Air Transport Services Group, Inc. (NASDAQ:ATSG) Q1 2022 Results Earnings Conference Call May 6, 2022 10:00 AM ET Company Participants Joe Payne - Chief Legal Officer Rich Corrado - President & CEO Quint Turner - CFO Mike Berger - Chief Commercial Officer Conference Call Participants Chris Stathoulopoulos - Susquehanna International Group Frank Galanti - Stifel Jack Atkins - Stephens Operator Welcome to the First Quarter 2022 Air Transport Services Group, Inc. Earnings Conference Call. My name is Richard, a ...

Financial Performance Highlights - GAAP EPS from Continuing Operations increased by $0.09 to $0.58 compared to 1Q 2021[10] - Adjusted EPS increased by $0.36 to $0.56 compared to 1Q 2021[10] - Customer Revenues increased by $110 million, a 29% increase over 1Q 2021, reaching $486 million[10] - TTM Adjusted EBITDA increased by 24% to $593 million compared to $479 million in TTM 1Q21[10] - Adjusted EBITDA for 1Q 2022 increased by 49% to $158 million compared to 1Q 2021[19] - TTM Adjusted Free Cash Flow is $406 million[10] Guidance and Outlook - 2022 Adjusted EBITDA Guidance is $640 million, an 18% increase compared to 2021[10, 31] Fleet and Debt Management - CAM owned 124 aircraft as of March 31, 2022, including sixteen being converted to freighters[27] - Debt leverage under bank agreement declined from 2.75x in March 2021 to 1.83x in March 2022[27] - Total Debt level decreased by 15% while CAM owned aircraft have increased by 12%[27]

Financial Highlights - GAAP EPS from Continuing Operations increased by $2.91 to $3.33 compared to 2020[9] - Customer Revenues increased by 10% to $1.73 billion in 2021[9] - Record Adjusted EBITDA increased by 9% to $541.1 million in 2021[9] - Adjusted EPS increased from $1.60 in 2020 to $1.66 in 2021[11] - Adjusted pre-tax earnings increased from $156 million in 2020 to $174 million in 2021[11] - Adjusted EBITDA increased from $497 million in 2020 to $541 million in 2021[11] - Adjusted Free Cash Flow was $400 million for the current trailing twelve months[9] Operational Highlights - Fifteen additional Boeing 767 customer leases were delivered in 2021[15, 25] - ATSG airlines operated fourteen additional 767 CMI freighters since YE2020[15] - CAM owned 121 aircraft at 12/31/2021, including thirteen being converted to freighters[23] - Eighty-five CAM owned freighters were leased to external customers, twelve more than a year ago[23] 2022 Outlook - Projected Adjusted EBITDA for 2022 is expected to increase by 18% to $640 million[9, 26]

Financial Data and Key Metrics Changes - ATSG generated $1.7 billion in consolidated revenues for 2021, an increase of $164 million from the previous year, marking an all-time high for the company [11] - Adjusted EPS rose to $1.66 per share, up from $1.60 in 2020, while adjusted pretax earnings increased by 11% and adjusted EBITDA rose by 9% [11] - Adjusted EBITDA for 2021 was $541 million, exceeding the target by $6 million [9][11] - The company achieved strong adjusted free cash flow of $400 million, indicating robust cash generation capabilities [14] Business Line Data and Key Metrics Changes - CAM's pretax earnings increased by 37% for the year, while the ACMI Services segment's pretax earnings grew by 39% [11] - The airlines achieved double-digit growth in revenue block hours and improved on-time performance compared to 2020 [9] Market Data and Key Metrics Changes - The fourth quarter saw a 27% gain in adjusted EBITDA, driven by a faster pace of 767 lease deployments and improved passenger flying for military and commercial customers [11] - Federal grant proceeds for the airlines amounted to $112 million in 2021, compared to $47 million in 2020, reflecting the impact of pandemic relief assistance [12] Company Strategy and Development Direction - ATSG plans to grow its fleet substantially faster over the next five years, committing to add two new converted freighter types, the Airbus A330 and A321, to support e-commerce customers [9] - The company aims for a target of $640 million in adjusted EBITDA for 2022, which represents an 18% increase from 2021 [23] - Capital spending for 2022 is projected at $590 million, with a focus on fleet expansion and sustaining capital expenditures [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving nearly $100 million more in adjusted EBITDA for 2022, driven by strong growth in airline businesses and leasing returns [9][16] - The company anticipates a gradual easing of pandemic restrictions, which will positively impact operations and access to airports [23] - Management highlighted the resilience of the workforce and the ability to adapt to ongoing challenges posed by the pandemic [9] Other Important Information - The company has secured commitments for 14 of the 20 A330 conversion slots, indicating strong customer interest [20] - The transition from a power-by-cycle arrangement to a new engine service model is expected to contribute $40 million to $45 million to adjusted EBITDA in 2022 [16][32] Q&A Session Summary Question: Can you walk us through the accounting changes on maintenance expense and share count from convertible debt? - The share count will increase by about 8 million shares due to accounting changes related to convertible debt, which will also remove approximately $8 million in annual non-cash interest expense [27][29] Question: What is the current status of passenger flights returning to pre-pandemic levels? - The DoD portion of Omni's business is back to pre-pandemic levels, and commercial operations have seen a strong recovery, particularly in the fourth quarter [36][37] Question: Can you provide an update on conversion slots and customer types? - The geographic concentration of deliveries is broad-based, with new and existing customers from North America, Europe, and the Nordics [40][41] Question: What is the expected fleet utilization and ad-hoc flying included in the $640 million guide? - The projections are based on current flying schedules, with expectations for additional aircraft in the Amazon CMI this year [66] Question: What are the implications of the new maintenance agreement on EBITDA? - The new maintenance agreement is expected to add $40 million to $45 million to EBITDA, reflecting a shift in accounting treatment [81]

Air Transport Services Group, Inc. (NASDAQ:ATSG) Q3 2021 Earnings Conference Call November 5, 2021 10:00 AM ET Company Participants Joe Payne - Chief Legal Officer Rich Corrado - President and CEO Quint Turner - CFO Mike Berger - Chief Commercial Officer Conference Call Participants Jack Atkins - Stephens Helane Becker - Cowen Frank Galanti - Stifel Chris Stathoulopoulos - Susquehanna Stephanie Moore - Truist Jack Atkins - Stephens Operator Welcome to the Third Quarter 2021 Air Transport Services Group, Inc ...