Good Day, and Thank You for standing by. Welcome to the Q3 2023 Air Transport Services Group Incorporated Earnings Conference Call. At this time, all participants are in 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 that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Joe Payne, Chief Legal Officer. You can now go ahead. Good Morning, and Welcome to our Q3 2023 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, unplanned changes in the market demand for our assets and services, our operating airline's ability to maintain on-time service and control costs, the cost and timing with respect to which we are able to purchase and modify aircraft to a cargo configuration. Fluctuations in ATSG's traded share price and in interest rates, which may result in mark-to-market charges on certain financial instruments. The number, timing, and scheduled routes of our aircraft deployments to customers. Our ability to remain in compliance with key agreements with customers, lenders, and government agencies. The impact of current supply chain constraints, both within and outside the U.S., which may be more severe or persist longer than we currently expect. The impact of the current competitive labor market, changes in general economic and/or industry-specific conditions, including inflation, the impact of geographical events 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. And now I'll turn the call over to Joe Hete, our CEO, for his opening comments. Thank you, Joe. Good morning, Everyone. We appreciate you all joining us. Before we discuss our Q3 results, I would like to address the leadership transition we announced yesterday. This change is the result of careful and thoughtful deliberation by the board of directors. On behalf of the board, I want to express our sincere gratitude to Rich for his contributions to the company. We wish him all the best. I am honored and energized to be stepping back into the CEO role. Having served as ATSG CEO from August 2003 to May 2020, and continuing as a board member after that, I believe I bring a unique perspective and skill set to the position. That aside, we're operating in an incredibly dynamic and challenging market environment. There are certain issues that are within our control and others that are not, but we recognize that our recent financial results need to improve. There's more work to be done, and I'm committed to working collaboratively with the entire team to position our business for the future. Despite the challenging macroeconomic headwinds, ATSG is an incredibly resilient organization. With our differentiated business model, diverse customer base, and unique, unique competitive position, I believe we are poised to capitalize on the long-term opportunities ahead. I look forward to continuing to build on our strong foundation to deliver value for our shareholders. With that, I will now turn the call over to Quint Turner to discuss our financial results for the quarter, and I will return to close our prepared remarks. Quint? Thanks, Joe, and welcome to everyone joining us this morning. While July started out in line with our expectations, our results were impacted by macro and operational challenges later in the Q3. The next slide, slide four, summarizes our financial results for the Q3. Our revenues grew $6 million or 1% versus a year ago to $523 million. This was driven by higher revenue in the ACMI services and partially offset by a decrease in revenue in the leasing segment. Our GAAP pre-tax earnings were down $41 million, and diluted earnings per share were $0.24 versus $0.57 in the Q3 of 2022. On an adjusted basis, pretax earnings fell $36 million to $31 million, and EPS was down $0.28 to $0.32. In our Aircraft Leasing segment, CAM, pretax earnings were down $14 million compared to a year ago at $23 million. Eleven 767-200 freighters have been returned as scheduled since September 2022, including two in the Q3. Power by Cycle engine revenue was also reduced due to fewer 767-200s in service, as well as fewer cycles flown by those 200s still in service. Additionally, the lack of aircraft sales during the quarter, versus two in the prior year period, negatively impacted our year-over-year comparison. Taken together, the effect of these items, all related to our 767-200 fleet, reduced pretax earnings from the prior year quarter by $13 million. Interest expense was $4.7 million higher than the prior year quarter. Those items offset $7.3 million in additional lease revenue from 10 more freighters added to service. In our ACMI services segment, pretax earnings were $12 million, down $13 million compared to the Q3 of 2022. This was driven by a mix with more military and less commercial flying, fewer hours over long-haul international routes for cargo customers, the effects of inflation and payroll costs, and service challenges in our passenger operations. Earnings from Cargo operations together were down $6 million, and passenger operations pretax was down $7 million. Total airline block hours were down 1% versus the prior year quarter, as increased passenger hours were unable to fully offset a drop in cargo hours. Cargo hours decreased 4%, and passenger block hours, including Combi flying for the military, were up 14%. Our 757 Combi operations resumed services over a transpacific route last fall. Turning to the next slide, our Q3 adjusted EBITDA was $137 million, down 16% compared to the prior year period. On a trailing 12 month basis, adjusted EBITDA was down $39 million to $594 million. As you can see, even with the year-over-year decrease, CAM still makes up the bulk of our EBITDA, and we still consider this to be our core business. We project 16 freighter lease deployments in 2023, including twelve 767-300s and our first four A321-200s. Since September 2022, our in-service fleet increased by six aircraft. The next slide details our capital spending. Total CapEx for the quarter was $168 million, comprising $120 million in growth CapEx and $48 million in sustaining CapEx. As you may recall, we lowered our capital expenditures outlook for the year last quarter. We continue to expect total capital spend of $785 million for 2023, $240 million of that will be sustaining CapEx, and $545 million will be for growth. The next slide covers our updates to adjusted free cash flow, as measured by our operating cash flow, net of our sustaining CapEx. Operating cash flows decreased $30 million to $118 million for the quarter and were $600 million for the trailing 12 months. Adjusted free cash flow was $400 million over the last 12 months. That equates to approximately $6 per share based on our outstanding shares as of September 30th. On the next slide, you can see that available credit under our revolver facilities in the U.S. and abroad was $428 million at the end of the Q3. This table reflects the recent convertible note refinancing transaction we completed, as well as the subsequent share repurchases we made. Combined, we bought back 9.4 million shares over the past year, with 5.4 million of those purchased in the Q3 alone. Our balance sheet remains strong, with net leverage under 3 times, putting us in a strong position to complete this year's investment plans. Now I'm going to turn the call over to Mike Berger, our President, who will summarize the issues that have developed since September and how they have affected our outlook for the rest of the year. Mike? Thanks, Quint. Most of you are aware that, at our Investor Day event in September, we reaffirmed our 2023 adjusted EBITDA guidance of $610 million-$620 million. At the 615 midpoint of that range, that implies $320 million in the H2, on top of the $295 million we delivered in the H1. We reviewed the latest results from each of our businesses before the event, and while we told you then about the risk around CAM's second half lease deployments and second half outlook for our airlines, we thought our plan was still attainable. But since then, a great deal has changed in the macro environment for Air Cargo capacity, as most of you are aware and are hearing on earnings calls and reading the trade press, and the performance of our passenger airline, Omni Air. To illustrate how those changes have affected our outlook, I'm going to focus on adjusted EBITDA and show you why we are reducing our guidance by about $45 million to a range of $560 million-$580 million. This slide shows that our prior guidance for the H2 on the left, the midpoint of our new guidance of $270 million on the right, and some key factors behind the changes. The vast majority of that $45 million reduction, about $43 million, stems from two pieces of our business: freighter leasing at CAM and Omni's passenger flying. It's important to note that our cargo airlines, ABX Air and ATI, are on track to meet their adjusted EBITDA targets for the year. Quint told you about the service delays and related higher costs that affect Omni's results for the Q3. Some of those higher costs are continuing, but the main reason for Omni's new Q4 outlook is the conflict in the Middle East, which began on October 7. Events in that part of the world have affected Omni's normal Q4 requirements for its government customers, which typically peak in October each year. Also, Omni's outlook for higher-margin commercial flying in the Q4 is lower than before. Omni's Q3 results include a good July and an August that was close to plan. Obviously, the disruptions in the Middle East were not part of our plan when we spoke to many of you in late September. We are closely monitoring Omni's progress and the global factors that drive its demand. Of the $45 million guidance reduction overall for the H2, more than a third of it is attributable to Omni. Moving to CAM, our new second half guidance reflects issues in three key areas: freighter and related engine leasing through the end of the year, plan changes in its 767-200 fleet, including sales of those aircraft types, and our current assessment of the new information we're receiving from some of our current 767-300 lease customers outside the U.S. CAM had a strong July for freighter lease deployments, although some were delayed from our from earlier in-service projections. We now expect to deliver 16 newly converted freighters by the end of the year, which is 3 fewer than we mentioned before. Leases of engines for 767-300s, which had been a significant contributor in the H1, have decreased. Quint mentioned in his remarks that CAM had intended to sell 767-200s in the H2 at prices that would yield significant returns on those fully depreciated assets. We expect to sell a couple this quarter and others in 2024. Additionally, in mid-October, we were contacted by certain airline customers of CAM, expressing that they were experiencing lower customer demand, which is negatively impacting their financial results and outlook. Our guidance reflects appropriate adjustments to address the potential effect of that new information. I think I speak for the entire management team in saying that we are probably even more unhappy to have to give you this news as you are to receive it. The air cargo industry is undergoing rapid changes this fall, as you are hearing everywhere else. Unfortunately, we are not immune to that. We still believe that our strategic direction to serve the airlines, who will remain in the express package fulfillment business, will eventually yield great results. Now, I'll turn the call back to Joe Hete for some closing remarks. Thanks, Mike. To echo Mike and Quint's words, I want to add that the board believes just as strongly in the long-term goals of the company to grow and achieve strong returns from leasing and operating midsize freighters and passenger aircraft. The growth capital we have spent over the last several years, plus what we will spend in the next several years, made sense to us even before the pandemic, when freighters were the hottest commodity in the aircraft business. I regard our foundational assets, midsize freighters and the foundational customers we lease to and fly for DHL, Amazon, and the Military, as a strong platform that will sustain the company through challenges and support continued long-term cash flow. I hope to bring back what I was probably best known for when I was CEO, leveraging my decades of experience in this industry to assess all of our options to deploy our capital for greater shareholder return and best-in-class customer service. One of Rich Corrado's many talents, which was a key part of why we chose him to run the company, was his insights about the markets we serve and where our range of capabilities fit best. That insight has served us well for several years, but those market conditions have changed. Our new reality is that growth will be more difficult to achieve than before. We've faced similar periods before, and I'm confident we can maintain the resilience that has been a hallmark of the company and keep it moving ahead in any climate. The board's view and mine is that we need to take a more conservative view of when and where we can best invest for the greatest shareholder return and sharply reduce our capital spending program in 2024 and beyond. We now plan to spend $505 million in 2024. That's down $100 million in capital spending compared to the 2024 plan provided at the end of September and down $280 million from this year's projected spend. That new 2024 outlook is driven by fewer conversions and only essential feedstock purchases. That includes purchases of Airbus A330 aircraft we will begin leasing next year. 2024 plan projected lease deployments of 14 converted freighters, including six 767-300s, five A321s, and three A330s. We are introducing no additional 767-300s for conversion beyond the seven currently in process. As I've said in the past, we always have the flexibility to not convert some of the aircraft we own until market conditions improve. It's too early to estimate our 2024 adjusted EBITDA, but with these capital spending reductions and the items that Mike mentioned earlier, we plan to provide new adjusted EBITDA guidance for 2024 during our Q4 earnings call in February. I can make one positive prediction about 2024, however, cutting our growth CapEx spending means our free cash generation will be higher than it would have been under the prior plan through 2024 and 2025. That concludes our prepared remarks. Quint and I, along with Mike Berger, our President, and Paul Chase, our Chief Commercial Officer, are ready to answer questions. May we have the first question? Thank you. At this time, we will conduct the Question-and-Answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Frank Galanti with Stifel. Yeah, hi, thanks for taking my questions. So- Right. This is a pretty material change from just a couple of weeks ago, six weeks ago. And obviously, in the prepared remarks, you hit on a lot of it, but can you sort of talk about how you're thinking about demand for the 767-300 and 200? Actually, so, you'd mentioned 77 767s are in conversion. I think I got that number right. That seems like a change from just even earlier this year on expectations. Is that demand waning all on the international side? Can you sort of talk through those dynamics, please? Yeah. Hey, Frank, it's Paul Chase here. Thanks for the question. You know, we'll talk about this year first, and we're filling the orders this year using our existing pipeline, but, you know, in the future, in 2024, that pipeline has slowed. So we're keeping an eye on that, and that's one of the reasons that the business has decided to pull back on the CapEx. So, with most of the deliveries that we expected to go internationally, sure, we're seeing some weakness there, but we're keeping an eye on it. Okay, and what about the 200? What sort of changed there from a demand perspective, expectations-wise? Sure. I mean, the 200s, right, I mean, it's a fleet that we're working on, you know, sunsetting over time, and we're really just being opportunistic about upcoming maintenance events and what we have to invest in the aircraft from a capital perspective. So it's really a case-by-case basis on those aircraft, and we're working them through. As you heard in the remarks, we still plan to sell a couple of those 200 as well this year, as well into 2024, Frank. Okay, that's helpful. And then on the capital allocation front, Joe, you'd mentioned wanting to take CapEx down. Can you sort of talk about what is locked in? Like, what kind of wiggle room do you have in 2023, 2024 to bring CapEx down further? And then, what do you think sort of peak leverage ratio is that you guys are comfortable getting to? And add a final question onto that, what do you think about share buybacks at these prices? Well, Frank, like I said, I haven't had an opportunity to get my arms around all the details in terms of what's committed to and what isn't committed to. As I mentioned in my remarks, you know, we always have the flexibility once we own the feedstock, not to run it through the conversion process, which is where the lion's share of the dollars are spent, not on acquiring the actual feedstock itself. So as Paul mentioned, we're seeing a little bit of a softening on the 767 side. So, feedstock that we've committed to or already own, we'll just park it and take the things like the engines. We have the opportunity to lease the engines out to other operators to generate some income. You know, we even have the flexibility, if the demand is there, to throw an aircraft or two to Omni, as for their use. And of course, if somebody needs a passenger aircraft, we can always lease that to a third party as well. So we've got a lot of flexibility there, but you know, at first blush, and like I said, this is you know, right now, I'm drinking from a fire hose, so to speak. You know, we're able to identify a significant amount, as I mentioned, over $100 million worth of CapEx just from what was presented back in September to the market. As far as capital allocation going forward, you know, right now we're below three times from a leverage perspective. Three times has always been kind of a ceiling for us. We like to stay, you know, no more than that, although we may creep up just a tad here and there. But ultimately, you know, as mentioned, we've expected to generate free cash flow in 2024 and into 2025, as we've pulled back on the CapEx spend. And at that point, we'll make a determination whether the best return to shareholders is to pay down the debt. You know, obviously, interest rates are at a very high watermark these days than what they were at the time I left 3+ years ago. And, you know, whether that makes more sense or to return the capital to shareholders via share buybacks. That's very thorough. I really appreciate it. Thanks very much. Yep. Thanks, Frank. Thank you. One moment for our next question. Our next question comes from Jack Atkins, with Stephens Incorporated. Hey, guys, this is Grant on for Jack. Thank you for taking my questions. Hey, Grant. Just wanted to kind of ask around. I know it's kind of early on in 2024, but if you could just maybe kind of frame up how firm some of those commitments are that you have for next year, and maybe could you just talk to kind of the range of outcomes that you're, you know, looking out, as you think out towards 2024? Thanks. So Thanks for the Question. So 2024, as we said, you know, we're fully expecting to deliver at this point, 14 freighters, Newly converted freighters. The breakdown of those are six 767s, five A321s, and three 330s. We've got the feedstock secured for those, and as you've heard us say, at this point, on a 767 side, all those aircraft are in or awaiting conversion. So we're in good shape on 2024, in regards to the forecasting. Longer term, as Joe mentioned, we'll see where the market goes. We'll see where the demand goes. We'll see what the cost goes. But, long-term forecasts, from the freighter standpoint, specifically from Boeing and Airbus, as we look out to the future, is still robust, as well as from a replacement standpoint. But, as you can see, and we've talked about, the flexibility in our model allows us to, to throttle back some, and produce that free cash flow that we talked about for 2024 and 2025. Okay, great. So just kind of to follow up on that, so, you know, kind of this, this pressure you're seeing on the leasing demand side in the, the third and fourth quarter, it kind of sounds like you think maybe it's a little more confined to, to the challenges we're seeing in the market today, and as long as things don't deteriorate too much in the next year, you think you can kind of hold the line on where you're at and get all these planes out the door? Yeah, this is, this is Paul Chase here, Grant. Yes, I do believe that's the case. Got it. Thank you, guys. One moment for our next question. Our next question comes from Helane Becker with TD Cowen. Thanks very much, operator. Hi, everybody, for the time. Just a couple of questions in here. Can you address the delays out of IAI? It's one of your biggest conversion firms, and yet many of their employees have been called to service. So how can you be confident that you're going to get aircraft out on time in from there? That's a really good question, and let me start by saying, the IAI folks have been incredible to work with since this event has happened in early October. We have really had consistent and daily, when I say multiple times a day, communication with our partners at IAI in Tel Aviv, and they're doing a heck of a job in terms of, you know, coming to work and getting the job done a nd we see, and we see that on a consistent basis. So we're really confident, Helane, that the numbers that we have presented today in terms of the aircraft for 2023 and 2024, we're going to see, and we see them working and delivering aircraft as recently as last week and this week. So, it's a fair question, but I can assure you that IAI has stepped up in this very, very difficult time, and been extremely resilient to produce and go about their business. Okay, that's great. That's great to hear. The other question I had was, I think MasAir returned three aircraft to you recently. Is that included in the numbers that you gave us for returned aircraft, A? And B, since some of your issues seem to be related to some of your newer international customers, do, do you have, and I don't mean to be nasty about this, but do you really have the expertise to grow beyond your core business? Or do you need to bring in more talent to be able to access risk, so that you don't get a lot of aircraft back when think the market turns? Yeah, so let me address the MAS situation, the the MAS piece first. To be clear, they haven't to date returned any aircraft. And in fact, they were actually scheduled to take an additional aircraft as recently as a short time ago. So we fully expect them to honor their commitments to the leases, and that's been our communication to them. In regards to the international expansion, you know, we've talked about that international growth for some time now, and when we look out to the future growth of the industry and see where that growth is going to come from, clearly all the data suggests very strongly it's going to come very well from Southeast Asia, East Asia, Central Asia, and across other parts of the world. That's where we've been focused on. In regards to the talent piece of it, that's really an excellent question. You know, we've, we've had a lot of discussions internally about that. We're building up that component of our CAM business to ensure that we address that. You may have heard or remember that we opened up the Irish entity last year, and we really have a big focus now of hiring some folks within the next six months or so that will be based outside the U.S. to address some of those concerns that you just mentioned. But make no mistake about it, a big part of our future is international, and we are a global organization, and we're looking forward to that growth going forward. Okay, that's very helpful. Then for my last question, to your point about Investor Day, which was September 27th, being sure of what you were seeing in the business. I mean, how can that be? How can you not know that you were missing the quarter, that close to the end of the quarter? I mean, I know that, you know, you're gonna close the books after September 30th, but things couldn't have just fallen apart in three days. To your point, you were seeing the decline in the business, and you talked about it during Investor Day, about, you know, being aware of what was going on w e saw, you know, we heard from FedEx, late August. We knew that UPS had issues, but how did you not, like, figure out that things were not that robust? And then when you did, how could you not have street prior to last night? Well, Helane, this is Quint. I mean, the, you know, in terms of the quarter, you know, we started out ahead of plan in July, and August was a bit worse, but we were, you know, not materially away from plan at the end of August. And truly, in September, you know, we had a, you know, as we mentioned in our press release, we had some service challenges with Omni. They had a very a typical quarter in terms of service delays. And that can and did lead to a lot of cost overrun, you know, in the travel area, as well as the flight crew and overtime. And that was in terms of the Q3, and I'm not talking about the H2 guidance, but just the Q3. That was a significant downturn in their September results. And that, what we did not have that visibility, you know, certainly at Investor Day. The other source of the Q3 miss was primarily CAM. And CAM, as we've said in prior quarters, one of the things they're working through is the disposition of some 767-200s that have come back. And, you know, they're selling some of those aircraft. And those sales were, you know, being worked and anticipated to be done by the end of the quarter. In fact, right up until the very last, you know, day. And in some cases, of course, you're relying on the buyer and the other party to, you know, carry through with the transaction. They're still, you know, working towards those transactions, but the timing of getting those executed did not occur during the quarter. And that was a, you know, I know that was over a $5 million CAM item just in the Q3. So, you know, we had, we had a truly, a lot of, the deterioration in the Q3 occurred late in the quarter, and we did not have that visibility at the time. And, you know, we, of course, mentioned in the earnings release, the, the Israeli conflict, you know, assessment of some customer news that we received in October, all that occurred subsequent to the quarter, which impacted our H2 guidance that was not known to us at the end of September. So I don't know if that... I know it's, it's quite a change, and I understand the question, but, truly, there were a lot of, developments subsequent to Investor Day, which impacts our guidance. Elaine, this is Joe. You know, obviously, that's a question that myself and the rest of the board members have asked a number of times in terms of, you know, how could we go out at that point in time? And, you know, while there's reasons for all of it, we don't find it acceptable. And as Mike noted in his comments, that, you know, it was more difficult for us to have to make that kind of news to the market, as opposed to you hearing it. So rest assured that that is at the top of the list of getting back in terms of where the numbers we put out are credible to the market, and not something that you have to question going forward. Well, yeah. I mean, I think the other thing, Joe, you might wanna think about is how everybody reports up to you, so that you don't get these surprises, and the board doesn't get surprised at the end of a quarter like this, 'cause your stock's down 25%. So you've got a lot of rebuilding to do, just in, you know, from a credibility perspective in the market going forward. It's, it's not gonna be easy to get that 25% back. No, it's not. One of those things, like I said, that's top of my list of things to focus on, Helane. It's point number one. Okay. Well, thank you. I don't know if I should say Welcome back, Joe, but here you go. Yep. Careful what you ask for, right? Just thanks for the time. Thanks, Helane. One moment for our next question. Our next question comes from Christopher Stathopoulos, with Susquehanna Financial Group. Thank you, operator. Good morning, Everyone. So, Joe, your comments around growth more difficult to achieve, Mike's comments around, what sounded, as you know, pointing to the challenges within Air Cargo. I'm just, you know... I'm still having difficulty sort of parsing out what's temporary, what's gonna persist here, you know, how much of... I understand perhaps what happened with the H2, but essentially now we have a double guide down with 2024 guidance at risk. So how much of this is kind of cyclical slowing here within Air Cargo? You talk about- Some international lanes perhaps slowing. What's operational? Are we having issues here with pilot attrition? Is it something else? Is it weather, geopolitical, supply chain? You spoke to IAI. I just want to understand, of course, and then with CAM, rising interest rates, depreciation, we all understand that. But just if you could help kind of put it into buckets here, because there's a lot obvious here to digest, but the magnitude of this miss and what is being viewed as two guide downs is significant. So if you could help just sort of frame the moving parts. Thank you. Yeah, before I turn it over to the other members of the team, you know, obviously, I think it kind of falls under the category of all of the above of the things you listed out there. I mean, it's no secret that the macroeconomic conditions around the globe are more challenging these days. And as we have said in the past, our customers' customers are the Amazons and DHLs of the world. So as you see decreasing cargo volumes around the globe, that's going to have a trickle-down effect to some of our lease customers. But as I think Quint noted in his remarks, or Mike, if you look at our core cargo business with the Amazons and DHLs of the world, that portion of it's pretty stable. So with that as a backdrop, you know, you can see that if you've got the smaller operators around the globe that support them, and conditions are not really good from a total macro perspective, then that's going to have that trickle-down effect. So with that, I'll turn it over to Mike, Quint, and Paul to further comment. Yeah, let me try to unpack the market piece a little bit more, Chris, for you. So, you know, the overall market demand has certainly, you know, softened and slowed. There's no question about it. We had, you know, the flexibility within our order book, if I could put it that way, that as the market faced challenges in 2023, we had the ability to bring 2024 leases and customer leases forward to 2023, okay? And that was due to the strength of our order book that you've heard us talk about now, for some time. Given that, as we pull stuff forward, obviously, we then took the opportunity really, and you've heard this, heard this said earlier, to really demonstrate the flexibility in our model and throttle back down some of our growth in 2024, specifically around the 767, which will allow us to reduce our CapEx dramatically in 2024, which ultimately will lead to the free cash flow that was referred to earlier. As it relates to the A321 and the A330s, you know, we just inducted our first A330 into conversion a couple of weeks back. We still fully anticipate to deliver the three A330s in 2024 that we talked about. And in this year, we still will, we'll deliver four A321s and five next year. So the overall demand, specifically, we've just had the ability and flexibility in the model to shift things around, throttle down on the CapEx in terms of some of the conversion costs that will help us on a go-forward basis. Yeah, and Chris, I'd just like... It's Paul Chase here. I'd like to reiterate just a couple of things that Joe said earlier. I mean, unfortunately, with some of this pullback in demand, it allows us the opportunity to look at the assets we have differently. So we are looking at, you know, aircraft that are sitting, that aren't being converted, to pull those engines off and deploy those assets. So it's allowing us to do that. But what I'd also like to say is, in conversations with customers, there are plenty of customers who have noted the macroeconomic environment, who intend to do business with us, you know, in the future, as some, you know, on their side look better. So there's still this pent-up demand as well, so I feel pretty confident. On the labor piece, you spoke in prior quarters about elevated levels of pilot attrition. If you'd talk to that and also plans around hiring for next year. Yeah, I mean, pilot attrition is a problem throughout the industry, and we're not immune from it by any stretch of the imagination. We're still managing to bring people in the front door. The key is to keep people from going out the back door. But when you've got other airlines, you know, offering significant hiring bonuses, exc, that becomes a challenge. But airplanes are still moving every day. We do have some service failures occasionally because a pilot got waylaid someplace or took ill, but we're still managing to move the aircraft as according to their schedule, so that hasn't been an impediment to the business overall. Obviously, we've got an ongoing negotiation with ATI. As I said earlier, I'm still drinking from a fire hose, so I haven't had a chance to dig into it in great depth. The negotiations are under the auspices of the National Mediation Board, so there's no ability for pilots to walk out until you go through the whole mediation process. I've been down this road many times in 40+ years, so I've got a lot of experience in terms of, you know, how you work through these issues. At the end of the day, you've got to have a contract that works for both sides. So if you've got, you know, on the union side asking for FedEx or UPS wages or industry-leading, and that's not in the cards from what we get from our customers, and that's just not something we can agree to. So the key, obviously, in the end, is finding a happy middle ground between their demands and our needs to keep things on the rails. Okay. As a follow-up here, I know you're not ready to give guidance for next year here, but if we look at the exit rate for this year, we annualize that, gets us to around $540. If we compare that to, I think, the low end of the guide you gave a few weeks ago, that's kind of a high teens growth. Quint, maybe if you could talk a little bit about, you know, the puts and takes as we think about, you know, as we help look at our models today, whether this is a wholesale revision or some fine-tuning. At 14 aircraft, if I understood correctly, we have elevated depreciation, interest rates l ease rates positively are moving higher, but it sounds like there is some slowing within cargo. Just if you could help frame the puts and takes as we think about EBITDA for next year. Thank you. Thanks, Chris. Yeah, the first in terms of the guidance, you know, sort of revision, right? You, because you asked about that earlier, you know, how much of that carries over, how you think about it. You know, around a little more than 40% of that, call it, you know, $45 million guide down since the end of September, is related to Omni, and it's not due to any loss of customers or business. It's due to a couple of factors. First off, Q3, and we mentioned, you know, they had an unusual service quarter, which drove a lot of costs, and I, you know, in terms of delays, and you know, because that drives that additional travel and crew costs that I mentioned earlier. That was a big piece of their miss for the quarter. The fourth, their Q4 portion of the guide down is related more to, and we mentioned in the release, the Israeli situation, we believe will impact some passenger requirements. You know, Omni has typically a very busy October. And with the onset of the conflict occurring early in October and looking through the remainder of the quarter, we just feel like that may have the effect of deferring some of their business until later periods. It's difficult to predict whether that'll be by the end of the Q4 or spill into the first quarter. But it's not a you know, like they lost some piece of business that will never occur or some customer. So I wouldn't say that the Omni piece of that $45 million is a systemic thing that you should think about necessarily for next year. Then the other pieces of that guide down, of course, primarily are CAM. And the largest piece of CAM's, and it's similar to Omni. I'd put it somewhere a little north of 40% of that. And the pieces of that are the 767-200 sales, which we had targeted for the H2. You know, I mentioned, we mentioned they didn't sell any in the Q3, and they have some slated, as Mike indicated, for the Q4. But as you might expect, we've tried to take a conservative view on that because the timing has proven to be difficult to pinpoint, you know, in terms of the other party tying up the sale. And then we've seen some reduced flying of the 767-200s that we provide engine power to customers for. And so the combined effect of that is, is probably more than half of the CAM's piece of the guide down, is related to the 767-200 fleet. And then they have had some later startups of new leases, of 767-300s than we had anticipated, and some of that is related to that softness in the market, we believe, right? We've got the MasAir and other customers that are feeling the pinch and aren't perhaps as in a quite the hurry to take the airplanes as they would be in a more robust macro environment. And so that's, you know, that's a piece of that as well, as well as our view, again, trying to be conservative on the realization of customer revenues from some of those folks through the Q4. And we've tried to take a reasonable estimate of that, you know, in terms of our revised guidance. Those were the biggest pieces of the $45 million guide down. Now, as far as the 2024 outlook, you know, Joe and Mike spoke about the CapEx reduction, which of course is much easier for us to revise at this point because we know what aircraft. You know, as Mike said, we're not going to refill the conversion lines once the airplanes are produced at IAI, so that'll reduce our 2024 CapEx. And we know what feedstock commitments we have. So we've looked at that and said, "We're gonna bring our CapEx down $100 million." Now, that doesn't mean that's where we necessarily stop. We're continuing to scrub that, and we're gonna look for more opportunities to lower the expenditures there as we move forward. I'm sure Joe, in particular, will be looking at that very closely. In terms of the adjusted EBITDA, to revise the guidance we gave at the end of September for 2024, because of, you know, the customer and macro market softness that we've mentioned, we wanna, you know, let that play out further and update that guidance in February. But that said, and, you know, we, we are confident that the adjusted EBITDA that we put forward for 2024 will be higher than our 2023 that we've guided to. And we, we look forward to in February, you know, once we've had some of these events continue to evolve, you know, and updating the market further. But we have enough, we believe, visibility to 2024, certainly to say it, it will improve upon 2023's result. Yeah, I just- Okay, so the [crosstalk] Just wanna highlight the one thing that Quint mentioned, specifically around Omni, is that you know, troop rotations will take place. We just, from a timing standpoint, can't predict that piece of it. Right. Okay, so if I hear you, the sort of base case, risk-adjusted view, if you will, of EBITDA for next year is higher than, let's say, the midpoint of yesterday or today's revised guide? Correct. Okay, and last one on the power by cycle contracts. Quint, how many of those sort of pandemic-era contracts are rolling off of this year? Well, what I was speaking of was related to the 767-200, GE-powered CF6 engines, and we maintained a pool. You may remember, when our previous arrangement for Power by Cycle ended, with a supplier, we instead went to a pooling concept where we would make that power available to lessees for 767-200s. So we have, you know, we provide that availability, and customers pay us by the cycle on that. And we maintain that pool of engines, which you can expect as that 767-200 fleet comes down. Our CapEx spend to do that will likewise come down. But what we have seen is, you know, as we're paid by the cycle, we've noted this year that sequentially, each quarter, we've seen those airplanes that are still out there with customers flying fewer cycles. And I think that is an indicator, you know, that they're perhaps of some softening market because there aren't, you know, there isn't as many flights taking place, not as much, perhaps, for those customers volumes or a reason to fly the airplane. And so that has impacted, as I mentioned, the EBITDA from the 200 fleet at hand is. I'm not sure, Chris, if you were asking about our own Power by Cycle arrangements that we have with suppliers to maintain other engine types, or you were just focusing on the comments around the 767-200 PBC? Not, not the 200. Overall, I'm guessing that you did that there were some contracts that were put together early, mid days of the pandemic, and was curious how many of those are rolling off at year-end? Well, I mean, the other engine types, the other aircraft types and the engines that power them, we don't maintain a pool of engines. You know, under the lease, the customer is typically responsible for the maintenance of those engines throughout the life of the lease. Now, we ourselves, you know, have a power-by-cycle arrangement with an outside vendor to take care of our engines, you know, for the 767-300 GE-powered fleet. And I believe we've entered into one with IAI for the PW4000, correct? That's correct. The Pratt engines b ut that's different than us offering a product to a customer. That's us buying from a supplier s o I'm not sure which side of the PBC you're getting at there. No, that's good. Thank you for the color. Thank you, everyone. One moment for our next question. Our next question comes from Howard Rosencrans with Value Advisory. Hi, guys. Thank you for taking the call. Hey, hi, Howard. Hello, guys. So the H2 looks like, so the midpoint of your guidance is $270 million. I'm, I'm just trying and, based on... So, the Omni part is largely the Middle East. Is, is that the big change there? That's in the Q4, Howard, from Omni, that would be, you know, of the second half, it's obviously that happened in October. So that's in the Q4, yes, that's the biggest impact on Omni. Okay. The rest of the stuff is lower demand or the absence of the engine sales, just to summarize, right? Yeah. I mean, we went through some of the puts there a minute ago, puts and takes. Right. Okay. Just having a little trouble processing. In my 40 years in the business, I never saw this happen. The, so the 270, the midpoint of the guide should be the absolute, absolute... You know, you already communicated your, you expect that, that the guide you'll introduce or that, ostensibly, 2024 will be higher than 2023. So, but just to take the bare, just to take $270 million as a H2 number, you have some anomalies, you have some, you have all of these factors. So sort of a worst case scenario is that that suggests that your $540-$550 is the absolute bare bones, just so we can understand what sort of a bare bones number there is out there? Well, I think, I think when we said it would be better, we were talking about for our full year 2023. So the full year 2023 guide, you know, is higher than $540, right? So we're talking about our guidance for the full year 2023. Okay. I thought you were talking about 24 when you made some comments about 24. Okay, maybe I misheard you. We are. We're saying 2024's will improve upon 2023's full year adjusted EBITDA. Yes. Okay. That was the point I was making. I was just trying to understand. I obviously, there seems to be a lack of filter of information that's going on at the company, so. All right. Well, thank you very much for your time, and certainly good luck to all of us. Thank you. Thanks, Howard. One moment for our next question. Our next question comes from Michael Ciarmoli with Truist Securities. Hey, Good Morning, Guys. Thanks for taking my questions. I guess, can we just maybe elaborate a little bit on how Israel is directly impacting Omni? I mean, at Investor Day, I know the focus was on a potential government shutdown. It sounded like all flight activity was booked and locked in for the end of the year. Obviously, the U.S. doesn't have any direct exposure, but I would think, you know, regardless, troop rotation movement would be good for Omni. So what's exactly happening with Israel? Well, and I'll, I'll take a stab at it and let, let others join in. Michael, this is Quint. But, you know, again, and we refer to them as passenger requirements. Obviously, we're not gonna, you know, go into, to a lot of detail on, you know, what Omni may be, may be hearing directly from their customer. But just in general, I think the, the Israeli conflict caused a, an atypical, you know, interruption to what would normally be their busiest period, that being October. And as I, as we remarked earlier, we do not believe that over a longer stretch of time, it will be a negative impact to Omni, because those, passenger operations will occur. It's just difficult to say, whether they will fall inside the Q4 or whether they will extend beyond that. And you're correct that in many cases, world events have resulted in additional revenue opportunities for Omni, outside the norm. And, you know, you only have to look back at, you know, the Afghanistan withdrawal, you know, the NATO situation near the Ukraine, to find some examples. So you know, Omni remains the, I believe, kind of a linchpin, if not the linchpin carrier for commercial passenger moves for the DOD, and we fully expect that to continue. You know, Omni, you know, has demonstrated that, while there's more volatility, you know, they can also do very well in the, you know, in those situations. So we're not saying that's changed. Okay. That they're, you know, the possibilities are lower now. We're not saying that. Okay. Yeah, you've got to understand, you know, the military is gonna do their contingency planning, and of course, you know, like I said, anything that they do in that regard is not something that's divulged to the public. But eventually, as Quint noted, troops have to move. You know, normally, October is a busy month because rotating troops in and out before the holiday season. But when you've got a crisis boiling like we have in the Middle East, it's one of those things where everything kind of has to be put on hold until you can better assess the situation and what the potential ramifications are. Got it. Got it. And then just on the... I mean, I get it on cutting CapEx, and it's gonna improve cash flow, but this is now multiple cuts to CapEx. And I guess, what's sort of the direct formula you can give us? Because as we look out now, I mean, the 25 EBITDA guide is obviously moved, but how much does the lack of growth CapEx spending impact the EBITDA generation that we were originally gonna see? Well, Michael, I mean, again, there's, of course, in addition to the CAM segment, which is where you know where the EBITDA drive is from CapEx spend, there's the ACMI services. And we've spoken a lot about some of the things, you know, world of you know with the the Israeli situation, and you know that that is is the reason we're deferring 2024's CapEx guide to next year. But, you know, I think that next year, the the aircraft that come out will, you know, as Mike said, 14 or 15 aircraft, will still drive a significant EBITDA. There will there will still be some headwind from 767-200s being removed from service at the same time. You know, he talked about 14 or 15 aircraft, you know, I think 8 of those are Airbus aircraft that come out next year. And I think, so we're still gonna have significant, you know, EBITDA contribution from newly converted aircraft that go on lease. But, you know, we're gonna hold off on the total EBITDA guide until we've had a chance to see how some of these other factors play out. Okay. But we are confident that it will exceed 2023's actual. Yeah, just keep in mind- Okay the EBITDA contribution of an asset is basically only a fraction of what the CapEx spend is for that similar asset s o it takes years to get that cash back in terms of leasing the aircraft out. So near term, it will have a minor impact on the EBITDA, but a significant impact on the CapEx spend. Okay. And Joe, last one for me, and I hate to go here, but back to Helane's line of questioning. I mean, we can literally monitor in real time flight operations. I just—I mean, what were you guys not seeing? I mean, I would think you could see your Power by the Cycle on a daily basis, your flight operations on a daily basis, the Block Hours on a daily basis. I mean, it just seems like there was a failure of internal controls here a nd I mean, if you're seeing all these trends in real time, and we've been hearing and talking about a macro slowdown for months, I just—it just doesn't really square to me. I don't know if you guys just weren't monitoring that data or weren't looking at it, but it just... Yeah, I just seemingly there seems like there was something that should have been jumping out and flashing red, you know, especially on 27 September. Yeah, in part, you're correct, in that regard, in terms of, but it's not an internal control, it's more of, understanding what the ramifications are of a delay. For example, when Omni had an aircraft that was down for three days, you know, an airplane's down for three days, but the part that wasn't connected was the fact that you had to put up 200 or 300 passengers in the middle of nowhere. I think it was in Guam, was where the aircraft- Yeah. -got waylaid. Right. It got nailed there for three days. So it's, it's the downstream ramifications of it. Everybody knew the airplane mechanical, for example. Yep. As far as the Power by the Cycle side thing goes, the users of the 200s turn in their hours at the end of the month. We don't get a daily recap from them that, you know, "I flew 2 hours yesterday and 5 hours the day before." At the end of the month, you total up what their utilization was, so you really wouldn't have the visibility into the PBC portion of it. Okay. until the end of the month. All you're doing is forecasting what you saw previously. Okay. Okay. Got it. All right. Thanks, guys. Yep. Thanks, Michael. One moment for our next question. Our next question comes from Chris Stathoulopoulos with Susquehanna. Thanks for getting me on here. I'll keep this quick. Just quick, if you could walk us through cash total liquidity, including your revolver, debt maturity, and also just remind us the pilot open contracts whether those were embedded in the out year guidance. Thank you. Sure, Chris. In terms of the last question first, I guess, the pilot open contracts, of course, we're not giving guidance—we're not refreshing our 2024 guidance, but if you're asking if we had it included at the end of September, yeah, we did when we talked to the market. But, you know, today, we're not refreshing our guidance on the expense side. But when we do, it will weigh in the status of the pilot agreements. As far as the liquidity section, you know, and of course, there's a slide in here, slide 8, which kind of lays it out. But, you know, we have a revolver that, you know, it's, I believe, a $1.1 billion capacity revolver that we've got undrawn, unused capacity of over, you know, over $400 million on. You know, our current leverage ratio after including the unsecured portion of our debt, which is a, you know, a new convertible, $400 million convertible due in 2029, as well as the remains of a convert we did in 2017, that's $54 million, that matures next year. And an unsecured bond that matures in February of 2028 of $580 million. Taking that into consideration and looking at the leverage ratio, we're currently levered at, I believe, it's like 2.88x our trailing... Still conservatively levered. You know, with some reduction in EBITDA, you know, we'll be around three times levered. We might even slightly go above it, depending upon how that comes out b ut with the reductions in CapEx that we spoke about, you know, there'll be the ability, if we choose to allocate capital to deliver, there'll be an ability to do that as we look to the next couple of years. I mean, as we said in our remarks, you know, the cash flow the business produces from the base of leases we have, you know, you think about 75% or more of our revenue is through Amazon, DHL, and the Department of Defense. You know, that stable cash flow will continue and generate a lot of capital that can be allocated to deliver should we choose to. And I think you said in your Investor Day, you had more than $1.5 billion of available unencumbered aircraft collateral. There's been some movement, I think, which would be a positive, given your 767 exposure on values. Is that number, give or take, around $1.5 billion of unencumbered collateral still the right way to think about it? Yes. Okay. Thank you. This concludes the question and answer session. I would now like to turn it back to Joe Hete for closing remarks. Thank you, Sean. To our stakeholders, we get it. Receiving the news we reported yesterday after an upbeat outlook in September is hard to accept. We need to restore your trust by making only, only the commitments we know we can keep. Many of you on today's call know me and the fundamental cash-generating power of the business that the ATSG team and I built over many years to investing for growth and shareholder return. I agreed to return as CEO to guide the company through the next phase of its development, which will require us to focus on maximizing returns on the aircraft assets we have today, while taking a more measured approach to investing for new ones. I've already told our employees that I welcome all their ideas to make us stronger, and advised our customers that our commitment to best-in-class service remains the basis for everything that we do. Thank you, and have a quality day. This concludes our conference for today. You may now disconnect.