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)

Financial Data and Key Metrics Changes - The company reported total revenue of $730 million for Q2 2022, reflecting an 11% year-over-year increase, with total NOI at $168 million, an 8% increase [43] - AFFO per share was $0.27, compared to $0.28 in the prior year quarter [45] - Core EBITDA was $120 million, a 1.6% year-over-year increase, with a core EBITDA margin decrease of 160 basis points to 16.5% [45] Business Line Data and Key Metrics Changes - Global Warehouse segment revenue was $564 million, a 12% increase year-over-year, driven by pricing initiatives and economic occupancy improvement [46] - Same-store Global Warehouse segment revenue increased by 5.9% year-over-year, with economic occupancy at 78.1%, up 288 basis points from the previous year [50] - Same-store warehouse services revenue increased by 3.9% year-over-year, with a 7.9% increase in revenue per throughput pallet [53] Market Data and Key Metrics Changes - Economic occupancy improvement was noted, with a significant increase in physical and economic occupancy due to increased production by food manufacturers and changes in consumer buying behavior [15][16] - The company experienced inflationary pressures primarily in power and warehouse supply costs, impacting overall costs and margins [18][19] Company Strategy and Development Direction - The company is focused on repricing its Warehouse business to offset inflationary pressures, with a commitment to cover all known inflation incurred through Q1 [8] - A new joint venture in Latin America was formed, focusing on high-growth food production, with a total equity commitment of just under $300 million [20][21] - The company aims to differentiate its platform by providing best-in-class customer service and optimizing labor management to reduce turnover rates [10][13] Management Comments on Operating Environment and Future Outlook - Management indicated that full recovery in the labor market is not expected this year, with improvements seen as a trickle rather than a constant flow [68] - The company anticipates continued inflationary pressures and a potential decline in throughput volumes due to changing consumer habits [26][27] - Guidance for AFFO per share remains in the range of $1 to $1.10, with expectations for same-store revenue growth to exceed previous guidance [25][58] Other Important Information - The company reported a total debt outstanding of $3.2 billion, with total liquidity of $597 million [56] - The company is maintaining its focus on ESG initiatives, having submitted to the Carbon Disclosure Project and GRESB for 2022 [29] Q&A Session Summary Question: Concerns about revenue guidance and challenges in the second half of the year - Management noted that pricing initiatives ramped up late in Q3, making year-over-year comparisons tougher [65] Question: Trajectory of recovery and stabilization for the business - Management indicated that full recovery is not expected this year, with labor improvements being gradual [68] Question: Impact of inflation on consumer habits - Management acknowledged that inflation is affecting consumer spending, leading to smaller basket sizes and less pantry stocking [71] Question: Clarification on guidance and potential disconnect with previous year's AFFO - Management explained that higher interest expenses and currency translation impacts are contributing to the lower AFFO guidance [74] Question: Ability to negotiate higher prices with customers due to rising costs - Management confirmed that they can negotiate price increases as needed, having done so multiple times already [77] Question: Impact of rising interest rates on guidance - Management indicated that a 100-basis-point increase in interest rates would result in approximately $10 million of incremental cost [85]

Warehouse Operations - As of June 30, 2022, the company operated 249 temperature-controlled warehouses, encompassing approximately 1.5 billion cubic feet, with 202 in North America, 27 in Europe, 18 in Asia-Pacific, and 2 in South America[143] - The total number of warehouses as of June 30, 2022, was 249, with 213 classified as same-store warehouses, indicating a stable operational base[187] - The average economic occupancy of warehouses is a key performance indicator, with a focus on transitioning customers to contracts with fixed storage commitments to mitigate seasonal fluctuations[175] - Economic occupancy at same stores increased to 78.1% for the three months ended June 30, 2022, up 288 basis points from 75.3% in the prior year[212] - The company had 213 same store sites for the three months ended June 30, 2022[200] - The same store pool consisted of 213 same stores for the six months ended June 30, 2022[245] - Economic occupancy percentage for same store sites improved to 77.8%, up from 76.3% in 2021[252] Financial Performance - The company reported revenues of $153.2 million for the six months ended June 30, 2022, compared to $130.0 million for the same period in 2021, reflecting an increase of 17.9%[174] - For the three months ended June 30, 2022, revenues from a significant customer were $75.2 million, up from $64.1 million in the same period of 2021, representing a growth of 17.3%[174] - Warehouse segment revenues for Q2 2022 were $564.4 million, a 12.0% increase from $503.7 million in Q2 2021, and a 14.4% increase on a constant currency basis to $576.5 million[195] - Total warehouse segment revenues for the three months ended June 30, 2022, were $564,379,000, representing a 12.0% increase compared to $503,734,000 in the same period of 2021[206] - Total warehouse segment revenues for six months ended June 2022 were $1,105,304, an increase of 11.7% compared to $989,185 in 2021[250] - Same store total revenues reached $978,610, a 5.2% increase from $930,160 in 2021[248] - Third-party managed revenues were $169.3 million for the six months ended June 30, 2022, an increase of $24.1 million, or 16.6%, compared to $145.2 million for the same period in 2021[261] Cost and Expenses - The cost of operations for the warehouse segment increased to $413.4 million in Q2 2022, up 15.0% from $359.4 million in Q2 2021, with a 17.7% increase on a constant currency basis to $422.8 million[198] - Total warehouse cost of operations for the same period was $413,394,000, up 15.0% from $359,355,000 in the prior year[206] - Warehouse segment cost of operations was $808.1 million for the six months ended June 30, 2022, an increase of $109.4 million, or 15.7%, compared to the same period in 2021[243] - Same store cost of operations totaled $696,558, an 8.3% increase from $643,453 in 2021[248] - Labor costs increased by $55.9 million, reflecting inflationary pressures and labor inefficiencies[243] - Corporate-level selling, general and administrative expenses increased to $56.3 million, up by $13.8 million or 32.5% from $42.5 million in the prior year[228] Joint Ventures and Market Presence - The company formed a joint venture, Americold LATAM Holdings Ltd, with a partner committing approximately $209.0 million for 85% equity, while the company retained 15%[163] - The company holds three minority interests in South American joint ventures, enhancing its market presence in the region[143] - The company has exited less strategic markets and business lines, including the sale of certain warehouse assets and the exit of the China joint venture, to streamline operations and reduce costs[171] Inflation and Economic Factors - Inflation has significantly impacted the cost of services, prompting the company to initiate out-of-cycle rate increases in customer contracts[158] - Labor availability continues to be a primary constraint on food production, affecting the company's operations and its customers[157] - The company expects to continue monitoring and implementing further inflation and pricing increases into 2022[158] - The foreign currency translation had a net unfavorable impact of $12.1 million on revenues during Q2 2022 due to the strengthening of the U.S. dollar[197] - The foreign currency translation had a $19.9 million unfavorable impact on revenues during the six months ended June 30, 2022[242] Tax and Income - Income tax benefit for the three months ended June 30, 2022, was $12.1 million, an increase of $21.0 million from an income tax expense of $9.0 million in the same quarter of 2021[236] - Income tax benefit for the six months ended June 30, 2022, was $12.8 million, an increase of $21.0 million compared to an income tax expense of $8.2 million for the same period in 2021[280] - Net income for the three months ended June 30, 2022, was $3,953,000, compared to a net loss of $13,399,000 for the same period in 2021[290] Capital Expenditures and Investments - Maintenance capital expenditures for the three months ended June 30, 2022, were $20,118,000, compared to $20,488,000 in 2021[313] - The company incurred approximately $21.3 million for contemplated future expansion or development projects during the six months ended June 30, 2022[321] - The company invested $4.4 million in the formation of the LATAM joint venture during the six months ended June 30, 2022[327] Debt and Financing - As of June 30, 2022, total outstanding indebtedness was $3,223,017,000, with fixed-rate debt comprising 70% and variable-rate debt 30%[307] - The effective interest rate of outstanding debt remained consistent at 3.24% for the six months ended June 30, 2021, and 3.23% for the same period in 2022[277] - The company has investment grade credit ratings of BBB from Fitch and DBRS Morningstar, and Baa3 from Moody's, which are crucial for favorable debt issuance[309] Other Financial Metrics - NAREIT Funds from operations (FFO) for the six months ended June 30, 2022, was $92.9 million, compared to $72.1 million for the same period in 2021, reflecting a year-over-year increase of 28.7%[285] - Core FFO applicable to common shareholders for the six months ended June 30, 2022, was $111.7 million, an increase from $101.2 million in the same period of 2021[285] - Adjusted FFO applicable to common shareholders for the six months ended June 30, 2022, was $142.7 million, compared to $147.7 million for the same period in 2021[285]

Financial Data and Key Metrics Changes - The company reported total revenue of $706 million for Q1 2022, reflecting an 11% increase across all segments, primarily driven by the warehouse segment [29] - Total company NOI was $158 million, a 1% increase, while the NOI margin decreased by 234 basis points to 22.4% [29][30] - AFFO per share was $0.26, with core EBITDA at $111 million, a decrease of 5.9% year-over-year [31] Business Line Data and Key Metrics Changes - Global warehouse segment revenue was $541 million, an 11% increase compared to the prior year, with NOI at $146 million, a slight increase of 0.1% [32] - Same-store global warehouse segment revenue was $483 million, up 4.5% year-over-year, while same-store NOI was $139 million, down 4.7% [34][35] - Same-store economic occupancy was 77.6%, reflecting a slight increase of 22 basis points from the previous year [36] Market Data and Key Metrics Changes - The company experienced a 6% total revenue growth in its global warehouse same-store pool, while NOI declined by 3.6% [15] - Power costs increased by approximately 18% year-over-year, significantly impacting the European portfolio [23] - The churn rate remained low at approximately 3.3% of total warehouse revenues, indicating stable customer retention [26] Company Strategy and Development Direction - The company is focused on repricing its warehouse business to offset inflationary pressures, achieving a 5.6% increase in rent and storage revenue per economic occupied pallet [7] - There is an ongoing effort to optimize the labor mix, aiming to increase the proportion of permanent associates to improve productivity and efficiency [8][10] - The company is committed to delivering development projects on time and on budget, with recent projects performing in line with expected yields [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the labor situation remains challenging, with customers struggling to produce at pre-COVID levels due to labor shortages [45] - The company expects inflationary pressures to continue, impacting costs and pricing strategies [40] - There is a commitment to maintaining guidance for AFFO per share in the range of $1 to $1.10, despite ongoing challenges in food manufacturing [40] Other Important Information - The company published its third ESG report, committing to science-based targets for greenhouse gas emissions and aiming for green building certifications on 50% of its portfolio by 2030 [17][18] - A partnership with Kraft Heinz and Feed the Children was announced to deliver frozen potatoes to families in need, highlighting the company's community engagement efforts [18] Q&A Session Summary Question: What are customers saying about labor challenges? - Customers report that the labor situation has not improved, and they are struggling to produce at historical levels [45] Question: How should we think about occupancy trends throughout the year? - The Q1 results were impacted by the timing of Easter, and a normalization is expected with a projected decline of 100 to 200 basis points for the year [46] Question: What is the expectation for refilling the channel amid labor issues? - There is no set timeframe for when the labor force will return to pre-COVID levels, and customers are motivated to increase production but face significant challenges [49] Question: How are inflationary costs being managed? - The company is implementing price increases to cover rising costs, with a focus on quickly passing through these costs to customers [61][62] Question: How is the Russia-Ukraine conflict impacting the business? - The primary impact observed is an increase in power costs, particularly in Europe, but there have been no significant reductions in production levels [66]