Operator: Good day, and welcome to the Aircastle Third Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Frank Constantinople, Head of Investor Relations. Sir, please go ahead.

Frank Constantinople: Thank you, Chelsea. Good morning, everyone, and welcome to Aircastle Limited's Third Quarter 2018 Earnings Call. With me today are Mike Inglese, Chief Executive Officer; Aaron Dahlke, Chief Financial Officer; and Mike Kriedberg, our Chief Commercial Officer. We'll begin the presentation shortly, but I'd like to remind everyone that this call is being recorded. And the replay will be available through our website at www.aircastle.com, along with the earnings press release and our PowerPoint presentation. I would like to remind, I'd like to point out that statements today which are not historical facts may be deemed forward-looking statements. Actual results may differ materially from the estimates or expectations expressed in those statements. And certain facts that could cause actual results to differ materially from Aircastle Limited's expectations are detailed in our SEC filings, which can also be found on our website. I'll direct you to Aircastle Limited's earning release for the full forward-looking statement legend. And we'll now turn the call over to Mike Inglese.

Michael Inglese: Thanks, Frank. We're pleased to report that Aircastle had another strong quarter right in line with comps and consensus. Business fundamentals remain robust and overall economic trends are positive. Global airline profitability through the first three quarters has been solid. The developed markets are in very good shape. The emerging markets, while slowing, also continue to grow at a healthy rate. The demand for leased current technologies narrow-body aircraft remains resilient. While Aaron will cover the financials in detail, let me briefly summarize our third quarter results. We reported Q3 net income of $36.3 million, adjusted net income of $38.2 million. Our book value per share at quarter end was $25.38, and over the past 12 months, that's a representative increase of about 6.7% in book value per share. Our dividend yield has averaged 5.2% over the same period, which produces a combined return of around 12%. On October 30, our board approved Aircastle's 50th consecutive quarterly dividend. And dividend was increased from $0.28 to $0.30 per share per quarter, representing a 7.1% increase. Since 2011, the dividend has been increased nine times, effectively tripling in value. Our 12 months GAAP ROE was 10.3%. Cash ROE came in at 13.7%. We were upgraded to investment grade by Moody's during the quarter, giving us investment-grade ratings from all three major agencies. In late September, we issued our first unsecured IG-rated notes at a very effective 4.4% rate. For the year, we're on track to acquire 36 narrow-body aircraft for about $1.35 billion. 10 of these are A320neos, our first investments in the new-tech aircraft. We closed on two of those NEOs during the third quarter and three more subsequent to quarter end. Finally, year-to-date we've repurchased $54 million of our common shares at an average cost of around $20 per share. Let me spend a few minutes on current market conditions. The macro environment is strong, though there are developments that we continue to monitor. According to the IMF, global GDP growth is expected to continue at a 3.7% clip for 2018 and '19, with all geographies, both emerging and developed markets, showing solid growth numbers. These estimates are down a bit from the 3.9% the IMF was forecasting earlier in the year. While GDP growth continues to be healthy, fuel prices and interest rates have been rising. Over the past 12 months, jet fuel was up 36%. And the yield on the 10-year U.S. treasury has increased by about 80 basis points. Demand growth in the air transport market continues to be above trend lines for the eighth consecutive year. Year-to-date through August, passenger traffic was up 6.8%. And IATA is forecasting full year traffic growth at around 7%. Supply growth continues to lag, with year-to-date capacity growth of 5.9%. With traffic growth higher than capacity growth, the airlines continue to increase load factors, reaching record levels of over 85% in August. According to IATA, global airline profits are forecast to be about $34 billion for the year, down 11% from 2017 but still very healthy. North American carriers are forecast to generate $15 billion of profits in 2018, while Europe and Asia are each expected to come in at a little over $8 billion. As an interesting note: The domestic air traffic market in China now represents 9% of the world's total. And Chinese domestic market is expected to pass the U.S. domestic market over the next five years. Rising costs in terms of fuel, foreign exchange rates and in some markets labor have started to put pressure on airlines. It's easier for airlines to lower ticket prices than to raise them, and demand stimulation to lower ticket prices appears to have brought in scores in many markets. The sudden spike in oil prices during the week of winter season would be particularly painful for many carriers. Recent airline failures, however, have generally been smaller operators with weak balance sheets. In addition to oil prices, the recent strengthening of the dollar has impacted certain emerging markets. As domestic travel in these markets have spikes in local currencies, carriers face difficulties recouping the effects on operating expenses through higher fares. Let me spend a minute on our current view of the leasing market and provide a short update on our investment strategy. We continue to find good opportunities in mid-aged narrow bodies in the 6 to 12 year range. Narrow body returns in general have been more consistent than wide body returns. In the current market, we found value in older mid-life narrow-body aircraft, many of which we price to part-out, which we believe reduces the re-leasing and residual value risk of those investments. We feel that older narrow bodies represent a good risk-return opportunity even though the lease terms tend to be shorter. Our technical team's skill in managing disposals is a competitive advantage and allows us to maximize value by parting-out aircraft and managing residual value risk. While new-tech SLBs may have a lower perceived long-term risk profile, we feel that they generally offer lower returns in today's market. Current yields is part of the market or close to and in some cases below less towards cost of capital. And we generally have not competed well in the new sale and leaseback market. Going forward, however, we do expect over time to continue to invest in new tech when appropriate opportunities arise. In short, we remain focused on finding the best investment opportunities across the marketplace that capitalize on our position as a leading investor in the secondary market. Our view remains that last of the wide current tech offer a poor risk-reward equation unless we speak of residual value curve which can be priced into the transaction. Over the past few years, we've made a conscious decision to reduce the asset risk in our portfolio. Today, 69% of our fleet is narrow body versus 30% in 2014, and the wide body proportion is down to 27% from 51% over that time frame. We expect this trend to continue with our continued focus on narrow-body aircraft. The market for sales remains robust as well. We've generated strong trading gains in 2018. And trading has allowed us to substantially improve the overall quality of the portfolio. Since our beginning, we've acquired over 450 aircraft for nearly $15 billion and have sold 218 aircraft for nearly $5 billion, generating gains over $300 million. We have generated nearly 60% of these gains since 2015, and we'll continue to take advantage of the market strength in optimizing our overall fleet mix. In closing, strong fundamentals continue to drive demand for air travel and aircraft. Our strategy is focused on disciplined capital allocation that we expect will deliver long-term shareholder value. And we'll continue to adapt to the ebb and flow in the demand for aircraft across the market. We're well positioned for continued profitable growth this year. And our conservative capital structure, our credit profile will enable us to grow profitably into the future. I'll now turn the call over to Aaron to briefly review the results for the third quarter.

Aaron Dahlke: Thanks, Mike. As Mike mentioned, we had another great quarter, as our core earnings continued to be solid and our bottom line performance remained strong. For the third quarter of 2018, net income was $36.3 million or $0.46 per diluted share, while adjusted net income was $38.2 million or $0.49 per diluted share. Adjusted EBITDA was $179.2 million and EBITDA was $76.8 million. Our GAAP ROE was 10.3% and cash ROE was 13.7%. Aircastle's book value per share at the end of the third quarter was $25.38, an increase of 6.7% over the past 12 months. And during this time, the dividend yield has averaged by 5.2%. Since going public, we've paid out more than $834 million in dividends. And based on the company's strong results and growing fleet, we once again are increasing our quarterly dividend per share by 7.1% from $0.28 to $0.30 per share. This is our ninth dividend increase since 2011. Year-to-date, we have also repurchased 2.7 million of our shares at approximately 80% of book value. And our board topped up our current authorization to $100 million. Let me spend a minute discussing our results. Core earnings were strong. Total lease rental, finance and sales-type lease revenues were $190.8 million, an increase of $12.7 million or 7.2% from the prior year due to the net impact of aircraft acquisitions and sales over the past year. We added a net total of 41 aircraft, and our total balance sheet assets grew 12.5% or $6.9 billion to $7.7 billion as of the third quarter of '18. Total revenues were $190.8 million, down 10.4% versus Q3 '17 primarily due to Q3 '18 gains on sale of flight equipment of $3 million versus $21.6 million in Q3 '17 and no maintenance revenue in Q3 '18 versus $14.5 million in Q3 '17. Gain on sale was lower because we only sold 3 aircraft during the third quarter of '18 versus 15 aircraft sold in the same period last year. Maintenance revenue was 0, as we had no aircraft in transition in Q3 '18 and therefore recognized no maintenance revenue. We recorded a gain on sale of flight equipment of $3 million in the third quarter and 26 - $28.6 million year-to-date. Total net proceeds from aircraft sales during the 9 months were $276.2 million. This translates into a sales margin of roughly 10.4%, which continue to be above our historical margin of 7%. The steady improvement in our fleet composition has led to our second straight quarter of 12 months double-digit GAAP ROE performance. For the 12 months ended September, GAAP ROE was 10.3% versus 11.6% for the 12 months ended June. The impact of the lower gain on sale in the third quarter versus the second quarter accounts for most of the sequential difference in the two results. ROE will ultimately drive valuation, and we are confident that generating consistent double-digit ROE will eventually lead to a higher market multiple on our shares. Expenses increased by $5.3 million or 3.5% primarily due to an $8 million rise in depreciation driven by our growing aircraft portfolio, offset by a lower interest expense of $2.5 million. Turning to our capital structure. We were upgraded in Q3 to investment grade by Moody's, giving us an IG rating from all three major agencies. As expected, our newly assigned IG credit rating has expanded our investor base and enhanced our liquidity profile. In late September, we successfully raised $650 million of fresh capital with our first IG-rated senior unsecured notes with a coupon of 4.4%. As of the second quarter, end of the second quarter, our total borrowings were - sorry, third quarter, was $4.7 billion. 85% of our debt is unsecured, and our unencumbered flight equipment was $5.6 billion. Our net debt-to-equity ratio is a modest 2.1x with a weighted average debt maturity of 3.2 years and a weighted average coupon of 5%. We ended the quarter with our net cash interest margin at 8.6%, which is up from 8.3% in Q2. Our portfolio yield increased from 11.5% in Q2 to 11.8% in Q3, why our - while our cash interest expense remained sequentially flat. We also ended the quarter with $1.5 billion of liquidity, which includes $594 million of unrestricted cash and $935 million of unused revolving credit capacity. Year-to-date and through October 30, we repurchased $53.7 million of our shares at a weighted average cost of $20.22 per share, which represented 80% of our book value per share at $25.38 at the end of the third quarter. Our board topped up our share buyback authorization to $100 million. We provided our usual guidance elements from the fourth quarter of 2018. I'd like to highlight that we expect to record between $14 million and $18 million of maintenance revenue in the fourth quarter due to planned aircraft transitions. We are also forecasting a sequential increase in lease and finance lease revenue of approximately 3%. To summarize. We had another profitable quarter and continued to generate solid and accretive growth with strong ROEs. Our pipeline is sought, and the balance sheet is liquid. We have minimal forward commitments, which affords us flexibility to remain disciplined and profitably expanding the fleet for the benefit of our investors. In short, we are well positioned to maximize shareholder value and remain committed to strong stewardship of investor capital. With that, operator, we can now open up the call for questions.

Operator: [Operator Instructions]. All right, our first question will come from Jamie Baker with JPMorgan.

Jamie Baker: Mike, just a quick question, first question, on interest rates. Is there any evidence yet that higher rates are starting to result in firmer lease rates? I'm assuming the answer is no, in which case I'd be curious as to what you think that lag time might ultimately end up being.

Michael Inglese: In short, Jamie, the answer is no. I don't think we've seen any evidence yet that lease rates are tracking with the recent increase in interest rates. I think it's reasonable to expect in time that we'll see that correlation. Whether it's a few more quarters out or a little bit longer, it's hard to tell, but I think logically it's kind of what we're expecting to take place in the marketplace as we move forward, assuming rates continue to rise.

Jamie Baker: Got it. And second, heading into this winter and if we specifically compare to this point going into last winter, can you quantify for sort of each November how much of your portfolio is considered, I don't know, at risk or whatever internal metric that you use to keep an eye on some of your weaker customers? I'm really just curious in understanding the change that might have taken place in the last year as we head into the leaner, weaker winter months at least north of the equator.

Michael Inglese: Yes. Look, I think you've seen a few smaller airlines have already halted operations at this point in the year compared to last year. Small exposure, smaller airlines, weak capital structures, so not entirely surprising. Look, we continue to look at our own book and our own AR balance, which has largely been driven this year by our customer in Brazil. They continue to work on what they've been trying to do to take appropriate steps to mitigate the effects of FX and oil on what they're doing with their operations. If they can make those steps and make those progressive moves, we think they'll be okay. To the extent they can't and there's other courses of action down there, we have 10 relatively young A320s that we feel very confident we'll find homes for. And we have a relatively young three year-old A330 that we feel very good about finding a new home for. So it's a situation we continue to monitor as we look at our AR list of the over 30 balance. Almost all of it is that customer. They've continued to struggle along and take steps that they're taking but I don't exactly know where that situation will play out, but in either case we'll do what we do. If it doesn't go the way maybe they're hoping and - we'll find new homes for those aircraft and move on.

Operator: Our next question will come from Helane Becker with Cowen and Company.

Tyler Seidman: This is actually Tyler on for Helane. Just to kind of piggyback off the A330 commentary. HNA said yesterday that they were looking to sell about 10 new A330s, part of their debt restructuring. And I'm just wondering if you have any interest in this aircraft or maybe if you could give a little bit more color on that front.

Michael Inglese: Yes. Look, it's hard to say. We are interested in certain things at the right price. I'm guessing and I haven't looked at HNA's aircraft. And I've heard about the same thing that you heard, that they're looking to move some of those aircraft. It's not likely to be high on my hit list in the nearer term, but it's obviously something they're doing in the context of the overall situation at the HNA Group that they're trying to work their way through.

Tyler Seidman: Got it. And then one more question. You didn't really touch on the E2 demand right now. Is there any update on that? Has demand firmed a little bit? Or are you still kind of seeing the soft demand that you've mentioned on the prior earnings calls?

Michael Inglese: So where we are today, we haven't signed any new lease commitments since we spoke three months ago. I would say, with the aircraft being out in the world, the Embraer has been flying the aircraft around different parts of the world, demonstrating it in particular customers, we've definitely seen an uptick in customer discussions and campaigns. That hasn't translated into any additional firm commitments for us or, frankly, much for Embraer in that time frame. We continue to work with them as a partner on the program. We'll be deferring some of our deliveries all out of the 2019 back end that we had when we spoke three months ago and pushing those forward as the program slips a bit, but I think they are - we're seeing increased discussions. They're very focused on the Boeing merger and progressing that forward and getting that done next year. And I think we all believe that Boeing coming on the scene and bringing its capabilities to the program will help the program in the context of what we've seen Airbus doing with the CSeries now, the A220.

Operator: Our next question will come from Mike Linenberg with Deutsche Bank.

Michael Linenberg: Yes. I guess, two questions here. Aaron, I'm not sure if you said this, and I may have not heard it, but when you gave guidance for 4Q, did you give us a feel for aircraft sales, whether they would be running sort of above or below average? And the return - the margin that you got this quarter, I guess, what was it, 3%, 4%? What's the type - what type of margin should we think about that we should apply to gains on sale? What's kind of the historical run rate? I know it ebbs and flows, but maybe give us a better feel for that.

Michael Inglese: Yes. I think, if you look at our entire history, Mike, that margin has been somewhere around 6.5%. In recent years, the activity has been a bit higher the third quarter. I would point out 1 of the 3 aircraft we sold in the third quarter was a 777-300ER with a relatively short remaining lease term until, frankly, we got out in our own book. And we're quite happy, we've been quite happy with that trade, by the way. So we'll - we would expect, as we've indicated in guidance, some sales activity in the fourth quarter. Net-net, maybe we're - net-net we're probably somewhere in the zip code of the high 300s of proceeds, but it's a bit of a moving target and things can slip across quarters.

Michael Linenberg: Okay, great. And then just one more, Mike. I just - the headline is out about Jet Airways of India indicating that they received some default notices from lessors. And I know - I think you guys have like half a dozen airplanes there. You may even manage some airplanes as well. Is - are they current? Or are you part of that group that has sent them a notice of default? If you can comment, that would be great.

Michael Inglese: Sure. So let me just give you some context. I'm not going to comment on specifics of my discussions with a customer. We do have seven Boeing 737-800 aircraft or actually 1 900 in Jet older vintage. We have been in discussions with them about understanding what they're doing to deal with their refinancing requirements and moving the airline forward and addressing some of their cost structure disadvantages. We have not taken any actions to do something in either direction with them. And we're trying to work with them, to the extent it makes sense for us, to find a solution either with them or somewhere else for some or all of those assets.

Operator: Our next question will come from Gary Liebowitz with Wells Fargo Securities.

Gary Liebowitz: Mike, can you just tell us how many months of receivables you have with that Brazilian customer? And are you starting to sort of shadow market those aircraft already?

Michael Inglese: I don't want to get into, again, the specifics. I'll tell you the same thing I told you 90 days ago. They're still operating within the constraints of our security package with them at the moment. And yes, in the context of being a good asset manager, we're starting to understand where the best opportunities would be outside of Brazil, if that's in fact what we think is the best course of action.

Gary Liebowitz: Okay. And just following up on the E2 question. How many of the 25 have you placed? And I saw that one of your competitors pushed out some deliveries out from - out of 2019 to 2020. Are you seeing similar movements in your delivery schedule?

Michael Inglese: Correct. Yes, as I mentioned earlier, Gary, we - when I spoke to you 90 days ago, we had three deliveries in the fourth quarter of '19. Those have all been pushed out. And we still have the three, out of our 25 orders stream, as our firm lease commitments. And we continue to work campaigns with Embraer and certain airlines to get that moving.

Operator: Our next question comes from Moshe Orenbuch with Crédit Suisse.

Moshe Orenbuch: Could you talk a little bit about what you're seeing with respect to kind of lease rates as you're re-leasing planes and how that's trended over the last year?

Michael Inglese: I don't think we've seen a dramatic change in lease rates for a particular age aircraft from what we were seeing a year ago versus what we're seeing today. I'll ask Mike Kriedberg, if you want to [indiscernible] a little color...

Michael Kriedberg: Yes, sure. I would say lease rates are similar, maybe modestly stronger, especially for current technology. If anything, though, we've seen an uptick in demand, especially for CFM-powered 320s as well as 738s. So there's still very strong demand in general but a modest uptick perhaps in rent but in general more operators looking for those aircrafts.

Moshe Orenbuch: Got it. Because I guess we've noticed kind of a couple of things. Obviously, the lease rate factor was up a little bit in the quarter, probably you've got better utilization, but down on a year-on-year basis. I mean, any thoughts as to what kind of would be driving that? I think the average age of the planes would have - should have probably been a little bit of a help, not a hurt.

Michael Kriedberg: Just my quick reference point on that and some of the delays in some of the new tech deliveries. For some folks, the - it's just growth in the marketplace. And there's backlog of - even if you wanted new tech, you're not going to show up and get it tomorrow. And frankly, in some cases the rents have been low. So for - like even today, if you wanted - there are some airlines looking for 319s and they can't find them in just the simplest sense. So a lot of it is really just pure growth and, frankly, just cheap lift and trying to bridge themselves right now. So it's still very strong in that regard. It's just a question of will you see a continued uptick in the rents or not.

Michael Inglese: Yes. And I think, Moshe, just to add context around the sort of year-over-year change in overall lease yield, what I'll remind everyone is, during the fourth quarter of last year and into the first quarter, we reset rents by placements and extensions on six A330s and 3 777s. And so we saw a big sequential step-down between that third quarter and into the fourth quarter of last year. So comparing this [indiscernible] that - to me, that's the large driver of what you saw in the revenue yield. When you think about last quarter to this quarter, the main driver was really utilization.

Operator: [Operator Instructions]. Our next question will come from Kevin Crissey with Citi.

Kevin Crissey: This is more of a bigger picture, broader question. How do you consider an airline's business model like a ULCC versus network, versus a long-haul transatlantic when determining the risk profile on your required return on a lease? Or is that not as much of a factor as maybe their balance sheet and their current credit profile?

Michael Inglese: So in simple, Kevin, we consider all those factors when we're looking to underwrite a credit. It's what is their business model. What do we think their position is? How do we think that's going to evolve over time? Not just what are the current credit metrics and balance sheet strength, et cetera. And of course, the management of the airline. So there is a number of factors that go into our own credit scoring around who is it we want to do business with; and depending upon all those factors, what do we think the appropriate risk premium ought to be in the context of those decisions.

Kevin Crissey: Okay. And then I guess that leads me to - I wasn't sure that, that was going to be the answer, but with that being the answer, what then is the business model that maybe has a preference within your business? And then - or maybe it's regionally specific. Is a ULCC model a better business model from a risk-return perspective from your perspective? Or does that vary by region? Or how do you think about that?

Michael Inglese: I think it varies by region. And it moves around a little bit over time, and it depends on what's happening in those particular regions and sectors as well. I wouldn't generalize that somehow our focus is this business model.

Operator: Our next question will come from Scott Valentin with Compass Point.

Scott Valentin: Just on the IG rating. You mentioned you issued some debt. I think it was five year-tenor debt at 4.4%. Looking at the debt sheet in the back of the slide deck, your current cost of debt is 5.1. I'm just wondering how much more opportunity is there to lower that cost of funds.

Michael Inglese: So look, if you look across our debt stack and the maturities that we have over the coming years, there's - there will be some opportunities. In the interim, there may be some opportunities in the construct of some liability management exercises as well, but fundamentally we have a - the debt stack that was laid as a BB+ credit. We now have a different rating. And it's going to take some time to relayer and refinance those stacks as we move forward with the business.

Scott Valentin: Okay, fair enough. And then just regarding average age - or sorry, average duration of debt versus the average lease term, both those - or the lease term has been shortening a little bit for the past couple quarters. Maybe that correlates with the age of the fleet going up a little bit over the past couple of quarters. But just wondering how we think about the duration of debt. I think that 3.2 years. And I believe the lease duration is around four, a little over four. I'm just wondering if you're okay with that gap.

Michael Inglese: Yes. Look, fundamentally we're reasonably okay with that gap. Over time, we - maybe we'd like to see it slightly tighter. We do have a $400 million maturity in two months. That influences the third quarter calculation a bit, but we do keep an eye on that missed - the gap there between those two. But I'm not sure you necessarily are going to ever see it perfectly line up on top of each other as a practical matter.

Scott Valentin: Okay. And just one final question. You mentioned the maintenance rights - or maintenance rent, sorry, in the fourth quarter with the transition of aircraft. I assume that's planned. And if it is, can you comment maybe on the status of remarketing of those aircraft.

Michael Inglese: Yes. The assets that we expect to transition during the fourth quarter already have leases signed, and we expect them to transition to their new homes during the first quarter of the next year.

Operator: [Operator Instructions]. And our next question comes from Jason Arnold with RBC Capital Markets.

Jason Arnold: Maybe just to follow on, on the last questions on utilizing the investment-grade rating. I'm just curious if you have any kind of bigger picture thoughts on ideal mix. I mean obviously you'll - like to make good use of the investment-grade rating, I'm sure, and do term debt issuance. But maybe just some funding mix thoughts, if you could.

Michael Inglese: Look, I think we're largely unsecured today, although we continue to utilize bank debt. We have also expanded our debt-raising and fundraising activities outside the U.S. in the form of our Asian revolving facility, some unsecured debt that we've issued in the Japanese market. And given the nature of our business, the global footprint that it has, we think it makes sense to continue to stay active in the bank market to some degree and also to look in the international markets to source capital for this business over the long term.

Operator: Our next question will come from Kristine Liwag with Bank of America Merrill Lynch.

Kristine Liwag: The weighted average remaining lease term ticked down to 4.5 years. What percent of your net book value is scheduled to have expiring leases in the next 12 months?

Michael Inglese: I think we're down to less than 2% of what rolls in 2019 at this point. It's all back - it's all in the back end of next year.

Michael Kriedberg: To put it - yes. To put into perspective: We have eight left to place for 2019, of which four have been outlined. So there's really only about four left for all of '19.

Kristine Liwag: And how about for '20?

Michael Kriedberg: In '20, if you take out a few of the part-outs, it will be about 20, 21 aircraft to place for '20. But it's unusual to go with current - if you use the aircraft, it's unusual to go much beyond 18 months books on focus.

Kristine Liwag: And for the lease expirations that you have in 2020, what are your expectations regarding lease rentals? It looks like fuel prices keep creeping up. Are these lease expires in 2020 younger planes, older planes? Can you give me more color on that?

Michael Kriedberg: They're kind of the more typical mid-life that you'll find, so stuff that's probably going to be around 10, 12 year old; bringing the part-outs to sign. So kind of we would expect similar rentals to what we're seeing today, not much different. As I mentioned earlier, we're just looking very strong demand. And this is stuff you start placing next year.

Kristine Liwag: Great. And for the aircraft that you said you're acquiring that you have commitments for, are there particular geographic exposure that you're getting with those airplanes? And then what made you guys decide to do - to actually invest in the new-technology aircraft? I mean, in the quarter, you got your first A320neos. And in the past, you were hesitant to do the new technology. What's changed?

Michael Inglese: So for us, what's changed is the opportunity to invest in new technology, get better returns than what we're seeing in other campaigns. And we think that arose because - for two reasons. Number one, it was an existing customer for current-generation Airbus technology. And they are a growing customer who's very profitable, who is looking to expand their footprint in terms of financing counterparties. And so we found a situation where there were a lot of our peers who were sort of full up on exposure and we were able to get returns that we think are consistent with the risk profile of this new asset.

Operator: Our next question will come from Russell Futski with Post [ph].

Unidentified Analyst: I just wanted to clarify on the accounts receivable. 3Q to 2Q sequentially was up $8 million, and you said that was related to one Latin American customer. And I think obviously we could probably deduce who it is given your kind of net book value exposure, but it's - between 3Q and 4Q '17, it's up about $15 million, so the other $7 million, how would you bracket that in terms of customer risk or any kind of idiosyncratic issues?

Michael Inglese: Look, it's spread across a bunch of little customers. And I don't see any of it as any particular idiosyncratic issue around what's likely to happen in our fleet, other than the world is a little tougher than it was 12 months ago.

Operator: We have a question next from Scott Valentin with Compass Point.

Scott Valentin: Just a quick follow-up. You mentioned the leverage ratio is now at the low end of around 2.1x. I mean, any plans to increase that? Or is that purely driven by what you see as opportunities in the market for acquiring aircraft?

Michael Inglese: Yes, look, I think it's going to be driven by, if we find investments that we think makes sense and using leverage in an appropriate way to do that work, that's what we will do. And we think, being able to do that, we can over time operate the platform with slightly higher leverage levels, which then help enhance ROE performance over time as well.

Operator: All right, thank you. That was our last question, and I'd like to turn it back over to Mr. Constantinople for any closing remarks.

Frank Constantinople: Okay, thanks for joining us today. Feel free to reach out if you have additional questions. I'll be at my desk throughout the day. Have a good one.

Operator: Thank you, ladies and gentlemen. This concludes today's teleconference, and you may now disconnect.