May 6, 2022
Operator
Welcome to the First Quarter 2022 Air Transport Services Group, Inc. Earnings Conference Call.
My name is Richard, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode.
Later, we will conduct a question-and-answer session. I will now turn the call over to Mr.
Joe Payne, Chief Legal Officer of ATSG. Mr.
Payne, you may begin.
Joe Payne
Good morning, and welcome to our first quarter 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.
ATSG 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 following, which relate to the current COVID-19 pandemic.
The pandemic may continue for a longer period or its effect on commercial and military passenger flying may be more substantial than we currently expect. It may also disrupt our workforce and staffing capability, our ability to access airports and maintenance facilities and the continuing ability of our vendors and third-party service providers to maintain customary service levels.
Other factors could also cause our actual results to differ materially from those we describe here, including 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 persists longer than we currently expect, changes in general economic and/or industry-specific conditions; 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 pretax 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 financial 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 Rich Corrado, our President and CEO, for his opening comments.
Rich Corrado
Thanks, Joe. Good morning, everyone.
I'm pleased to report that ATSG had a great first quarter, with strong growth across both our business segments and more customers ready to lease all the cargo aircraft that we can deliver. Our airlines led the way as our revenues grew 29%.
Omni Air, our passenger airline delivered the biggest percentage gain in flying time as measured by block hours, as operations return to pre-pandemic pace. A record 15 freighter lease deliveries in 2021 drove a 63% increase in that business, and we have already leased 2 of 11 more this year.
Taken together, I'm pleased to say that these results have set us on a course to meet or exceed both our $640 million adjusted EBITDA and our $2 target for adjusted earnings per share in 2022. The free cash flow we are generating will fuel more aircraft investing in 2022, especially in the second half to serve our customers' cargo aircraft needs over the coming years.
But we also look forward to the time later this year when our Board of Directors will have the opportunity to explore more options to maximize shareholder returns. Quint is ready to review the details of our outstanding progress to date.
I'll be back to share more about our even brighter long-term outlook after that. Quint?
Quint Turner
Thanks, Rich, and welcome to everyone on the call this morning. The next slide in our deck hit some of the first quarter operating highlights that Rich was referring to.
Our consolidated revenues for the first quarter grew $110 million to $486 million. As Rich noted, both of our principal businesses were strong contributors with revenue growth of 34% in our Airline segment and 28% for our leasing business, CAM.
Our adjusted pretax earnings more than tripled to over $60 million, and our adjusted EPS nearly did the same. Adjusted EBITDA rose 49% to $158 million.
Those strong segment revenue contributions also yielded higher segment earnings. CAM's pretax earnings increased 63%.
As we have mentioned before, two of our airlines received brand awards from the federal government in 2020 and 2021 to maintain jobs as the pandemic reduced passenger volumes. That assistance added $28 million to our ACMI Services earnings in the first quarter last year.
Without any such assistance this year, our first quarter ACMI Services earnings were still up 4% year-over-year. On the next slide, you can see that our $52 million growth in first quarter adjusted EBITDA raised our trailing 12 month pace to $593 million, which, as Rich noted, has us on a very good pace towards the $640 million target we announced in February.
Assuming the scheduled pace of 767 lease deployments, along with steady improvement in our passenger flying, we're confident we can achieve 11% growth in adjusted EBITDA over the last 9 months of 2022 compared to the last 9 months of 2021. On the next slide, you'll see that our capital spending for the first quarter is ramping slowly, reflecting ongoing logistics and other challenges facing providers, passenger-to-freighter conversion services throughout the world.
Our first quarter CapEx was $108 million, down from $125 million in the first quarter last year. With 13 aircraft in line for conversion at the end of 2021 and commitments to deliver only 11 this year, we have back loaded the majority of our 2022 airframe purchases, while remaining ready to buy when we find aircraft that meet our needs.
As you can see, we're continuing to separate what we call sustaining CapEx, mainly for airframe and engine maintenance, technology and other equipment from the spending we allocate to fleet expansion. Sustaining CapEx was $36 million in the first quarter and growth CapEx was $72 million, both below our projected spending pace of $200 million sustaining and $390 million growth CapEx for 2022.
As Rich will note shortly, we expect conversion services firms to increase their pace as the year progresses, although pandemic constraints remain in China and other sources of important conversion components. The next slide updates you on our adjusted free cash flow, the metric we began providing in our third quarter report 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.
Keep in mind that those trailing 12-month totals for GAAP operating cash flow shown above the bars do include $83 million in cash we received in federal pandemic relief grants in the first half of last year. For the first quarter, our adjusted free cash flow was $89 million, up $10 million from a year ago and raising our 12 months total to $406 million.
As I mentioned a moment ago, this year's growth CapEx plan remains at $390 million. The next slide, vividly illustrates what we regard as the key to our value proposition.
Our business model generates significant recurring cash flow, while at the same time, the strong demand for our freighter aircraft provides us with very profitable ways to reinvest that strong cash flow. Our overall debt to adjusted EBITDA leverage ratio, as measured under our bank credit agreements remains below two times and is trending lower.
The debt restructuring we completed early last year means we have more than enough capacity to fund a more aggressive investment program. But in the meantime, we can use cash to reduce debt and examine other capital deployment options as they become available, such as returning cash to shareholders.
On our February call, we discussed our new engine services for lessees of our 767-200 aircraft. It offers them access to a pool of engines that we maintain under new pay by cycle arrangements.
We said that we expect this service offering to add $40 million to $45 million to our year-over-year growth in adjusted EBITDA and add to our earnings this year, but it will also raise our sustaining capital expenditures, commensurate with our cost to maintain as many engines as our customers choose to put in the pool. At this point, we're on track with our projections as most of those who lease 767-200s from us have agreed to participate.
I also wanted to call your attention once again to the adoption of new accounting rules pertaining to our convertible debt. The change raised our 2022 adjusted diluted share count by 8 million shares.
As you can see in the adjusted earnings reconciliation table in our earnings release, we have revised our first quarter 2021 adjusted diluted share count to provide a like shares comparison with 2022. With that summary of our financial and operating results, I'll turn it back to Rich for some comments on our operations and outlook.
Rich?
Rich Corrado
Thanks, Quint. Before I begin sharing how our 2021 achievements are driving our 2022 performance on the next slide, I want to acknowledge our employees as the fundamental source of all the great financial results that we deliver and the basis of our forecast of even better results to come.
Our people are out in the tarmac servicing aircraft in the cold, wind-driven snow and rain and following steps that keep them safe and healthy, but often make their tests a bit harder. But the people of ATSG are also smart and resourceful, and I'm grateful every day to join them in the overall mission of making our company a better, more diverse place to work and a better community citizen.
I also credit them for the many 2021 operating accomplishments that we talked about on our call in February. Today, I'm pleased to report that those accomplishments are already delivering benefits in 2022.
One of those 2021 items was the completion of our most recent freighter order for Amazon. We leased them 11 767s for a total of 42 lease 767s overall.
Our flight crews operate all of them in the Amazon Air Network that we launched for them more than 6 years ago. But that's not all.
Our pilots now fly 5 767s that Amazon owns itself or leases from others and more such owner assigned aircraft are joining our fleet this year. Starting with just two such customer signed 767s in March of 2021, we now fly a total of 7, including one Amazon added in the first quarter.
By the end of 2022, we expect to have 13 including more from DHL on top of the three we are converting and leasing to them this year. The fact that those customers are choosing our cargo airlines to fly their aircraft is a great testament to the service we provide and the value we offer.
It also signals their confidence in our ongoing ability to attract pilots and other operating personnel, train them well and support them as they achieve some of the best on-time performance metrics in the business. This year, our deployed aircraft footprint will shift dramatically.
All but two of the nine 767-300s will lease will be operated in Asia, Europe and Canada. Two of them have already been delivered.
These customers are responding to demand throughout the world for dedicated midsized freighters, which play the same role in meeting e-commerce demand for rapid delivery of goods elsewhere as they do in the U.S. Mike Berger has worked hard to promote the advantages of choosing CAM, the world's largest source of leased midsized freighters to airlines throughout the world.
Those efforts are paying off big time this year, both in new leases of 767-300s as well as re-leases of returning 767-200s. Another 2021 accomplishment was the FAA's certification of our joint ventures design for converting Airbus A321-200 passenger aircraft into freighters.
In the first quarter this year, CAM purchased 2 A321 feedstock aircraft for conversion at PEMCO's facilities in Tampa in addition to the one at Bog last year. CAM will begin leasing those A321 freighters later this year, while purchasing 6 more feedstock airframes to meet demand from customers eager to lease them.
The first CAM A321 deliveries will go to ASL Aviation Holdings in the second half of 2022 with a third ordered in 2023. ASL, a major operator of Cargo Lift with integrated global networks is an important new CAM customer and also plans to lease 2 A330s from CAM to be delivered in 2024.
Speaking of A330s, last year, we committed to 29 conversion slots for this new aircraft type, which extends our midsized pre-leasing strategy with a platform that is somewhat larger than our Boeing 767-300s. We also began searching for feedstock aircraft to fill slots when they open next year and now hold options to buy several of them.
To date, we have orders from customers for 20 of the 29 A330s we expect to convert and deliver by the end of 2027, and customer interest in the remaining 9 is significant. Together with the 767 and A321, CAM now holds rights to more than 80 passenger freighter conversions for induction through 2026.
With 30 lease orders from customers covering all of our planned deliveries through next year, we already hold orders for more than 50 of those 80-plus freighters in our pipeline. To my knowledge, no other potential lessor in the midsized converted freighter market has or could easily acquire anything close to the number of aircraft in our 5-year lease and delivery schedule.
Finally, we made a commitment last year to report our progress against ESG metrics. This will make us a better company, and we also understand the information is valuable for your investment decisions.
Our progress is summarized in the new sustainability report that we issued in February and is available on our website. We have already received recognition as a quality employer and have reached better-than-expected fuel savings from investments in real-time flight management technology.
As our progress continues, we will track our results in subsequent additions of this report. As the next slide shows, I'm confident about our outlook in 2022, but I'm also looking forward to the next 5 years.
On the investments we are making today, we will be driving our earnings and adjusted free cash flow even higher. We believe that expansions of military logistics networks and theaters around the world will spur demand for our combi and passenger aircraft even higher.
We are relatively well protected from economic risk. Our customers are responsible for their fuel cost, and we do not sell cargo space or promote charter services that could be vulnerable in a recession.
We would not be well positioned today, of course, if we hadn't looked ahead and saw the greater opportunity in our own midsized freighter niche than in other benches we might have pursued. Our stock price suggests the market is beginning to acknowledge that we're on the right track.
We execute the unique strategy well, and we deliver great service through exceptional people. I assure you that we will keep performing at levels that merit your continued confidence.
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?
Operator
Thank you. And our first question line comes from Mr.
Chris Stathoulopoulos from Susquehanna International Group. Please go ahead.
Chris Stathoulopoulos
Hey, everyone. Thanks for taking my question.
So Quint or Rich, you know, with 1Q, your base of customers, healthy order book, I would have thought that perhaps the EBITDA guide for this year would have been raised. Is there just some conservatism here given the volatility with fuel, geopolitical risk and interest rates?
And then also, any supply chain issues and kind of general labor tightness impacting the workflow at the conversion shops and/or perhaps interest levels from shippers and airlines to take on additional capacity or perhaps replace any existing capacity? Thanks.
Quint Turner
Yeah, Chris, this is Quinn. I'll take a shot at the first part and kick it to Rich here for the last part of your question.
Yeah, I mean it's certainly a good observation. The first quarter certainly came in very strong, and we're very encouraged by it.
It's early. And I would say that we have taken sort of a conservative approach to guidance.
We last talked to the market in February. But we certainly made the point and it's worth reiterating that the pace we're on certainly positions us to improve upon that guidance.
We want to being the conservative how we are, we want to give ourselves a little more time and see things unfold. But we really like the trajectory that our business is on, and we look forward to hopefully updating that guidance when we next speak, but it's a very good start.
Rich, I'll kick it to you for the...
Rich Corrado
Yeah. In regard, Chris, to your question about the economic impacts of inflation and labor and those types of things on the business.
A couple of things. One is our logistics operations and our MRO have seen some pressure on the labor side.
But really, we made adjustments towards the end of 2021 that are starting to improve the actual employee sourcing piece of that. And so we're looking for improved operations out of those groups.
And so we're controlling it. Now on the conversion side, II our main converter of 767s in Israel had a lot of supply chain disruptions again in the fourth quarter of 2021 and has been improving to date in 2022.
But look, we have in our guidance right now, 9 767 deliveries, if you recall, we delivered more than that last year. So it had an impact, but that impact is already weighed into what we're doing.
And they're improving. And so our guidance for 2023 in terms of the amount of aircraft that we're going to be delivering is solid.
On the pilot side, because there's a lot of talk about sourcing pilots and attrition of pilots, we are very much in control of that situation. The great thing about all three of our airlines is they're growing.
And so they're very appealing to prospective pilots coming out of the regional ranks and other places to grow. So we're in good shape as it relates to having enough pilots to fly all the routes and all the growth that we're going to see this year.
So we're in good shape. So long story short, yes, there are impacts out there, but we're managing with it.
We've got a great opportunity on the growth side as it relates to flying. And that's one of the things that's helping us attract and retain the folks that are doing a great job for us right now.
Mike Berger
Chris, the other thing I would just add in, its Mike Berger, is that in 2021, we went out and secured for the first time 4 Boeing slots to ensure that we had enough capability and diversity within that. We announced 4 additional Boeing slots recently with 4 options as well if we choose.
And we're already seeing the benefit of that with customers who are specifically looking to have some conversions done with Boeing just to ensure that their capacity requirements are met. So we have taken steps to ensure that we meet our customer commitments, not only in '22, but '23 and '24, et cetera.
Chris Stathoulopoulos
Okay. Thank you.
And Rich, I appreciate the color on the value proposition, if you will, for flying for ATSG. That was actually one of my questions.
I think you have two CBAs open here, one with Alpha, one with IBT currently, yes.
Rich Corrado
Correct.
Chris Stathoulopoulos
Okay. So right now, most of the large U.S.
airlines have pilot deals open. Robin at the CEO at JetBlue said he thinks that pay is going to gradually start to converge here.
So are you concerned here that there could be a new floor for pilot pay going forward across the board. Certainly, I have my view on the mainline U.S.
carriers, but curious your thoughts on the cargo and lesser side? Thank you.
Rich Corrado
Yeah. Well, no, thanks for the question, Chris.
Recall, we just completed - we're about a year into the ABX Air CBA that was just negotiated effective in January of 2021. And that's a 6-year agreement and there's - as far as the CBA goes.
As far as the Omni and the ATI agreements go, we're working through those agreements in terms of work rules and all the other things that we work through compensation is one of the - obviously, one of the things that you do once you've got a good understanding of what the overall contract profile looks like. We look at it in perspective of the value that we deliver to our customers, the pricing that we have with our customers and what's adaptable.
And so from that perspective, we think we'll be able to negotiate as we do with AVX, a competitive agreement that allows us to do two critical things. One is attract and retain the most professional pilots that we can.
And the second is to be able to competitively price our business so that we continue to grow all three airlines. And we're pretty confident we'll be able to do that within the balance of both the labor agreements and the customer agreements that we have.
Chris Stathoulopoulos
Okay. If I could just get in one more, and then I'll hand it off.
Amazon said during our call last week, I think it was that the - there might be some redundancy in their network and that they're looking to save on transportation costs where they could. I think that might be on the last mile.
So not sure how much that would affect the dedicated air fleet or airlift. But just if you could remind us of how the TSA with Amazon works, specifically volume commitments and what the termination clauses are?
And then also, what's left with your order book? And how many aircraft do you expect to be operating for them by the end of this year and 2023?
Thanks.
Rich Corrado
Yes. So at the end of 2022, we were operating 46 airplanes for Amazon, all 767s.
And we - 42 of those released from CAM and the others were provided by Amazon. This year, we expect to - we've been notified that we're going to get three additional growth assets from Amazon.
So we'll be up to 49 aircraft. As it relates to the contract and the flying that we do, it's kind of complex because it's a network.
And so the aircraft they're put into a schedule and fly in this compensation associated to both fixed and variable cycles and hours and et cetera, et cetera. It's kind of complex along those lines.
The termination clauses are really - there's the ATSA and then there's each individual lease for each new airplane, generally, they're not going to terminate any of the individual airplanes. But on the ATSA side, it's, Quint, I'm not sure exactly - of the parameters on that.
Quint Turner
One of the things that I heard on the - because I listened to some of the Amazon call as well as they were asked about transportation, shipping costs, and I thought it was interesting, I think it was a CFO, basically said that the shipping rates they have are very competitive within their own network, and they're seeing savings versus what they would get using external carriers, external providers of the network. And I think they also pointed out that the last 2 years, of course, with the pandemic growth, along with the growth in e-commerce, it would have been impossible really for them to have handled all that growth or at least very difficult, had they not had their own internal network.
And so as Rich points out, I mean, with the lease commitments being separate, I don't think we spend a lot of time worrying about cancellation of their network internal network, which they're saying is a more efficient one than they could get from external providers...
Rich Corrado
And don't recall that the reason Amazon got into this network back with us in 2015 was they had been disappointed due to the peak operation they were receiving from the integrators. At least that's the way the people at the time had explained it to us.
That peak environment still exists today and will exist. So the assets that they fly today, whether they're flying them to Boise billings, Butte or Buffalo, they're going to continue to need to fly them there.
And then when peaks, they're even going to need more lift or more capacity. And they still use integrators in addition to the captive Amazon network.
And so there's that opportunity as well. This remains a cost-effective solution for them.
And so going forward, as I said, we've got three growth assets this year, and we're looking forward to growing the business to more.
Quint Turner
And of course, last year, we grew, what, 13 airport enter the network. And so I'm sure that as you would expect, they would look to wring out efficiencies in the network design because there was that rapid growth just as we look to get cost efficiencies from our cargo airlines that operate in those networks.
And you saw the performance of the airline segment in the first quarter. So with a little bit slower growth this year compared to last year, I think there are opportunities to really improve cost efficiency and improve our ACMI Services bottom line, and we saw that in the first quarter.
Chris Stathoulopoulos
Okay. So there's nothing that you're currently seeing with respect to - I know you don't report this, but in terms of utilization with that fleet that would give you concern as perhaps Amazon looks to recalibrate, if you will, into what is, I guess, this kind of hyper inflationary environment?
Quint Turner
Well, schedule changes are routine in the network environment. So there will always be schedule changes.
But I think as we said in the earnings release, we saw a 19% increase year-over-year in terms of the utilization of our cargo aircraft in block hours. And of course, on the passenger side, it was even sharper with a 32% increase in passenger and combi flights.
So not, as I say, not a lot that we're concerned with in that regard.
Chris Stathoulopoulos
Okay. Thank you.
Operator
Thank you. Our next question in line comes from Mr.
Frank Galanti from Stifel. Please go ahead.
Frank Galanti
Yeah, hi. Thanks for taking my question.
Actually, the biggest question I get from investors on ATSG is sort of how robust current air freight demand is. And really, it's around how ATSG would perform should the market roll over, right?
There's concerns over our sort of peak cycle here. But obviously, it's super encouraging at 50 out of the 80 conversion slots already signed up, right, through 2023.
I know its A330s. But can you sort of talk about any current exposure to variability in cash flows?
Sort of in that question, what level of the CMI customers are flying above current minimum floors? And is there any exposure to the charter market, sorry.
And I guess sort of another aspect of that question is how many CMI contracts come up for renewal a year and sort of how are those discussions going lately and sort of on the older assets as opposed to the newer stuff?
Rich Corrado
Yeah. Thanks for the question.
There's a lot there. Keep in mind, I mean, if you look at ATSG, the bulk of our EBITDA comes from three places.
It comes from the long-term dry leases that we have. That's the majority of it are more than 50%.
It comes from the long-term CMI agreements we have with Amazon and DHL. The DHL has just signed a 6-year agreement and we're well into another 6-year agreement with Amazon.
And then the flying that Omni does for the Department of Defense and the government. Those three business segments are extremely resilient and to business cycle disruption and global trade disruption and those types of things.
If you look at the leases, there's 7 to 10-year leases in general and whether the utilization on the airplane is up or down, they still have to pay the lease on those, and that's again, the majority of our EBITDA. When you look at the large CMI flying that we do, again, this is CMI flying because they're leasing the airplane separately from CAM, and then they have an agreement.
We have an agreement to fly those airplanes separately. Again, those are network flying assets.
And those customers, Amazon and DHL have to service their market every day, whether those planes are full or not. They have overnight commitments.
They have time-definite commitments, and they have to service that so that they can't not service geographies as it relates to their customers' commitments that they make. And then lastly, on Omni, they're going to fly on what is either the Department of Defense Department of State needs, which don't flow generally with the commercial business cycle and global trade.
They're going to fly military exercises, they're going to fly operations, they're going to fly expeditionary troop rotations, things that flying opportunities for us that are routine operational readiness fastest of the military. So when you look at that bulk of that's probably 90% to 95% of our EBITDA is in those three segments, and it's rock-solid resilient, especially in this time of inflation and other disruptions that you see around the globe.
Quint Turner
Yeah. The - and Frank, one of the things that we talk about, this is Quint in the release, of course, and Mike will elaborate on some.
But is this on top of those, that revenue visibility, those multiyear streams that Rich just described. On the growth side, the order book is extremely strong with I think between this year and next year, 30 new lease deployments.
And as Rich said, that makes up, call it, two thirds or more of the total EBITDA, 30 more aircraft lease deployments by the end of '23, including 19 more next year. Now if you think about the 19 aircraft that we described that we have orders for 2023 deliveries, it's 1476 and 5 Airbus 321.
The annualized EBITDA contribution just from those 19 aircraft, is easily somewhere around the mid-60s, call it, $65 million, which is more than 10% of our EBITDA guide this year, which was up 18% over what we actually did last year. Now that doesn't consider the Airbus 330, which come into play in '24 and beyond where we already have 29 conversion slots, we have customers that have stepped up wanting those airplanes.
So I mean you've got really, we're very fortunate and particularly in an economic environment where a lot of investors are probably looking for some defensive protection because that's afforded by these revenue streams Rich just described. But beyond that, we have a lot of growth to look forward to and these are being deployed around the world.
I'll let Mike elaborate on that.
Mike Berger
Yeah. I think that's the key.
When you look at where our growth is coming from, we've really diversified that, and that's been a strategic direction that we've had it. So we got into the Airbus products.
They are certainly an aircraft type that's been flying extremely well across Europe, Asia, Southeast Asia, et cetera. And when you look at where we're placing our new customer dry leases, you see that across the A321s and the future of the A330 deliveries across those geographic parts of the world.
The engine for our industry has been e-commerce growth for several years, and people are now starting to think about the growth moderating, not going away, but moderating some and when we look at it from a statistical standpoint, we - there's still - the forecast all strongly suggest that incremental e-commerce growth over the next several years stays in the low teens and not until we get to 2025, does the growth rates just go slightly below 10% growth on a year-over-year basis. Maybe a little bit drilling down a little bit further when you look at the actual dollars from a retail standpoint, total dollars spent at the end of '21 was just under $5 trillion.
And when you look out to 2025, it's about $7, $7.5 trillion. So while the actual growth levels have slowed down into low teens, excuse me, the dollar amounts really continue to grow in the 50% range over those - during that period.
All through that, the overall percent of retail sales out to 2025 is still under 25%, about 23.5% of total retail sales will be e-commerce sales. So there's a long, long, strong path there in terms of our growth.
Quint and Rich spoke about it. Our order book for 2022 has been filled for a long period of time, '23 is booked solid and ll24 looks fabulous.
So we're poised to capture and capitalize on it. And the engine around it is still really, really going very well.
Frank Galanti
Great. That's super helpful.
I appreciate all the color. I guess switching gears a little bit.
In the prepared remarks, you had alluded to returning capital to shareholders. Can you just talk through those dynamics given kind of substantial growth CapEx that ATSG is committed to?
How much do you forecast having been able to return to shareholders? And can you remind us when the limitations on share buybacks and...
Quint Turner
Sure, Frank. This is Quint.
The CARES Act or the payroll support plan restrictions, I believe, expire in late September into September. And so call it, fourth quarter.
In terms of the amount of capital or getting specific about that or what we would do, we don't want to be that specific at this point, certainly, but we can talk about the flexibility that the cash flows our business generates afford us to have a diversified capital allocation strategy. And you can see on the slides that we covered, our debt continues to decline even though as you point out, we have a robust growth plan and a robust CapEx plan to support these attractive opportunities we have in the place the aircraft Mike just described.
But it will not constrain us from considering other ways to create value with our shareholders, including returning capital. And of course, what we have done historically is share repurchase.
We had to, of course, put that on the sidelines due to the Cares restrictions. But that opportunity will be fully available to us, and we are not particularly constrained from a capital standpoint.
With those decisions, and you always, of course, take into account not only your other opportunities for capital, but also, of course, where your stock sits and where it's trading, value-wise and how - what you believe the returns are that are available. But we certainly expect, and I think we've said this in past quarters, we believe our shares are not valued based upon where they should be.
And so I would fully expect that when the restrictions are removed, we will look to utilize share repurchase as a way of creating value for the shareholders. We'll just have to see when we get closer to that date, where all those metrics are, and that will determine kind of relative size and how aggressive and over what time frame, et cetera, that we would implement that strategy, but there isn't any financial constraint that is significant to implementing it.
Operator
Thank you. Our next question on line comes from Adam Ritzer
Unidentified Analyst
Hi, guys. Thanks for taking my call, Haven't been on the call for a while, but I listened to everyone, and I have to say you guys are doing a fantastic job.
Rich Corrado
Thanks, Adam.
Unidentified Analyst
Just getting back to the last question, I was going to ask that, but I put it in another way, how much leverage would you guys get to in terms of a buyback?
Rich Corrado
Well, you're kind of asking the same question, Adam. We want to understand where you're going, right.
But to your point, I mean, our current leverage is around two times right or just a little – so you know, the company is leverage profile is more than comfortable certainly. And we have - with the visibility we have on our cash flows and revenue streams, and even in the past, as you know, we've levered over three times depending on the opportunity.
So as our EBITDA continues to grow, one turn of leverage is getting to be a bigger and bigger number, right? So there's plenty of capacity to do a buyback, and that was kind of where we were headed with my last response there to Frank's question.
So again, access capital not the constraint.
Unidentified Analyst
Right. Even if you do $700 million next year, that $1.4 billion of debt you could carry.
That's an additional $150 million of a buyback roughly. So you're going to have to go much above two times to do a decent sized buyback and keep doing it.
Okay, I get it. My other question, just could you refresh my memory on the EBITDA returns on the capital spending.
If you spend $300 million a year on new aircraft, are you still in the 10% to 12% EBITDA type returns even with the new aircraft you're converting?
Rich Corrado
That's roughly the range. And as you know, our model is to tack on some additional non-asset-intensive value-added services, whether it's the CMI or the maintenance piece.
And so yeah, the returns we're getting are in the - certainly in the teens.
Unidentified Analyst
Right. And now you have the pilot piece.
That's not a new thing you guys have decided to go into. So that's additive as well.
Rich Corrado
Sure.
Unidentified Analyst
Okay. That's it.
I really appreciate you taking my call and continue to keep up the good work. Thanks a lot.
Rich Corrado
Thanks, Adam.
Quint Turner
Thanks, Adam.
Operator
Thank you. Our next question on line comes from Mr.
Jack Atkins from Stephens.
Jack Atkins
Okay, great. Good morning, guys.
Thanks for taking my questions. Sorry, I was late jumping in the queue.
So I guess maybe just kind of going back to the capital allocation question for a minute and then I want to jump into other parts of the business. But if we think about the - cash flows from operations, right?
I mean, you guys are seeing very strong performance there and you have for quite some time. When you think about your growth profile here in these 80 conversion slots, would you say the business itself should continue to be self-funding in terms of its growth over the course of the next few years as you execute on that?
Quint Turner
Yeah, Jack, generally speaking, yes, we're going to have - next year will be a big year in terms of - we talked about nearly 20 lease deployments. And so associated with that, you'll have some increase in CapEx, right?
But over - if you look at it over a multiyear period, yes, the business is funding its growth.
Jack Atkins
Okay. That makes sense.
And I guess, theoretically, just from your perspective, given how stable the model is, and this goes back to the earlier comments around the stability of your customer demand and the way the contracts are structured, how do we see other leasing models that perhaps operate with a higher level of leverage with stable cash flows, I guess, why is two turns the right number? Why not maybe 3 or 3.5 turns of leverage, just given how unique your model is?
Quint Turner
I think it's a great question, Jack. And I don't think we're at two turns necessarily by design, right?
It's been a function of the cash flows the business has produced the fact that we have been hampered somewhat in our options for capital deployment, as we discussed a minute ago. It's not to say that it's - it doesn't allow us to move leverage higher and be quite comfortable with all the factors you described, the visibility, the long-term contracts, et cetera.
Now we've always - in the past, we've been will, as you know, to operate I think we were roughly 3.5 times when we've done a couple of acquisitions in the past, and you saw the bottle quickly begin to delever again because of the cash flow production. So it's a powerful in terms of the cash flow it generates.
And I think that you're correct that the leverage can easily move higher and the business perform, continue to perform extremely well.
Jack Atkins
Okay. Now that makes sense.
I mean it's an exciting time for you guys because we've been laying a lot of these foundation stones now for years and beginning to really see it spool up in the earnings profile, the cash flows. And so I'm glad to see the market finally getting the picture here over the last few months.
I guess maybe shifting gears a bit, A lot of discussion around sort of the core leasing business, but would love to get your take on Omni and military flying, sort of do you feel like that's sort of back to normal. And I guess given all the rising geopolitical sort of pressures out there, should we be expecting that Omni business to perhaps be seeing additional momentum here over the next few quarters?
Rich Corrado
Thanks for the question, Jack. Yeah, so Omnis, we're projecting for the year that Omni will be at or a little higher than their 2019 DoD business.
Keep in mind, they also fly for government other government agencies like the Department of State. A lot of the military exercises that they do and the expeditionary repositioning of troops models or kind of back into what we had seen in the past.
And so they - we saw a very strong first quarter. Remember, the first quarter of 2021 was probably the - as far as the DoD goes was the low point for Omni during the pandemic.
And so they're back in the swing of things. And like I said, we're projecting them to be a little bit better than they were in 2019.
As far as the geopolitical pieces of it, most of the flying Omni historically has done is not conflict related. They have run some humanitarian missions as has ATI, some humanitarian admissions related to Europe.
But we're not, at this point, projecting that any of the instability in the political system is going to do anything more than the Omni is doing today. But we anticipate that the rest of the year will be a good year for Omni as well.
Jack Atkins
Okay. And...
Quint Turner
Just to add that the commercial business on the Omni side also has come back quite nicely. It was obviously during the core of the pandemic, the non-military business, I put it that way, was impacted like others.
But recently, we've seen a large increase in flying on the block hour side on the commercial side, and that pipeline in regards to supporting other flying for other airlines - around the world as that expansion comes back as well as colleges, universities, bowl games, et cetera, has bounced back quite nicely as well. It's a smaller portion, as you know, of the overall Omni military business, but it's great to see that component of the Omni business also responded back nicely.
Jack Atkins
Well, I wish my Albert Tigers were going to go to a bull game issue, but I think that's unlikely. So...
Quint Turner
We've got a great rate for...
Jack Atkins
Okay. Last thing, I guess, Quint, can you maybe help us think a little bit about the cadence of, I guess, let's just stick with EBITDA as we sort of move through the year.
I mean - I guess, theoretically, what you earned in the first quarter is about a quarter of what you're expecting for the full year. But typically, there is some seasonality and you implied that perhaps there's conservatism to the guidance.
I mean is there anything to kind of think about sequentially from an earnings cadence perspective that we should be kind of keeping in mind as we're maybe modeling this out?
Quint Turner
Yeah, Jack, I think we said in February that this year, it was a little less in terms of the variation between, call it, first half and second half, a little less than what we've seen in some past years. So it's actually - while we expect certainly sequential improvement as we add leases, it's actually not real volatile from quarter-to-quarter is what we're modeling and what we expect.
I mean certainly, some of the assumptions that will ultimately impact our performance, and we reiterated some of those in our earnings release. For example, we expect to continue to see improved passenger operations and Combi operations in particular.
We've had a route or two impacted by an international route for the Combi's that's been impacted with the pandemic restrictions for the DoD. I think we had a location that was undergoing runway construction and so forth and things like that, that in the second half will help.
But it's also just the timing of CAMs lease deployments, which will help drive sequential improvement. So I don't know that there's like this huge disparity between among the quarters that remain this year.
It's just sort of a gradual...
Jack Atkins
But just to be clear, I mean, going back to what you're saying earlier, I mean, you do feel like that you've baked in conservatism to the guidance and that sort of as we move through the year, assuming that the bottom doesn't fall out just in terms of the macro, that there's an opportunity to maybe work both those outlooks higher?
Quint Turner
I think so, Jack. I mean certainly, we considered doing it.
It just seems - we've just spoken to the market in February, and we are - we do tend to be a little conservative. And there are some things we want to see happen, which Rich described.
But we feel confident and very positive about this, how we got out of the gate here in the first quarter. And so hopefully, we'll be able to update our guidance when we next talk to you guys.
Jack Atkins
Okay. Well, that's great.
I'll hand it back to you. But congratulations on a great quarter and its exciting about what's in front of you.
Thanks, again.
Rich Corrado
Thanks, Jack.
Quint Turner
Thanks, Jack.
Operator
And we have no further questions at this time. I will now turn the call over to Rich Corrado for closing remarks.
Rich Corrado
Thank you all for joining us on the call today. The aircraft leasing and airline business are facing challenges, but our business model has kept us fairly immune to those peaks and valleys.
Most of our EBITDA comes from aircraft leases are flying for the DoD and other government agencies and long-term CMI contracts, which are growing in network expansion and outsourcing is projected to continue. We hope you stay with us for that will be a great ride ahead.
Thank you again for your interest in ATSG.
Operator
And thank you, ladies and gentlemen. This concludes today's conference.
Thank you for participating. You may now disconnect.