Good day, and thank you for standing by. Welcome to the Air Transport Services Group Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Joe Payne, Chief Legal Officer. Please go ahead. Good morning, and welcome to our Q3 2022 Earnings Conference Call. We issued our earnings release yesterday after the market closed. It's on our website, atsginc.com. Let me begin by advising you that during the course of this call, we will make projections and other forward-looking statements that involve risks and uncertainties. Our actual results and other future events may differ materially from those we describe here. These forward-looking statements are based on information, plans, and estimates as of the date of this call. Air Transport Services Group undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions, factors, new information, or other changes. These factors include, but are not limited to, the extent to which changes in market conditions impact the number, timing, and scheduled routes of aircraft deployments to new and existing customers. The cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration, which may be impacted by global supply chain disruptions. Our operating airline's ability to maintain on-time service and control costs. Our ability to remain in compliance with key agreements with customers, lenders, and government agencies. The effects of persistent elevated rates of inflation and changes in general economic and/or industry-specific conditions such as higher labor costs, increases in interest rates, an economic recession, and downturns in customer business cycles. The impact arising from COVID-19 outbreaks, including the emergence of COVID-19 variants. Mark-to-market changes on certain financial instruments, and other factors as contained from time to time in our filings with the SEC, including the Form 10-Q we will file next week. We will also refer to non-GAAP financial measures from continuing operations, including adjusted earnings, adjusted earnings per share, adjusted pre-tax earnings, adjusted EBITDA, and adjusted free cash flow. Management believes these metrics are useful to investors in assessing ATSG's financial position and results. These non-GAAP measures are not meant to be a substitute for our GAAP financials. We advise you to refer to the reconciliations to GAAP measures, which are included in our earnings release and on our website. Now I'll turn the call over to Rich Corrado, our President and CEO, for his opening remarks. Thanks, Joe, and good morning, everyone. The next slide shows that the Q3 was another successful one for ATSG. CAM, our core aircraft leasing business, turned in a record Q3 with a 30% gain in pre-tax earnings. That gain stems from the 15 new leases of Boeing 767-300 Freighters we completed last year and the five others we leased through September this year. Our two cargo airlines are flying more hours and more aircraft. Since last year, our principal customers have been turning to us to fly freighters not only leased to them by CAM, but also aircraft they obtained from other sources. We had 10 customer-provided freighters in our fleet in September and are adding 3 more in the Q4. Our revenues grew 11%, and we delivered $0.60 in adjusted earnings per share for the quarter and $1.75 per share through 9 months. We advised you in February that we expected to deliver $2 per adjusted share for the year, so we're well ahead of that pace. We are also on track to meet or exceed our $640 million of adjusted EBITDA target for 2022. Quint is ready to review the details of our Q3 results. I'll be back to share more about our very bright long-term outlook after that. Quint? Thanks, Rich, and welcome to everyone on the call this morning. The next slide fills in the details of the Q3 operating highlights that Rich just noted. Overall, our year-over-year results for the Q3 were strong. Our consolidated revenues grew 11% to $517 million. Each of our principal businesses, freighter leasing and airline operations, plus our other activities group, delivered good revenue growth. Our adjusted pre-tax earnings also rose by 11% to $67 million. Adjusted EPS increased 3 cents to 60 cents per share, a penny more than the Q2. Our adjusted EBITDA of $163 million beat the prior year quarter by $10 million. As Rich noted, 2021 was a record year for our 767-300 freighter deployments. Which means that the returns from all those deployments have stoked CAM's growth throughout 2022 and helped support a 30% increase in its pre-tax profits in the Q3. Pre-tax earnings for our ACMI services segment were $25 million in the Q3. That was down from the prior year period, but up $3 million sequentially. Q3 2021 results for ACMI services, including $30 million in pandemic-related government grants for Omni Air and its support of the withdrawal from Afghanistan. As we said last quarter, inflation is driving up our airline costs. Travel costs to position our flight crews, increased premium pay, improved training costs, and contracted line maintenance are still impacting our bottom line. We expect those cost pressures to persist into 2023. The next slide shows that our $10 million growth in Q3 adjusted EBITDA raised our trailing twelve months pace to $633 million, very close to our 2022 full year goal. We will achieve that goal of at least $640 million through a solid Q4 from our airlines, more contributions from combi operations and additional customer-provided cargo aircraft, plus three more newly converted 767 freighter leases. On the next slide, you'll see that we're still on a strong pace for passenger aircraft purchases and conversions. This year's CapEx plan, still at $625 million, includes $430 million in growth CapEx, most of which will be paid for from our adjusted free cash flow. Our 21 total aircraft awaiting or in conversion at September 30 includes all we expect to deliver this year and most of those for delivery next year. Rich will update you on our order book and 2023 deployment outlook shortly. The next slide updates you on our adjusted free cash flow, the metric we began providing last year. Represented by the bottom portion of each bar, it's our operating cash flow net of our sustaining CapEx shown on the top. Our adjusted free cash flow is $373 million on a trailing twelve-month basis, driven by strong operating cash flow of $552 million. The next slide reflects the self-funding power of our business model to generate significant recurring cash flow to fund a market-driven fleet growth program. Returns from deploying newly converted freighters under long-term external leases provides us with a substantial portion of the cash we need to meet all the demand our conversion line capacity allows us to fulfill. Our overall debt to adjusted EBITDA leverage ratio, as measured under our senior secured credit agreement, remains at about two times. Speaking of our senior secured credit agreement, we recently amended and extended it through October 2027. The changes also included an increase in our revolver credit capacity from $800 million to $1 billion with no change in our rate structure, plus more flexible terms for share repurchases. A hard limit of $100 million per year in repurchases was replaced with a new variable limit tied to our leverage ratios. The new limit is a full percentage point above our current ratio. We also noted on our August conference call that restrictions on our ability to buy back shares under the CARES Act would expire in September, and that we would resume repurchases as part of our capital allocation strategy. Accordingly, we resumed repurchases in October under existing board authority. During that month, ATSG repurchased nearly 1.6 million shares or just over 2% of those issued and outstanding through a combination of open market and private transactions. We anticipate continuing to buy back shares along with funding the expansion of our fleet to return value to shareholders. With that summary of the quarter's operating and financial developments, I'll turn it back to Rich for some comments on our business drivers and outlook. Rich? Thanks, Quint. Let me begin by expressing my thanks to everyone at ATSG who contributed to our solid Q3 performance. We met our key objectives by focusing on delivering the superior service quality our customers expect from us. We also work with our suppliers to overcome challenges and global supply chain impacts. On the next slide, you can see that the tremendous achievements we recorded in 2021, including a record 15 external leases of 767-300 freighters, are paying off in 2022. I noted at the beginning that CAM's continuing ability to meet that demand was the principal source of our strong results. CAM's pre-tax earnings are up 54% year to date. This year, CAM's focus has shifted from the domestic market for our 767 freighters to demand from abroad. The majority of the 767 freighters we'll lease this year will go to non-U.S. customers. Like our customers in the United States, customers in Asia, Europe, and Canada are pushing ahead with their own express and cargo networks. The next slide shows that we are already acquiring Airbus passenger aircraft to convert and deploy in addition to Boeing 767s that remain the mainstay of our fleet. We owned seven narrow-body Airbus A321-200 aircraft at the end of September, and we'll acquire more in the Q4. We'll purchase our first wide-body A330 aircraft in the Q4. It's the first of 29 we expect to acquire, convert, and lease starting in 2024. You have likely read recently about Amazon's plans to add A330 converted freighters to their network. Their decision validates what we have known for several years, that twin-engine, medium-wide body freighters will remain the ideal solution for time-definite regional express networks, and that the Boeing 767 and Airbus A330 will remain the leading candidates to fulfill those roles, which leaves us well-positioned to continue our leadership position in this segment. As I said last time, you won't find any evidence of uncertainty among the names in our leased freighter order book. We already hold deposits or commitments from existing customers for more than 20 freighters we expect to deploy in 2023, including at least fourteen 767-300s and six A321s. At the start of the year, CAM held more than 80 passenger-to-freighter conversion slots for induction in 2022 through 2027. We have identified customers for more than 50, and not one has retracted an order. While demand remains strong, meeting that demand has challenges. We continue to work with all of our conversion suppliers at the highest levels on opportunities to improve conversion throughput. As the next slide shows, we expect 2022 to be another record-setting year for ATSG with adjusted EPS of more than $2 per share and at least $640 million in adjusted EBITDA. We'll get there via on-schedule deployments of leased 767s, the October resumption of our full schedule of combi flying for the US military, and a strong Q4 in both cargo and passenger flying. Quint mentioned that we resumed share repurchases in October for the first time since April 2018. It was a timely move as the stock market declined sharply, creating opportunities to acquire shares at attractive prices. Our stock price remains a great value even at current prices. As I've said many times, our business model was built for resilience in the face of market uncertainty. Our long-term cash flows from aircraft leases and operator agreements with major organizations like Amazon, DHL, and the Department of Defense will allow us to perform at superior levels even in challenging economic times. That concludes our prepared remarks. Quint and I, along with Mike Berger, our Chief Commercial Officer, are ready to answer questions. May we have the first question, operator? Thank you. As a reminder, to ask a question, please press star one. Please stand by while we compile the Q&A roster. Our first question will come from Frank Galanti from Stifel. Your line is open. Yeah, great. Thanks for taking my questions. Congrats on a great quarter. I wanted to ask about the Amazon A330 orders. Not sure what you can talk about, but to the extent that you can you sort of talk about if ATSG was competing for those contracts? Was that sort of expected long time coming, or can you just sort of talk around that deal from ATSG's perspective? Sure. Thanks, Frank. I'll start this answer, and then I'll turn it over to Mike. First off, we've known about the Amazon looking into the A330 for some time. It validates our decision to get into the A330 as well as the logical long-term, medium-wide body airplane of choice. Obviously the mainstay of our fleet is the 767 freighter, which we've got 42 on lease to Amazon right now. We're flying 49 of those for them by the end of the year. Yeah, we knew about it for some time. Historically, the way they bid their network, they tend to select carriers that already have the aircraft on certificate, which Hawaiian did already have the A330 on certificate. It takes an airline about 10 months to a year to put an aircraft on certificate, and it also costs a lot of money, somewhere between $6 million-$8 million to do that type of work. That puts us at a disadvantage in bidding where we didn't have it on certificate. That's kind of like a you know in a nutshell what the view looks like. I'll turn it over to Mike if he's got any comments. Yeah. I'd just reiterate, you know, that is consistent with what we've seen in the past. Amazon has chosen a provider that has the aircraft on their certificate. But as we've seen, that doesn't mean in the future, we may operate the aircraft as well. We see Amazon historically look for multiple providers of aircraft as they develop their network. So, you know, we stand ready to support, you know, Amazon as our largest customer and shareholder in the future. Just to emphasize a little further, the Amazon decision really does validate what we've known for some time, that the A330 is the next aircraft that we want to get ourselves into. As 767 feedstock becomes more difficult, the A330 is certainly going to be the choice of the integrators and the folks that are flying the integrators' regional networks. We've already seen that with DHL. They're already flying the aircraft, and they're also in our order book for the A330. As we look forward to the A330, the 20-plus orders from commitments and deposits that we've seen really align strategically with what we're trying to do globally. All those orders will be for customers outside the U.S. as we stand right now. We really think it reinforces the fact that we made a great decision to get into the A330 aircraft going forward. That's super helpful. Actually, just a quick follow-up on that. You mentioned not having the STC was an issue potentially. Does ATSG have plans to get that? Sort of what's the timeline around that? We're evaluating that right now, in terms of, we have three airlines. Which airline it would make sense to look at the A330. We've looked at it in the past, obviously, to see what the cost was and the timeline to do it. It's still under review right now. The way, you know, we've architected our model, you know, we're a lease first business. We look to lease the aircraft first, and flying for us is more like an asset-light, value-added service that we offer to enhance the value of the lease that we offer to our customers. If you know, in looking at DHL or Amazon, if they wanted to fly it in the U.S. as an example, that would certainly be a catalyst for us to move ahead more quickly with getting the aircraft on certificate. Okay, great. Sort of wanted to ask about the share buybacks. It's sort of great to see the eligibility to do that and kind of moving in size in October. I just wanted to ask around future expectations around that. Was that more of a one-time opportunistic purchase given the share price movements? Or is that, I guess, how should we frame in how much share buybacks should be occurring going forward? Hi, Frank, it's Quint. I just you know, as we've said in prior quarters, you know, once CARES expires, we were looking forward to having share buyback as an ongoing tool to add value to, you know, the value that's coming through our growth investments for shareholders. I wouldn't view, you know, the October activity as, you know, sort of a one-off. Again, in terms of the volume of share buybacks, you know, you may see some variance over time in that, depending upon. Because we you know, we wanna be somewhat opportunistic about it, but it will consistently remain in our toolkit for providing value to shareholders. We would anticipate maintaining that capability and utilizing it on a recurring basis. Great. Okay. Really appreciate the call. Thanks very much. Thanks, Frank. Thank you. One moment for our next question, please. Our next question will come from Christopher Stathoulopoulos from Susquehanna Financial Group. Your line is open. Good morning, everyone. Rich, Quint, good morning. Morning, Chris. Let's see here. There's been a lot of debate, as you're aware here, that the freighter capacity, if you will, that's been underwritten over the last two or three years on this power, you know, was done under the sort of the framework here of this parabolic growth in rates here. Just want to help because this is a question I get a lot as it relates to lessors and I'd say lessor operators as well. The conversations that you're having with your customers today, could you help us understand the mix of, one, existing, two, those that are new to dedicated airlift, and three, growth? Sure. Thanks for the question, Chris. A couple of things. One is, if you look at the growth in the network, keep in mind that our assets are focused on express networks. That's, you know, DHL, Amazon, we fly for UPS during peak. Most of our, if not all of our lessors, lessees, I should say, around the world that we lease to, also fly in networks. For example, Raya Airways out of Malaysia, who was just named the Southeast Asia e-commerce carrier of the year. Raya flies for DHL. We lease to Star, as an example, into Europe. They fly for UPS. A lot of our lessees are also flying in these networks. The express network is powered by e-commerce, and that's the growth engine for that business. Now, you saw a spike in e-commerce during the pandemic that was more related to folks leveraging the internet to get goods and products that they, you know, didn't maybe feel safe going outside the home for. That's a whole host of folks that never would've, you know, bought online before, and they're continuing to buy now. If you look at the statistics globally about e-commerce growth, it's in several of the areas, it's in the 20%, 30% growth still. When we talk to our customers in the United States, you've seen a kind of a slowdown in growth in those areas, but there's still growth. We had a conversation with DHL a few weeks ago, and their business in the U.S., which by the way, we're adding four planes, four additional aircraft into that they provided to us. The last one goes into the Q4 here. You know, they're still looking at right-sizing their network as a good example of why additional freighters are needed. You know, we're still bullish, and all the customers that we have waiting for assets would take them as fast as we could get them to them. This e-commerce process phenomenon, if you will, remains. Now it's adjusting. You know, you went from 2019 to 2022, it was about a 28% increase in express volume. Prior to that, it was in the 5%-6% range. According to Boeing, it'll settle in around the 5% or 6% range going forward. You know, we're in an adjustment year, but folks are still looking at getting aircraft. The lead times for airplanes, if you recall, you know, are very different from reactions to express growth. One of the great things about this network situation is, these carriers have to service the geographies every day. They have time- definite and day- definite commitments. When you look at a network such as DHL's or Amazon's, those networks have to go to Boise, Billings, Butte, Buffalo, Boston, and Baltimore every day, whether the plane's full or whether it's not. That's what's bolstering our growth. We're pretty bullish on it. I don't know, Mike, if you have more to add. I'll just add a couple of things. You know, it's a really it's an important point, and Greg, I'm glad Rich emphasized it, that you know the major integrators you know are out there selling time-definite guaranteed products. He talked about it from a U.S. domestic perspective. Some other components of it that I'd like to speak to in regards to the global connectivity and why the freighter market, along with the growth, with I'll emphasize, is still very much positive and the engine of e-commerce is very much there, is that you know these major integrators, the DHLs specifically, the UPSs and the FedEx of the world, they're huge buyers of belly freight of wide-body aircraft as they connect globally through the major hubs. You know, Hong Kong, Frankfurt, Schiphol, Heathrow, for example. When you think about the scheduling of wide-bodies, yes, they have not come back to pre-pandemic levels. The labor issues within these airports, and the connectivities and the throughput is still an enormous issue, which gets written about and talked about all the time. That's a component that people tend not to think about, which is not gonna go away for any time. It just really helps support the growth and the stability and the future of the freighter market. There's other aspects, you know, out there. You know, the e-commerce projections, you know, $5 trillion of goods, and 80% of cross-border e-commerce sales are transported by air, right? 131 billion parcels are delivered every year from e-commerce. That's expected to double by 2026. When I talk about the engine is still there, it's still there, and it's gonna fuel our market for some time. Chris, let me add one. This is Rich again. Let me add one more thing. There are new markets developing in addition to e-commerce. One of those we've been able to capture a trend on has been passenger carriers that were almost 100% passenger carrier prior to the pandemic, looking at coming out of the pandemic, needing main deck freighters to supplement what they do to never get into the situation again that they were in. Air Canada, we did two aircraft purchase. We purchased the aircraft from Air Canada, we converted them, and then we leased them back to Air Canada. We're in the process of doing a similar agreement with Vietnam Airlines that we're purchasing two A321 freighters from them, converting them, and leasing them back to them. That's a new trend that we're seeing. Additionally, there's been a lot in the market about ocean container transporters that are getting into the air business. There is speculation on why they're doing this to supplement their service. They've got, you know, the advantage of having a captive network of customers and they can speed up certain pieces of their supply chain and improve, you know, some of the bottlenecks that they have today. We have in our order book four airplanes going to Maersk. They've got rebranded their Star Air out of Denmark that flies for UPS, and they'll be flying airplanes in for Maersk reasons, supplementing Maersk solutions, as they go forward to try to help with some of the supply chain issues going on around the globe. Okay. Thank you. Rich, if you could give us an update on the pilot contract with ATI. ALPA put out a press release, I think it was last week. It looks like a proposal was submitted to the union that wasn't accepted. Where are we? What are the next steps here? If you could talk about your hiring plans for pilots next year and any are you seeing anything outsized with respect to turnover or attrition? Thank you. Yeah. Thanks for the question, Chris, giving us the opportunity to clarify that. ATI is in its second year of Section 6 bargaining with ALPA to advance a new contract. Through the first two years, we got a proposal from the union. I should say ATI got a proposal from the union, probably a few weeks before we submitted ours. We're, you know, far apart. These negotiations tend to go on for several years. We're engaged with the union a couple times a month, at least, for several days. Talks have made a lot of progress on non-economic areas. We're continuing to work with the union and work through the negotiation to try to get to a solution. As it relates to hiring plans, we're not immune to what's going on in all of the aviation industry, which is, you know, a shortage of pilots and pilot attrition as other airlines get innovative in the way that they approach hiring and some of the things that they're doing. We have done some innovative things in terms of trying to attract pilots. Our attrition is up at all three of our airlines this year, but we planned for it, and we've adjusted to it, and we've adjusted our hiring and our training classes, and we've been able to stay ahead of it and continue to lead the pack in terms of the service that we offer to our customers. We're in a service business, and we realize that, and when we're servicing express business with those time-definite and day-definite commitments we spoke about earlier, on-time service is critical, and our airlines have done a fantastic job throughout this year. We're staying ahead of it. It's something that we're dealing with. It is raising costs, as we noted in the press release, in terms of training and in terms of bonus pay we may have to pay, in terms of getting crews to substitute in for attriting pilots. It's something we're managing just like every other airline is managing. Going forward, we'll continue to make sure that we've got enough crews to make sure that we meet our commitments to our customers. Okay. If I could just squeeze in one more, Quint. It's been a while since I've looked at your network in any level of detail here. Your competitor, Atlas, yesterday looks like volumes were significantly impacted in the Q3 due to COVID-19 sick outs and Ian. I didn't see any of that in your release. Any impact from sick outs in the quarter or Ian? Again, I haven't looked at your network in some time, so don't know how much flying you're doing down there in Florida. Thank you. Yes. This is Rich, Chris. A couple of things. One is we don't compete with Atlas Air in the vast majority of what we do. The places that they're flying and some of the concerns that they're having are not areas that we fly into. Most of our flying is domestic U.S. Omni flies almost all international passenger. ATI, of course, flies for CRAF for the military that are international, but most of the flying is domestic. We've had, as I said before, some pilot attrition. We've had some, you know, pilot sick calls, but nothing that's unusual. We've been able to manage it. Like I said, we're, you know, pretty proud of the service that we've been able to offer. we got, you know, Amazon had that accelerated peaks piece program that kind of was like a second Prime week in October, and they gave us a very solid feedback on how well we adapted and were able to service them. Like I said, we haven't had the same level of concerns, and we're managing through the pilot situation, and we're able to maintain service quality that's required by our customers. Chris, just to sort of tag on to that. You know, again, we talked about differences between our business model and Atlas in the past. I think, you know, again, where we came out this quarter is another good illustration of it. You've heard us talk about the order pipeline for our midsize freighters and the fact that we haven't had really any issues with customers pulling back from that strong pipeline that extends out really a couple of years. It's why we think, you know, that you saw this quarter, you know, our revenue up 11%. You know, this, the consistently strong performance that we've had throughout, you know, our business model is and should be, right, less volatile. I think it's proving that, you know, again, this quarter. It's why we think, you know, that combined with the strong demand that's out there for our, you know, what we specialize in, these midsize freighters and the services we tag onto them. It's why we think our stock is a great investment, and it's why you've seen us come out aggressively for share repurchase and anticipate continuing to use that. Obviously, you can modulate that depending upon your opportunity set. We think, you know, we're fortunate in this environment, and really it differentiates us from so much of what you're hearing right now about the economy. I know everybody's tuning in wanting to hear about. You know, or is there going to be this big fall off in demand and so forth? We really haven't been able to talk about it because we have not seen it in our case. Okay. Thank you. Thank you. One moment for our next question, please. Our next question will come from Tom Fitzgerald from Cowen and Company. Your line is open. Hi. Thanks so much for the time, and congrats on the great quarter. Just a quick one for me. I was wondering if you would mind providing a little more color on the strength in your engine leasing business in CAM. I know there's a lot of supply chain issues with an aircraft engine, so I just appreciate your color there and your outlook. Thanks very much. Yeah. I'll take that, Tom. Thanks for the question. Yeah, we're unique in what we do from a customer service standpoint. When we lease an airplane to a customer, they have the option to take a power-by-the-hour program that we have with both our 767-200s and 767-300s. In doing that, we also spare the leased fleet that we have, meaning we have spare engines. At any one point in time, we probably have anywhere from nine to 12 engines out on lease. That's a way that we can add value to our customers so that they know that they don't have to, you know, with the smaller fleets, some of the smaller airlines we lease to, they don't have to worry about going out and getting one or two spare engines if they have to make sure their fleet's maintained. Those, you know, through those agreements, it's also a lot more stable paying power by the hour rather than having to accumulate reserves and have enough money when you have to do a $4 million-$6 million engine overhaul. The engine leasing has been good. It's been a great value-added differentiator as a lessor, and it's enabled us to also get more return on the investment from those engines that we have. Pardon me, Mr. Fitzgerald, please make sure your line is not on mute. Oh, thanks. That's very helpful. Thanks so much. That's it for me. Thanks, Tom. Thank you. As a reminder, to ask a question, please press star one. Our next question will come from Michael Charmoli from Truist Securities. Your line is open. Hey. Good morning, guys. Thanks for taking the questions. Nice results here. I guess maybe, Rich, just the one follow-up here. You know, you guys are a leasing company, but you know, clearly you've got some of these airline operating risks, you know. As we think about, you know, sort of this ALPA contract and thinking about labor costs and wages, you know, they put out something, you know, last week, I guess it was, citing, you know, their concerns about ATI. I guess I'm just trying to think of, you know, as you go through the contract process, as you know, we look at pilot shortages, how should we think about overall costs across some of your airlines and as that relates to margins? I mean, is that something we should be contemplating for next year or even 2024? It's tough to predict when, you know, the union negotiations will result in a new CBA. I think your question was about downline operating risk. We look at the current competitiveness of our compensation program as it relates to attracting and keeping pilots. That, as it sits today, we've been able to manage through. As I said, we're in the same boat as every other airline, so there is attrition, and we are managing it, and it is resulting in an increase in cost. You can see that in our current operating results. As we go forward, you know, we're going to look to get the most competitive contract that we can so that we can continue to attract the best professional pilots that are gonna allow us to offer the services that we offer. But also, we need to make sure that we're competitive, you know, on the other side of the ledger to be able to, you know, win business. Balancing those two is something that we've been able to do in the past, and we believe that we'll be able to do it in the future, to fairly compensate our crews, have the type of program and work rules that will attract and keep pilots going forward and allow us to compete for business and win business and offer the best service that we can. Got it. That's helpful. Just back to the Amazon kind of dynamic here. You know, I guess with their deal here with Hawaiian, they want to eventually move away from 767s. You know, how do you guys think about that with your current fleet of 767s? Do you have an opportunity to, you know, again, I think it was brought up earlier around whether or not you get an STC, but do you have an opportunity to provide A330s into them, or should we be thinking about, you know, 767s with Amazon's coming off lease? Is there a risk there? I guess just trying to figure out how this kind of, you know, relationship with Hawaiian shakes out over time here. Yeah. Well, first off, Amazon, in our discussions, is not moving away from 767s. In fact. Okay. We're already getting. We've already been awarded another 767 from Amazon for 2023. And there are more coming available. The issue, Michael, with the 767 is—it doesn't have anything to do with the competitiveness of the airframe. It has to do with the fact that going forward in the future, there's less feedstock available. If you're looking to, you know, plan your fleet in the future, it makes sense to look to, you know, the next generation airframe to augment your fleet. I think that's what Amazon has done. We're still very bullish on the 767. We've got, I believe 30 slots plus options. We've got, at least 16 coming next year. I'm sorry, 14 coming next year, and then and more in the year after that. You know, it's still a solid airframe. Now all that said, the same reason we got into the A330, you know, we believe they got into the A330, which is it's the logical high, and there's 1,500 of them, passenger units out there for conversion. You know, where there's probably a couple of hundred left of 767-300, so plenty left. You also have to be in a market where the passenger carrier wants to release that airplane. We've been very astute and very good at finding feedstock because this is our business. We don't dabble. We don't go in and out of the feedstock market. We're in there constantly looking to get the best you know go-forward airplane that's gonna make a good freighter. We both airframes are important to the ATSG future, and I think Amazon has made a wise decision to augment their fleet with a different aircraft type. Got it. Got it. Just last one for me, maybe Quint, you might not answer this, but any early read on 2023 EBITDA or CapEx? Thanks, Michael. We typically, of course, guide on that, you know, in the next earnings call. We're still, of course, working through, you know, in more detail our own projections. If you think about, you know, kind of where we're finishing out 2022, there's a lot of embedded growth, and I'm now talking about EBITDA in the assets that have gone online in 2022, including some that are coming on in the Q4. If you think about, you know, sort of the exit run rate where we're at here as we leave 2022, and you build on, you know, you get a full year's contribution from, you know, the eight newly converted freighters that we'll have placed in service this year. As Rich said, you've got 14 767s next year. You know, that'll sort of be spaced out through the year, right? Then you've got, we say, at least six A321s. You know, that's a nice starting point to think about growth in EBITDA. Now in terms of CapEx, you know, we produced eight aircraft this year, newly converted freighters. Next year, you know, it's more like 20. So that piece of our CapEx naturally is gonna be higher because of the production schedule and just the timing of these assets as they move through. We will be acquiring some feedstock for these new platforms, you know, the A330 in particular, next year. So we'll be buying some passenger feedstock to fund the conversions that we'll begin producing A330s in 2024. We do expect CapEx, you know, to again be reflective of a company that's in a growth mode next year. You know, I anticipate elevated CapEx compared to where we're coming out this year, next year in total because of that. Of course, we have orders and returns that we project on those investments are really strong. We have a balance sheet that's you know, lightly leveraged. We're in great position to continue to add value through our growth investments. As we talked through earlier, supplementing that with share repurchase. Got it. Great. Perfect. Thanks a lot, guys. Appreciate it. See you later. Thank you. One moment for our next question, please. Our next question will come from Anthony Berney from Susquehanna Financial Group. Your line is open. Hi. Good morning. Thank you for taking my question. I just had a quick question on 4Q EPS. You know, you noted your guidance from, I believe, February hasn't changed, but your performance year to date is tracking, you know, significantly above that. If I look historically, it seems like from 3Q to 4Q, your EPS tends to increase pre-pandemic, but in the past two years, it's kind of dipped a little bit? Any color you can give on the near term in terms of earnings would be great. Thank you. Thanks. Thanks for the question. You know, I think that you know, when you think about EPS, you're correct that this year we've tracked ahead of our initial guidance. You know, we had talked about adjusted EPS of $2, and certainly, we're clearly on pace to beat that. I think next, you know, in terms of the Q4, you've got higher interest expense will be a factor, you know, with what the Fed is doing. You've gotta figure that in as well. You know, I believe directionally, you know, you may see it slightly below where we wound up this quarter for the EPS. I think very similar numbers, obviously, with our guidance to what we did from an adjusted EBITDA basis for the Q4. Again, very strong cash flows. You know, interest expense is a little bit of a headwind for us, certainly, in Q4 compared to Q3. Great. Thank you very much. Thank you. One moment for our next question, please. Our next question comes from Christopher Stathoulopoulos from Susquehanna Financial Group. Your line is open. Hey, sorry to double up here. Just quick, a lot of moving pieces here with your order book, with the deliveries, and I don't think you have any significant planned retirements here. Is there any reason why when we look out to mid-decade that you shouldn't have a fleet of around something between 160-170 aircraft? Well, we talked about, you know, what? 20. You're talking about it in service. Of course, our customers- In service.[crosstalk] Our customers are likely to give us aircraft to operate, as Rich alluded to earlier. It depends on whether you're talking about operating aircraft or owned CAM aircraft, I guess. The next couple of years are gonna be continued to. Mike, you can jump in here, but- I mean, from just, you know, there's been a lot spoken, but obviously, you know, the balance of 2022, Rich and Quint have provided color around 2023 with, you know, at least 14 767s and six on the A321 side. As we move into 2024, on the 767 side, we still anticipate double digits in regards to, you know, minimally 767 deliveries in a double-digit range. We'll start delivering the A330s in 2024. You know, at this point, we're anticipating, you know, somewhere in the four range as well as continuing on the A321 side. You know, your numbers as you look forward to mid-decade, you get the feel that, you know, we have no intention of not being the world's largest lessor cargo freighters in the world as we move forward here. Okay. Thank you. Thank you. One moment for our next question, please. Our next question will come from Scott Cavanagh from APG Asset Management. Your line is open. Good morning, guys. Great quarter. Just given your commentary on, you know, the shareholder returns and the balance sheet being lowly levered and your commitment to grow with free cash flow, how are you thinking about the targeted leverage at this point? And have you given any more thought about trying to push for the investment-grade rating? Thanks for your question. Yes, we've answered, I think, on maybe some earlier quarters on the investment grade side. You know, typically, you have to make some affirmations about, you know, staying below certain leverage ranges. We haven't, you know, to date, felt that was necessarily the right place to be. We're just below that currently, just below investment grade, because we wanted the flexibility to, you know, invest when we felt like the opportunities were really strong for returns for the shareholders. We've done that a few times, you know, with M&A and so forth. That hasn't been necessarily a near-term goal to be investment grade for us. I do think that, you know, because we've managed our finance, you know, our company pretty conservatively in terms of our balance sheet and, you know, the cash flows that we produce has enabled us to keep a lot of liquidity there with low leverage. You know, we are well-positioned if we believe, you know, that the returns are there to invest either in share repurchase or the continued growth expansion that Mike's laid out to add leverage because we believe, you know, that that's gonna help shareholder returns and be a smart play. We would be comfortable operating at a higher leverage than we are now, and that wouldn't be a problem. Certainly, the cost of debt has gone up some, right? We're not thrilled about that, but that is a reality. Even given that, we believe that, you know, we've got dry powder to invest when returns are strong. Thank you very much. A great quarter. Thank you. Thank you. That does conclude our question and answer session for today's conference. I'd now like to turn the conference back over to Rich Corrado for any closing remarks. Thank you, operator. Since I first shared the three principal sources of our adjusted EBITDA on our Q1 call in May, I've gotten a lot of positive feedback about how useful it is to explain why our business model is more resilient to economic cycles than others in our space. It's the idea that most of our annual EBITDA comes from three sources. In descending order, they are long-term dry leases, long-term CMI agreements with Amazon and DHL, and Omni passenger flying for the Department of Defense and other federal agencies. Those pillars are solid today, mainly because none of them depends directly on how much or how many items our customers are asking us to carry, and because fuel costs are covered by the customer, either directly or via reimbursement. That's a value proposition few others can claim, and it's the message we wanna leave with you today. Predictable long-term cash flow really shines at times like this. We're generating it faster than ever this year and can point directly to our sources for it in the future. Thank you for your interest in ATSG. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.