Financial Performance - Total revenues for the three months ended September 30, 2023, were $667,939,000, a decrease of 12% compared to $757,780,000 for the same period in 2022[14] - Operating income for the three months ended September 30, 2023, was $33,000,000, compared to $23,170,000 for the same period in 2022, reflecting a 42% increase[14] - Net loss attributable to Americold Realty Trust, Inc. for the three months ended September 30, 2023, was $2,088,000, compared to a net loss of $8,912,000 for the same period in 2022[14] - Total operating expenses for the three months ended September 30, 2023, were $634,939,000, a decrease from $734,610,000 for the same period in 2022, reflecting a reduction of about 14%[14] - The company reported a loss from continuing operations of $2,299,000 for the three months ended September 30, 2023, compared to a loss of $7,453,000 for the same period in 2022, showing an improvement of about 69%[14] - The company reported a total comprehensive loss of $913 for the three months ended September 30, 2023, compared to a total comprehensive loss of $25,688 for the same period in 2022[32] - Net loss for the three months ended September 30, 2023, was $30, compared to a net loss of $8,937 for the same period in 2022[32] - Net loss for the nine months ended September 30, 2023, was $109,469, compared to a net loss of $22,429 for the same period in 2022[32] Assets and Liabilities - Total liabilities as of September 30, 2023, were $4,067,069,000, down from $4,316,683,000 as of December 31, 2022, indicating a reduction of approximately 6%[13] - Total assets as of September 30, 2023, amounted to $8,013,719, a decrease from $8,104,561 as of December 31, 2022[29] - Stockholders' equity increased to $3,929,855,000 as of September 30, 2023, from $3,773,419,000 as of December 31, 2022, representing a growth of about 4%[13] - Cash, cash equivalents, and restricted cash as of September 30, 2023, were $53,831, slightly up from $53,063 as of December 31, 2022[29] - Accounts receivable, net of allowance, was $424,540 as of September 30, 2023, down from $430,042 as of December 31, 2022[29] - Identifiable intangible assets, net, decreased to $897,238 as of September 30, 2023, from $925,223 as of December 31, 2022[29] - Goodwill as of September 30, 2023, was $1,022,989, a slight decrease from $1,033,637 as of December 31, 2022[29] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2023, was $193.213 million, compared to $182.883 million in 2022[39] - Net cash used in investing activities for the nine months ended September 30, 2023, was $258.378 million, compared to $288.008 million in 2022[39] - Total cash provided by financing activities was $69.1 million for the nine months ended September 30, 2023, primarily from $545.4 million in proceeds from the Senior Unsecured Revolving Credit Facility[196] - The ending cash, cash equivalents, and restricted cash balance as of September 30, 2023, was $53.831 million, compared to $45.693 million at the end of the same period in 2022[39] Revenue Segments - Rent, storage, and warehouse services revenue for the nine months ended September 30, 2023, was $1,778,827,000, up from $1,704,281,000 for the same period in 2022, marking an increase of approximately 4%[14] - Warehouse segment revenues for the three months ended September 30, 2023, were $602.6 million, reflecting a 0.6% increase compared to the same period in 2022[70] - The warehouse segment contribution (NOI) for the three months ended September 30, 2023, was $177.8 million, a 6.7% increase year-over-year[71] - Same store revenues for rent and storage increased by 5.0% to $257.9 million for the three months ended September 30, 2023[72] - Transportation revenues decreased by $20.8 million, or 27.2%, on a constant currency basis for the three months ended September 30, 2023, primarily due to a strategic transition to a third-party logistics model in the UK and softening demand[77] - The transportation segment contribution NOI decreased by 10.0% on a constant currency basis during the same period, reflecting the same factors[78] - Total warehouse segment revenues increased by 4.4% to $1,778.8 million for the nine months ended September 30, 2023[121] - Transportation revenues decreased by $51.1 million, or 21.5%, for the nine months ended September 30, 2023, compared to the same period in the prior year[130] Expenses and Costs - Interest expense for the three months ended September 30, 2023, was $35,572,000, compared to $30,402,000 for the same period in 2022, indicating an increase of approximately 17%[14] - Interest expense rose by $5.2 million, or 17.0%, to $35.6 million, with the effective interest rate increasing from 3.95% to 4.02%[88] - Corporate-level acquisition, cyber incident, and other costs increased by $9.1 million to $13.9 million for the three months ended September 30, 2023, with severance costs rising by 106%[85] - Depreciation and amortization for the nine months ended September 30, 2023, amounted to $259.644 million, up from $248.979 million in 2022[39] - Depreciation and amortization expense increased by $6.1 million, or 7.2%, due to recent expansions and developments[83] - Bad debt expense for the three months ended September 30, 2023, was $1.0 million, compared to $0.3 million for the same period in 2022, with total bad debt allowances at approximately $18.5 million as of September 30, 2023[179] Cybersecurity and Operational Challenges - The company is conducting a thorough review of a cybersecurity incident that began on April 26, 2023, affecting its internal controls over financial reporting[201][210] - Incremental charges related to the cybersecurity incident were $24.4 million for the nine months ended September 30, 2023, primarily due to internal labor costs and professional fees[48] - The company is continuing to invest in information technology to strengthen its information security infrastructure following a cybersecurity incident[48] - The company has engaged a leading cybersecurity defense firm to manage remediation efforts, with many recommended activities already completed[48] Acquisitions and Dispositions - The company successfully sold the Comfrio business in August 2023, which was classified as discontinued operations[44] - The company acquired a 78% interest in the Comfrio joint venture for a total consideration of $56.6 million, with $46.7 million funded during the nine months ended September 30, 2023[60] - The company sold the assets and liabilities of Comfrio in August 2023, resulting in a loss of $1.1 million from the sale[62] - The company recognized a gain of $0.3 million from the sale of its remaining 15% equity interest in the LATAM joint venture for total proceeds of $36.9 million[68] Shareholder and Stock Information - Weighted average common stock outstanding for the three months ended September 30, 2023, was 278,137,000 shares, an increase from 269,586,000 shares for the same period in 2022[14] - The Company entered into a 2023 ATM Equity Program allowing for the sale of up to $900.0 million of common shares, issuing 13,244,905 shares with net proceeds of $412.9 million during the three and nine months ended September 30, 2023[177][178] - The Company has a total indebtedness of $2,931.3 million as of September 30, 2023, net of deferred financing costs, amounting to $2,920.1 million[184]

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.28 for Q2 2023, with revenue growth of 3.9% and NOI growth of 13.8% year-over-year on a constant currency basis [33][57] - The full year 2023 AFFO per share guidance has been increased to a range of $1.20 to $1.30, reflecting strong operational performance despite the impact of a cybersecurity event [57][62] Business Line Data and Key Metrics Changes - Same store economic occupancy increased to 84.8%, a record-setting level for the second quarter, with a year-over-year increase of 687 basis points [16][20] - Rent and storage revenue from fixed commitment contracts increased to $521 million, up from $379 million in Q2 2022, representing an 800 basis point improvement [20] Market Data and Key Metrics Changes - The company observed a moderation in inflationary pressures, particularly in power costs, which positively impacted cost control measures [10][17] - Economic occupancy is expected to increase by approximately 400 to 500 basis points for the full year, with year-to-date increases of 722 basis points [57] Company Strategy and Development Direction - The company is focusing on expanding its strategic alliances, including a new agreement with Canadian Pacific Kansas City (CPKC) to build cold storage facilities along their railway network [37][62] - The company exited its LATAM joint venture to pursue better opportunities with lower risks, indicating a strategic shift towards more aligned partnerships [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the impact of the cybersecurity event is largely contained to Q2, with expectations for improved operational performance moving forward [31][46] - The company anticipates further expansion announcements in the second half of the year, driven by a robust development pipeline that includes both expansions and new projects [48][62] Other Important Information - The company completed the acquisition of a distribution facility in Brisbane, Australia, for approximately AUD36 million, expecting to stabilize it at a range of 9% to 10% over the next three years [22] - The company has classified its Brazilian joint venture, Comfrio, as assets held for sale and is exploring strategic alternatives for it [54] Q&A Session Summary Question: What is the cash usage for the Brazilian JV and the process to monetize it? - Management indicated that there is interest from buyers and a process is ongoing to sell the asset [38] Question: Are there lingering impacts from the cybersecurity event in Q3? - Management confirmed that the bulk of the impact has been accounted for in Q2, and guidance reflects no significant ongoing effects [46] Question: How does the company view competition from newer automated operators? - Management stated that they also provide highly automated solutions and continue to gain market share, as evidenced by record occupancy and low churn rates [70][71]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [General Information](index=1&type=section&id=1.1%20General%20Information) This section details Americold Realty Trust, Inc.'s Form 10-Q filing, including its corporate status, NYSE listing, and compliance as a large accelerated filer - Americold Realty Trust, Inc. is a Maryland corporation, listed on the New York Stock Exchange (NYSE) under the trading symbol **COLD**[177](index=177&type=chunk) - The registrant is classified as a **'large accelerated filer'** and has filed all required reports under the Securities Exchange Act of 1934 during the preceding 12 months[43](index=43&type=chunk)[178](index=178&type=chunk) Common Stock Outstanding as of August 1, 2023 | Class | Outstanding at August 1, 2023 | | :------------------------ | :---------------------------- | | Common Stock, $0.01 par value per share | 270,254,951 | [Table of Contents](index=3&type=section&id=1.2%20Table%20of%20Contents) The Table of Contents outlines the Form 10-Q's structure, dividing it into Part I (Financial Information) and Part II (Other Information) - The report is structured into two main parts: **Part I - Financial Information** (Items 1-4) and **Part II - Other Information** (Items 1-6)[44](index=44&type=chunk)[179](index=179&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Americold Realty Trust, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, with accompanying notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=2.1.1%20Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets present the company's financial position as of June 30, 2023, compared to December 31, 2022, detailing changes in assets, liabilities, and equity Key Balance Sheet Figures (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Total assets | $8,215,759 | $8,104,561 | | Total liabilities | $4,626,000 | $4,316,683 | | Total equity | $3,589,759 | $3,787,878 | | Property, buildings and equipment – net | $5,061,513 | $5,065,817 | | Goodwill | $1,036,332 | $1,033,637 | | Assets held for sale | $106,368 | $— | | Liabilities held for sale | $112,752 | $— | [Condensed Consolidated Statements of Operations](index=9&type=section&id=2.1.2%20Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations detail the company's revenues, operating expenses, and net loss for the three and six months ended June 30, 2023 and 2022, showing a significant increase in net loss for the current periods Key Income Statement Figures (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $649,610 | $729,756 | $1,326,099 | $1,435,451 | | Total operating expenses | $628,943 | $706,091 | $1,273,083 | $1,403,795 | | Operating income | $20,667 | $23,665 | $53,016 | $31,656 | | Loss from continuing operations before income taxes | $(96,063) | $(4,828) | $(97,897) | $(21,333) | | Net (loss) income | $(104,802) | $3,953 | $(107,373) | $(13,492) | | Basic (loss) earnings per share | $(0.39) | $0.01 | $(0.40) | $(0.05) | | Diluted (loss) earnings per share | $(0.39) | $0.01 | $(0.40) | $(0.05) | - The company reported a **net loss of $104.8 million** for the three months ended June 30, 2023, compared to a net income of $3.95 million in the prior year, and a **net loss of $107.37 million** for the six months ended June 30, 2023, compared to a net loss of $13.49 million in the prior year[209](index=209&type=chunk) - Key factors contributing to the increased loss include significant 'Acquisition, cyber incident and other, net' expenses (**$27.2 million for Q2 2023** vs $5.66 million for Q2 2022) and a **'Loss on put option' of $56.6 million** related to the Comfrio acquisition[209](index=209&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=11&type=section&id=2.1.3%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The Condensed Consolidated Statements of Comprehensive Loss show the total comprehensive loss for the three and six months ended June 30, 2023 and 2022, including net loss and other comprehensive income (loss) components Key Comprehensive Loss Figures (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(104,802) | $3,953 | $(107,373) | $(13,492) | | Change in unrealized net gain (loss) on foreign currency | $6,143 | $(23,867) | $6,322 | $(12,681) | | Unrealized gain on cash flow hedges | $22,359 | $1,558 | $9,795 | $1,709 | | Total comprehensive loss | $(76,576) | $(18,542) | $(90,869) | $(24,560) | - Total comprehensive loss for the three months ended June 30, 2023, was **$(76.6) million**, an increase from $(18.5) million in the prior year, primarily due to the net loss, despite positive foreign currency translation adjustments and unrealized gains on cash flow hedges[184](index=184&type=chunk) [Condensed Consolidated Statements of Equity](index=12&type=section&id=2.1.4%20Condensed%20Consolidated%20Statements%20of%20Equity) The Condensed Consolidated Statements of Equity present the changes in stockholders' equity and noncontrolling interests for the six months ended June 30, 2023 and 2022, reflecting net losses, distributions, and stock-based compensation Key Equity Changes (in thousands) | Metric | Balance - December 31, 2022 | Balance - June 30, 2023 | | :----------------------------------------- | :-------------------------- | :---------------------- | | Total equity | $3,787,878 | $3,589,759 | | Net loss | — | $(107,373) | | Other comprehensive income (loss) | — | $10,377 | | Distributions on common stock, restricted stock and OP units | — | $(119,613) | | Stock-based compensation expense | — | $11,609 | - Total equity decreased from **$3,787.9 million** at December 31, 2022, to **$3,589.8 million** at June 30, 2023, primarily driven by net losses and distributions[20](index=20&type=chunk)[50](index=50&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=2.1.5%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows summarize the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2023 and 2022, showing a decrease in net cash provided by operating activities Key Cash Flow Figures (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $82,768 | $133,242 | | Net cash used in investing activities | $(162,674) | $(191,960) | | Net cash provided by financing activities | $76,513 | $52,219 | | Net decrease in cash, cash equivalents and restricted cash | $(3,393) | $(6,499) | | Cash, cash equivalents and restricted cash: End of period | $48,873 | $74,616 | - Net cash provided by operating activities decreased by **$50.5 million**, from $133.2 million in H1 2022 to $82.8 million in H1 2023, primarily due to the payment of the annual bonus accrual in 2023 and limitations on bill collection due to the Cyber Incident[437](index=437&type=chunk) - Investing activities included **$40.7 million** for the Comfrio joint venture acquisition and **$20.1 million** for a lease buyout, partially offset by **$36.9 million** from the sale of the LATAM joint venture[438](index=438&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=16&type=section&id=2.1.6%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, significant events, segment information, debt, derivatives, and other financial details [General Information and Basis of Presentation](index=16&type=section&id=2.1.6.1%20General%20Information%20and%20Basis%20of%20Presentation) This section describes Americold Realty Trust, Inc. as a self-administered and self-managed REIT focused on temperature-controlled logistics, real estate, and value-added services, outlining the basis of financial statement preparation - Americold Realty Trust, Inc. operates as a REIT, specializing in temperature-controlled logistics, real estate, and value-added services, with a global network of **242 warehouses**[115](index=115&type=chunk)[189](index=189&type=chunk) - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and SEC rules, requiring management to make estimates and assumptions[54](index=54&type=chunk)[215](index=215&type=chunk) - The company's Board of Directors approved a plan to terminate the Americold Retirement Income Plan (ARIP) on February 28, 2023, with expected cash contributions in 2023 to fully fund it[29](index=29&type=chunk)[56](index=56&type=chunk) [Acquisitions, Held for Sale, Discontinued Operations and Dispositions](index=19&type=section&id=2.1.6.2%20Acquisitions%2C%20Held%20for%20Sale%2C%20Discontinued%20Operations%20and%20Dispositions) This note details the acquisition of the remaining 78% equity interest in the Comfrio joint venture, its classification as held for sale and discontinued operations, and the sale of the company's minority ownership in the LATAM JV - The company acquired the remaining **78% interest** in the Comfrio joint venture for **$56.6 million** in May 2023, after the exercise of a put option, and classified it as held for sale and discontinued operations[196](index=196&type=chunk)[221](index=221&type=chunk) Loss from Discontinued Operations (Comfrio) (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $14,237 | $— | $14,237 | $— | | Pre-tax loss | $(8,034) | $(3,288) | $(10,415) | $(4,936) | | Loss from discontinued operations, net of tax | $(8,275) | $(3,288) | $(10,656) | $(4,936) | - The company sold its remaining **15% equity interest** in the LATAM JV for **$36.9 million** on May 30, 2023, recognizing a **$0.3 million gain**[60](index=60&type=chunk)[122](index=122&type=chunk) [Acquisition, Cyber Incident and Other, Net](index=20&type=section&id=2.1.6.3%20Acquisition%2C%20Cyber%20Incident%20and%20Other%2C%20Net) This note details the components of 'Acquisition, cyber incident and other, net' expenses, which significantly increased for the three and six months ended June 30, 2023, primarily due to costs associated with a cybersecurity incident and Project Orion Acquisition, Cyber Incident and Other, Net Expenses (in thousands) | Component | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Acquisition and integration related costs | $2,402 | $3,786 | $4,188 | $10,071 | | Cyber incident related costs, net of insurance recoveries | $18,998 | $(819) | $18,998 | $(793) | | Severance costs | $2,793 | $910 | $6,209 | $3,474 | | Project Orion expenses | $2,543 | $— | $4,488 | $— | | Total acquisition, cyber incident and other, net | $27,235 | $5,663 | $34,382 | $15,738 | - Cyber incident related costs of **$19.0 million** were incurred during the three and six months ended June 30, 2023, comprising incremental internal labor, professional fees, customer claims, and insurance deductibles[28](index=28&type=chunk)[34](index=34&type=chunk) - Project Orion expenses, related to the transformation of technology systems and implementation of a new ERP system, amounted to **$2.5 million** for the three months and **$4.5 million** for the six months ended June 30, 2023[34](index=34&type=chunk)[198](index=198&type=chunk) [Debt](index=21&type=section&id=2.1.6.4%20Debt) This note provides a summary of the company's outstanding indebtedness, including Senior Unsecured Notes, Term Loans, and Revolving Credit Facility, detailing their carrying amounts and effective interest rates Outstanding Indebtedness (in thousands) | Debt Type | June 30, 2023 Carrying Amount | December 31, 2022 Carrying Amount | | :--------------------------------------- | :---------------------------- | :-------------------------------- | | Senior Unsecured Notes | $1,768,175 | $1,752,875 | | Senior Unsecured Term Loans | $833,800 | $829,450 | | Senior Unsecured Revolving Credit Facility | $723,436 | $500,052 | | Total indebtedness, net of deferred financing costs | $3,313,563 | $3,069,333 | - The total principal amount of indebtedness increased from **$3,082.4 million** at December 31, 2022, to **$3,325.4 million** at June 30, 2023[62](index=62&type=chunk) - The weighted-average effective interest rate for Senior Unsecured Notes was **3.25%** at June 30, 2023, and for Senior Unsecured Term Loans was **4.66%**, while the Revolving Credit Facility had a weighted-average effective interest rate of **6.03%**[62](index=62&type=chunk) [Derivative Financial Instruments](index=22&type=section&id=2.1.6.5%20Derivative%20Financial%20Instruments) This note details the company's use of derivative instruments, including interest rate swaps to manage interest rate volatility and cross-currency swaps to manage foreign exchange rate risk on intercompany loans - The company uses interest rate swap agreements to reduce exposure to fluctuations in cash flows due to changes in interest rates, effectively exchanging variable-rate amounts for fixed-rate payments[67](index=67&type=chunk) - Cross-currency swaps are used to mitigate foreign currency exchange rate risk on foreign-currency denominated intercompany loans, hedging **$153.5 million AUD** and **$37.5 million NZD** balances as of June 30, 2023[68](index=68&type=chunk) Fair Value of Derivative Financial Instruments (in thousands) | Derivative Type | June 30, 2023 Fair Value | December 31, 2022 Fair Value | | :----------------------- | :----------------------- | :--------------------------- | | Foreign exchange contracts | $10,882 | $7,948 | | Interest rate contracts | $24,124 | $15,572 | | Total fair value of derivatives | $35,006 | $23,520 | [Fair Value Measurements](index=26&type=section&id=2.1.6.6%20Fair%20Value%20Measurements) This note outlines the fair value measurements of the company's assets and liabilities, categorizing them by the fair value hierarchy (Level 2 and Level 3 inputs) Fair Value Measurements (in thousands) | Instrument | Fair Value Hierarchy | June 30, 2023 Fair Value | December 31, 2022 Fair Value | | :--------------------------------------- | :------------------- | :----------------------- | :--------------------------- | | Interest rate swap assets | Level 2 | $24,124 | $15,572 | | Cross currency swap assets | Level 2 | $10,882 | $7,948 | | Senior unsecured notes, term loans, and revolving credit facility | Level 3 | $3,069,105 | $2,829,574 | - The fair values of cash, accounts receivable, accounts payable, accrued expenses, and revolving line of credit approximate their carrying amounts due to short-term maturities[79](index=79&type=chunk) - The valuation of the Comfrio acquisition and associated put option liability utilized **Level 3 inputs**, including terms of the put option agreement and estimated future cash flows[80](index=80&type=chunk) [Income Taxes](index=26&type=section&id=2.1.6.7%20Income%20Taxes) This note explains the company's effective tax rate, which varies from the U.S. federal income tax rate due to its REIT designation, highlighting the impact of pre-tax income/losses by jurisdiction and a non-recurring tax benefit - The company's effective tax rate is primarily influenced by its **REIT designation**, which generally treats it as a non-tax paying entity[107](index=107&type=chunk) - The effective tax rate for the three and six months ended June 30, 2023, was favorably impacted by the blend of pre-tax book income and losses across jurisdictions[107](index=107&type=chunk) - A non-recurring **$6.5 million discrete net tax benefit** was recognized in the three and six months ended June 30, 2022, due to the deconsolidation of Chilean operations[107](index=107&type=chunk) [Commitments and Contingencies](index=26&type=section&id=2.1.6.8%20Commitments%20and%20Contingencies) This note addresses the company's legal proceedings, environmental matters, and OSHA compliance, stating that no material unrecorded contingent liabilities exist as of June 30, 2023 - The company is involved in litigation with Preferred Freezer Services, LLC (PFS) regarding alleged breach of a confidentiality agreement, with PFS seeking damages and an injunction[38](index=38&type=chunk)[111](index=111&type=chunk) - The company denies PFS's allegations and believes the claims are without merit, intending to vigorously defend itself, and does not expect a material adverse impact on its financial statements[39](index=39&type=chunk) - The company is subject to environmental laws and regulations, particularly concerning ammonia as a refrigerant in most warehouses, and believes it is in compliance in all material respects with no material unrecorded contingent environmental liabilities[1](index=1&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The company's U.S. warehouses are subject to OSHA regulations, and it believes it is in substantial compliance, with no material unrecorded contingent liabilities as of June 30, 2023, and December 31, 2022[2](index=2&type=chunk) [Accumulated Other Comprehensive (Loss) Income](index=29&type=section&id=2.1.6.9%20Accumulated%20Other%20Comprehensive%20%28Loss%29%20Income) This note details the components of Accumulated Other Comprehensive (Loss) Income (AOCI), including foreign currency translation adjustments, unrealized gains and losses on designated derivatives, and pension and other postretirement benefits Components of AOCI (in thousands) | Component | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cumulative translation adjustment | $14,427 | $(84,167) | $25,228 | $(96,674) | | Derivative net investment hedges | $(8,284) | $55,330 | $(18,906) | $79,023 | | Total foreign currency translation adjustments | $6,143 | $(23,867) | $6,322 | $(12,681) | | Total pension and other postretirement benefits, net of tax | $(388) | $(113) | $310 | $(46) | | Total unrealized gain on derivative contracts | $22,359 | $1,558 | $9,795 | $1,709 | | Total change in other comprehensive income (loss) | $28,114 | $(22,422) | $16,427 | $(11,018) | - AOCI activity for the three months ended June 30, 2023, showed a total change in other comprehensive income of **$28.1 million**, a significant improvement from a loss of $(22.4) million in the prior year, driven by positive cumulative translation adjustments and unrealized gains on derivatives[5](index=5&type=chunk) [Segment Information](index=29&type=section&id=2.1.6.10%20Segment%20Information) This note describes the company's three reportable segments: Warehouse, Transportation, and Third-party managed, and presents their revenues and contributions, with a reconciliation to loss before income taxes - The company's principal operations are organized into three reportable segments: **Warehouse, Transportation, and Third-party managed**, each managed separately with distinct strategies[6](index=6&type=chunk) Segment Revenues and Contribution (in thousands) | Segment | Three Months Ended June 30, 2023 Revenue | Three Months Ended June 30, 2022 Revenue | Six Months Ended June 30, 2023 Revenue | Six Months Ended June 30, 2022 Revenue | | :------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Warehouse | $581,170 | $564,379 | $1,176,222 | $1,105,304 | | Transportation | $58,072 | $81,891 | $126,150 | $160,801 | | Third-party managed | $10,368 | $83,486 | $23,727 | $169,346 | | Total revenues | $649,610 | $729,756 | $1,326,099 | $1,435,451 | | | | | | | | Segment Contribution | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | Warehouse | $172,842 | $150,985 | $347,669 | $297,243 | | Transportation | $9,809 | $13,585 | $21,469 | $22,114 | | Third-party managed | $1,400 | $3,721 | $2,479 | $7,222 | | Total segment contribution | $184,051 | $168,291 | $371,617 | $326,579 | - Warehouse segment revenues increased by **3.0%** for the three months and **6.4%** for the six months ended June 30, 2023, while Transportation and Third-party managed segments saw significant revenue declines due to strategic shifts and customer transitions[10](index=10&type=chunk) [Loss/Earnings per Common Share](index=30&type=section&id=2.1.6.11%20Loss%2FEarnings%20per%20Common%20Share) This note details the calculation of basic and diluted loss/earnings per common share using the two-class method, and provides a reconciliation of weighted-average common shares outstanding - Basic and diluted (loss)/earnings per common share are calculated by dividing net income or loss attributable to common stockholders by the weighted-average number of common shares outstanding, using the **two-class method**[11](index=11&type=chunk) Weighted-Average Common Shares Outstanding (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted average common shares outstanding – basic | 270,462 | 269,497 | 270,387 | 269,464 | | Weighted average common shares outstanding – diluted | 270,462 | 270,384 | 270,387 | 269,464 | - For the three and six months ended June 30, 2023, potential common shares were antidilutive due to a net loss, resulting in no adjustments between basic and diluted loss per share[150](index=150&type=chunk) [Revenue from Contracts with Customers](index=31&type=section&id=2.1.6.12%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates revenue from customer contracts by segment and geographic region, explains performance obligations, and details contract balances, including accounts receivable and unearned revenue Total Revenues from Contracts with All Customers by Segment and Region (in thousands) | Segment/Region | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $512,981 | $575,342 | $1,047,688 | $1,123,076 | | Europe | $67,380 | $84,926 | $139,051 | $170,063 | | Asia-Pacific | $65,417 | $64,781 | $131,922 | $132,604 | | South America | $3,832 | $4,707 | $7,438 | $9,708 | | Total revenues | $649,610 | $729,756 | $1,326,099 | $1,435,451 | - As of June 30, 2023, the company had **$652.0 million** of remaining unsatisfied performance obligations from non-cancellable contracts, with **17%** expected to be recognized in 2023 and the remaining **83%** over a weighted average period of **12.3 years** through 2038[159](index=159&type=chunk) - Receivable balances related to contracts with customers under ASC 606 were **$446.0 million** at June 30, 2023, and unearned revenue balances were **$31.2 million**[161](index=161&type=chunk)[162](index=162&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key business drivers, segment performance, and factors affecting financial results [Management's Overview](index=34&type=section&id=2.2.1%20Management%27s%20Overview) Americold Realty Trust, Inc. is a global leader in temperature-controlled logistics, real estate, and value-added services, operating a network of 242 warehouses across North America, Europe, Asia-Pacific, and South America, managed through three primary business segments - The company operates a global network of **242 temperature-controlled warehouses**, encompassing approximately **1.5 billion cubic feet**, with 195 in North America, 27 in Europe, 18 in Asia-Pacific, and 2 in South America[115](index=115&type=chunk) - The business is managed through three primary segments: **Warehouse, Transportation, and Third-party managed**[115](index=115&type=chunk) - The company holds minority interests in two joint ventures: SuperFrio (**35 warehouses in Brazil**) and RSA JV (**1 warehouse in Dubai**), and **26 warehouses in Brazil** are classified as held-for-sale[115](index=115&type=chunk) [Components of Our Results of Operations](index=34&type=section&id=2.2.2%20Components%20of%20Our%20Results%20of%20Operations) This section details the revenue and cost components for each of the company's operating segments: Warehouse, Transportation, and Third-Party Managed, along with other consolidated operating expenses [Warehouse Segment](index=34&type=section&id=2.2.2.1%20Warehouse%20Segment) The Warehouse segment's primary revenues come from rent, storage, and a wide array of value-added services, with costs mainly driven by labor and power, which are subject to various external factors - Primary revenues for the Warehouse segment include rent, storage, and value-added services such as handling, blast freezing, case-picking, kitting, repackaging, and e-commerce fulfillment[138](index=138&type=chunk) - Labor is the largest cost component, influenced by headcount, compensation, third-party labor, collective bargaining, customer requirements, productivity, and governmental regulations[81](index=81&type=chunk) - Power is the second largest cost, impacted by price fluctuations in operating regions and business mix (temperature zone/freezing type)[83](index=83&type=chunk) [Transportation Segment](index=35&type=section&id=2.2.2.2%20Transportation%20Segment) The Transportation segment generates revenue from arranging product transportation, including fuel and capacity surcharges, with costs primarily from third-party carrier charges and operational expenses for company-employed drivers and assets - Transportation fees, including fuel and capacity surcharges, are charged for arranging product transportation[116](index=116&type=chunk) - Cost of operations primarily consists of third-party carrier charges, influenced by driver and equipment availability, and costs for company-employed drivers and assets (wages, fuel, tolls, insurance, maintenance)[116](index=116&type=chunk) [Third-Party Managed Segment](index=35&type=section&id=2.2.2.3%20Third-Party%20Managed%20Segment) The Third-Party Managed segment earns management and incentive fees, with substantially all expenses reimbursed by third-party owners, meaning costs are typically passed through to customers - Revenues include reimbursement of substantially all expenses for managed warehouses, management fees, and incentive fees based on performance and cost-savings[117](index=117&type=chunk) - Cost of operations for this segment is reimbursed on a pass-through basis[117](index=117&type=chunk) - The company strategically transitioned its largest third-party managed customer's warehouses to a new provider in Q4 2022, ceasing those operations[117](index=117&type=chunk) [Other Consolidated Operating Expenses](index=35&type=section&id=2.2.2.4%20Other%20Consolidated%20Operating%20Expenses) This section covers corporate-level expenses not allocated to specific segments, including depreciation and amortization, selling, general and administrative (SG&A), and acquisition, cyber incident and other, net expenses - Depreciation and amortization charges primarily result from the capital-intensive nature of the business, covering warehouses, equipment, and intangible assets like customer relationships[139](index=139&type=chunk) - Corporate-level SG&A expenses include wages, benefits, equity incentive plans, professional fees, and IT personnel, influenced by headcount and compensation levels[140](index=140&type=chunk) - Acquisition, cyber incident and other, net expenses are highly variable and include acquisition/integration costs, Project Orion costs, litigation, severance, terminated site operations, and cyber incident related costs[141](index=141&type=chunk) [Key Factors Affecting Our Business and Financial Results](index=36&type=section&id=2.2.3%20Key%20Factors%20Affecting%20Our%20Business%20and%20Financial%20Results) This section discusses various internal and external factors influencing the company's business and financial performance, including a recent cybersecurity incident, strategic dispositions, market risks, seasonality, foreign currency impacts, and operational efficiency initiatives [Cybersecurity Incident](index=36&type=section&id=2.2.3.1%20Cybersecurity%20Incident) The company experienced a cybersecurity incident on April 26, 2023, impacting systems and operations for a limited period, with remediation efforts ongoing and resulting in estimated lost revenue and net operating income - A cybersecurity incident occurred on **April 26, 2023**, impacting systems and partially disrupting operations, leading to preventative measures like shutting down systems and enhanced security monitoring[120](index=120&type=chunk)[216](index=216&type=chunk) - All locations resumed operations at pre-cyberattack levels by June 30, 2023, with incremental charges of **$19.0 million** recorded for remediation and response efforts[28](index=28&type=chunk)[120](index=120&type=chunk) - The incident resulted in an estimated **$15.0 million in lost revenue** and **$9.0 million in lost net operating income** for the warehouse segment during Q2 2023, with additional costs expected in H2 2023[143](index=143&type=chunk) [Sale of Outstanding Minority Ownership in LATAM JV](index=36&type=section&id=2.2.3.2%20Sale%20of%20Outstanding%20Minority%20Ownership%20in%20LATAM%20JV) The company completed the sale of its remaining 15% equity interest in the LATAM JV for $36.9 million, recognizing a gain of $0.3 million - The company sold its remaining **15% equity interest** in the LATAM JV for **$36.9 million** on May 30, 2023[60](index=60&type=chunk)[122](index=122&type=chunk) - A gain of **$0.3 million** was recognized from the sale, recorded in 'Other (income) expense, net'[60](index=60&type=chunk)[122](index=122&type=chunk) [Significant Risks and Uncertainties](index=37&type=section&id=2.2.3.3%20Significant%20Risks%20and%20Uncertainties) This section refers to the comprehensive list of risk factors detailed in the company's 2022 Annual Report on Form 10-K, which could materially impact the business - The company's business is subject to significant risks and uncertainties, as detailed in 'Item 1A - Risk Factors' of its **2022 Annual Report on Form 10-K**[123](index=123&type=chunk)[168](index=168&type=chunk) [Seasonality](index=37&type=section&id=2.2.3.4%20Seasonality) The company's business is influenced by seasonal and cyclical factors in the food industry, but fixed commitment contracts and southern hemisphere operations help mitigate revenue volatility, with physical occupancy typically peaking between mid-September and early December - The company mitigates revenue and earnings volatility from seasonal food industry business through **fixed commitment contracts** with customers[146](index=146&type=chunk) - Southern hemisphere operations (Australia, New Zealand, South America) help balance seasonality due to complementary growing and harvesting cycles[124](index=124&type=chunk) - Physical occupancy rates are generally lowest in May and June, gradually increasing to peak between mid-September and early December due to annual harvests and holiday inventory build-up[146](index=146&type=chunk) [Foreign Currency Translation Impact on Our Operations](index=37&type=section&id=2.2.3.5%20Foreign%20Currency%20Translation%20Impact%20on%20Our%20Operations) Consolidated revenues and expenses are subject to variations from foreign currency translation, which can materially impact results due to the relative size of international operations, though partially mitigated as revenues and expenses are denominated in local currencies - Foreign currency translation causes variations in consolidated revenues and expenses, which can materially impact results due to the size of international operations[147](index=147&type=chunk)[171](index=171&type=chunk) - The impact of foreign currency fluctuations is partially mitigated because international revenues and expenses are typically denominated in local currencies[171](index=171&type=chunk) - Constant currency metrics are used to assess underlying business performance by applying prior-year average foreign exchange rates to current local currency results, removing the effect of currency movements[126](index=126&type=chunk) [Focus on Our Operational Effectiveness and Cost Structure](index=39&type=section&id=2.2.3.6%20Focus%20on%20Our%20Operational%20Effectiveness%20and%20Cost%20Structure) The company continuously implements initiatives to streamline business processes, reduce costs, and enhance operational effectiveness, including integrating acquisitions, standardizing processes, and investing in energy efficiency projects - Initiatives include realigning and centralizing business processes, integrating acquired assets, implementing standardized operational processes, and launching new information technology tools[466](index=466&type=chunk) - Investments in energy efficiency projects, such as LED lighting, thermal energy storage, and motion-sensor technology, aim to reduce kilowatt-hour consumption and energy spend[466](index=466&type=chunk) - Project Orion, initiated in 2022, aims to enhance operational effectiveness and integrate acquisitions through technology system transformation and new ERP software implementation[198](index=198&type=chunk)[466](index=466&type=chunk) [Strategic Shift within Our Transportation Segment](index=39&type=section&id=2.2.3.7%20Strategic%20Shift%20within%20Our%20Transportation%20Segment) The company has strategically shifted its Transportation segment to focus on more profitable, value-added programs that complement its warehouse business, moving away from commoditized, low-margin services - The company is exiting commoditized, non-scalable, or low-margin transportation services in favor of more profitable, value-added programs like regional, national, truckload, and retailer-specific multi-vendor consolidation services[231](index=231&type=chunk) - This strategic shift aims to improve efficiency, reduce transportation and logistics costs for warehouse customers, and drive increased client retention and high occupancy levels in temperature-controlled warehouses[231](index=231&type=chunk) [Historically Significant Customer](index=39&type=section&id=2.2.3.8%20Historically%20Significant%20Customer) A historically significant customer, which accounted for over 10% of total revenues in 2022, transitioned its third-party managed warehouses to a new provider in Q4 2022, impacting the segment's revenues - One customer accounted for over **10% of total revenues** for the three and six months ended June 30, 2022, primarily within the third-party managed segment[232](index=232&type=chunk) - This customer transitioned its managed warehouses to a new third-party provider in Q4 2022, resulting in the company no longer serving them in that segment[117](index=117&type=chunk)[233](index=233&type=chunk) Revenues from Historically Significant Customer (in millions) | Period | Total Revenues | Reimbursements for Expenses | | :----------------------------------- | :------------- | :-------------------------- | | Three Months Ended June 30, 2022 | $75.2 | $73.0 | | Six Months Ended June 30, 2022 | $153.2 | $147.8 | [Economic Occupancy of our Warehouses](index=40&type=section&id=2.2.3.9%20Economic%20Occupancy%20of%20our%20Warehouses) Economic occupancy, defined as physically occupied pallets plus contractually committed pallets, is a key driver of financial results, with the company actively seeking fixed storage commitment contracts to mitigate seasonality and ensure customer space - Economic occupancy is defined as the aggregate number of physically occupied pallets and additional pallets contractually committed, without duplication[234](index=234&type=chunk) - The company actively seeks fixed storage commitment contracts with new and existing customers to mitigate the impact of seasonality on physical occupancy and ensure necessary space[234](index=234&type=chunk) - Economic occupancy is regarded as an important driver of financial results[234](index=234&type=chunk) [Throughput at our Warehouses](index=40&type=section&id=2.2.3.10%20Throughput%20at%20our%20Warehouses) Throughput, representing the volume of pallets entering and exiting warehouses, significantly impacts warehouse services revenues, influenced by food manufacturers' production levels and shifts in consumer demand - Throughput, the volume of pallets entering and exiting warehouses, is a key factor impacting warehouse services revenues, as customers are typically billed based on throughput levels[235](index=235&type=chunk) - Throughput is influenced by food manufacturers' production levels (responding to market conditions, labor, supply chain, consumer preferences) and changes in inventory turnover due to consumer demand shifts[235](index=235&type=chunk) [How We Assess the Performance of Our Business](index=40&type=section&id=2.2.4%20How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section explains the key metrics and methodologies used by management to evaluate business performance, including segment contribution (NOI), same store analysis, and constant currency metrics, to provide a clear understanding of operational results [Segment Contribution (Net Operating Income or "NOI")](index=40&type=section&id=2.2.4.1%20Segment%20Contribution%20%28Net%20Operating%20Income%20or%20%22NOI%22%29) Segment contribution (NOI) is a non-GAAP measure used to evaluate segment performance, calculated as segment revenues less cost of operations, excluding corporate-level expenses, with the company also analyzing NOI and NOI margin for warehouse rent/storage and services operations - Segment contribution (NOI) is a non-GAAP measure used to evaluate segment performance, calculated as segment revenues minus cost of operations, excluding depreciation, amortization, impairment, corporate SG&A, and acquisition/cyber incident/other expenses[136](index=136&type=chunk)[252](index=252&type=chunk) - The company also analyzes 'segment contribution (NOI) margin' (segment contribution divided by segment revenues) and breaks down warehouse segment NOI into rent/storage and services components[237](index=237&type=chunk)[238](index=238&type=chunk) [Same Store Analysis](index=41&type=section&id=2.2.4.2%20Same%20Store%20Analysis) The company uses a 'same store' analysis to evaluate the performance of its owned or leased warehouses, defining the same store population annually to ensure consistent comparisons by excluding newly acquired, sold, or developed properties - The 'same store' population includes properties owned or leased for the entirety of two comparable periods and with at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year[239](index=239&type=chunk)[255](index=255&type=chunk) - 'Same store contribution (NOI)' is calculated as same store revenues less cost of operations, also presented on a constant currency basis to remove foreign exchange rate movements[240](index=240&type=chunk) - As of June 30, 2023, the portfolio consisted of **242 total warehouses**, with **220 classified as same store** and **17 as non-same store**[242](index=242&type=chunk)[283](index=283&type=chunk) [Constant Currency Metrics](index=42&type=section&id=2.2.4.3%20Constant%20Currency%20Metrics) Constant currency metrics are non-GAAP calculations used to assess business performance by translating current period results at prior period exchange rates, thereby isolating the impact of underlying operations from foreign currency fluctuations - Constant currency reporting translates current period results into U.S. dollars using average foreign exchange rates from the comparable prior period[243](index=243&type=chunk) - This non-GAAP measure helps investors understand underlying business performance by excluding the impact of uncontrollable foreign currency movements[243](index=243&type=chunk) [Results of Operations](index=43&type=section&id=2.2.5%20Results%20of%20Operations) This section provides a detailed comparison of the company's operating results for the three and six months ended June 30, 2023, versus 2022, broken down by segment and highlighting key financial drivers and changes [Comparison of Results for the Three Months Ended June 30, 2023 and 2022](index=43&type=section&id=2.2.5.1%20Comparison%20of%20Results%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) This sub-section analyzes the financial performance for the second quarter of 2023 compared to 2022, detailing revenue, cost of operations, and contribution (NOI) for each segment, as well as other consolidated expenses and income [Warehouse Segment](index=43&type=section&id=2.2.5.1.1%20Warehouse%20Segment) Warehouse segment revenues increased by 3.0% (4.1% on a constant currency basis) for Q2 2023, driven by pricing initiatives and improved economic occupancy, despite a slight decline in throughput due to the cyber incident, with cost of operations decreasing slightly Warehouse Segment Performance (Three Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Total warehouse segment revenues | $581,170 | $587,715 | $564,379 | 3.0 % | 4.1 % | | Total warehouse segment cost of operations | $408,328 | $413,039 | $413,394 | (1.2)% | (0.1)% | | Warehouse segment contribution (NOI) | $172,842 | $174,676 | $150,985 | 14.5 % | 15.7 % | | Total warehouse segment margin | 29.7 % | 29.7 % | 26.8 % | 299 bps | 297 bps | - Revenue growth was primarily from same store pool due to pricing initiatives, rate escalations, and improved economic occupancy, partially offset by throughput decline from the cyber incident[260](index=260&type=chunk) - Warehouse segment NOI increased by **14.5%** (**15.7% on a constant currency basis**) to **$172.8 million**, with margin improving by **299 basis points**[289](index=289&type=chunk) [Same Store and Non-Same Store Results (Three Months)](index=44&type=section&id=2.2.5.1.2%20Same%20Store%20and%20Non-Same%20Store%20Results%20%28Three%20Months%29) Same store results for Q2 2023 showed increased economic occupancy and rent/storage revenues per pallet, while throughput declined due to the cyber incident, with non-same store results impacted by expansions and acquisitions Same Store Warehouse Performance (Three Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Total same store revenues | $553,097 | $559,274 | $538,270 | 2.8 % | 3.9 % | | Total same store cost of operations | $381,233 | $385,690 | $385,727 | (1.2)% | — % | | Same store contribution (NOI) | $171,864 | $173,584 | $152,543 | 12.7 % | 13.8 % | | Economic occupancy percentage | 84.8 % | n/a | 78.0 % | 687 bps | n/a | | Throughput pallets (in thousands) | 8,678 | n/a | 9,571 | (9.3)% | n/a | - Same store economic occupancy increased by **687 basis points** to **84.8%**, driven by increased food production and improved labor market, despite shrinking end-consumer basket sizes[296](index=296&type=chunk) - Same store throughput pallets decreased by **9.3%** due to the Cyber Incident and a slight decline in end-consumer demand[269](index=269&type=chunk) [Transportation Segment](index=48&type=section&id=2.2.5.1.3%20Transportation%20Segment) Transportation segment revenues decreased significantly by 29.1% for Q2 2023, primarily due to a strategic transition in the UK, softening demand, and the cyber incident, though margin improved due to rate increases Transportation Segment Performance (Three Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Transportation revenues | $58,072 | $59,198 | $81,891 | (29.1)% | (27.7)% | | Transportation cost of operations | $48,263 | $49,256 | $68,306 | (29.3)% | (27.9)% | | Transportation segment contribution (NOI) | $9,809 | $9,942 | $13,585 | (27.8)% | (26.8)% | | Transportation margin | 16.9 % | 16.8 % | 16.6 % | 30 bps | 21 bps | - Revenue decrease was primarily driven by the strategic transition of UK transportation business to a third-party logistics model, softening macro-environment demand, and the cyber incident[271](index=271&type=chunk) - Transportation segment margin increased by **30 basis points** to **16.9%**, mainly due to rate increases[299](index=299&type=chunk) [Third-Party Managed Segment](index=49&type=section&id=2.2.5.1.4%20Third-Party%20Managed%20Segment) Third-party managed segment revenues and contribution (NOI) experienced substantial decreases for Q2 2023, primarily due to the strategic exit of operations for the company's largest domestic customer in this segment Third-Party Managed Segment Performance (Three Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Third-party managed revenues | $10,368 | $10,814 | $83,486 | (87.6)% | (87.0)% | | Third-party managed cost of operations | $8,968 | $9,324 | $79,765 | (88.8)% | (88.3)% | | Third-party managed segment contribution | $1,400 | $1,490 | $3,721 | (62.4)% | (60.0)% | | Third-party managed margin | 13.5 % | 13.8 % | 4.5 % | 905 bps | 932 bps | - The significant decreases in revenue, cost, and NOI were primarily caused by the strategic exit of operations for the historically largest domestic customer in this segment[301](index=301&type=chunk) [Other Consolidated Operating Expenses (Three Months)](index=49&type=section&id=2.2.5.1.5%20Other%20Consolidated%20Operating%20Expenses%20%28Three%20Months%29) This section details changes in corporate-level operating expenses for Q2 2023, including depreciation and amortization, selling, general and administrative (SG&A), and acquisition, cyber incident and other, net expenses - Depreciation and amortization expense increased by **2.7%** to **$84.9 million**, mainly due to recently completed expansions and developments, partially offset by favorable foreign currency translation[334](index=334&type=chunk) - Corporate-level SG&A expenses decreased by **4.4%** to **$53.8 million**, driven by lower stock-based compensation, partially offset by increased travel and professional fees[302](index=302&type=chunk)[335](index=335&type=chunk) - Acquisition, cyber incident and other, net expenses increased significantly to **$27.2 million**, primarily due to **$19.0 million** in cyber incident costs, **$2.8 million** in severance, and **$2.5 million** in Project Orion implementation costs[303](index=303&type=chunk) [Other Expense and Income (Three Months)](index=50&type=section&id=2.2.5.1.6%20Other%20Expense%20and%20Income%20%28Three%20Months%29) This section highlights significant changes in other expense and income items for Q2 2023, including a gain from real estate sale, increased interest expense, impairment of a related party loan, and a substantial loss on a put option Other (Expense) Income (Three Months Ended June 30, in thousands) | Metric | 2023 Actual | 2022 Actual | Change % | | :----------------------------------------- | :---------- | :---------- | :------- | | Interest expense | $(36,431) | $(26,545) | 37.2 % | | Loss on debt extinguishment, modifications and termination of derivative instruments | $(627) | $(627) | — % | | Loss from investments in partially owned entities | $(709) | $(359) | 97.5 % | | Impairment of related party loan receivable | $(21,972) | $— | n/r | | Loss on put option | $(56,576) | $— | n/r | - Interest expense increased by **37.2%** to **$36.4 million**, driven by rising interest rates on floating-rate debt and higher outstanding borrowings[278](index=278&type=chunk) - A **$22.0 million impairment** of a related party loan receivable was recorded for a loan to Comfrio, which was fully impaired during Q2 2023[337](index=337&type=chunk) - A **$56.6 million loss on put option** was recognized, representing the estimated loss when the exercise of the Comfrio put option became probable[279](index=279&type=chunk) [Income Tax Benefit (Expense) (Three Months)](index=51&type=section&id=2.2.5.1.7%20Income%20Tax%20Benefit%20%28Expense%29%20%28Three%20Months%29) Income tax expense for Q2 2023 was $0.5 million, a significant increase from a $12.1 million benefit in Q2 2022, primarily due to improved operating results and the absence of a non-recurring tax benefit from the prior year - Income tax expense for Q2 2023 was **$0.5 million**, compared to a **$12.1 million income tax benefit** in Q2 2022[306](index=306&type=chunk) - The change is primarily due to improved operating results and the non-recurring **$6.5 million discrete tax benefit** recognized in Q2 2022 from the deconsolidation of Chilean operations[306](index=306&type=chunk) [Comparison of Results for the Six Months Ended June 30, 2023 and 2022](index=51&type=section&id=2.2.5.2%20Comparison%20of%20Results%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) This sub-section analyzes the financial performance for the first six months of 2023 compared to 2022, detailing revenue, cost of operations, and contribution (NOI) for each segment, as well as other consolidated expenses and income [Warehouse Segment](index=51&type=section&id=2.2.5.2.1%20Warehouse%20Segment) Warehouse segment revenues increased by 6.4% (7.9% on a constant currency basis) for H1 2023, driven by pricing initiatives and improved economic occupancy, despite a slight decline in throughput due to the cyber incident, with cost of operations also increasing Warehouse Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Total warehouse segment revenues | $1,176,222 | $1,192,228 | $1,105,304 | 6.4 % | 7.9 % | | Total warehouse segment cost of operations | $828,553 | $840,188 | $808,061 | 2.5 % | 4.0 % | | Warehouse segment contribution (NOI) | $347,669 | $352,040 | $297,243 | 17.0 % | 18.4 % | | Total warehouse segment margin | 29.6 % | 29.5 % | 26.9 % | 267 bps | 264 bps | - Revenue growth was primarily from the same store pool due to pricing initiatives, rate escalations, and improved economic occupancy, partially offset by throughput decline from the cyber incident[340](index=340&type=chunk) - Warehouse segment NOI increased by **17.0%** (**18.4% on a constant currency basis**) to **$347.7 million**, with margin improving by **267 basis points**[310](index=310&type=chunk) [Same Store and Non-Same Store Analysis (Six Months)](index=52&type=section&id=2.2.5.2.2%20Same%20Store%20and%20Non-Same%20Store%20Analysis%20%28Six%20Months%29) Same store results for H1 2023 showed increased economic occupancy and rent/storage revenues per pallet, while throughput declined due to the cyber incident, with non-same store results impacted by expansions and acquisitions Same Store Warehouse Performance (Six Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Total same store revenues | $1,124,503 | $1,139,267 | $1,054,379 | 6.7 % | 8.1 % | | Total same store cost of operations | $771,631 | $782,355 | $756,715 | 2.0 % | 3.4 % | | Same store contribution (NOI) | $352,872 | $356,912 | $297,664 | 18.5 % | 19.9 % | | Economic occupancy percentage | 84.7 % | n/a | 77.5 % | 722 bps | n/a | | Throughput pallets (in thousands) | 17,868 | n/a | 18,902 | (5.5)% | n/a | - Same store economic occupancy increased by **722 basis points** to **84.7%**, driven by improved customer service initiatives and increased food production[318](index=318&type=chunk) - Same store throughput pallets decreased by **5.5%** due to the cyber incident and a slight decline in end-consumer demand[348](index=348&type=chunk) [Transportation Segment](index=57&type=section&id=2.2.5.2.3%20Transportation%20Segment) Transportation segment revenues decreased by 21.5% for H1 2023, primarily due to a strategic transition in the UK, softening demand, and the cyber incident, though margin improved significantly Transportation Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2023 Actual | 2023 Constant Currency | 2022 Actual | Change Actual | Change Constant Currency | | :------------------------------------ | :---------- | :--------------------- | :---------- | :------------ | :----------------------- | | Transportation revenues | $126,150 | $130,453 | $160,801 | (21.5)% | (18.9)% | | Total transportation cost of operations | $104,681 | $108,561 | $138,687 | (24.5)% | (21.7)% | | Transportation segment contribution (NOI) | $21,469 | $21,892 | $22,114 | (2.9)% | (1.0)% | | Transportation margin | 17.0 % | 16.8 % | 13.8 % | 327 bps | 303 bps | - Revenue decrease was primarily driven by the strategic transition of UK transportation business to a 3PL model, softening macro-environment demand, and the cyber incident[320](index=320&type=chunk) - Transportation segment margin increased by **327 basis points** to **17.0%**, mainly due to rate increases[321](index=321&type=chunk)

14 Three Months Ended Acquisition, Litigation and Other, net Dollars in thousands | --- | --- | --- | --- | --- | |--------------------------------------------------------------------------------------------------|-------|-------------------------------------|-------|-------| | Segment revenues: | | Three Months Ended March 31, \n2023 | | 2022 | | Warehouse | | $ 595,052 $ 540,925 | | | | Transportation 68,078 78,910 | | | | | | Third-party managed 13,359 85,860 | | | | | | Total revenues 676,489 705,695 | ...

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.29, a 12% increase compared to the prior year, driven by a 12.3% revenue growth and a 26.1% NOI growth in the global warehouse same-store pool on a constant currency basis [42][43] - Same-store economic occupancy increased by 748 basis points year-over-year to 84.6%, marking a record-setting first quarter level [15][17] - Rent and storage revenue per economic occupied pallet increased by 10.3% compared to the prior year, while service revenue per throughput pallet increased by 8.6% [15][23] Business Line Data and Key Metrics Changes - The fixed commitment storage contracts accounted for 46.1% of rent and storage revenue, representing a 630 basis point improvement over the first quarter of 2022 [8][44] - Rent and storage revenue from fixed commitment contracts increased to $480 million, up from $367 million in the first quarter of 2022 [17] Market Data and Key Metrics Changes - The company is experiencing a low churn rate of approximately 3.1% of total warehouse revenues, consistent with historical rates [45] - The company has seen significant market share gains attributed to food manufacturers ramping up production and the increase in fixed commitments [62] Company Strategy and Development Direction - The company is focused on increasing fixed commitment contracts to smooth out revenue and reduce seasonality impacts [8][107] - Recent investments include a joint venture in Dubai, where the company owns 49% of RSA Cold Chain, indicating a strategic move to expand in the Middle East [19] - The company is also pursuing partnerships, such as with DP World, to enhance its logistics capabilities globally [46] Management's Comments on Operating Environment and Future Outlook - Management has increased the full-year 2023 AFFO per share guidance to a range of $1.16 to $1.26, reflecting strong first-quarter results and the impact of a recent cybersecurity event [21][43] - The company expects economic occupancy to increase by approximately 275 to 375 basis points for the full year, with a projected decline in throughput volumes of 1% to 3% [22][49] - Management acknowledges the ongoing cybersecurity event as a disruption but emphasizes commitment to long-term growth and operational recovery [28][90] Other Important Information - The company has invested $20 million in cybersecurity enhancements since late 2020, indicating a proactive approach to risk management [40] - The company expects SG&A expenses for the full year to be in the range of $228 million to $239 million, with core SG&A expected to be between $206 million and $215 million [25] Q&A Session Summary Question: What factors contributed to the higher occupancy in Q1? - Management indicated that the increase was primarily driven by food manufacturers ramping up production and a record-setting increase in fixed commitments, resulting in over $100 million year-over-year revenue growth in fixed commitments [30][62] Question: How does the company view occupancy trends for the remainder of the year? - Management expects occupancy to continue increasing throughout the year, with potential seasonal fluctuations but an overall upward trend anticipated for Q3 and Q4 [78] Question: What is the impact of the cybersecurity event on guidance? - Management acknowledged that the ongoing cybersecurity event is impacting multiple line items, estimating a drag of approximately $17 million to $20 million on guidance [116] Question: How is customer reaction to the cybersecurity incident? - Management emphasized proactive communication and the implementation of manual processes to maintain service levels during the recovery from the cybersecurity event [124] Question: What is the outlook for Europe? - Management reported that the European portfolio is performing well, with high occupancy and customer activity, and expects a good year ahead [129]

FORM 10-Q (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ If an emerging growth company, indicate by ch ...

AMERICOLD REALTY TRUST, INC. | --- | --- | --- | --- | |---------|-------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|---------| | I t e m | | | P a g e | | | | PA RT I | | | 1. | B u s i n e s s | | 3 | | 1 A. | R i s k F a c t o r s | | 1 6 | | 1 B. | U n r e s o l v e d S t a ff C o m m e n t s | | 5 4 | | 2. | P r o p e r t i e s | | 5 6 | | 3. | L e g a l P ...

Financial Data and Key Metrics Changes - For Q4 2022, rent and storage revenue increased by 8.9% year-over-year, with service revenue per throughput pallet rising by 9.8% [10][25] - The company achieved FFO per share of $1.11 for the full year 2022, driven by a global warehouse same-store revenue growth of 8.5% and NOI growth of 6.7% [25][43] - Economic occupancy increased by 634 basis points year-over-year to 85%, the highest level since Q4 2019 [12][25] Business Line Data and Key Metrics Changes - The same-store economic occupancy for Q4 2022 was 85%, reflecting a significant recovery in customer service and operational efficiency [12][25] - The perm to temp hours ratio improved to 73/27, up 11 points from Q4 2021, indicating better labor management [19][25] - Fixed commitment contracts accounted for approximately 41.9% of rent and storage revenue, a 260 basis point improvement from the previous year [58] Market Data and Key Metrics Changes - The company noted that food manufacturers are ramping up production levels, contributing to increased demand for cold storage services [31][39] - The overall economic environment is expected to lead to lower throughput volumes as consumers reduce basket sizes due to inflation [28][43] Company Strategy and Development Direction - The company is focused on repricing warehouse services to offset inflationary pressures and protect margins [17][50] - A partnership with DP World aims to explore opportunities for developing cold storage facilities at global port locations, enhancing the company's market reach [36][37] - The company plans to invest in a new cloud-based ERP system to improve operational efficiency and integrate global acquisitions [48][53] Management's Comments on Operating Environment and Future Outlook - Management expects inflationary pressures to continue, particularly in power costs, but anticipates moderation in certain areas [5][28] - The company is guiding for AFFO per share in the range of $1.14 to $1.24 for 2023, reflecting cautious optimism amid economic challenges [52][68] - Management highlighted the importance of improving labor efficiency and reducing turnover to enhance service margins [20][96] Other Important Information - The company achieved ENERGY STAR certification for 19 facilities in the U.S. in 2022, with plans for further certifications in 2023 [30] - The company has invested approximately $471 million in development projects, with an additional $76 million planned for the next year [42][91] Q&A Session Summary Question: What are the expectations for labor and occupancy in 2023? - Management emphasized the need for permanent labor to improve productivity and reduce costs associated with temporary labor [80][96] Question: How does the company view throughput trends moving forward? - Management noted that reduced disposable income and rising prices are leading to smaller basket sizes and less pantry loading, impacting throughput [99][120] Question: Can you elaborate on the DP World partnership? - The partnership allows for a first look at opportunities for cold storage development globally, leveraging DP World's insights into market needs [128][115]

Financial Data and Key Metrics Changes - Americold reported an AFFO per share of $0.29, a 7.4% increase compared to the prior year, driven by a 9.6% growth in same-store revenue and a 14.4% increase in NOI, both on a constant currency basis [14][17][32] - The same-store NOI margin improved to 29.4%, an increase of 125 basis points year-over-year, primarily due to pricing initiatives [10][11][14] - Economic occupancy increased by 437 basis points compared to Q3 2021, although throughput volumes declined by 1.3% [14][32] Business Line Data and Key Metrics Changes - The warehouse business saw rent and storage revenue per economic occupied pallet increase by 8.1% and service revenue per throughput pallet increase by 7.7% on a constant currency basis [9][21] - The company successfully exited a management agreement with a national retailer, which contributed approximately 1% of total NOI, allowing a focus on core warehouse operations [15][16][17] Market Data and Key Metrics Changes - The company experienced inflationary pressures primarily in power costs, property taxes, and warehouse supplies, with power costs expected to remain a significant concern in international markets [10][18] - The company reported a stable term rate of approximately 3.2% for total warehouse revenues, consistent with historical rates [24] Company Strategy and Development Direction - Americold is focused on repricing its warehouse business to offset inflationary pressures and protect margin dollars, with targeted pricing and power surcharge initiatives in place [9][10][21] - The company aims to achieve a perm-to-temp ratio of 80/20 and reduce turnover rates to improve operational efficiency [12][42] - Recent development projects in Dublin, Ireland, and Barcelona, Spain, were completed, with expectations for stabilization and growth in these facilities [13][25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about operational improvements despite macroeconomic challenges, including high inflation and a difficult labor market [18][42] - The company is increasing its full-year 2022 AFFO per share guidance to a range of $1.08 to $1.12, reflecting confidence in ongoing pricing initiatives and occupancy recovery [17][32] Other Important Information - Americold received a 2022 GRESB score of 75, an improvement of 12 points from the previous year, indicating progress in its ESG initiatives [19] - The company closed on a $2 billion sustainability-linked senior unsecured credit facility, enhancing liquidity and reducing floating rate debt exposure [30][31] Q&A Session Summary Question: How should throughput volumes be considered in light of a potential economic slowdown? - Management indicated that throughput volumes are expected to remain challenged, citing smaller basket sizes and reduced store traffic as contributing factors [44] Question: What initiatives are being implemented to retain workers amid elevated turnover? - Management noted progress in reducing open positions and implementing various recruitment and retention strategies, although challenges remain in retaining staff [45] Question: How do current operating results compare to pre-COVID levels? - Economic occupancy is approaching pre-COVID levels, with management noting that while occupancy has improved, efficiency issues persist due to a high percentage of new associates [47][50] Question: What is the impact of the Kroger-Albertsons merger on Americold's business? - Management stated that the merger is not expected to have a significant impact, as Americold does not have substantial business with Kroger and only a minor relationship with Albertsons [60][61] Question: How is the company managing utility cost increases in Europe compared to the U.S.? - Management confirmed that pricing surcharges can be applied in both regions, but noted that power price increases in Europe have been more rapid and substantial [56] Question: What is the current state of the cold storage supply landscape in the U.S.? - Management indicated no noticeable changes in the supply landscape that would impact Americold's business, with occupancy levels rising [63][64] Question: How is automation being approached in light of labor challenges? - Management acknowledged a slowdown in large-scale automation projects due to rising costs but mentioned ongoing efforts to semi-automate conventional facilities [67][68] Question: What guidance can be provided regarding the development pipeline for 2023? - Full-year guidance will be provided in February, but management indicated that several development projects are planned to contribute cash flow in the coming year [69][70]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents Americold Realty Trust's financial statements, management's discussion, and market risk disclosures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Americold's unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed notes - Americold Realty Trust, Inc. converted from a Maryland real estate investment trust to a Maryland corporation on May 25, 2022, but continues to operate as a REIT for U.S. federal income tax purposes[34](index=34&type=chunk) - The company formed a joint venture, Americold LATAM Holdings Ltd, on May 31, 2022, contributing its Chilean business and retaining a **15% equity interest**, resulting in a recognized loss of approximately **$4.1 million**[39](index=39&type=chunk) - A gain of **$3.4 million** was recognized during Q2 2022 from the extinguishment of New Markets Tax Credit agreements after their seven-year compliance period[40](index=40&type=chunk) - Impairment charges totaling **$6.6 million** were recorded for the nine months ended September 30, 2022, including **$3.2 million** for goodwill in the Third-party managed segment due to a strategic shift, **$2.2 million** for assets under construction, and **$1.2 million** for warehouse segment assets[41](index=41&type=chunk) - The company's business and financial results were negatively impacted by COVID-19 disruptions, labor availability and cost, and inflation, leading to lower occupancy and throughput volumes[44](index=44&type=chunk) - Out-of-cycle rate increases were initiated to address inflationary pressures[46](index=46&type=chunk) - On July 1, 2022, Americold acquired De Bruyn Cold Storage in Tasmania, Australia, for **$16.0 million**, allocated to the Warehouse segment[48](index=48&type=chunk) - The company refinanced its senior unsecured credit facility in August 2022, extending it to approximately **$2.0 billion** and updating the base interest rate to SOFR from LIBOR, incorporating a sustainability-linked pricing component[63](index=63&type=chunk) - Aggregate share-based compensation charges were **$22.1 million** for the nine months ended September 30, 2022, up from **$14.8 million** in the prior year[92](index=92&type=chunk) - As of September 30, 2022, the Company had **$676.8 million** of remaining unsatisfied performance obligations from non-cancellable customer contracts with an original expected duration exceeding one year[150](index=150&type=chunk) [1.1 Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=1.1%20Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets decreased to $8,001,904 thousand by September 30, 2022, while total equity declined to $3,822,591 thousand Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | Change | | :----- | :----------- | :----------- | :----- | | Total Assets | $8,001,904 | $8,216,197 | $(214,293) | | Total Liabilities | $4,179,313 | $4,187,121 | $(7,808) | | Total Equity | $3,822,591 | $4,029,076 | $(206,485) | [1.2 Condensed Consolidated Statements of Operations (Unaudited)](index=8&type=section&id=1.2%20Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) The company reported a net loss of $8,937 thousand for Q3 2022, a shift from prior year net income, despite a 6.9% revenue increase Statements of Operations Highlights (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Total Revenues | $757,780 | $708,808 | +6.9% | $2,193,231 | $1,998,310 | +9.8% | | Total Operating Expenses | $734,610 | $677,250 | +8.5% | $2,138,405 | $1,929,562 | +10.8% | | Operating Income | $23,170 | $31,558 | -26.6% | $54,826 | $68,748 | -20.3% | | Net (Loss) Income | $(8,937) | $5,308 | N/A | $(22,429) | $(22,327) | N/A | | Net (Loss) Income per Common Share - Basic | $(0.03) | $0.02 | N/A | $(0.08) | $ (0.09) | N/A | [1.3 Condensed Consolidated Statements of Comprehensive Loss (Unaudited)](index=9&type=section&id=1.3%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20(Unaudited)) Total comprehensive loss for Q3 2022 was $25,688 thousand, significantly higher due to increased unrealized foreign currency losses Statements of Comprehensive Loss Highlights (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Net (Loss) Income | $(8,937) | $5,308 | N/A | $(22,429) | $(22,327) | N/A | | Change in unrealized net loss on foreign currency | $(25,038) | $(9,485) | +163.9% | $(37,720) | $(13,141) | +187.0% | | Total Comprehensive Loss | $(25,688) | $(3,560) | +624.4% | $(50,248) | $(31,436) | +59.8% | [1.4 Condensed Consolidated Statements of Equity (Unaudited)](index=10&type=section&id=1.4%20Condensed%20Consolidated%20Statements%20of%20Equity%20(Unaudited)) Total equity decreased to $3,822,591 thousand by September 30, 2022, primarily due to net losses and distributions Statements of Equity Highlights (in thousands) | Metric | Dec 31, 2021 | Sep 30, 2022 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Equity | $4,029,076 | $3,822,591 | $(206,485) | | Net Loss (9 months) | $(17,407) | $(22,429) | N/A | | Distributions on common stock, restricted stock and OP units (9 months) | $(178,911) | $(179,074) | N/A | | Accumulated Other Comprehensive Income (Loss) | $4,522 | $(23,194) | $(27,716) | [1.5 Condensed Consolidated Statements of Cash Flows (Unaudited)](index=12&type=section&id=1.5%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow increased by 11.3% to $182,883 thousand, while investing and financing cash flows significantly decreased Statements of Cash Flows Highlights (in thousands) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $182,883 | $164,319 | +11.3% | | Net cash used in investing activities | $(288,008) | $(945,491) | -69.5% | | Net cash provided by financing activities | $74,473 | $315,269 | -76.4% | | Net decrease in cash, cash equivalents and restricted cash | $(30,652) | $(465,903) | -93.4% | [1.6 Notes to Condensed Consolidated Financial Statements (Unaudited)](index=15&type=section&id=1.6%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section details accounting policies, significant transactions, financial instruments, and segment information, including joint ventures and impairment charges [1.6.1 General Information](index=15&type=section&id=1.6.1%20General%20Information) Americold is the world's largest publicly traded REIT for temperature-controlled warehouses, converting to a Maryland corporation in May 2022 - Americold Realty Trust, Inc. is the world's largest publicly traded REIT focused on the ownership, operation, and development of temperature-controlled warehouses[33](index=33&type=chunk) - On May 25, 2022, the Company converted from a Maryland real estate investment trust to a Maryland corporation, while continuing to operate as a REIT for U.S. federal income tax purposes[34](index=34&type=chunk) [1.6.2 Formation of Latin America Joint Venture](index=17&type=section&id=1.6.2%20Formation%20of%20Latin%20America%20Joint%20Venture) Americold formed the LATAM JV on May 31, 2022, contributing its Chilean business for a 15% stake and recognizing a $4.1 million loss - Americold formed a joint venture, Americold LATAM Holdings Ltd (LATAM JV), on May 31, 2022, with Cold LATAM Limited to grow its business in Latin America (excluding Brazil)[39](index=39&type=chunk) - Americold contributed its Chilean business to the LATAM JV and retained a **15% equity interest**, recognizing a loss of approximately **$4.1 million** upon deconsolidation[39](index=39&type=chunk) - The JV partner committed to invest approximately **$209.0 million** for an **85% equity interest** in the LATAM JV[39](index=39&type=chunk) [1.6.3 Extinguishment of New Market Tax Credit ("NMTC") Arrangement](index=17&type=section&id=1.6.3%20Extinguishment%20of%20New%20Market%20Tax%20Credit%20(%22NMTC%22)%20Arrangement) A $3.4 million gain was recognized in Q2 2022 from the extinguishment of New Markets Tax Credit agreements - A gain of **$3.4 million** was recognized in the second quarter of 2022 from the extinguishment of New Markets Tax Credit (NMTC) agreements[40](index=40&type=chunk) [1.6.4 Impairment of Indefinite and Long-Lived Assets](index=17&type=section&id=1.6.4%20Impairment%20of%20Indefinite%20and%20Long-Lived%20Assets) Americold recorded $6.6 million in impairment charges for the nine months ended September 30, 2022, including goodwill and assets under construction Impairment Charges (in millions) | Impairment Type | 9 Months Ended Sep 30, 2022 | | :-------------- | :-------------------------- | | Goodwill | $3.2 | | Assets under construction | $2.2 | | Buildings and improvements | $1.2 | | **Total Impairment Charges** | **$6.6** | - The goodwill impairment in the Third-party managed segment is due to a strategic shift focusing on the core warehouse portfolio and winding down business with a large customer[41](index=41&type=chunk) [1.6.5 Significant Risks and Uncertainties](index=18&type=section&id=1.6.5%20Significant%20Risks%20and%20Uncertainties) The company faces significant risks from COVID-19, labor shortages, inflation, and geopolitical conflicts, impacting operations and costs - COVID-19, labor availability, and inflation negatively impacted the food supply chain, customer production, and operating costs, leading to lower occupancy and throughput[44](index=44&type=chunk) - Americold initiated out-of-cycle rate increases in customer contracts during the second half of 2021 and Q3 2022 to address significant inflationary pressures on storage, services, and transportation costs[46](index=46&type=chunk) - Global supply chain volatility due to the Russia-Ukraine conflict could impact operations, particularly in Europe, though no material impact has been observed to date[47](index=47&type=chunk) [1.6.6 Business Combinations](index=18&type=section&id=1.6.6%20Business%20Combinations) Americold acquired De Bruyn Cold Storage in Australia for $16.0 million on July 1, 2022, allocating assets to the Warehouse segment - On July 1, 2022, Americold acquired De Bruyn Cold Storage in Tasmania, Australia, for **$16.0 million** (A$23.5 million)[48](index=48&type=chunk) Acquired Assets (in millions) | Acquired Asset (De Bruyn Cold Storage) | Amount | | :------------------------------------- | :----- | | Land | $1.0 | | Buildings and improvements | $8.6 | | Machinery and equipment | $3.4 | | Goodwill | $3.1 | [1.6.7 Acquisition, Litigation and Other, net](index=19&type=section&id=1.6.7%20Acquisition,%20Litigation%20and%20Other,%20net) Acquisition, litigation and other, net expenses decreased to $20.6 million for the nine months ended September 30, 2022, benefiting from a litigation settlement Acquisition, Litigation and Other, Net Expenses (in thousands) | Component | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------- | :-------------------------- | :-------------------------- | | Acquisition and integration related costs | $15,879 | $22,851 | | Litigation (gain) loss | $179 | $942 | | Severance costs | $5,060 | $2,850 | | Cyber incident related costs, net of insurance recoveries | $(785) | $3,539 | | **Total acquisition, litigation and other, net** | **$20,612** | **$31,011** | - A **$2.2 million** benefit was recognized during Q3 2022 due to a favorable litigation settlement[52](index=52&type=chunk) [1.6.8 Debt](index=20&type=section&id=1.6.8%20Debt) Total indebtedness increased to $2,973,315 thousand by September 30, 2022, with rising interest rates and a refinanced credit facility Debt Overview (in thousands) | Debt Type | Sep 30, 2022 | Dec 31, 2021 | Weighted-Average Effective Interest Rate (Sep 30, 2022) | | :----------------------- | :----------- | :----------- | :-------------------------------------- | | Senior Unsecured Notes | $1,685,150 | $1,802,750 | 3.33% | | Senior Unsecured Term Loans | $555,775 | $372,800 | 4.72% | | Senior Unsecured Revolving Credit Facility | $468,286 | $399,314 | 4.13% | | 2013 Mortgage Loans | $264,104 | $269,545 | 5.97% | | **Total principal amount of indebtedness** | **$2,973,315** | **$2,854,170** | | - On August 23, 2022, the company extended and upsized its senior unsecured credit facility from **$1.5 billion** to approximately **$2.0 billion**, updating the base interest rate to SOFR from LIBOR and incorporating a sustainability-linked pricing component[63](index=63&type=chunk) - The company was in compliance with all debt covenants as of September 30, 2022[66](index=66&type=chunk) [1.6.9 Derivative Financial Instruments](index=23&type=section&id=1.6.9%20Derivative%20Financial%20Instruments) Americold uses derivatives to manage interest rate and foreign currency risks, with derivative assets increasing to $27,928 thousand by September 30, 2022 - The company entered into several interest rate swap agreements to hedge an aggregate of **$200 million USD** and **C$250 million** variable interest rate debt, following an increase in variable interest rate exposure from the 2022 Senior Unsecured Credit Facility refinancing[74](index=74&type=chunk) - Cross-currency swaps are used to manage foreign currency exchange rate risk on intercompany loans, hedging **$153.5 million AUD** and **$37.5 million NZD** balances[75](index=75&type=chunk) Derivative Financial Instruments (in thousands) | Derivative Type | Sep 30, 2022 (Assets) | Dec 31, 2021 (Assets) | | :----------------------------- | :-------------------- | :-------------------- | | Foreign exchange contracts | $17,099 | $2,015 | | Interest rate contracts | $10,829 | $0 | | **Total derivatives** | **$27,928** | **$2,015** | [1.6.10 Fair Value Measurements](index=26&type=section&id=1.6.10%20Fair%20Value%20Measurements) Americold categorizes fair value measurements into Level 1, Level 2, and Level 3 inputs, primarily using Level 2 for derivatives and a combination for debt instruments - Derivative instruments (interest rate swaps, cross-currency swaps, foreign currency forward contracts) are valued using **Level 2 inputs**[85](index=85&type=chunk) - Mortgage notes, senior unsecured notes, and term loans are valued using a combination of **Level 2** (e.g., loan spreads, interest rates) and **Level 3** (e.g., future cash flows) inputs[84](index=84&type=chunk) Fair Value Measurements (in thousands) | Asset/Liability | Fair Value Hierarchy | Sep 30, 2022 | Dec 31, 2021 | | :----------------------------- | :------------------- | :----------- | :----------- | | Interest rate swap assets | Level 2 | $10,829 | $0 | | Cross currency swap assets | Level 2 | $17,099 | $2,015 | | Total Mortgage notes, senior unsecured notes and term loans | Level 3 | $2,705,416 | $2,939,237 | [1.6.11 Stock-Based Compensation](index=27&type=section&id=1.6.11%20Stock-Based%20Compensation) Aggregate share-based compensation charges increased to $22.1 million for the nine months ended September 30, 2022, with $29.2 million unrecognized expense remaining - Aggregate share-based compensation charges were **$22.1 million** for the nine months ended September 30, 2022, compared to **$14.8 million** for the same period in 2021[92](index=92&type=chunk) - As of September 30, 2022, **$29.2 million** of unrecognized share-based compensation expense remains, to be recognized over a weighted-average period of **1.8 years**[92](index=92&type=chunk) Restricted Stock Units Granted (9 Months Ended Sep 30) | Restricted Stock Units Granted | 2022 | 2021 | | :----------------------------------------------------- | :--- | :--- | | Directors | 4,810 | 6,616 | | Associates | 529,883 | 321,150 | OP Units Granted (9 Months Ended Sep 30) | OP Units Granted | 2022 | 2021 | | :--------------------------------------- | :--- | :--- | | Directors | 35,593 | 17,863 | | Associates | 342,980 | 258,479 | [1.6.12 Income Taxes](index=31&type=section&id=1.6.12%20Income%20Taxes) Americold reported a $16.1 million income tax benefit for the nine months ended September 30, 2022, driven by operating losses and a deferred tax benefit Income Tax Benefit (Expense) (in thousands) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Total Income Tax Benefit (Expense) | $16,145 | $(7,957) | +$24,102 | - The income tax benefit for the nine months ended September 30, 2022, was primarily due to increased operating losses from U.S. and foreign operations and a **$6.5 million** deferred tax benefit from the deconsolidation of Chilean operations[302](index=302&type=chunk) [1.6.13 Commitments and Contingencies](index=31&type=section&id=1.6.13%20Commitments%20and%20Contingencies) The company is involved in legal proceedings and environmental matters, with management believing outcomes will not materially impact financial statements - Americold is involved in ongoing legal proceedings, including the Kansas Breach of Settlement Agreement Litigation and Preferred Freezer Services, LLC Litigation, but management believes the ultimate outcome will not have a material adverse impact on its financial statements[123](index=123&type=chunk) - The company records accruals for environmental matters and OSHA compliance when liabilities are probable and reasonably estimable, and believes it is in compliance with applicable regulations in all material respects[125](index=125&type=chunk)[126](index=126&type=chunk) [1.6.14 Accumulated Other Comprehensive (Loss) Income](index=34&type=section&id=1.6.14%20Accumulated%20Other%20Comprehensive%20(Loss)%20Income) AOCI showed a total change in other comprehensive loss of $27,716 thousand for the nine months ended September 30, 2022, driven by translation adjustments Accumulated Other Comprehensive (Loss) Income (in thousands) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Cumulative translation adjustment | $(187,853) | $(13,141) | | Derecognition of cumulative foreign currency translation upon deconsolidation of entity contributed to a joint venture | $4,970 | $0 | | Total change in other comprehensive loss | $(27,716) | $(9,098) | [1.6.15 Segment Information](index=34&type=section&id=1.6.15%20Segment%20Information) Americold operates in Warehouse, Third-party managed, and Transportation segments, with performance evaluated by revenues and segment contribution (NOI) - Americold's principal operations are organized into three reportable segments: Warehouse, Third-party managed, and Transportation[129](index=129&type=chunk) - Segment performance is evaluated using revenues and segment contribution (NOI), calculated as earnings before interest expense, taxes, depreciation and amortization, and excluding selling, general and administrative expense, acquisition, litigation and other, net, impairment, and gain/loss on sale of real estate[131](index=131&type=chunk) Segment Revenues (in thousands) | Segment Revenues | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Warehouse | $598,977 | $542,047 | $1,704,281 | $1,531,232 | | Third-party managed | $82,436 | $87,782 | $251,782 | $233,027 | | Transportation | $76,367 | $78,979 | $237,168 | $234,051 | | **Total Revenues** | **$757,780** | **$708,808** | **$2,193,231** | **$1,998,310** | Segment Contribution (NOI) (in thousands) | Segment Contribution (NOI) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Warehouse | $166,662 | $144,992 | $463,905 | $435,552 | | Third-party managed | $3,660 | $4,551 | $10,882 | $10,626 | | Transportation | $10,836 | $6,251 | $32,950 | $22,204 | | **Total Segment Contribution** | **$181,158** | **$155,794** | **$507,737** | **$468,382** | [1.6.16 Loss (Income) per Common Share](index=37&type=section&id=1.6.16%20Loss%20(Income)%20per%20Common%20Share) Basic and diluted net loss per common share for Q3 2022 was $(0.03), with potential common shares being antidilutive due to net losses Loss (Income) per Common Share | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (Loss) Income per Common Share - Basic | $(0.03) | $0.02 | $(0.08) | $(0.09) | | Net (Loss) Income per Common Share - Diluted | $(0.03) | $0.02 | $(0.08) | $(0.09) | - Potential common shares from employee stock options, restricted stock units, OP units, and equity forward contracts were antidilutive for the three and nine months ended September 30, 2022 and 2021, due to the company reporting a net loss[141](index=141&type=chunk)[142](index=142&type=chunk) [1.6.17 Revenue from Contracts with Customers](index=38&type=section&id=1.6.17%20Revenue%20from%20Contracts%20with%20Customers) Total revenues from contracts with customers for Q3 2022 were $757.8 million, with $676.8 million in remaining performance obligations Revenue from Contracts with Customers (in thousands) | Revenue Source | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Warehouse rent and storage | $249,147 | $217,480 | $699,675 | $620,794 | | Warehouse services | $338,729 | $316,813 | $971,925 | $888,445 | | Third-party managed | $82,436 | $87,782 | $251,782 | $233,027 | | Transportation | $76,367 | $78,979 | $237,168 | $234,051 | | Lease revenue | $11,101 | $8,180 | $32,681 | $21,993 | | **Total revenues from contracts with all customers** | **$757,780** | **$708,808** | **$2,193,231** | **$1,998,310** | - As of September 30, 2022, the company had **$676.8 million** of remaining unsatisfied performance obligations from non-cancellable contracts with an original expected duration exceeding one year, with **92%** expected to be recognized over a weighted average period of **14.5 years** through 2038[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Americold's financial condition and operational results, highlighting macroeconomic impacts, strategic initiatives, and segment performance [2.1 Management's Overview](index=41&type=section&id=2.1%20Management's%20Overview) Americold is the world's largest publicly traded REIT for temperature-controlled warehouses, operating a global network and expanding through a new LATAM JV - Americold operates a global network of **249** temperature-controlled warehouses, including **202** in North America, **27** in Europe, **18** in Asia-Pacific, and **two** in South America, as of September 30, 2022[157](index=157&type=chunk) - The company's primary revenue sources are rent, storage, and value-added warehouse services (e.g., blast freezing, case-picking, e-commerce fulfillment)[158](index=158&type=chunk)[160](index=160&type=chunk) - Key operating costs for the warehouse segment include labor (wages, benefits) and power, with fluctuations in power prices significantly impacting financial results[161](index=161&type=chunk) - A Latin America joint venture (LATAM JV) was formed in Q2 2022 to grow market presence in the region (excluding Brazil)[157](index=157&type=chunk) [2.2 Key Factors Affecting Our Business and Financial Results](index=44&type=section&id=2.2%20Key%20Factors%20Affecting%20Our%20Business%20and%20Financial%20Results) Americold's results are impacted by COVID-19, labor shortages, inflation, acquisitions, and foreign currency fluctuations, with rate increases implemented - COVID-19, labor availability, and inflation negatively impacted food supply chains, customer production, and operating costs, resulting in lower occupancy and throughput[170](index=170&type=chunk) - Americold initiated out-of-cycle rate increases in customer contracts during the second half of 2021 and Q3 2022 to address inflationary pressures, but cannot assure full offset[172](index=172&type=chunk) - The acquisition of De Bruyn Cold Storage in Tasmania, Australia, for **$16.0 million** was completed on July 1, 2022, and a LATAM JV was formed on June 2, 2022, to expand in Latin America[175](index=175&type=chunk)[177](index=177&type=chunk) - Physical occupancy rates are typically lowest in May-June and peak between mid-September and early December due to harvests and holiday inventory build-up, while Q3 generally sees increased power expenses due to higher external temperatures[179](index=179&type=chunk) - Foreign currency translation had an unfavorable impact on revenues and expenses due to the strengthening of the U.S. dollar against foreign currencies[181](index=181&type=chunk)[214](index=214&type=chunk) [2.3 How We Assess the Performance of Our Business](index=48&type=section&id=2.3%20How%20We%20Assess%20the%20Performance%20of%20Our%20Business) Americold assesses performance using Segment Contribution (NOI), Same Store Analysis, and Constant Currency Metrics to evaluate underlying business trends - Segment Contribution (NOI) is calculated as a segment's revenues less its cost of operations, excluding depreciation, amortization, impairment, corporate SG&A, and acquisition/litigation/other net expenses[195](index=195&type=chunk) - Same Store Analysis includes properties owned or leased for the entirety of two comparable periods with at least twelve months of normalized operations, adjusted for acquisitions, sales, and developments, and is presented on a constant currency basis[198](index=198&type=chunk)[202](index=202&type=chunk) - Constant Currency Metrics translate current period results into U.S. dollars using prior period average foreign exchange rates to assess underlying business performance, excluding foreign currency fluctuations[208](index=208&type=chunk) Warehouse Count | Warehouse Count | Sep 30, 2022 | | :-------------- | :----------- | | Total Warehouses | 249 | | Same Store Warehouses | 212 | | Non-Same Store Warehouses | 28 | | Third-Party Managed Warehouses | 9 | [2.4 Results of Operations](index=51&type=section&id=2.4%20Results%20of%20Operations) This section details Americold's financial performance for the three and nine months ended September 30, 2022, across its operating segments [2.4.1 Comparison of Results for the Three Months Ended September 30, 2022 and 2021](index=51&type=section&id=2.4.1%20Comparison%20of%20Results%20for%20the%20Three%20Months%20Ended%20September%2030,%202022%20and%202021) Total revenues increased by 6.9% to $757.8 million for Q3 2022, but operating income decreased by 26.6%, leading to a net loss [2.4.1.1 Warehouse Segment](index=51&type=section&id=2.4.1.1%20Warehouse%20Segment) Warehouse segment revenues increased by 10.5% to $599.0 million for Q3 2022, driven by pricing and improved occupancy, with NOI rising by 14.9% Warehouse Segment Performance (in thousands) | Metric | 3 Months Ended Sep 30, 2022 (Actual) | 3 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 3 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Total Warehouse Segment Revenues | $598,977 | $542,047 | +10.5% | $613,571 | +13.2% | | Total Warehouse Segment Cost of Operations | $432,315 | $397,055 | +8.9% | $443,734 | +11.8% | | Warehouse Segment Contribution (NOI) | $166,662 | $144,992 | +14.9% | $169,837 | +17.1% | | Total Warehouse Segment Margin | 27.8% | 26.7% | +108 bps | 27.7% | +93 bps | Same Store Operating Metrics | Same Store Operating Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Economic occupancy percentage | 80.7% | 76.3% | +437 bps | | Average occupied economic pallets (in thousands) | 3,910 | 3,699 | +5.7% | | Throughput pallets (in thousands) | 9,146 | 9,263 | (1.3)% | - Same store rent and storage revenues per economic occupied pallet increased **5.9%** (**8.1% constant currency**) due to pricing initiatives, contractual rate escalations, and business mix[229](index=229&type=chunk) [2.4.1.2 Third-Party Managed Segment](index=57&type=section&id=2.4.1.2%20Third-Party%20Managed%20Segment) Third-party managed revenues decreased by 6.1% to $82.4 million for Q3 2022, leading to a 19.6% decline in segment contribution (NOI) Third-Party Managed Segment Performance (in thousands) | Metric | 3 Months Ended Sep 30, 2022 (Actual) | 3 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 3 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Third-party managed revenues | $82,436 | $87,782 | (6.1)% | $82,870 | (5.6)% | | Third-party managed cost of operations | $78,776 | $83,231 | (5.4)% | $79,133 | (4.9)% | | Third-party managed segment contribution | $3,660 | $4,551 | (19.6)% | $3,737 | (17.9)% | | Third-party managed margin | 4.4% | 5.2% | -74 bps | 4.5% | -67 bps | - The decrease in revenues and contribution was driven by lower business volumes in domestic managed operations and a reduction in certain direct pass-through costs[234](index=234&type=chunk)[235](index=235&type=chunk) [2.4.1.3 Transportation Segment](index=57&type=section&id=2.4.1.3%20Transportation%20Segment) Transportation revenues decreased by 3.3% to $76.4 million for Q3 2022, but segment contribution (NOI) significantly increased by 73.3% due to rate increases Transportation Segment Performance (in thousands) | Metric | 3 Months Ended Sep 30, 2022 (Actual) | 3 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 3 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Transportation revenues | $76,367 | $78,979 | (3.3)% | $82,174 | +4.0% | | Transportation cost of operations | $65,532 | $72,728 | (9.9)% | $71,486 | (1.7)% | | Transportation segment contribution (NOI) | $10,835 | $6,251 | +73.3% | $10,688 | +71.0% | | Transportation margin | 14.2% | 7.9% | +627 bps | 13.0% | +509 bps | - The significant increase in transportation segment contribution and margin was primarily due to rate increases implemented in 2022 and the exit of certain less profitable market operations[242](index=242&type=chunk) [2.4.1.4 Other Consolidated Operating Expenses](index=59&type=section&id=2.4.1.4%20Other%20Consolidated%20Operating%20Expenses) Depreciation and amortization increased by 18.6% to $83.7 million, while SG&A rose by 25.4% for Q3 2022, alongside impairment charges and real estate loss Other Consolidated Operating Expenses (in thousands) | Expense | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | | :--------------------- | :-------------------------- | :-------------------------- | :----- | | Depreciation and amortization | $83,669 | $70,569 | +18.6% | | Selling, general and administrative | $57,119 | $45,545 | +25.4% | | Acquisition, litigation and other, net | $4,874 | $6,338 | -23.1% | | Impairment of indefinite and long-lived assets | $6,616 | $1,784 | +270.9% | | Loss from sale of real estate | $5,710 | $0 | N/A | - The increase in selling, general and administrative expenses was driven by the resumption of performance-based compensation, higher third-party legal and professional fees, and increased travel costs[244](index=244&type=chunk) - Impairment charges included **$3.2 million** for goodwill in the Third-party managed segment due to a strategic shift[246](index=246&type=chunk) [2.4.1.5 Other Expense and Income](index=60&type=section&id=2.4.1.5%20Other%20Expense%20and%20Income) Interest expense increased by 20.2% to $30.4 million for Q3 2022 due to rising rates, with other net expense significantly increasing from foreign currency loss Other Expense and Income (in thousands) | Expense/Income | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | | :---------------------------- | :-------------------------- | :-------------------------- | :----- | | Interest expense | $(30,402) | $(25,303) | +20.2% | | Loss on debt extinguishment, modifications and termination of derivative instruments | $(1,040) | $(627) | +65.9% | | Other, net | $(2,593) | $(57) | N/A | | Loss from investments in partially owned entities | $(1,440) | $(489) | +194.5% | - The effective interest rate on outstanding debt increased from **3.09%** in Q3 2021 to **3.95%** in Q3 2022, primarily due to rising interest rates on the Senior Unsecured Credit Facility[250](index=250&type=chunk) - Other, net expense increased due to a **$2.1 million** increase in foreign currency exchange loss and a **$1.4 million** increase in loss on asset disposals[252](index=252&type=chunk) [2.4.1.6 Income Tax Benefit (Expense)](index=61&type=section&id=2.4.1.6%20Income%20Tax%20Benefit%20(Expense)) Americold reported an income tax benefit of $3.4 million for Q3 2022, a $3.2 million increase, primarily due to losses from foreign operations Income Tax Benefit (Expense) (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Total Income Tax Benefit (Expense) | $3,368 | $226 | +$3,142 | - The increase in income tax benefit was primarily due to losses generated by foreign operations[255](index=255&type=chunk) [2.4.2 Comparison of Results for the Nine Months Ended September 30, 2022 and 2021](index=61&type=section&id=2.4.2%20Comparison%20of%20Results%20for%20the%20Nine%20Months%20Ended%20September%2030,%202022%20and%202021) Total revenues increased by 9.8% to $2,193.2 million for the nine months ended September 30, 2022, but operating income decreased by 20.3% [2.4.2.1 Warehouse Segment](index=61&type=section&id=2.4.2.1%20Warehouse%20Segment) Warehouse segment revenues increased by 11.3% to $1.70 billion for the nine months ended September 30, 2022, driven by pricing and occupancy, with NOI rising by 6.5% Warehouse Segment Performance (in thousands) | Metric | 9 Months Ended Sep 30, 2022 (Actual) | 9 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 9 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Total Warehouse Segment Revenues | $1,704,281 | $1,531,232 | +11.3% | $1,738,745 | +13.6% | | Total Warehouse Segment Cost of Operations | $1,240,376 | $1,095,680 | +13.2% | $1,267,341 | +15.7% | | Warehouse Segment Contribution (NOI) | $463,905 | $435,552 | +6.5% | $471,404 | +8.2% | | Total Warehouse Segment Margin | 27.2% | 28.4% | -122 bps | 27.1% | -133 bps | Same Store Operating Metrics | Same Store Operating Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Economic occupancy percentage | 78.7% | 76.2% | +249 bps | | Average occupied economic pallets (in thousands) | 3,821 | 3,694 | +3.4% | | Throughput pallets (in thousands) | 26,999 | 27,304 | (1.1)% | - Same store rent and storage revenues per economic occupied pallet increased **5.0%** (**6.8% constant currency**) due to pricing initiatives and contractual rate escalations[274](index=274&type=chunk) - Warehouse services contribution (NOI) decreased by **50.7%** to **$22.3 million**, and its margin declined by **280 bps** to **2.3%**, primarily due to labor inefficiencies and inflationary pressure[257](index=257&type=chunk) [2.4.2.2 Third-Party Managed Segment](index=66&type=section&id=2.4.2.2%20Third-Party%20Managed%20Segment) Third-party managed revenues increased by 8.0% to $251.8 million for the nine months ended September 30, 2022, with segment contribution (NOI) slightly up by 2.4% Third-Party Managed Segment Performance (in thousands) | Metric | 9 Months Ended Sep 30, 2022 (Actual) | 9 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 9 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Third-party managed revenues | $251,782 | $233,027 | +8.0% | $252,987 | +8.6% | | Third-party managed cost of operations | $240,900 | $222,401 | +8.3% | $241,880 | +8.8% | | Third-party managed segment contribution | $10,882 | $10,626 | +2.4% | $11,107 | +4.5% | | Third-party managed margin | 4.3% | 4.6% | -24 bps | 4.4% | -17 bps | - The increase in revenues was a result of higher business volume in domestic managed operations and higher pass-through costs, primarily labor and related costs due to inflation[279](index=279&type=chunk) [2.4.2.3 Transportation Segment](index=68&type=section&id=2.4.2.3%20Transportation%20Segment) Transportation revenues increased by 1.3% to $237.2 million for the nine months ended September 30, 2022, with segment contribution (NOI) significantly up by 48.4% Transportation Segment Performance (in thousands) | Metric | 9 Months Ended Sep 30, 2022 (Actual) | 9 Months Ended Sep 30, 2021 (Actual) | Change (Actual) | 9 Months Ended Sep 30, 2022 (Constant Currency) | Change (Constant Currency) | | :-------------------- | :----------------------------------- | :----------------------------------- | :-------------- | :---------------------------------------------- | :------------------------- | | Transportation revenues | $237,168 | $234,051 | +1.3% | $249,920 | +6.8% | | Total transportation cost of operations | $204,218 | $211,847 | (3.6)% | $216,598 | +2.2% | | Transportation segment contribution (NOI) | $32,950 | $22,204 | +48.4% | $33,322 | +50.1% | | Transportation margin | 13.9% | 9.5% | +441 bps | 13.3% | +385 bps | - The significant increase in transportation segment contribution and margin was primarily due to rate increases implemented during 2022[287](index=287&type=chunk) [2.4.2.4 Other Consolidated Operating Expenses](index=68&type=section&id=2.4.2.4%20Other%20Consolidated%20Operating%20Expenses) Depreciation and amortization increased by 7.2% to $249.0 million, while SG&A rose by 28.5% for the nine months ended September 30, 2022 Other Consolidated Operating Expenses (in thousands) | Expense | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :--------------------- | :-------------------------- | :-------------------------- | :----- | | Depreciation and amortization | $248,979 | $232,239 | +7.2% | | Selling, general and administrative | $170,994 | $133,072 | +28.5% | | Acquisition, litigation and other, net | $20,612 | $31,011 | -33.6% | | Impairment of indefinite and long-lived assets | $6,616 | $3,312 | +99.7% | | Loss from sale of real estate | $5,710 | $0 | N/A | - The increase in selling, general and administrative expenses was driven by the resumption of performance-based compensation, higher third-party legal and professional fees, and increased travel costs[290](index=290&type=chunk) - Impairment charges included **$3.2 million** for goodwill in the Third-party managed segment due to a strategic shift[292](index=292&type=chunk) [2.4.2.5 Other Expense and Income](index=70&type=section&id=2.4.2.5%20Other%20Expense%20and%20Income) Interest expense increased by 6.3% to $82.7 million for the nine months ended September 30, 2022, with other net expense increasing due to deconsolidation loss Other Expense and Income (in thousands) | Expense/Income | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :---------------------------- | :-------------------------- | :-------------------------- | :----- | | Interest expense | $(82,720) | $(77,838) | +6.3% | | Loss on debt extinguishment, modifications and termination of derivative instruments | $(2,284) | $(5,051) | -54.8% | | Other, net | $(1,197) | $1,021 | N/A | | Loss from investments in partially owned entities | $(7,199) | $(1,250) | N/A | - Other, net expense increased due to a **$4.1 million** loss from the deconsolidation of Chilean operations upon contribution to the LATAM JV and a **$3.1 million** increase in foreign currency exchange loss, partially offset by a **$3.4 million** gain from the dissolution of NMTC entities[299](index=299&type=chunk) - Loss from investments in partially owned entities increased by **$5.9 million** due to higher interest expense incurred by joint ventures given rising interest rates[300](index=300&type=chunk) [2.4.2.6 Income Tax Benefit (Expense)](index=71&type=section&id=2.4.2.6%20Income%20Tax%20Benefit%20(Expense)) Americold reported a $16.1 million income tax benefit for the nine months ended September 30, 2022, driven by operating losses and a deferred tax benefit Income Tax Benefit (Expense) (in thousands) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Total Income Tax Benefit (Expense) | $16,145 | $(7,957) | +$24,102 | - The income tax benefit was primarily due to a **$13.8 million** increase in deferred tax benefit from higher operating losses and a **$6.5 million** deferred tax benefit from the deconsolidation of Chilean operations[302](index=302&type=chunk) [2.5 Non-GAAP Financial Measures](index=72&type=section&id=2.5%20Non-GAAP%20Financial%20Measures) Americold uses non-GAAP measures like FFO, Core FFO, Adjusted FFO, EBITDAre, and Core EBITDA to evaluate operating performance and funding capacity - FFO, Core FFO, Adjusted FFO, EBITDAre, and Core EBITDA are used as supplemental performance measures to evaluate operating performance and ability to fund distributions[304](index=304&type=chunk)[305](index=305&type=chunk)[309](index=309&type=chunk) Funds from Operations (FFO) (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | NAREIT Funds from operations applicable to common shareholders | $55,034 | $54,211 | $147,926 | $126,330 | | Core FFO applicable to common shareholders | $67,091 | $61,476 | $178,816 | $162,642 | | Adjusted FFO applicable to common shareholders | $79,333 | $69,595 | $222,062 | $217,259 | EBITDAre and Core EBITDA (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | NAREIT EBITDAre | $110,859 | $102,808 | $311,631 | $299,995 | | Core EBITDA | $131,857 | $114,661 | $362,945 | $350,789 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Americold's exposure to market risks, primarily focusing on interest rate risk and foreign currency risk management [3.1 Interest Rate Risk](index=83&type=section&id=3.1%20Interest%20Rate%20Risk) Americold manages interest rate risk on its variable-rate debt using swaps, with a 100 bps increase impacting annual interest expense by $6.4 million - As of September 30, 2022, Americold had **$375.0 million USD** and **$250 million CAD** of outstanding variable-rate debt[356](index=356&type=chunk) - Interest rate swaps effectively fix the floating rates on **$200 million USD** and **$250 million CAD** of the term loan, leaving **$175 million USD** variable-rate debt[356](index=356&type=chunk) - A **100 basis point** increase in market interest rates would result in an approximate **$6.4 million** increase in annual interest expense for the variable-rate debt[356](index=356&type=chunk) [3.2 Foreign Currency Risk](index=83&type=section&id=3.2%20Foreign%20Currency%20Risk) Americold's foreign currency risk exposure at September 30, 2022, remained consistent with prior disclosures in its 2021 Annual Report - Foreign currency risk exposure at September 30, 2022, was not materially different from what was disclosed in the 2021 Annual Report on Form 10-K[357](index=357&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control [4.1 Evaluation of Controls and Procedures](index=83&type=section&id=4.1%20Evaluation%20of%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022 - The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of September 30, 2022[358](index=358&type=chunk) [4.2 Changes in Internal Control over Financial Reporting](index=84&type=section&id=4.2%20Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting were identified during the quarter ended September 30, 2022 - No material changes in internal control over financial reporting were identified during the quarter ended September 30, 2022[362](index=362&type=chunk) [PART II - OTHER INFORMATION](index=78&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides other information, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) No material litigation or legal proceedings are currently ongoing that would significantly impact the company's financial condition or operations - No material litigation or legal proceedings are currently ongoing that would have a material impact on the company's business, financial condition, liquidity, results of operations, and prospects, other than those disclosed in Note 9[364](index=364&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) Investors should consider the risk factors detailed in the 2021 Annual Report on Form 10-K and the Q1 2022 Quarterly Report - Investors should consider the risk factors identified in Item 1A of the 2021 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022[366](index=366&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - None[367](index=367&type=chunk) [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[368](index=368&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures are applicable for the reporting period - None[369](index=369&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) No other information is reported in this item for the period - None[370](index=370&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including various agreements and certifications - The report includes exhibits such as waiver and release forms, offer letters, credit agreements, CEO/CFO certifications (Sarbanes-Oxley Act), and XBRL interactive data files[372](index=372&type=chunk) [SIGNATURES](index=80&type=section&id=SIGNATURES) This section contains the official signatures for the report [SIGNATURES](index=87&type=section&id=SIGNATURES) The report is duly signed on behalf of Americold Realty Trust, Inc. by Marc J. Smernoff, Chief Financial Officer and Executive Vice President, on November 4, 2022 - The report was signed by Marc J. Smernoff, Chief Financial Officer and Executive Vice President, on November 4, 2022[376](index=376&type=chunk)