ATLANTA, GA, March 07, 2024 (GLOBE NEWSWIRE) -- Americold Realty Trust (NYSE:COLD), a global leader in temperature-controlled logistics, real estate, and value-added services focused on the ownership, operation, acquisition and development of temperature-controlled warehouses, today announced that its Board of Directors has declared a dividend of $0.22 per share for the first quarter of 2024, payable to holders of the Company's common stock. The dividend will be payable in cash on April 15, 2024 to stockhol ...

Debt and Financing - As of December 31, 2023, the company had approximately $1.2 billion of variable-rate indebtedness and $1.8 billion of fixed-rate indebtedness outstanding[196]. - The company has converted $833.8 million of its variable-rate indebtedness to fixed-rate through interest rate swaps[200]. - Increases in interest rates could raise the company's debt payments, reducing cash flows and funds from operations[200]. - The company may face challenges in refinancing its indebtedness at maturity, which could lead to defaults and adverse financial consequences[198]. - The company has covenants in its existing and future indebtedness that may restrict operational flexibility and financial activities[202]. - Future capital raising efforts may dilute existing stockholders' equity and affect the market price of common stock[215]. - As of December 31, 2023, the company had $645.0 million of outstanding USD-denominated variable-rate debt and C$250.0 million of CAD-denominated variable-rate debt[458]. - A 100 basis point increase in market interest rates would result in an increase in interest expense of approximately $3.9 million[458]. REIT Compliance and Taxation - The company is required to distribute at least 90% of its REIT taxable income to qualify as a REIT, which may limit its ability to fund future capital needs[201]. - To maintain REIT status, the company must distribute at least 90% of its REIT taxable income annually[223]. - The company may face a 4% excise tax if it fails to meet distribution requirements[223]. - At least 75% of the value of the company's assets must consist of cash, government securities, and qualified real estate assets to qualify as a REIT[227]. - Failure to qualify as a REIT could result in significant tax liabilities, reducing cash available for investment or distribution to stockholders[222]. - If the Operating Partnership fails to qualify as a partnership for tax purposes, it could jeopardize the company's REIT status[238]. - The company must comply with REIT requirements, which may limit its ability to undertake certain investments or activities[226]. - The company may be subject to various taxes that could reduce funds available for distribution to stockholders[233]. - Future changes to U.S. federal income tax laws could adversely impact the company's business and financial results[230]. Shareholder and Governance - The current annualized distributions to stockholders are $0.88 per share, with potential risks of insufficient cash available for distribution[214]. - The board of directors has significant authority to make decisions without stockholder approval, which could impact stockholder interests[206]. - Ownership limitations in the company's articles of incorporation are designed to maintain REIT status and may hinder potential changes in control[209]. - As of December 31, 2023, there are 283,699,120 shares of common stock issued and outstanding[218]. - The company has filed a registration statement on Form S-8 covering common stock issuable under various equity incentive plans[219]. International Operations - Revenues from international operations for the year ended December 31, 2023, were $597.2 million, representing 22.3% of consolidated revenues[462]. - Net assets in international operations decreased from approximately $1.3 billion in 2022 to $1.1 billion in 2023[462]. - A 10% depreciation in the year-end functional currencies of international operations relative to the U.S. dollar would have resulted in a reduction in total equity of approximately $137.9 million[459]. - The company entered into cross-currency swaps to hedge cash flow variability from foreign currency changes on intercompany loans[464]. - The Agro acquisition involved €750 million in Senior Unsecured Notes, designated as a net investment hedge for European operations[465]. - The company drew £68.5 million from its Senior Unsecured Revolving Credit Facility to fund the Bowman acquisition, designated as a net investment hedge[468]. - During 2022 and 2023, the company funded various international capital requirements with borrowings from its Senior Unsecured Revolving Credit Facility, designated as a net investment hedge[471]. - The operating income of the Argentina subsidiary was less than 1.0% of consolidated operating income for the years ended December 31, 2023, and 2022[460].

Financial Data and Key Metrics Changes - For the full year 2023, the company achieved a record same-store economic occupancy of 84.3%, an increase of almost 400 basis points compared to the previous record of 80.5% [22][61] - The company reported an AFFO per share of $0.38 for Q4 2023, a 31% increase year-over-year, marking a record level for quarterly AFFO per share [56] - The total net debt outstanding at the end of the quarter was $3.2 billion, with total liquidity of $797 million [74] Business Line Data and Key Metrics Changes - Rent and storage revenue from fixed commitment contracts increased to $577 million in Q4 2023, compared to $420 million in Q4 2022, representing a significant improvement [35] - Service revenue per throughput pallet increased by 9.1% in Q4 2023, reflecting the company's focus on pricing initiatives [66] - The company introduced a new labor metric indicating that 32% of hourly associates had less than 12 months of experience, down from a COVID high of 41% [24] Market Data and Key Metrics Changes - Throughput volumes declined by approximately 760 basis points year-over-year, although the decline improved sequentially by 140 basis points [29] - The company expects a slight decline in throughput volumes of 1% to 3% in 2024 due to a slowdown in end consumer demand [75] - The European warehouse business NOI grew by approximately 32% in 2023 despite a $237 million non-cash goodwill impairment due to higher interest rates and a weakened macroeconomic environment [113] Company Strategy and Development Direction - The company announced a $130 million greenfield development in Kansas City, Missouri, in collaboration with Canadian Pacific Kansas City (CPKC) [28] - A new multi-customer major market distribution center is planned in Dubai for $35 million, which will optimize temperature-sensitive food flows in the Gulf Cooperation Council [54][55] - The company is focused on maintaining high occupancy and fixed commitment contracts while expanding its development pipeline, which remains robust at over $1 billion [119] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a recovery in throughput volumes in the second half of 2024, despite challenges in the first half due to weak consumer demand [101][95] - The company anticipates that economic occupancy may decline slightly in 2024, but remains optimistic about maintaining strong occupancy levels [30][88] - Management highlighted the importance of customer service and commercialization efforts in driving occupancy and revenue growth [62] Other Important Information - The company completed five automated developments in 2023, enhancing its service capabilities [86] - A new Vice President of Investor Relations, Kevin Reed, has joined the company, bringing extensive experience in investor relations [36] - The company is committed to community initiatives, partnering with Feed The Children to assist families in underserved communities [33] Q&A Session Summary Question: What is the outlook for throughput in 2024? - Management expects a weak first half of 2024 but anticipates a stronger second half as consumer demand picks up [95][101] Question: How does the company view occupancy trends? - The company set a record occupancy of over 84% and is confident in maintaining strong occupancy levels despite a slight expected decline [96][118] Question: What are the expectations for new developments? - The company has a robust development pipeline and expects to continue pursuing both customer-dedicated builds and strategic partnerships for new developments [120][119]

For the quarter ended December 2023, Americold Realty Trust Inc. (COLD) reported revenue of $679.29 million, down 5.9% over the same period last year. EPS came in at $0.38, compared to $0.01 in the year-ago quarter.The reported revenue represents a surprise of -1.94% over the Zacks Consensus Estimate of $692.71 million. With the consensus EPS estimate being $0.36, the EPS surprise was +5.56%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they comp ...

Exhibit 99.2 Financial Information Consolidated Balance Sheets 17 Consolidated Statements of Operations 18 Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO and AFFO 19 Reconciliation of Net (Loss) Income to EBITDA, NAREIT EBITDAre, and Core EBITDA 21 Acquisition, Cyber Incident and Other, net 22 Debt Detail and Maturities 23 External Growth and Capital Deployment 39 Table of Contents | --- | --- | |-------|------------------------------| | | | | | | | | | | | | | | EARNINGS RELEASE & FINANCIAL | ...

LebazeleAmericold (NYSE:COLD) is a cold storage REIT with 18.3% market share in North America, making it the second-largest player behind the soon to IPO, Lineage Logistics. Why Americold should be on your watchlist While COLD trades at a fairly high multiple today, the growth implied by consensus Wall Street estimates would easily overcome that multiple in a matter of a few years. We are not ready to buy COLD yet, as we view it as a “show me” stock in the sense that its growth potential relies on impro ...

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.32, an increase of over 10% compared to the prior year's quarter [16] - Same-store economic occupancy increased to 84%, a 345 basis point increase year-over-year, but an 80 basis point decline sequentially from the second quarter [11][18] - The churn rate remained low at approximately 3.2% of total warehouse revenues, consistent with historical rates [22][50] Business Line Data and Key Metrics Changes - Rent and storage revenue from fixed commitment contracts increased to $551 million, compared to $379 million in the third quarter of 2022 [22] - Rent and storage revenue for economic occupied pallets increased by 3.5% year-over-year on a constant currency basis [23] - Service revenue per throughput pallet increased by 6.1% [23] Market Data and Key Metrics Changes - The company expects constant currency revenue growth in the same-store pool for the full year to be in the range of 3% to 5% [31] - Year-to-date throughput volumes decreased by 6.7%, with expectations for a decline of 6% to 7.5% for the full year [32] Company Strategy and Development Direction - The company announced an $85 million expansion of its Allentown, Pennsylvania facility, driven by strong demand from its customer base [7][52] - The company is focusing on three primary development areas: expansion projects, customer dedicated build-to-suit developments, and collaborations with CPKC and DP World [24][64] - A strategic tuck-in acquisition of Safeway Freezers for approximately $37 million was completed, enhancing the company's presence in New Jersey [15][55] Management's Comments on Operating Environment and Future Outlook - Management noted that throughput volumes are expected to rise sequentially in the fourth quarter due to seasonal demand [19] - The company is optimistic about managing variable costs effectively, despite the challenges posed by the current economic environment [45][119] - Management highlighted the importance of maintaining strong occupancy rates and pricing initiatives to offset inflationary pressures [6][23] Other Important Information - The company achieved a GRESB score of 80, improving its rank among peers [49] - The company raised its full year 2023 AFFO per share guidance to a midpoint of $1.27, reflecting improved economic occupancy and cost management [20][59] Q&A Session Summary Question: What is the strategy for pricing renewals? - Management emphasized that renewals are being priced to market rates, with annual general rate increases implemented in January [68] Question: What is driving the CapEx guidance change? - The change is directly related to throughput declines, leading to adjustments in preventative maintenance spending [70] Question: How long do throughput slowdowns typically last? - Management indicated that throughput is expected to improve sequentially through the holiday season, despite being down year-over-year [72][120] Question: What are the economics of the Safeway acquisition? - The acquisition is expected to yield a net entry NOI of approximately 9%, supporting the company's existing infrastructure in a strong market [111] Question: How does the company manage variable costs? - Management noted that about 50% of the cost structure is fixed, and effective management of variable costs is crucial for maintaining margins [118]

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)