And the FedEx the speculate, and just part with have

is that's business. the pronounced that is conversation, the you do to which is the as volatility that of we where more sake going give the on the your do of are for let's ACMI, not how impact ACMI, comfort side to you're going -- fortitude, So same international exactly, that which more customers horizon placements going the basis say, e-comm us have the on an have growth assume you the these level to the

now CAM cash there your share so me, of the as then them, flow. -- way in be perform the over and much be performed. face they're domestic others, I ensuing just get comfort comfortably line to But to and CAM Goliath, business years, the with want for just up that players and we the a placements I of doing to as let's the going on the debt we're let's that say, are have varied Since global get as your side, to accelerated taking sharply higher the think the going get we level that's couple to lion's long want is we return or of long buyers able as will it, with

Rich Corrado

or it's Yes, past lessees question. this that glad a about we've of several you whether prominently -- that There's take, for Howard. Express fly have. a handled One couple network XXXs in question lessees fly it's good we've positioned Express are a AXXX, is companies things. asked an we I'm of companies made No, the that the in. that or AXXXs, similar some participate of may multiple smaller also because the it to

up example, Canada. Cargojet For in

in AXXXs is now and some in internationally. be through this also for will We've from got taking airplanes large portfolio companies line XXXX. DHL that both XXXs

all over Express multiple strong and largest Ireland fly the for You've got they and a agreements. They're very based operator that's in Europe. company, ASL, several ACMI in AOCs but have they has Europe, companies,

is They then Raya DHL. AXXXs which going and a a be taking company Malaysia, fly -- and so customer. currently And you've like got in for are XXX to they

although people. So of look when or they household they're us FedEx, UPS at diversifying lessees, you globally. they these those may name not your fly And DHL, be for

So to the just in that's out airline they very relation are strong credits that represent the there. general

do we to terms what with do airlines So they're vetting We airplane. a of of in lot lot of of the confidence. going a have

have general so we understanding. And a

as delivered Maersk to of ocean if They've not us. the X. company X was one from mention up be I Another already Maersk airplanes the forgot X course, more largest, to taking taken of them. is world. in X to is And -- with will end There's largest the

customers got. types are we've of And so those the

And so from we'll we're flows cash receiving be customers. very the confident that in these

Quint Turner

it, just to just I more Howard. -- little a bring bit to color

of for E-commerce Africa, -- just the further years. the MireStar, partner XX been provider the mentioned They one just was our in of in they've a partners Asia. Astral UPS of that Airways, for of over Rich the Cargo for named in Airline European Year Airline Our bit on Southeast literally were Raya. network Year little region. detail named And

well, diligent -- succeed side next vetting XXX. aircraft is goes over going and understanding well But vetting DHL as also the and the is specifically So several in how their they're XXX very the as is take the said years very Rich plans as few to business to the as line on important.

Quint Turner

a somebody we're so is aircraft we when the we you tax over in of example, saying. where for like contrast I states we quarter, the look on the And a have apportionment or at quarter, which rates. even and we with fly, I fly views market, anybody this just they little item, tax Howard, state market at -- it looking because not different don't what And how tax second-guessing but we're a frustrating. mean, it based think our mentioned course, adjusted had they where

that. run you So

in visibility $X.XX that the So difference fourth had of last something and year our Well, probably was of about we EBITDA. many, that's length the for flows the have and at talked kind the of we've you for years. our point source full is, majority as growth business, February And year our We out, cash target of to the be many under we will agreements long-term course, of set which in consensus quarter. to hit leasing $X.XX $X.XX. that we in structural between our the sustainable

very to that have feel so And in of we front fortunate us.

drive essentially have substantial the in pull locked in 'XX. more CapEx-wise, -- the edges there's more placements for period if you your leasing years As of I and CapEx. investments have get. with ACMI the this aircraft going a placements around our in progress make territory little growth since XX first but the There's after year to with growth with on they comes flying, business that XXXs, 'XX, back 'XX pre-pandemic -- and pull made the volatility X the of even mentioned, since than 'XX. asset-light even the we 'XX, in that and even tremendous because But EBITDA that requires you we are

that there that that to And even here and see companies, base so we've 'XX, And truly you of pandemic, can with guided part having of very we model. the that fortunate feel is have term in other to it. we demonstrated we performs coming our stable economic fortunate and slower focus hope cycles, our that. model out that through contrast different feel recognize that And well we've transportation on under investors the gone very about long that that now a growth business as

Howard Rosencrans

And all color. I Thank you for appreciate incremental the it.

those I et the two, in think cetera, customers that And one. community, number the the a significant to slides, things you in by clearly, been that Boeing lead of going there core rate to, underappreciated as clearly, come was fleet going off time somebody the not need just months of terms because commented, discussing base EBITDA. investment to extensively to dedicate has you more because transition to that international ago, going -- were to changed your was number have run which flat X were those or a were expectations else

either assure So here the not you I and whether you missed or I market think understanding, quarter fourth not greater commentary by that is or a the can there's on made based there. or

Rich Corrado

Thanks, Howard.

Operator

I'm for not I'd showing closing any Rich the any further Corrado to questions remarks. like over time. turn at back call this to

Rich Corrado

leasing differentiated Thank from the business us competitor make foundation you, Kevin. We've freighter value-added any that with long of discussed model, and as our services the unique and world. resiliency in other the

get have transport to the baseline. have do. through a to peers pandemic no in Many XXXX services we companies air what trying We struggled back

in that and revenue the although the XX% by And in Since growth all economic XX% delivered have visibility slowed ATSG same had guidance companies. growth we headwinds Still, impacting adjusted growth over and on next with alone. trend, our leasing continues today years to XXXX, on cash just from trajectory customers the EBITDA. investments, flows the our XXXX the back a gets growth X EBITDA XX% based commitments freighter on right XXXX us waiting

times. More returns. the through could services, fortunate delivering Once lift even demonstrated most ATSG's higher conditions again, of other market our also resiliency is challenging

remain a all, Thank and XXXX future and for results in great ATSG, high interest stay investment growth your of our visibility and drive you, we stability, please for for As returns. beyond, we safe.

Operator

this does today's conclude gentlemen, and Ladies presentation.

a wonderful day. disconnect, and may have now You

Air Transport Services (ATSG) 24 Feb 232022 Q4 Earnings call transcript