[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section details the administrative filing information for the Form 10-Q report [Filing Details](index=1&type=section&id=Filing%20Details) This section provides the administrative details of the Form 10-Q filing for Americold Realty Trust for the quarterly period ended March 31, 2022, including its status as a large accelerated filer and registered securities - The registrant, **Americold Realty Trust**, is filing a **Quarterly Report** on **Form 10-Q** for the period ended March 31, 2022[2](index=2&type=chunk) - The **company** is classified as a '**Large accelerated filer**'[4](index=4&type=chunk) Securities Registered | Title of each class | Trading symbol(s) | Name of each exchange on which registered | | :---------------------------------------- | :---------------- | :---------------------------------------- | | Common Shares of Beneficial Interest, $0.01 par value per share | COLD | New York Stock Exchange (NYSE) | Common Stock Outstanding as of May 3, 2022 | Class | Outstanding at May 3, 2022 | | :------------------------------------- | :------------------------- | | Common Stock, $0.01 par value per share | 269,275,929 | [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section provides an organized list of all chapters and sections within the report [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the inherent risks and uncertainties associated with forward-looking statements in the report [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section provides a cautionary statement regarding forward-looking statements within the report, highlighting various risks and uncertainties that could cause actual results to differ materially from expectations - **Forward-looking statements** are based on beliefs, assumptions, and expectations of future financial and **operating performance** and **growth plans**, but involve **risks** and **uncertainties**[9](index=9&type=chunk) - **Key factors** that could cause actual results to differ include **supply chain disruptions**, **COVID-19 pandemic impacts**, **adverse economic conditions**, **rising interest rates** and **inflation**, **labor shortages**, **acquisition risks**, **IT system failures**, and **geopolitical conflicts** (e.g., **Russia-Ukraine**)[9](index=9&type=chunk)[11](index=11&type=chunk) - The **company assumes no obligation** to update or revise these **forward-looking statements**[12](index=12&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Americold Realty Trust, including the balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining significant accounting policies, business combinations, debt, share-based compensation, commitments, segment information, and revenue recognition [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :---------------------------------------- | :------------- | :---------------- | | **Assets** | | | | Property, buildings and equipment – net | $5,140,900 | $5,127,901 | | Total assets | $8,207,869 | $8,216,197 | | **Liabilities** | | | | Total liabilities | $4,236,630 | $4,187,121 | | **Equity** | | | | Total shareholders' equity | $3,961,380 | $4,021,007 | | Total equity | $3,971,239 | $4,029,076 | - **Total assets decreased** slightly from **$8,216,197 thousand** at December 31, 2021, to **$8,207,869 thousand** at March 31, 2022[15](index=15&type=chunk) - **Total liabilities increased** from **$4,187,121 thousand** to **$4,236,630 thousand**, while **total equity decreased** from **$4,029,076 thousand** to **$3,971,239 thousand**[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss for the reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $705,695 | $634,795 | | Total operating expenses | $697,704 | $620,543 | | Operating income | $7,991 | $14,252 | | Net loss | $(17,445) | $(14,236) | | Net loss attributable to Americold Realty Trust | $(17,407) | $(14,414) | | Net loss per common share - basic | $(0.06) | $(0.06) | | Net loss per common share - diluted | $(0.06) | $(0.06) | - **Total revenues increased** by **$70.9 million** (**11.2%**) from **$634,795 thousand** in Q1 2021 to **$705,695 thousand** in Q1 2022[19](index=19&type=chunk) - **Operating income decreased significantly** from **$14,252 thousand** in Q1 2021 to **$7,991 thousand** in Q1 2022, a **43.9% decline**[19](index=19&type=chunk) - **Net loss attributable to Americold Realty Trust widened** from **$(14,414) thousand** in Q1 2021 to **$(17,407) thousand** in Q1 2022[19](index=19&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the components of comprehensive income, including net loss and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(17,445) | $(14,236) | | Other comprehensive income (loss) - net of tax attributable to Americold Realty Trust | $11,404 | $(9,280) | | Total comprehensive loss | $(6,018) | $(23,528) | - **Total comprehensive loss significantly improved** from **$(23,528) thousand** in Q1 2021 to **$(6,018) thousand** in Q1 2022, **primarily due to a positive change** in **unrealized net gain** on **foreign currency**[21](index=21&type=chunk) [Condensed Consolidated Statements of Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section presents changes in the company's equity, reflecting contributions, distributions, and comprehensive income Condensed Consolidated Statements of Equity (in thousands) | Metric | Balance - December 31, 2021 | Balance - March 31, 2022 | | :------------------------------------------------------------------ | :-------------------------- | :----------------------- | | Common Shares of Beneficial Interest Par Value | $2,683 | $2,687 | | Paid-in Capital | $5,171,690 | $5,177,642 | | Accumulated Deficit and Distributions in Excess of Net Earnings | $(1,157,888) | $(1,234,875) | | Accumulated Other Comprehensive Income | $4,522 | $15,926 | | Noncontrolling Interests in Operating Partnership | $8,069 | $9,859 | | Total Equity | $4,029,076 | $3,971,239 | - **Total equity decreased** from **$4,029,076 thousand** at December 31, 2021, to **$3,971,239 thousand** at March 31, 2022, **driven by net loss** and **distributions**, partially offset by **other comprehensive income** and **share-based compensation**[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $15,586 | $46,531 | | Net cash used in investing activities | $(94,244) | $(143,737) | | Net cash provided by financing activities | $46,256 | $(235,530) | | Net decrease in cash, cash equivalents and restricted cash | $(32,402) | $(332,736) | | Cash, cash equivalents and restricted cash: End of period | $50,965 | $287,691 | - **Net cash provided by operating activities decreased significantly** from **$46,531 thousand** in Q1 2021 to **$15,586 thousand** in Q1 2022[27](index=27&type=chunk) - **Net cash used in investing activities decreased** from **$(143,737) thousand** in Q1 2021 to **$(94,244) thousand** in Q1 2022, **primarily due to lower business combination outlays**[27](index=27&type=chunk) - **Net cash provided by financing activities** was **$46,256 thousand** in Q1 2022, a **substantial improvement** from **net cash used** of **$(235,530) thousand** in Q1 2021, **driven by proceeds** from the **revolving line of credit**[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. General](index=12&type=section&id=1.%20General) This note provides an overview of Americold Realty Trust and the basis of financial statement preparation - **Americold Realty Trust** is the **world's largest publicly traded REIT focused** on **temperature-controlled warehouses**[28](index=28&type=chunk) - The **company's financial statements** are prepared in accordance with **GAAP** for interim information and **SEC rules**, and should be read with the **2021 Annual Report** on **Form 10-K**[29](index=29&type=chunk) - The **COVID-19 pandemic continued to negatively impact** the **business** in Q1 2022 due to **disruptions** in the **food supply chain**, **customer production**, **labor market** (**availability** and **cost**), and overall **inflation**, leading to **lower occupancy** and **throughput**[36](index=36&type=chunk) [2. Business Combinations](index=14&type=section&id=2.%20Business%20Combinations) This note details the accounting for business acquisitions, including finalized and preliminary allocations - **No businesses** were **acquired** during the three months ended March 31, 2022[39](index=39&type=chunk) - **Acquisition accounting** for **Liberty Freezers** (acquired Q1 2021 for **C$56.8 million** or **$44.9 million**) was finalized in Q1 2022, with **no material adjustments**[39](index=39&type=chunk) - **Acquisition accounting** for other 2021 **acquisitions** (KMT Brrr!, Bowman Stores, ColdCo, Newark Facility Management, Lago Cold Stores) remained preliminary as of March 31, 2022[39](index=39&type=chunk) [3. Acquisition, Litigation and Other, net](index=14&type=section&id=3.%20Acquisition%2C%20Litigation%20and%20Other%2C%20net) This note outlines expenses related to acquisitions, litigation, severance, and cyber incidents Acquisition, Litigation and Other, net (in thousands) | Component | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Acquisition and integration related costs | $6,285 | $13,475 | | Litigation | $1,200 | $0 | | Severance costs | $2,564 | $2,446 | | Cyber incident related costs, net of insurance recoveries | $26 | $4,771 | | Total acquisition, litigation and other, net | $10,075 | $20,751 | - **Total acquisition, litigation and other, net expenses decreased** by **$10.7 million** (**51.5%**) from **$20,751 thousand** in Q1 2021 to **$10,075 thousand** in Q1 2022, **primarily due to lower acquisition** and **integration costs** and **significantly reduced cyber incident related costs**[40](index=40&type=chunk) [4. Debt](index=16&type=section&id=4.%20Debt) This note provides details on the company's outstanding indebtedness, including principal amounts and compliance with covenants Outstanding Indebtedness (in thousands) | Indebtedness Type | March 31, 2022 Carrying Amount | December 31, 2021 Carrying Amount | | :------------------------------------ | :----------------------------- | :-------------------------------- | | Total principal amount of indebtedness | $2,946,886 | $2,854,170 | | Less: unamortized deferred financing costs | $(10,492) | $(11,050) | | Total indebtedness, net | $2,936,394 | $2,843,120 | - **Total principal amount of indebtedness increased** by **$92.7 million** (**3.3%**) from **$2,854,170 thousand** at December 31, 2021, to **$2,946,886 thousand** at March 31, 2022[46](index=46&type=chunk) - The **company** was in **compliance** with all **debt covenants** as of March 31, 2022[49](index=49&type=chunk) - **Loss on debt extinguishment**, **modifications** and **termination of derivative instruments decreased significantly** from **$3,499 thousand** in Q1 2021 to **$616 thousand** in Q1 2022, **primarily due to the early repayment** of **$200 million principal** on the **Senior Unsecured Term Loan A Facility** in Q1 2021[50](index=50&type=chunk) [5. Fair Value Measurements](index=17&type=section&id=5.%20Fair%20Value%20Measurements) This note describes the categorization and estimation of fair values for financial assets and liabilities - The **company categorizes assets** and **liabilities recorded** at **fair value** into **Level 1** (**quoted market prices**), **Level 2** (**observable inputs** other than **Level 1**), and **Level 3** (**unobservable inputs**)[51](index=51&type=chunk) - **Mortgage notes**, **senior unsecured notes**, and **term loans** are estimated using **Level 2** and **Level 3 inputs**[54](index=54&type=chunk) Fair Value Measurements (in thousands) | Metric | Hierarchy | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :-------- | :------------- | :---------------- | | Cross-currency swap asset | Level 2 | $191 | $2,015 | | Cross-currency swap liability | Level 2 | $2,502 | $0 | | Mortgage notes, senior unsecured notes and term loans (disclosed) | Level 3 | $2,865,874 | $2,939,237 | [6. Share-Based Compensation](index=19&type=section&id=6.%20Share-Based%20Compensation) This note details the company's share-based compensation plans, including expense recognition and unit grants - **Aggregate share-based compensation charges increased** from **$5.0 million** in Q1 2021 to **$8.3 million** in Q1 2022[62](index=62&type=chunk) - As of March 31, 2022, there was **$44.1 million** of **unrecognized share-based compensation expense**, to be recognized over a **weighted-average period** of **2.0 years**[62](index=62&type=chunk) Restricted Stock Unit Grants (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Number of Restricted Stock Units Granted | 481,099 | 296,610 | | Grant Date Fair Value | $12,857 | $9,885 | OP Unit Grants (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Number of OP Units Granted | 342,980 | 258,479 | | Grant Date Fair Value (in thousands) | $9,001 | $8,434 | [7. Commitments and Contingencies](index=23&type=section&id=7.%20Commitments%20and%20Contingencies) This note discloses the company's legal proceedings, environmental obligations, and other contingent liabilities - The **company** is involved in **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 **financial statements**[80](index=80&type=chunk)[88](index=88&type=chunk)[93](index=93&type=chunk) - The **company** is subject to **environmental laws** and **OSHA regulations**, with **accruals recorded** for **probable liabilities**, and believes it is in **substantial compliance**[94](index=94&type=chunk)[96](index=96&type=chunk) - Most **warehouses use ammonia** as a refrigerant, which is a **hazardous chemical regulated** by the **EPA**, posing **risks** of **injuries**, **loss of life**, and **property damage** in case of a **significant release**[95](index=95&type=chunk) [8. Accumulated Other Comprehensive Loss](index=26&type=section&id=8.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components and changes in accumulated other comprehensive loss, including foreign currency translation Activity in Accumulated Other Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total pension and other postretirement benefits, net of tax | $67 | $381 | | Total foreign currency translation gain (loss) | $11,186 | $(10,682) | | Total unrealized gains on derivative contracts | $151 | $1,021 | | Total change in other comprehensive income (loss) | $11,404 | $(9,280) | - **Total change** in **other comprehensive income** (**loss**) shifted from a **loss** of **$(9,280) thousand** in Q1 2021 to an **income** of **$11,404 thousand** in Q1 2022, **primarily driven by a significant foreign currency translation gain**[98](index=98&type=chunk) [9. Segment Information](index=26&type=section&id=9.%20Segment%20Information) This note provides financial data for the company's Warehouse, Third-party managed, and Transportation segments - The **company operates** in three **reportable segments**: **Warehouse**, **Third-party managed**, and **Transportation**[99](index=99&type=chunk) - **Segment contribution** (**NOI**) is used to evaluate **segment performance**, calculated as **revenues less cost of operations**, excluding **depreciation**, **amortization**, **SG&A**, and **acquisition/litigation/other, net**[101](index=101&type=chunk)[102](index=102&type=chunk) Segment Revenues and Contribution (in thousands) | Segment | Three Months Ended March 31, 2022 Revenues | Three Months Ended March 31, 2021 Revenues | Three Months Ended March 31, 2022 Contribution | Three Months Ended March 31, 2021 Contribution | | :-------------------- | :----------------------------------------- | :----------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Warehouse | $540,925 | $485,451 | $146,258 | $146,181 | | Third-party managed | $85,860 | $73,072 | $3,501 | $4,382 | | Transportation | $78,910 | $76,272 | $8,529 | $6,703 | | Total | $705,695 | $634,795 | $158,288 | $157,266 | - **Total segment revenues increased** by **11.2% YoY**, while **total segment contribution increased** by **0.6% YoY**[103](index=103&type=chunk) [10. Loss per Common Share](index=29&type=section&id=10.%20Loss%20per%20Common%20Share) This note details the calculation of basic and diluted loss per common share, including antidilutive effects Weighted Average Common Shares Outstanding (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Weighted average common shares outstanding – basic | 269,164 | 252,938 | | Weighted average common shares outstanding – diluted | 269,164 | 252,938 | - **Basic** and **diluted weighted-average common shares outstanding increased** by **6.4% YoY**[109](index=109&type=chunk) - **Potential common shares** were **antidilutive** for both periods due to **net loss**, resulting in **no adjustments** between **basic** and **diluted loss per share**[109](index=109&type=chunk) Antidilutive Potential Common Shares (in thousands) | Type | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Employee stock options | 202 | 413 | | Restricted stock units | 1,295 | 964 | | OP units | 494 | 358 | | Equity forward contracts | 0 | 9,665 | | Total Antidilutive Shares | 1,991 | 11,400 | [11. Revenue from Contracts with Customers](index=31&type=section&id=11.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates revenue by segment and geographic region, and details remaining performance obligations Disaggregated Revenue by Segment and Geographic Region (in thousands) | Segment/Region | Q1 2022 North America | Q1 2022 Europe | Q1 2022 Asia-Pacific | Q1 2022 South America | Q1 2022 Total | Q1 2021 North America | Q1 2021 Europe | Q1 2021 Asia-Pacific | Q1 2021 South America | Q1 2021 Total | | :------------- | :-------------------- | :------------- | :------------------- | :-------------------- | :------------ | :-------------------- | :------------- | :------------------- | :-------------------- | :------------ | | Warehouse rent and storage | $181,939 | $17,355 | $16,721 | $2,950 | $218,965 | $164,246 | $17,252 | $15,176 | $2,425 | $199,099 | | Warehouse services | $238,169 | $32,197 | $39,202 | $1,600 | $311,168 | $210,846 | $25,336 | $42,469 | $1,524 | $280,175 | | Third-party managed | $80,820 | $0 | $5,040 | $0 | $85,860 | $67,697 | $0 | $5,375 | $0 | $73,072 | | Transportation | $37,493 | $34,106 | $6,860 | $451 | $78,910 | $40,315 | $30,612 | $4,973 | $372 | $76,272 | | Lease revenue | $9,313 | $1,479 | $0 | $0 | $10,792 | $6,177 | $0 | $0 | $0 | $6,177 | | Total revenues | $547,734 | $85,137 | $67,823 | $5,001 | $705,695 | $489,281 | $73,200 | $67,993 | $4,321 | $634,795 | - **Total revenues** from **contracts with customers increased** by **$70.9 million** (**11.2%**) **YoY**, with **North America showing** the **largest absolute increase**[112](index=112&type=chunk) - As of March 31, 2022, the **company** had **$703.7 million** of **remaining unsatisfied performance obligations** from **non-cancellable contracts**, with **24% expected** to be recognized in 2022 and the remainder over a **weighted average** of **12.6 years** through 2038[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&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, detailing business segments, key factors affecting performance, how performance is assessed, a comparison of Q1 2022 and Q1 2021 results, non-GAAP financial measures, and liquidity and capital resources [Management's Overview](index=33&type=section&id=MANAGEMENT%27S%20OVERVIEW) This section provides a high-level overview of Americold Realty Trust's global operations and strategic positioning - **Americold Realty Trust** is the **world's largest publicly traded REIT specializing** in **temperature-controlled warehouses**[123](index=123&type=chunk) - As of March 31, 2022, the **company operated** a **global network** of **249 temperature-controlled warehouses** (**1.5 billion cubic feet**) across **North America** (**201**), **Europe** (**27**), **Asia-Pacific** (**18**), and **South America** (**3**)[123](index=123&type=chunk) - The **company also holds minority interests** in two Brazilian **joint ventures**, **SuperFrio** (**33 warehouses**) and **Comfrio** (**27 warehouses**)[123](index=123&type=chunk) [Components of Our Results of Operations](index=33&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section details the primary revenue sources and operating expense categories that constitute the company's financial results - The **primary revenue sources** are **rent**, **storage**, and **warehouse services fees** (**Warehouse segment**), **third-party managed services** (**reimbursement of expenses** plus **management/incentive fees**), and **transportation services** (**transportation fees**, **fuel/capacity surcharges**)[124](index=124&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - **Warehouse segment costs** include **power**, other **facilities costs**, **labor** (**largest component**), and other **service costs**, all **impacted by inflation** and **COVID-19 related inefficiencies**[125](index=125&type=chunk)[127](index=127&type=chunk) - Other **consolidated operating expenses** include **depreciation** and **amortization** (**primarily** from **warehouses** and **intangible assets**), **corporate-level selling, general and administrative expenses** (**wages**, **benefits**, **equity incentive plans**), and **corporate-level acquisition, litigation and other, net expenses** (**transaction costs**, **litigation**, **severance**, **cyber incident costs**)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [Key Factors Affecting Our Business and Financial Results](index=35&type=section&id=Key%20Factors%20Affecting%20Our%20Business%20and%20Financial%20Results) This section identifies critical internal and external factors, including macroeconomic conditions and geopolitical events, influencing the company's performance - **Business** and **financial results** were **negatively impacted** by **COVID-19 related disruptions** in the **food supply chain**, **customer production/transportation**, **labor market** (**availability** and **cost**), and **macroeconomic inflation**[135](index=135&type=chunk) - **Occupancy** and **throughput volumes remain lower** than pre-COVID-19 levels due to **food production** and **transportation challenges**, exacerbated by **labor availability** and the **Omicron variant**[137](index=137&type=chunk)[138](index=138&type=chunk) - The **company initiated out-of-cycle rate increases** in **customer contracts** during H2 2021 and expects to continue monitoring pricing in 2022 to **mitigate inflationary pressures**[139](index=139&type=chunk) - **Geopolitical conflicts**, such as the **Russia-Ukraine war**, create **uncertainty** and **risks** including **increased inflation**, **commodity price volatility**, **supply chain disruptions**, and **foreign currency fluctuations**, potentially **impacting European operations**[140](index=140&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - **Seasonality impacts physical occupancy** (**lowest** in May-June, **peaks** Sept-Dec) and **power expense** (**highest** in Q3), but is **mitigated by fixed commitment contracts** and **diverse customer industries/geographies** (**Southern Hemisphere operations**)[143](index=143&type=chunk)[146](index=146&type=chunk) - **Foreign currency translation causes variations** in **consolidated revenues** and **expenses**, with **fluctuations potentially material** to **results of operations**[147](index=147&type=chunk) [Focus on Our Operational Effectiveness and Cost Structure](index=38&type=section&id=Focus%20on%20Our%20Operational%20Effectiveness%20and%20Cost%20Structure) This section outlines the company's initiatives to enhance efficiency, integrate acquisitions, and manage costs through strategic investments and portfolio adjustments - The **company focuses** on **streamlining business processes**, **integrating acquired assets**, **standardizing operations**, and implementing **new IT tools**[152](index=152&type=chunk) - **Cost reduction initiatives** include **investments** in **energy efficiency projects** (**LED lighting**, **thermal energy storage**, **motion-sensor technology**) and **participation** in **Power Demand Response programs**[152](index=152&type=chunk) - **Active portfolio management involves evaluating** and **exiting less strategic/profitable markets** or **business lines**, such as selling **warehouse assets** or exiting **leased facilities**[153](index=153&type=chunk) [Strategic Shift within Our Transportation Segment](index=38&type=section&id=Strategic%20Shift%20within%20Our%20Transportation%20Segment) This section describes the company's strategic reorientation of its transportation segment towards higher-margin, value-added services - The **transportation segment** is undergoing a **strategic shift** to exit **commoditized**, **non-scalable**, or **low-margin services**[154](index=154&type=chunk) - The **focus** is on more **profitable**, **value-added programs** like **regional**, **national**, **truckload**, and **retailer-specific multi-vendor consolidation services**[154](index=154&type=chunk) - This **strategy aims** to **improve efficiency**, **reduce customer transportation costs**, drive **client retention**, and maintain **high occupancy** in **temperature-controlled warehouses**, including adding **dedicated fleet services** through **acquisitions**[154](index=154&type=chunk) [Historically Significant Customer](index=38&type=section&id=Historically%20Significant%20Customer) This section discusses the financial impact and nature of business with a major customer, primarily within the third-party managed segment - One **customer accounted** for over **10%** of **total revenues** for the three months ended March 31, 2022 (**$78.1 million**) and 2021 (**$65.8 million**)[155](index=155&type=chunk) - The **substantial majority** of this **customer's business relates** to the **third-party managed segment**, where the **company** is **reimbursed** for most **expenses**[155](index=155&type=chunk) - **Reimbursements** from this **customer** were **$75.2 million** in Q1 2022 and **$61.3 million** in Q1 2021, offset by **matching expenses**[155](index=155&type=chunk) [Economic Occupancy of our Warehouses](index=39&type=section&id=Economic%20Occupancy%20of%20our%20Warehouses) This section defines and explains the importance of economic occupancy as a key driver of warehouse segment financial performance - **Average economic occupancy** is defined as **physically occupied pallets** plus **contractually committed pallets**[157](index=157&type=chunk) - The **company actively seeks fixed commitment contracts** to **mitigate seasonality** and other **factors impacting physical occupancy**, ensuring **customers** have necessary space[157](index=157&type=chunk) - **Economic occupancy** is considered an **important driver** of **financial results**[157](index=157&type=chunk) [Throughput at our Warehouses](index=39&type=section&id=Throughput%20at%20our%20Warehouses) This section describes how the volume of goods movement in warehouses impacts service revenues and is influenced by production and demand - **Throughput**, the **volume of pallets entering** and **exiting warehouses**, **significantly impacts warehouse services revenues**[158](index=158&type=chunk) - **Higher throughput drives revenues** as **customers** are typically billed based on the **level of goods movement**[158](index=158&type=chunk) - **Throughput** can be influenced by **food manufacturers' production levels** (responding to **market conditions**, **labor**, **supply chain**, **consumer preferences**) and **changes** in **inventory turnover** due to **demand shifts**[158](index=158&type=chunk) [How We Assess the Performance of Our Business](index=39&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section details the key metrics and analytical approaches, including Segment Contribution and Same Store Analysis, used to evaluate business performance - **Segment Contribution** (**NOI**) is used to evaluate **primary business segments**, calculated as **segment revenues less cost of operations** (excluding certain **corporate-level expenses**)[159](index=159&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**, or **developments**[164](index=164&type=chunk)[165](index=165&type=chunk) - **Constant Currency Metrics** are used to assess **underlying business performance** by translating **current period results** at **prior period average foreign exchange rates**, excluding the **impact of currency fluctuations**[173](index=173&type=chunk) [Comparison of Results for the Three Months Ended March 31, 2022 and 2021](index=42&type=section&id=Comparison%20of%20Results%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202022%20and%202021) This section provides a detailed comparative analysis of the company's financial and operational performance between the first quarters of 2022 and 2021 [Warehouse Segment](index=42&type=section&id=Warehouse%20Segment) This section analyzes the revenue, cost of operations, and contribution of the company's core warehouse segment Warehouse Segment Operating Results (in thousands) | Metric | Q1 2022 Actual | Q1 2022 Constant Currency | Q1 2021 Actual | Change Actual (%) | Change Constant Currency (%) | | :------------------------------------ | :------------- | :------------------------ | :------------- | :---------------- | :--------------------------- | | Total warehouse segment revenues | $540,925 | $548,722 | $485,451 | 11.4% | 13.0% | | Total warehouse segment cost of operations | $394,667 | $400,764 | $339,270 | 16.3% | 18.1% | | Warehouse segment contribution (NOI) | $146,258 | $147,958 | $146,181 | 0.1% | 1.2% | | Total warehouse segment margin | 27.0% | 27.0% | 30.1% | -307 bps | -315 bps | - **Warehouse segment revenues increased** by **11.4%** (**13.0%** on a **constant currency basis**) **YoY**, **driven by 2021 acquisitions**, **contractual/market-driven rate escalations**, and recently completed **developments**[177](index=177&type=chunk) - **Warehouse segment cost of operations increased** by **16.3%** (**18.1%** on a **constant currency basis**) **YoY**, due to **additional acquired facilities** and **elevated inflation impacting power**, **labor**, and other **costs**[180](index=180&type=chunk) - **Warehouse segment contribution** (**NOI**) **increased marginally** by **0.1%** (**1.2%** on a **constant currency basis**) **YoY**, with **margin decreasing** by **307 basis points**, reflecting **higher costs** and **lower throughput**[176](index=176&type=chunk)[181](index=181&type=chunk) [Same Store and Non-Same Store Analysis](index=43&type=section&id=Same%20Store%20and%20Non-Same%20Store%20Analysis) This section evaluates the performance of comparable properties, highlighting changes in occupancy, revenues, and throughput Same Store Performance Metrics | Metric | Q1 2022 | Q1 2021 | Change | | :---------------------------------------------------- | :------ | :------ | :----- | | Number of same store sites | 215 | 215 | n/a | | Economic occupancy percentage | 77.6% | 77.4% | 22 bps | | Same store rent and storage revenues per economic occupied pallet | $53.80 | $51.55 | 4.4% | | Throughput pallets (in thousands) | 8,893 | 8,947 | (0.6)% | | Same store warehouse services revenues per throughput pallet | $31.38 | $30.02 | 4.5% | - **Same store economic occupancy increased** by **22 basis points** to **77.6%**, while **physical occupancy remained stable** at **70.7%**[193](index=193&type=chunk) - **Same store rent** and **storage revenues per economic occupied pallet increased** by **4.4%** (**5.6% constant currency**), **driven by commercial terms** and **rate escalations**[193](index=193&type=chunk) - **Same store throughput pallets decreased** by **0.6%** due to **Easter holiday timing** and ongoing **COVID-19 related supply chain** and **labor disruptions**[194](index=194&type=chunk) - **Same store warehouse services revenues per throughput pallet increased** by **4.5%** (**6.3% constant currency**) due to **rate escalations** and **higher-priced value-added services**[194](index=194&type=chunk) [Third-Party Managed Segment](index=47&type=section&id=Third-Party%20Managed%20Segment) This section reviews the financial performance of the third-party managed segment, including revenue and contribution trends Third-Party Managed Segment Operating Results (in thousands) | Metric | Q1 2022 Actual | Q1 2022 Constant Currency | Q1 2021 Actual | Change Actual (%) | Change Constant Currency (%) | | :--------------------------------------- | :------------- | :------------------------ | :------------- | :---------------- | :--------------------------- | | Third-party managed revenues | $85,860 | $86,199 | $73,072 | 17.5% | 18.0% | | Third-party managed cost of operations | $82,359 | $82,631 | $68,690 | 19.9% | 20.3% | | Third-party managed segment contribution | $3,501 | $3,568 | $4,382 | (20.1)% | (18.6)% | | Third-party managed margin | 4.1% | 4.1% | 6.0% | -192 bps | -186 bps | - **Third-party managed revenues increased** by **17.5%** (**18.0% constant currency**) **YoY**, **driven by higher business volume** in **domestic managed operations** and **increased pass-through costs** (**labor**, **inflation**)[198](index=198&type=chunk) - **Third-party managed cost of operations increased** by **19.9%** (**20.3% constant currency**) **YoY**, mirroring **revenue trends**[199](index=199&type=chunk) - **Third-party managed segment contribution decreased** by **20.1%** (**18.6% constant currency**) **YoY**, with **margin declining** by **192 basis points**[200](index=200&type=chunk) [Transportation Segment](index=49&type=section&id=Transportation%20Segment) This section examines the revenue, costs, and contribution of the transportation segment, reflecting strategic shifts and market dynamics Transportation Segment Operating Results (in thousands) | Metric | Q1 2022 Actual | Q1 2022 Constant Currency | Q1 2021 Actual | Change Actual (%) | Change Constant Currency (%) | | :---------------------------------------- | :------------- | :------------------------ | :------------- | :---------------- | :--------------------------- | | Transportation revenues | $78,910 | $80,952 | $76,272 | 3.5% | 6.1% | | Total transportation cost of operations | $70,381 | $72,238 | $69,569 | 1.2% | 3.8% | | Transportation segment contribution (NOI) | $8,529 | $8,714 | $6,703 | 27.2% | 30.0% | | Transportation margin | 10.8% | 10.8% | 8.8% | 202 bps | 198 bps | - **Transportation revenues increased** by **3.5%** (**6.1% constant currency**) **YoY**, **driven by higher rates** in **consolidation business**, **acquisitions** (KMT Brrr!), and **increased brokered transportation costs/surcharges**[204](index=204&type=chunk) - **Transportation cost of operations increased** by **1.2%** (**3.8% constant currency**) **YoY**, due to **capacity constraints**, **higher carrier fees**, and **increased wage/fuel costs**[205](index=205&type=chunk) - **Transportation segment contribution increased** by **27.2%** (**30.0% constant currency**) **YoY**, with **margin improving** by **202 basis points** due to **rate increases**[206](index=206&type=chunk) [Other Consolidated Operating Expenses](index=49&type=section&id=Other%20Consolidated%20Operating%20Expenses) This section details changes in depreciation, amortization, SG&A, and acquisition/litigation-related expenses - **Depreciation** and **amortization expense increased** by **7.0%** to **$82.6 million** in Q1 2022, **primarily due to 2021 acquisitions** and recently completed **developments**[207](index=207&type=chunk) - **Corporate-level selling, general and administrative expenses increased** by **27.9%** to **$57.6 million** in Q1 2022, **driven by higher third-party legal/professional fees**, **resumption of performance-based compensation**, and **higher share-based compensation**[209](index=209&type=chunk) - **Corporate-level acquisition, litigation and other, net expenses decreased** by **$10.7 million** to **$10.1 million** in Q1 2022, mainly due to **lower acquisition/integration costs** and **cyber incident related costs** compared to Q1 2021[210](index=210&type=chunk) [Other Expense and Income](index=50&type=section&id=Other%20Expense%20and%20Income) This section reports on non-operating financial items, including interest expense and gains/losses from debt extinguishment Other (Expense) Income (in thousands) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :------------------------------------------------------------------ | :------ | :------ | :--------- | | Interest expense | $(25,773) | $(25,956) | (0.7)% | | Loss on debt extinguishment, modifications and termination of derivative instruments | $(616) | $(3,499) | (82.4)% | | Other, net | $245 | $176 | 39.2% | - **Interest expense decreased** slightly by **0.7%** due to a **lower effective interest rate** (**3.06%** in Q1 2022 vs. **3.31%** in Q1 2021), despite an **increase** in **outstanding principal**[212](index=212&type=chunk) - **Loss on debt extinguishment**, **modifications**, and **termination of derivative instruments decreased** by **82.4%**, **primarily due to the early repayment** of **$200 million principal** on the **Senior Unsecured Term Loan A Facility** in Q1 2021[213](index=213&type=chunk) [Income Tax Benefit](index=51&type=section&id=Income%20Tax%20Benefit) This section discusses the income tax benefit recognized and its components for the reporting periods - **Income tax benefit** for Q1 2022 was **$0.7 million**, a **slight decrease** of **$0.1 million** compared to **$0.8 million** in Q1 2021[215](index=215&type=chunk) - **Current tax expense** and **deferred income tax benefit remained consistent** due to **comparable operating results** in both periods[215](index=215&type=chunk) [Non-GAAP Financial Measures](index=52&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures such as FFO, Core FFO, Adjusted FFO, EBITDAre, and Core EBITDA - The **company uses FFO**, **Core FFO**, **Adjusted FFO**, **EBITDAre**, and **Core EBITDA** as **supplemental performance measures**[217](index=217&type=chunk) - **FFO** is calculated per **NAREIT standards**, excluding **depreciation**, **amortization**, and **gains/losses** from **real estate sales**[218](index=218&type=chunk) - **Core FFO adjusts FFO** for items like **non-real estate asset sales**, **acquisition/litigation costs**, **share-based compensation** for **IPO grants**, **debt extinguishment losses**, and **foreign currency exchange loss**[218](index=218&type=chunk) - **Adjusted FFO further adjusts Core FFO** for **amortization of deferred financing costs**, **above/below market leases**, **straight-line net rent**, **deferred income taxes**, **share-based compensation** (excluding **IPO grants**), **non-real estate depreciation/amortization**, and **maintenance capital expenditures**[218](index=218&type=chunk) - **EBITDAre** is calculated per **NAREIT standards**, and **Core EBITDA further adjusts EBITDAre** for **non-core operating items**[220](index=220&type=chunk) Reconciliation of Net Loss to FFO, Core FFO, and Adjusted FFO (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(17,445) | $(14,236) | | NAREIT Funds from operations | $35,851 | $38,271 | | Core FFO applicable to common shareholders | $46,329 | $62,546 | | Adjusted FFO applicable to common shareholders | $68,854 | $75,921 | Reconciliation of Net Loss to EBITDAre and Core EBITDA (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(17,445) | $(14,236) | | NAREIT EBITDAre | $93,438 | $88,789 | | Core EBITDA | $110,895 | $117,789 | [Liquidity and Capital Resources](index=55&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's ability to meet its financial obligations and fund operations through cash flows, credit facilities, and capital markets - **Principal funding sources** include **current cash balances**, **cash flows** from **operations**, the **2020 Senior Unsecured Revolving Credit Facility**, **ATM Equity Programs**, and other **debt/equity offerings**[227](index=227&type=chunk) - These **sources** are expected to be **adequate** for **short-term** and **long-term liquidity requirements**, including **working capital**, **capital expenditures**, **debt service**, and **shareholder distributions**[228](index=228&type=chunk)[229](index=229&type=chunk) - As of March 31, 2022, approximately **$809.4 million remained available** under the **2021 ATM Equity Program**, with **no activity** during Q1 2022[233](index=233&type=chunk) - The **company maintains warehouseman's liens** on **customer products** to secure payments and has historically been **successful** in **collecting accounts receivable** during **customer bankruptcies**[234](index=234&type=chunk) - **Bad debt expense** was **$1.3 million** in Q1 2022, with **allowances** of **$20.7 million** as of March 31, 2022[235](index=235&type=chunk) - Approximately **37%** of the **labor force** is covered by **collective bargaining agreements**, with **less than 8% set** to expire in the remaining nine months of 2022[236](index=236&type=chunk) - As a **REIT**, the **company** is required to **distribute 90%** of its **taxable income annually** and intends to make **regular quarterly distributions**, funded by **cash flows** or **borrowings** if necessary[237](index=237&type=chunk)[238](index=238&type=chunk) Debt Summary as of March 31, 2022 (in thousands) | Debt Type | Amount | Percent of Total | | :--------------------------------------------------------------------- | :---------- | :--------------- | | Fixed rate | $2,058,187 | 72% | | Variable rate - unhedged | $888,699 | 28% | | Total mortgage notes, senior unsecured notes, term loans and borrowings under revolving line of credit | $2,946,886 | | | Sale-leaseback financing obligations | $177,305 | | | Financing lease obligations | $91,436 | | | Total debt and debt-like obligations | $3,215,627 | | - The **effective interest rate** as of March 31, 2022, was **3.06%**, with a **weighted average term** to **initial maturity** of approximately **5.8 years**[242](index=242&type=chunk)[243](index=243&type=chunk) - The **company holds investment-grade credit ratings**: **BBB** (Fitch, **stable outlook**), **BBB** (DBRS Morningstar, **Positive Trends outlook**), and **Baa3** (Moody's, **stable outlook**)[245](index=245&type=chunk) Maintenance Capital Expenditures (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------- | :-------------------------------- | :-------------------------------- | | Real estate | $13,864 | $12,928 | | Personal property | $974 | $1,782 | | Information technology | $1,268 | $1,021 | | Total | $16,106 | $15,731 | | Per cubic foot | $0.011 | $0.011 | Repair and Maintenance Expenses (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------- | :-------------------------------- | :-------------------------------- | | Real estate | $8,843 | $8,376 | | Personal property | $14,446 | $11,454 | | Total | $23,289 | $19,830 | | Per cubic foot | $0.016 | $0.014 | Growth and Expansion Capital Expenditures (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | | Acquisitions, net of cash acquired and adjustments | $(603) | $41,956 | | Expansion and development initiatives | $58,521 | $83,268 | | Information technology | $741 | $1,528 | | Total Growth and Expansion Capital Expenditures | $58,659 | $126,752 | - **Expansion** and **development expenditures** in Q1 2022 were **primarily** for **automated development sites** in Connecticut and Pennsylvania (**$17.6 million**), Spearwood, Australia **expansion** (**$8.1 million**), and Dunkirk, NY **development** (**$7.8 million**)[255](index=255&type=chunk) Historical Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $15,586 | $46,531 | | Net cash used in investing activities | $(94,244) | $(143,737) | | Net cash provided by (used in) financing activities | $46,256 | $(235,530) | - **Net cash provided by operating activities decreased** by **$30.9 million YoY**, mainly due to **increased accounts receivable** and **higher SG&A expenses**[262](index=262&type=chunk) - **Net cash used in investing activities decreased** by **$49.5 million YoY**, reflecting **lower cash used** for **business combinations**[263](index=263&type=chunk)[264](index=264&type=chunk) - **Net cash provided by financing activities** was **$46.3 million** in Q1 2022, a **significant improvement** from **cash used** of **$235.5 million** in Q1 2021, **primarily due to proceeds** from the **revolving line of credit**[265](index=265&type=chunk)[266](index=266&type=chunk) [SIGNIFICANT ACCOUNTING POLICIES UPDATE](index=60&type=section&id=SIGNIFICANT%20ACCOUNTING%20POLICIES%20UPDATE) This section refers to the detailed disclosures on significant accounting policies within the financial statements - Refer to **Note 1** to the **condensed consolidated financial statements** for **significant accounting policies**[267](index=267&type=chunk) [NEW ACCOUNTING PRONOUNCEMENTS](index=61&type=section&id=NEW%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to the detailed disclosures on new accounting pronouncements within the financial statements - Refer to **Note 1** to the **condensed consolidated financial statements** for **new accounting pronouncements**[269](index=269&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically interest rate risk and foreign currency risk, and how these could impact future income and cash flows - As of March 31, 2022, the **company** had **$174.9 million** in **USD-denominated variable-rate debt** and **$250 million** in **CAD-denominated variable-rate debt**[272](index=272&type=chunk) - A **100 basis point increase** in **market interest rates** would **increase annual interest expense** by approximately **$8.9 million**, while a **100 basis point decrease** would **reduce** it by **$5.2 million**[272](index=272&type=chunk) - **Foreign currency risk exposure** at March 31, 2022, was **not materially different** from what was disclosed in the **2021 Annual Report** on **Form 10-K**[273](index=273&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness and reporting on any changes - **Management**, with **CEO** and **CFO participation**, concluded that the **company's disclosure controls** and **procedures** were **effective** as of March 31, 2022[274](index=274&type=chunk) - **No changes** in **internal control over financial reporting** were identified during Q1 2022 that **materially affected**, or are reasonably likely to **materially affect**, the **company's internal control over financial reporting**[277](index=277&type=chunk) [PART II - OTHER INFORMATION](index=64&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not a party to any material litigation or legal proceedings that would have a material impact on its business, financial condition, liquidity, results of operations, and prospects, referring to Note 7 for further details - The **company** is **not a party** to any **material litigation** or **legal proceedings** that would have a **material impact** on its **business**, **financial condition**, **liquidity**, **results of operations**, and **prospects**[279](index=279&type=chunk) - **Further information** regarding **material legal proceedings** is provided in **Note 7** to the **Condensed Consolidated Financial Statements**[280](index=280&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section highlights that investing in the company's common shares involves risks and uncertainties, referencing the 2021 Annual Report on Form 10-K and specifically discussing the adverse effects of geopolitical conflicts, such as the Russia-Ukraine conflict, on global operations - **Investing** in the **company's common shares involves risks** and **uncertainties**, as detailed in the **2021 Annual Report** on **Form 10-K**[281](index=281&type=chunk) - **Geopolitical conflicts**, specifically the **Russia-Ukraine conflict**, may **adversely affect** the **business** and **results of operations**, particularly **European operations**, through **increased inflation**, **commodity price volatility**, **supply chain disruptions**, and **foreign currency fluctuations**[282](index=282&type=chunk)[283](index=283&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were **no unregistered sales** of **equity securities** and **use of proceeds**[286](index=286&type=chunk) [Item 3. Defaults Upon Senior Securities](index=65&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - There were **no defaults** upon **senior securities**[287](index=287&type=chunk) [Item 4. Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - There are **no mine safety disclosures**[288](index=288&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - There is **no other information** to report[289](index=289&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including offer letters, severance plans, equity award agreements, certifications, and XBRL financial statements - The **exhibits include various management contracts**, **compensatory plans**, **certifications** (**CEO**, **CFO**), and **XBRL financial statements**[291](index=291&type=chunk) [SIGNATURES](index=67&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q filing, confirming its submission on behalf of Americold Realty Trust [Filing Signatures](index=67&type=section&id=Filing%20Signatures) This section contains the official signatures for the Form 10-Q filing, confirming its submission on behalf of Americold Realty Trust - The **report** was signed by **Marc J. Smernoff**, **Chief Financial Officer** and **Executive Vice President**, on May 6, 2022[295](index=295&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 001-34723 AMERICOLD REALTY TRUST (Exact name of registrant as specified in its charter) Maryland 93-0295215 (State or other jurisdiction of incorpo ...

Financial Data and Key Metrics Changes - For the full year 2021, total revenues were $2.7 billion, with global warehouse segment revenues at $2.1 billion, reflecting increases of 36.6% and 34.6% respectively [32] - The company reported total NOI of $630 million and global warehouse segment NOI of $586 million, marking increases of 14.2% and 12.7% respectively [32] - AFFO per share was $1.15, aligning with guidance [9][32] - Core EBITDA for Q4 2021 was $124 million, a 5.6% year-over-year increase, while the core EBITDA margin decreased by 511 basis points to 17.3% [25] Business Line Data and Key Metrics Changes - Global warehouse segment revenue for Q4 2021 was $554 million, a 36% increase year-over-year, driven by acquisitions and rate escalations [26] - Same store global warehouse segment revenue for Q4 2021 was $379 million, up 2.5% year-over-year [28] - Same store global warehouse NOI decreased by 8.2% year-over-year, reflecting ongoing disruptions in food production and labor challenges [28] Market Data and Key Metrics Changes - Economic and physical occupancies for the 2021 same store pool averaged approximately 77% and 68.4% respectively, significantly below pre-COVID levels [12][13] - The overall cold storage industry saw a decline in total holdings of 8% to 10% throughout 2021 compared to 2019 levels [13] - The company noted that fill rates have dropped to the 70% range, a significant decrease from the pre-COVID standard of 98.5% [15][16] Company Strategy and Development Direction - The company aims to enhance labor management, focusing on recruitment and retention to reduce dependence on temporary labor [44] - There is a commitment to improving customer service levels to exceed pre-COVID standards [44] - The company plans to maintain its development projects on track despite macroeconomic challenges [44] Management's Comments on Operating Environment and Future Outlook - Management highlighted that COVID-related supply chain and labor disruptions continue to impact the global food supply chain, affecting occupancy and throughput [37] - The company expects AFFO per share in the range of $1 to $1.10 for 2022, with guidance reflecting ongoing challenges in the labor market and inflation [37] - Management expressed confidence in the recovery of inventory levels once labor challenges are resolved, although the timing remains uncertain [64] Other Important Information - The company received recognition from Newsweek for its ESG efforts, being included in the list of America's most responsible companies for 2022 [17] - The company completed $766 million in global acquisitions and announced $168 million in development starts for 2021 [32][34] - Total debt outstanding was $3.1 billion, with total liquidity of $803 million at quarter end [36] Q&A Session Summary Question: What led to the change of heart regarding the CEO position? - The CEO mentioned that the decision to accept the permanent position was influenced by the board's support and his commitment to the company [43] Question: How does the company plan to address labor cost increases? - Management indicated that the full impact of pricing increases will be felt in Q2 2022, as they continue to engage with customers [47] Question: What factors contributed to the deceleration in service revenue growth? - The CEO noted that lower throughput volumes and a shift in business mix contributed to the deceleration in service revenue growth [49] Question: How is the company managing customer commitments amid recent challenges? - Management stated that customers recognize the need for space as production levels recover, and fixed commitments have continued to grow [51] Question: What is the outlook for the impact of the Russia conflict on food production? - The CEO acknowledged that the conflict could impact European business but emphasized that supply chain challenges are global in nature [68][70]

Financial Data and Key Metrics Changes - For Q3 2021, total company revenue was $709 million, reflecting a 42% increase year-over-year, while total company NOI was $156 million, a 15% increase year-over-year [32] - Core EBITDA for Q3 2021 was $115 million, a 10% increase year-over-year, with a core EBITDA margin decrease of 474 basis points to 15.2% [32] - AFFO for Q3 2021 was $70 million or $0.27 per diluted share, consistent with internal expectations [32] Business Line Data and Key Metrics Changes - Within the Global Warehouse segment, rent and storage revenue from fixed commitment contracts increased to $346 million compared to $280 million in Q3 2020 [33] - Same-store Global Warehouse segment revenue was $374 million, up 2.3% year-over-year, while same-store NOI decreased by 5.1% year-over-year to $117 million [34][35] - Same-store economic occupancy was 76.5%, reflecting a decrease of 179 basis points from the previous year, impacted by reduced food production levels [36] Market Data and Key Metrics Changes - Current physical occupancy levels in the U.S. portfolio improved sequentially but remain below Q3 2020 levels and pre-COVID levels [21] - Customers are producing at approximately 80% to 85% of pre-COVID levels, with expectations to reach normalized inventory levels by mid-2022 [23][25] Company Strategy and Development Direction - The company announced the appointment of George Chappelle as Interim CEO, emphasizing a strategic mindset and operational acumen [9][11] - Investments include a $42 million expansion of the Spearwood facility in Australia and an additional $10 million to $11 million into automation at the Rochelle facility [40][41] - The company is focused on mitigating inflationary pressures through rate increases and operational efficiencies [30][31] Management Comments on Operating Environment and Future Outlook - Management noted strong end consumer demand for temperature-controlled food, despite ongoing COVID-related supply chain and labor disruptions [20] - The company remains confident in the global demand for food and expects food manufacturers to return to pre-COVID inventory levels [25] - Management affirmed full year 2021 AFFO guidance of $1.15 to $1.20 per share, contingent on macroeconomic factors improving food manufacturing [46] Other Important Information - The company has a total debt outstanding of $3 billion and total liquidity of approximately $810 million [45] - The churn rate for top customers remains low at approximately 3% of total warehouse revenues [39] Q&A Session Summary - The conference call concluded without a Q&A session, indicating a focus on prepared remarks rather than audience interaction [49]

Warehouse Operations - As of September 30, 2021, the company operated 248 temperature-controlled warehouses with a total capacity of over 1.5 billion cubic feet[240]. - Labor costs are the largest component of warehouse operations, influenced by headcount, compensation levels, and COVID-19 related changes[242]. - The company has implemented a shared services support structure to enhance operational efficiency and manage costs[249]. - Throughput at warehouses, which refers to the volume of pallets entering and exiting, is a key factor impacting warehouse services revenues, influenced by food manufacturers' production levels and shifts in demand preferences[282]. - Warehouse segment revenues for Q3 2021 were $542.0 million, a 39.7% increase from $388.0 million in Q3 2020[300]. - Warehouse segment cost of operations rose to $397.1 million, a 52.6% increase compared to $260.3 million in Q3 2020[303]. - The number of same-store warehouses as of September 30, 2021, was 162 out of a total of 248 warehouses[292]. - Total warehouse segment revenues for the nine months ended September 30, 2021, were $1,531,232, representing a 34.1% increase compared to $1,141,503 in the same period of 2020[355]. - Same store revenues for the nine months ended September 30, 2021, were $1,089,078, a 0.9% increase from $1,073,281 in 2020[353]. - Economic occupancy at same stores decreased to 76.2% for the nine months ended September 30, 2021, down 393 basis points from 80.1% in the prior year[361]. Acquisitions and Investments - The company reported an acquisition of Newark Facility Management for $391.4 million, funded through its 2020 Senior Unsecured Revolving Credit Facility[253]. - The acquisition of Agro Merchants was completed for a total consideration of $1.59 billion, expanding the company's temperature-controlled warehouse and transportation services[259]. - The company acquired Bowman Stores for $107.1 million, which included a single campus in Spalding, England[255]. - Approximately $371.1 million of the revenue increase was driven by acquisitions completed during 2020 and 2021[347]. - Acquisitions during the nine months ended September 30, 2021, totaled $616.3 million, including Bowman Stores and ColdCo[425]. Financial Performance - The nine months ended September 30, 2021 were negatively impacted by COVID-19 related disruptions, affecting the food supply chain, production of goods, labor market, and inflation, leading to lower occupancy and throughput volumes compared to pre-pandemic levels[267]. - One customer accounted for more than 10% of total revenues, with sales of $79.8 million for the three months ended September 30, 2021, up from $66.7 million in the same period of 2020[279]. - The total warehouse segment margin decreased to 26.7% in Q3 2021 from 32.9% in Q3 2020, a decline of 618 basis points[299]. - Net income for the three months ended September 30, 2021, was $5.308 million, a decrease from $12.374 million in 2020, while the nine-month net loss was $22.327 million compared to a profit of $68.547 million in 2020[391]. - NAREIT Funds from Operations (FFO) for the three months ended September 30, 2021, was $54.211 million, up from $50.361 million in 2020[391]. Cost Management - The company reported that power costs significantly impact financial results, with potential hedging strategies in place[244]. - The company has implemented fixed commitment contracts with customers to stabilize revenue and earnings during seasonal fluctuations, particularly during peak occupancy periods[269]. - The company has invested in energy efficiency projects to reduce costs, including LED lighting and energy management practices, which have led to reduced energy consumption[275]. - The company anticipates inflationary impacts on service costs but expects to mitigate these through price increases that have already taken effect or are expected to take effect[267]. Transportation Segment - The transportation segment includes services from the Hall's acquisition, which operates in the Northeast corridor of the U.S.[246]. - Transportation revenues surged to $79.0 million, a 131.6% increase compared to $34.1 million for the same period in 2020[329]. - Transportation segment contribution (NOI) was $6.3 million for the three months ended September 30, 2021, an increase of 49.3% compared to the same period in 2020[331]. - Transportation cost of operations increased by 143.2% to $72.7 million, up from $29.9 million in the same quarter last year[330]. - Transportation revenues increased by 123.2% to $234.1 million for the nine months ended September 30, 2021, compared to $104.9 million in the same period of 2020[371]. Debt and Liquidity - As of September 30, 2021, the company had approximately $2.7 billion in outstanding debt, with 76.90% being fixed-rate and 23.10% variable-rate[413]. - The effective interest rate on the company's debt as of September 30, 2021, was 3.09%[412]. - The company expects to utilize current cash balances, cash flows from operations, and various financing agreements to meet short-term liquidity requirements and capital commitments[400]. - 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[416]. Operational Challenges - 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, as part of its portfolio management strategy[276]. - Average occupied economic pallets at same stores fell to 2,878, a decrease of 2.2% from 2,942 pallets year-over-year[318]. - Economic occupancy is defined as the aggregate number of physically occupied pallets and contractually committed pallets, which is crucial for financial results and mitigates the impact of seasonal changes[280].

Warehouse Operations - As of June 30, 2021, the company operated 246 temperature-controlled warehouses with a total capacity of over 1.4 billion cubic feet[279]. - The company has a global presence with 200 warehouses in North America, 27 in Europe, 16 in Asia-Pacific, and 3 in South America[279]. - As of June 30, 2021, the company operated a total of 246 warehouses, with 162 classified as same-store warehouses[328]. - The average economic occupancy of warehouses is a key performance indicator, with a focus on transitioning customers to contracts featuring fixed storage commitments to mitigate seasonal fluctuations[315][317]. - The throughput at warehouses, which refers to the volume of pallets entering and exiting, is crucial for revenue generation, as customers are billed based on throughput levels[318]. - Economic occupancy at same stores decreased to 75.2% for the three months ended June 30, 2021, down 403 basis points from 79.2% in the same period of 2020[354]. - Average occupied economic pallets for same store sites decreased by 4.7% to 2,830 pallets, impacting economic occupancy percentage[350]. - Economic occupancy percentage for same store sites dropped to 76.0%, down from 80.9%[397]. - Average economic occupied pallets for same store sites decreased by 5.8% to 2,858[397]. Acquisitions and Expansion - The company acquired Agro Merchants for a total consideration of $1.59 billion, expanding its temperature-controlled warehouse and transportation services[293]. - The acquisition of Hall's Warehouse Corporation was completed for $489.2 million, enhancing the company's service offerings in the Northeast U.S.[296]. - The company acquired KMT Brrr! for $70.8 million, funded through its 2020 Senior Unsecured Revolving Credit Facility[291]. - The company holds a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. for approximately $25.7 million, which operates 33 warehouses in Brazil[299]. - Approximately $229.8 million of the revenue increase was driven by acquisitions completed during 2020 and 2021, including 61 warehouse facilities acquired[385]. - The company expanded its non-same store sites to 75, up from 10 in the previous year[397]. - The company invested $63.5 million in two fully-automated development sites in Connecticut and Pennsylvania during the six months ended June 30, 2021[470]. - New development projects announced included an $8.7 million investment in the Atlanta major market phase 2 project and a $4.5 million investment in the Dunkirk NY expansion[471]. Financial Performance - For the three months ended June 30, 2021, sales to a significant customer were $64.1 million, compared to $64.4 million for the same period in 2020, indicating a slight decrease of 0.5%[314]. - For the six months ended June 30, 2021, sales to the same customer were $130.0 million, up from $120.0 million in 2020, reflecting an increase of 8.3%[314]. - Warehouse segment revenues for the three months ended June 30, 2021, were $503.7 million, a 35.3% increase from $372.4 million in the same period of 2020[336]. - The increase in warehouse segment revenues was driven by acquisitions totaling 64 facilities and contractual rate escalations, contributing approximately $120.6 million to revenue growth[336]. - Warehouse segment revenues for the six months ended June 30, 2021, were $989.2 million, an increase of $235.7 million or 31.3% compared to $753.5 million for the same period in 2020[385]. - Total warehouse segment revenues increased by 31.3% to $989,185,000 compared to $753,479,000 in the same period last year[395]. - Total same store revenues grew by 0.2% to $715,493,000, while total same store cost of operations increased by 1.8% to $480,766,000[393]. - Non-same store revenues surged by 600.2% to $273,692,000, with non-same store cost of operations rising by 534.6% to $217,859,000[393]. Costs and Expenses - The company reported that labor costs are the largest component of warehouse operations, influenced by headcount changes and compensation levels[281]. - Warehouse segment cost of operations rose to $359.4 million, reflecting a 42.4% increase compared to $252.3 million in the prior year[339]. - The increase in costs was attributed to power, labor, property tax, and insurance, reflecting current market trends[339]. - Total warehouse cost of operations rose by 37.9% to $698,625,000, up from $506,574,000 in the previous year[395]. - Labor costs increased to $438.9 million for the six months ended June 30, 2021, reflecting a 30.8% increase compared to $335.6 million for the same period in 2020[384]. - Corporate-level selling, general and administrative expenses were $42.5 million for the three months ended June 30, 2021, an increase of $10.1 million, or 31.3%, compared to $32.3 million in the same period of 2020[369]. - Corporate-level selling, general and administrative expenses rose to $87.5 million for the six months ended June 30, 2021, an increase of 26.4% from $69.2 million in the same period of 2020[416]. Depreciation and Amortization - The company incurred significant depreciation and amortization expenses due to the capital-intensive nature of its business[287]. - Depreciation and amortization expense rose to $84.5 million for the three months ended June 30, 2021, an increase of $32.1 million, or 61.2%, compared to $52.4 million in the same period of 2020[368]. - Depreciation and amortization expense was $161.7 million for the six months ended June 30, 2021, up 55.4% from $104.0 million in the same period of 2020[415]. COVID-19 Impact - The company expects to continue facing inefficiencies due to COVID-19 related operational changes[281]. - The company continues to monitor the impact of COVID-19 on operations, with ongoing uncertainties regarding its effects on financial performance and market conditions[304]. Currency and Taxation - The impact of foreign currency translation on revenues and expenses from international operations is significant, with fluctuations potentially affecting overall financial results[305][307]. - The foreign currency translation had a favorable impact of $13.1 million on revenues and $9.5 million unfavorable impact on expenses during the three months ended June 30, 2021[338][339]. - The foreign currency translation of revenues had a favorable impact of $25.0 million during the six months ended June 30, 2021, mainly due to the weakening of the U.S. dollar[387]. - The income tax expense for the three months ended June 30, 2021, was $9.0 million, an increase of $7.8 million from $1.2 million for the same period in 2020, primarily due to a tax rate change in the UK[380]. - Income tax expense for the six months ended June 30, 2021, was $8.2 million, a decrease of $6.5 million compared to the same period in 2020, influenced by a tax rate change in the UK[430]. Debt and Financing - The company had approximately $2.6 billion in outstanding debt as of June 30, 2021, with 81.94% being fixed-rate debt[457]. - The effective interest rate on outstanding debt decreased from 4.22% to 3.24% for the six months ended June 30, 2021, despite an increase in outstanding principal from $1.8 billion to $2.6 billion[424]. - Interest expense increased to $26.6 million for the three months ended June 30, 2021, up $3.4 million, or 14.7%, compared to $23.2 million in the same period of 2020[375]. - Interest expense increased by $5.5 million, or 11.7%, to $52.5 million for the six months ended June 30, 2021, compared to $47.0 million for the same period in 2020[424]. - Loss on debt extinguishment was $0.9 million for the three months ended June 30, 2021, primarily due to the amortization of fees for the termination of interest rate swaps[377]. - Loss on debt extinguishment and modifications was $4.4 million for the six months ended June 30, 2021, primarily due to early repayment of $200 million on the Senior Unsecured Term Loan A Facility[426]. Revenue Streams - Transportation revenues increased to $78.8 million for the three months ended June 30, 2021, a rise of $43.9 million, or 126.0%, compared to $34.9 million in the same period of 2020[364]. - Transportation revenues surged to $155.1 million for the six months ended June 30, 2021, an increase of 119.1% compared to $70.8 million in the same period of 2020[412]. - Third-party managed revenues were $72.2 million for the three months ended June 30, 2021, a decrease of $0.8 million, or 1.1%, compared to $73.0 million in the same period of 2020[359]. - Third-party managed revenues increased to $145.2 million for the six months ended June 30, 2021, a rise of 5.3% from $137.9 million in the same period of 2020[406]. Miscellaneous - The company has implemented a shared services support structure to manage costs and enhance operational efficiency[288]. - The company has implemented various cost-reduction initiatives, including energy efficiency projects, which have led to reduced energy consumption and costs[310]. - The strategic shift in the transportation segment aims to focus on temperature-controlled warehouses, moving away from low-margin services to more profitable, value-added programs[313]. - 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, as part of active portfolio management[312]. - The company is required to distribute 90% of its taxable income annually to maintain its REIT status, which it has consistently met by distributing at least 100% of taxable income since inception[452]. - The company has entered into an equity distribution agreement allowing for the sale of up to $900 million of common shares through an ATM equity program[448].

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2021, including the balance sheets, statements of operations, statements of equity, and statements of cash flows, along with detailed notes covering significant accounting policies, recent business combinations, debt structure, segment performance, and other key financial disclosures [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company reported total revenues of **$634.8 million** and a net loss of **$14.2 million** for the three months ended March 31, 2021, compared to total revenues of **$484.1 million** and net income of **$23.5 million** in the prior-year period, with the shift to a net loss primarily driven by increased operating expenses, including higher acquisition-related costs and depreciation, while total assets decreased slightly to **$7.54 billion** from **$7.83 billion** at year-end 2020, mainly due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $7,540,008 | $7,831,151 | | Total Liabilities | $3,831,801 | $4,038,330 | | Total Equity | $3,708,207 | $3,792,821 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total Revenues | $634,795 | $484,069 | | Operating Income | $14,226 | $47,678 | | Net (Loss) Income | $(14,236) | $23,511 | | Net (Loss) Income per Share - diluted | $(0.06) | $0.11 | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $46,531 | $80,517 | | Net cash used in investing activities | $(143,737) | $(358,074) | | Net cash (used in) provided by financing activities | $(235,530) | $315,101 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the basis of the financial statements, highlighting significant events and policies, including the impact of recent acquisitions like Liberty Freezers and Agro, which have significantly expanded the company's global footprint, and outlining the company's debt structure with total indebtedness of **$2.43 billion**, segment performance with the Warehouse segment contributing the majority of revenue and profit, legal contingencies, revenue recognition policies, and share-based compensation plans - As of March 31, 2021, the company operated a global network of **242 temperature-controlled warehouses**, an increase driven by recent acquisitions[31](index=31&type=chunk) - On March 1, 2021, the company acquired Liberty Freezers for **C$55.0 million ($43.5 million USD)**, funded by its revolving credit facility, following several major acquisitions in 2020, including Agro, Hall's, AM-C, and Caspers[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) Outstanding Indebtedness as of March 31, 2021 (in thousands) | Debt Category | Carrying Amount | | :--- | :--- | | 2013 Mortgage Loans | $274,927 | | Senior Unsecured Notes | $1,829,750 | | 2020 Senior Unsecured Term Loan | $324,025 | | **Total Principal** | **$2,428,702** | | 2020 Senior Unsecured Revolving Credit | $43,786 | Segment Contribution (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Warehouse | $146,181 | $126,773 | | Third-party managed | $4,382 | $3,769 | | Transportation | $6,703 | $4,805 | | **Total Segment Contribution** | **$157,240** | **$135,402** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the operational and financial results for the quarter, emphasizing the impact of recent acquisitions (Agro, Hall's, Liberty Freezers) which drove significant revenue growth but also increased costs, noting that the Warehouse segment saw a **27.4%** revenue increase largely from acquisitions, while same-store results were impacted by lower throughput and occupancy due to COVID-19 supply chain disruptions, and the Transportation segment revenue more than doubled due to acquisitions, resulting in a decrease in cash from operations and an increase in capital expenditures related to development projects, though non-GAAP measures like Core FFO and Core EBITDA showed growth, reflecting underlying operational performance adjusted for acquisition costs and other non-recurring items [Results of Operations](index=70&type=section&id=Results%20of%20Operations) Total revenue for Q1 2021 increased by **31.1%** to **$634.8 million**, primarily driven by acquisitions, with the Warehouse segment revenue growing **27.4%** to **$485.5 million**, where acquisitions contributed **$109.1 million** to the increase, though same-store warehouse contribution (NOI) decreased by **5.2%** due to lower occupancy and throughput related to COVID-19 supply chain impacts, and the Transportation segment saw revenue increase **112.4%** to **$76.3 million**, also due to acquisitions, while operating expenses rose, with SG&A up **22.1%** and acquisition-related costs increasing to **$20.8 million** from **$1.7 million** year-over-year Warehouse Segment Performance (in thousands) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $485,451 | $381,068 | 27.4% | | Segment Contribution (NOI) | $146,181 | $126,773 | 15.3% | - Same-store warehouse contribution (NOI) decreased by **5.2%** (**6.9%** on a constant currency basis), driven by lower occupancy and throughput, with average economic occupancy for same stores falling to **76.7%** from **82.6%** in the prior year[330](index=330&type=chunk)[339](index=339&type=chunk) Transportation Segment Performance (in thousands) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $76,272 | $35,917 | 112.4% | | Segment Contribution (NOI) | $6,703 | $4,805 | 39.5% | - Acquisition, litigation, and other expenses increased significantly to **$20.8 million** in Q1 2021 from **$1.7 million** in Q1 2020, primarily due to **$13.5 million** in costs related to the Agro acquisition and **$4.8 million** in costs from a prior cyber event[355](index=355&type=chunk) [Non-GAAP Financial Measures](index=79&type=section&id=Non-GAAP%20Financial%20Measures) The company provides reconciliations for key non-GAAP metrics to supplement its GAAP results, reporting Core Funds from Operations (Core FFO) of **$62.5 million** for Q1 2021, a slight increase from **$60.1 million** in Q1 2020, and Adjusted Funds from Operations (AFFO) growth to **$75.9 million** from **$67.2 million**, while Core EBITDA saw a more substantial increase, rising to **$117.8 million** from **$104.1 million** year-over-year, reflecting strong underlying performance when excluding acquisition-related costs and other non-core items Reconciliation of Net (Loss) Income to FFO, Core FFO, and Adjusted FFO (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net (Loss) Income | $(14,236) | $23,511 | | NAREIT FFO | $38,271 | $56,891 | | Core FFO | $62,546 | $60,060 | | Adjusted FFO | $75,921 | $67,151 | Reconciliation of Net (Loss) Income to EBITDAre and Core EBITDA (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net (Loss) Income | $(14,236) | $23,511 | | NAREIT EBITDAre | $88,789 | $97,040 | | Core EBITDA | $117,789 | $104,110 | [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations, its revolving credit facility, and equity programs, with total principal debt outstanding of **$2.43 billion** as of March 31, 2021, and during the quarter, the company repaid **$200 million** of its Term Loan A facility and expanded its revolving credit facility capacity by **$200 million**, while net cash from operations decreased to **$46.5 million** from **$80.5 million** in the prior year due to higher acquisition costs and bonus payments, and capital expenditures for growth and expansion totaled **$126.8 million**, primarily for acquisitions and development projects - The company had approximately **$227.4 million** of availability remaining under its ATM Equity Program as of March 31, 2021[382](index=382&type=chunk) - In Q1 2021, the company repaid **$200 million** of its Senior Unsecured Term Loan A-1 facility and expanded its revolving credit facility by **$200 million**[399](index=399&type=chunk) Capital Expenditures (in thousands) | Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Maintenance Capital Expenditures** | **$15,731** | **$12,438** | | Real estate | $12,928 | $9,390 | | Personal property & IT | $2,803 | $3,048 | | **Growth & Expansion Capital Expenditures** | **$126,752** | **$346,120** | | Acquisitions | $41,956 | $315,583 | | Expansion and development | $84,796 | $30,537 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=89&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from changes in interest rates and foreign currency exchange rates, with **$125 million** in USD-denominated and **$250 million** in CAD-denominated variable-rate debt as of March 31, 2021, where a hypothetical **100 basis point** increase in market interest rates would increase annual interest expense by approximately **$3.7 million**, while foreign currency risk remains a factor due to the company's international operations, but the exposure was not materially different from that disclosed at year-end 2020 - A **100 basis point** increase in market interest rates would increase the company's annual interest expense by approximately **$3.7 million** due to its variable-rate debt exposure[447](index=447&type=chunk) - Foreign currency risk exposure as of March 31, 2021, was not materially different from the exposure at the end of the fiscal year 2020[448](index=448&type=chunk) [Item 4. Controls and Procedures](index=89&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021, with the company currently integrating the internal controls of the recently acquired Agro business, planning full inclusion in the annual assessment for the 2021 fiscal year, and no other material changes to internal control over financial reporting were identified during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[449](index=449&type=chunk) - The company is in the process of integrating the internal controls and procedures of Agro, acquired on December 30, 2020, with this integration expected to be completed and included in the annual assessment for the 2021 fiscal year[452](index=452&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=91&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any material litigation that would have a material impact on its financial condition, beyond what is disclosed in Note 14 of the financial statements, which details ongoing litigation, including a breach of settlement agreement case in Kansas and litigation related to Preferred Freezer Services, LLC - The company states that it is not a party to any material litigation or legal proceedings that would have a material impact on its business, financial condition, or results of operations, referring to the disclosures in Note 14[455](index=455&type=chunk)[456](index=456&type=chunk) [Item 1A. Risk Factors](index=91&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020, with no new or materially changed risk factors presented in this quarterly report - The report directs readers to the Risk Factors section of the Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of factors that could harm the business[457](index=457&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities or use of proceeds during the quarter[457](index=457&type=chunk) [Item 6. Exhibits](index=92&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to corporate documents, credit agreements, forms of compensatory plans, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - Exhibits filed include the Third Amendment to the Credit Agreement, forms of employee stock unit agreements, and CEO/CFO certifications[462](index=462&type=chunk)

Financial Performance and Investments - The company completed an initial public offering on January 23, 2018, issuing 33,350,000 common shares and generating net proceeds of approximately $493.6 million after costs[26] - The company aims to enhance operating and financial results through proactive asset management and has made significant investments in its business over the last several years[30] - The company completed the acquisition of Agro Merchants Group for a total transaction cost of approximately $1.7 billion, which includes cash consideration of $1.08 billion and the issuance of common shares valued at $512.1 million[24] - The company acquired Hall's Warehouse Corporation for $489.2 million on November 2, 2020[23] Revenue and Customer Base - The company has transitioned a significant portion of its rent and storage revenues from an as-utilized basis to a fixed storage commitment basis, which is expected to provide commercial advantages[31] - The company’s warehouse portfolio serves approximately 2,500 customers, with the top 25 customers generating 55%, 60%, and 63% of total warehouse segment revenues for the years ended December 31, 2020, 2019, and 2018, respectively[44] - The warehouse segment generates 55%, 60%, and 63% of total warehouse segment revenues from the 25 largest customers for the years ended December 31, 2020, 2019, and 2018, respectively[44] - The company serves approximately 2,500 customers, primarily in the frozen and perishable food sectors, providing stable cash flows and growth potential[44] Business Segments and Operations - The company operates through three primary business segments: warehouse, third-party managed, and transportation, with the core business being the warehouse segment[38] - The company manages its business through three primary segments: warehouse, third-party managed, and transportation[38] - The company has expanded its transportation services through acquisitions, including the Halls acquisition and Agro Merchants, enhancing its service offerings in the U.S., Ireland, and the UK[42] Strategic Positioning and Market Trends - The company is strategically positioned to capitalize on increased outsourcing by global food producers and retailers, anticipating continued demand for third-party temperature-controlled warehousing[33] - The company believes its strategic locations and extensive geographic presence are fundamental to optimizing customers' distribution networks and reducing supply-chain risks[18] - The company is well-positioned to benefit from e-commerce growth, leveraging its warehouse capabilities to serve both online and traditional retailers[35] - The company anticipates continued outsourcing of temperature-controlled warehousing needs by food producers and retailers, positioning itself to capitalize on this trend[33] - The company serves as a bridge between food producers and fulfillment centers, aiming to benefit from the growth of e-commerce[35] Employee Relations and Labor - The company employs approximately 16,300 people worldwide, with 37% represented by local labor unions[57] - In 2021, the company expects to negotiate 11 additional collective bargaining agreements, covering about 3.3% of its employee population[58] - The company has successfully negotiated 95 collective bargaining agreements since January 1, 2016, without any work stoppages[57] Compliance and Safety - The company is committed to compliance with food safety regulations, including the Food Safety Modernization Act, which requires a comprehensive food safety system[71] - The company emphasizes safety and health, providing ongoing training and personal protective equipment to associates[63] - OSHA regulations require the company to maintain a safe work environment, with potential substantial penalties for non-compliance[74] - International facilities are subject to various local laws, and failure to comply could materially affect the company's financial condition and operations[75] Insurance and Risk Management - The company carries comprehensive insurance coverage, including general liability and business interruption, to protect its operations[76] - The company is self-insured for workers' compensation and health insurance under a large-deductible program, with excess loss coverage for significant claims[77] - The company does not carry insurance for generally uninsured losses but includes coverage for terrorism and has specific insurance for earthquake and flood risks[78] Community Engagement and Ethics - The company partners with organizations like Feed the Children to support community outreach efforts, providing donations and volunteer opportunities[67] - The company is committed to the highest standards of business ethics, with regular training and policies in place to prevent discrimination and harassment[65] - The company provides a range of employee benefits, including a new Employee Stock Purchase Program (ESPP) to enhance engagement[64] Environmental Compliance - Compliance with environmental laws incurs significant capital and operating costs, and future changes could adversely affect financial conditions and shareholder distributions[69]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to , Commission File Number: 001-34723 AMERICOLD REALTY TRUST (Exact name of registrant as specified in its charter) Maryland (Americold ...

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) Americold Realty Trust's quarterly report for the period ended June 30, 2020 [Table of Contents](index=3&type=section&id=Table%20of%20Contents) Provides an organized guide to the report's detailed financial and operational sections [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Highlights risks and uncertainties associated with forward-looking business projections [PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents the core financial statements and detailed notes for the reporting period [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Presents Americold's unaudited condensed consolidated financial statements and detailed notes, highlighting key financial performance and position [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's assets, liabilities, and equity at specific reporting dates | Metric | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (YoY) | | :----- | :--------------------------- | :------------------------------- | :----------- | | Total Assets | $4,612,776 | $4,170,683 | +10.6% | | Property, buildings and equipment – net | $3,123,946 | $2,932,661 | +6.5% | | Cash and cash equivalents | $298,709 | $234,303 | +27.5% | | Identifiable intangible assets – net | $352,100 | $284,758 | +23.6% | | Goodwill | $385,285 | $318,483 | +20.9% | | Total Liabilities | $2,481,770 | $2,337,665 | +6.2% | | Mortgage notes, senior unsecured notes and term loans – net | $1,824,406 | $1,695,447 | +7.6% | | Total Shareholders' Equity | $2,131,006 | $1,833,018 | +16.3% | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Reports the company's revenues, expenses, and net income over specific periods | Metric | 3 Months Ended June 30, 2020 (in thousands) | 3 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Total Revenues | $482,522 | $438,460 | +10.1% | | Operating Income | $56,545 | $29,085 | +94.4% | | Net Income | $32,662 | $4,891 | +567.8% | | Net Income per Common Share - Basic | $0.16 | $0.03 | +433.3% | | Net Income per Common Share - Diluted | $0.16 | $0.03 | +433.3% | | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Total Revenues | $966,591 | $831,539 | +16.2% | | Operating Income | $104,223 | $45,502 | +129.0% | | Net Income | $56,173 | $262 | +21340.8% | | Net Income per Common Share - Basic | $0.28 | $0.00 | N/A | | Net Income per Common Share - Diluted | $0.27 | $0.00 | N/A | [Condensed Consolidated Statements of Comprehensive Income](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Presents net income and other comprehensive income items, reflecting total non-owner changes in equity | Metric | 3 Months Ended June 30, 2020 (in thousands) | 3 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net Income | $32,662 | $4,891 | +567.8% | | Change in unrealized net loss on foreign currency | $10,337 | $(2,257) | N/A | | Unrealized loss on designated derivatives | $(3,494) | $(1,763) | +98.2% | | Total Comprehensive Income (Loss) | $39,917 | $1,398 | +2755.3% | | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net Income | $56,173 | $262 | +21340.8% | | Change in unrealized net loss on foreign currency | $(15,210) | $(1,036) | +1368.1% | | Unrealized loss on designated derivatives | $(7,533) | $(4,477) | +68.3% | | Total Comprehensive Income (Loss) | $34,256 | $(4,200) | N/A | [Condensed Consolidated Statements of Shareholders' Equity](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in equity components, including net income, share issuances, and distributions | Metric | December 31, 2019 (in thousands) | June 30, 2020 (in thousands) | Change | | :----- | :------------------------------- | :--------------------------- | :----- | | Total Shareholders' Equity | $1,833,018 | $2,131,006 | +16.3% | | Net Income (6 months) | N/A | $56,173 | N/A | | Issuance of common shares (6 months) | N/A | $340,628 | N/A | | Distributions on common shares (6 months) | N/A | $(85,839) | N/A | | Accumulated Other Comprehensive Loss (6 months) | $(14,126) | $(36,043) | +155.1% | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net cash provided by operating activities | $163,980 | $79,835 | +105.4% | | Net cash used in investing activities | $(443,025) | $(1,454,794) | -69.5% | | Net cash provided by financing activities | $374,312 | $1,488,022 | -74.8% | | Net increase in cash, cash equivalents and restricted cash | $95,267 | $113,063 | -15.8% | | Cash, cash equivalents and restricted cash, End of period | $331,840 | $327,246 | +1.4% | [Notes to Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the financial statement figures [1. General](index=17&type=section&id=1.%20General) Details the company's REIT structure, recent equity activities, strategic acquisitions, and the impact of the COVID-19 pandemic - Americold Realty Trust operates as a Maryland REIT with an UPREIT structure, holding approximately **99%** of its Operating Partnership[34](index=34&type=chunk) - Authorized common shares increased from **250,000,000 to 325,000,000** in March 2020[36](index=36&type=chunk) Equity Offering/Program Details | Equity Offering/Program | Date | Details | Net Proceeds / Gross Proceeds (in millions) | | :---------------------- | :--- | :------ | :---------------------------------------- | | September 2018 Follow-On | Sep 2018 | 4M common shares sold, 6M via forward sale (settle by Sep 2020) | ~$92.5M | | April 2019 Follow-On | Apr 2019 | 42.06M common shares sold, 8.25M via forward sale (settled Jan 2020) | ~$1.21B | | 2020 ATM Equity Program | Apr 2020 | Up to $500M common shares; 3.09M shares sold in Q2 2020 | $110.4M | | 2020 ATM Forward Sale | Q2 2020 | 472,551 common shares (settle by Jul 2021) | $17.2M | - Recent acquisitions include PortFresh (**$35.2 million**), Cloverleaf (**$1.24 billion**), Lanier (**$81.9 million**), MHW (**$50.8 million**), Nova Cold (**$259.6 million USD**), and Newport Cold (**$56.1 million**)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) The company also acquired a **14.99%** interest in Brazil's SuperFrio for **$25.7 million** in March 2020[54](index=54&type=chunk) - The COVID-19 pandemic has led to **elevated labor-related costs** and **incremental health and safety supply costs**, with the full impact on financial condition, results of operations, and cash flows remaining uncertain[59](index=59&type=chunk)[60](index=60&type=chunk) [2. Summary of Significant Accounting Policies](index=21&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines adopted accounting standards, impairment charges, and capitalized interest for the period - Adopted ASU 2018-13 (Fair Value Measurement) and ASU 2016-13 (Credit Losses - CECL) effective **January 1, 2020**[75](index=75&type=chunk)[76](index=76&type=chunk) - CECL adoption resulted in a **$0.5 million non-cash cumulative effect adjustment** to the opening accumulated deficit as of January 1, 2020[76](index=76&type=chunk) Impairment Charges and Capitalized Interest | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Impairment charges | $3,667 | $13,485 | -72.8% | | Capitalized interest | $1,200 | $1,600 | -25.0% | [3. Business Combinations](index=26&type=section&id=3.%20Business%20Combinations) Details significant acquisitions in 2020, including Nova Cold and Newport Cold, and the finalization of the 2019 Cloverleaf acquisition Recent Acquisitions | Acquisition | Date | Total Cash Consideration (Net of Cash Acquired) (in millions) | Primary Assets Acquired | Strategic Benefits | | :---------- | :--- | :-------------------------------------------- | :---------------------- | :----------------- | | Nova Cold | Jan 2, 2020 | CAD $337.4M (USD $259.6M) | Land & Buildings ($171.9M), Customer Relationships ($59.6M), Goodwill ($60.4M) | Expanded presence in Canada, synergy leverage | | Newport Cold | Jan 2, 2020 | $56.1M | Land & Buildings ($30.2M), Customer Relationships ($18.7M), Goodwill ($6.5M) | Expanded presence in Minneapolis-St. Paul, synergy leverage | - The Cloverleaf acquisition, finalized in 2019 for **$1.24 billion**, resulted in the recognition of **$250.3 million** for customer relationships (25-year useful life) and **$1.6 million** for trade names/trademarks (1.5-year useful life)[89](index=89&type=chunk)[92](index=92&type=chunk) Measurement period adjustments primarily led to a **net increase in goodwill**[92](index=92&type=chunk) [4. Investment in Partially Owned Entities](index=30&type=section&id=4.%20Investment%20in%20Partially%20Owned%20Entities) In Q1 2020, Americold acquired a 14.99% equity interest in Superfrio Armazéns Gerais S.A. (SuperFrio), a Brazilian temperature-controlled storage and logistics company, for approximately $25.7 million This investment is accounted for under the equity method, and its debt is non-recourse to Americold - Acquired a **14.99% equity interest** in Superfrio Armazéns Gerais S.A. (SuperFrio), a Brazilian temperature-controlled storage and logistics company, for approximately **$25.7 million** in Q1 2020[54](index=54&type=chunk)[100](index=100&type=chunk) - The investment is accounted for under the **equity method**, and the joint venture's debt is **non-recourse** to Americold, except for customary exceptions[100](index=100&type=chunk) [5. Acquisition, Litigation and Other Charges](index=30&type=section&id=5.%20Acquisition,%20Litigation%20and%20Other%20Charges) Reports a significant decrease in acquisition, litigation, and other charges due to lower prior-year acquisition costs Acquisition, Litigation and Other Charges (3 Months) | Expense Category | 3 Months Ended June 30, 2020 (in thousands) | 3 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Acquisition related costs | $2,651 | $15,014 | -82.3% | | Litigation | $0 | $467 | -100.0% | | Severance, equity award modifications and acceleration | $150 | $2,641 | -94.3% | | Total | $2,801 | $17,964 | -84.4% | Acquisition, Litigation and Other Charges (6 Months) | Expense Category | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Acquisition related costs | $3,417 | $16,455 | -79.2% | | Litigation | $0 | $1,377 | -100.0% | | Severance, equity award modifications and acceleration | $1,072 | $6,934 | -84.5% | | Total | $4,489 | $26,457 | -83.0% | [6. Debt](index=32&type=section&id=6.%20Debt) Details the increase in indebtedness, the refinancing of the Senior Unsecured Credit Facility, and compliance with debt covenants Indebtedness Overview | Debt Type | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (YoY) | | :-------- | :--------------------------- | :------------------------------- | :----------- | | Total principal amount of indebtedness | $1,838,701 | $1,708,443 | +7.6% | | Total indebtedness, net of unamortized deferred financing costs | $1,824,406 | $1,695,447 | +7.6% | | Weighted average effective interest rate | 4.15% | 4.57% | -42 bps | - Refinanced Senior Unsecured Credit Facility in March 2020, establishing a new **$1.4 billion facility** comprising a five-year Senior Unsecured Term Loan A Facility and a four-year **$800 million** Senior Unsecured Revolving Credit Facility[111](index=111&type=chunk)[494](index=494&type=chunk) - The 2020 Senior Unsecured Term Loan A Facility includes a **CAD $250.0 million tranche** (Tranche A-2), which provides a **natural hedge** for the company's investment in Canada[112](index=112&type=chunk)[495](index=495&type=chunk) - The company was in **compliance with all debt covenants** as of June 30, 2020, including maximum leverage ratios, minimum fixed charge coverage, and unsecured interest coverage ratios[115](index=115&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk)[498](index=498&type=chunk)[510](index=510&type=chunk)[515](index=515&type=chunk) [7. Derivative Financial Instruments](index=36&type=section&id=7.%20Derivative%20Financial%20Instruments) Americold uses interest rate swaps to hedge $325 million of variable-rate debt, converting it to a fixed-rate basis to reduce interest rate volatility Cross-currency swaps are employed to manage foreign exchange risk on intercompany loans, hedging $153.5 million AUD and $37.5 million NZD The fair value of derivative assets was $9.8 million at June 30, 2020, while derivative liabilities were $18.6 million - The company uses interest rate swap agreements to hedge **$325 million of variable interest-rate debt**, converting it to a **fixed-rate basis** to reduce interest rate volatility[135](index=135&type=chunk) - Cross-currency swaps are used to manage foreign exchange rate risk on intercompany loans, hedging **$153.5 million AUD** and **$37.5 million NZD** outstanding balances as of June 30, 2020[139](index=139&type=chunk) Derivative Financial Instruments Fair Value | Derivative Type | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------- | :--------------------------- | :------------------------------- | | Derivative Assets | $9,768 | $6,855 | | Derivative Liabilities | $18,565 | $6,094 | [8. Sale-Leasebacks of Real Estate](index=40&type=section&id=8.%20Sale-Leasebacks%20of%20Real%20Estate) The company's outstanding sale-leaseback financing obligations for real estate-related long-lived assets totaled $114.0 million as of June 30, 2020, a slight decrease from $115.8 million at December 31, 2019 These obligations are primarily associated with 12 warehouses, with interest rates ranging from 7.00% to 19.59% and maturities extending to 2027 and 2030 Sale-Leaseback Financing Obligations | Metric | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (YoY) | | :----- | :--------------------------- | :------------------------------- | :----------- | | Total sale-leaseback financing obligations | $113,974 | $115,759 | -1.5% | - Obligations are tied to **12 warehouses** (1 from 2010, 11 from 2007) with maturities in **2030 and 2027**, respectively, and interest rates ranging from **7.00% to 19.59%**[153](index=153&type=chunk) [9. Fair Value Measurements](index=42&type=section&id=9.%20Fair%20Value%20Measurements) The company categorizes fair value measurements into Level 1 (quoted market prices), Level 2 (observable inputs), and Level 3 (unobservable inputs) Derivative instruments are primarily valued using Level 2 inputs, while mortgage notes, senior unsecured notes, and term loans are disclosed at fair value using Level 3 inputs Long-lived assets written down at June 30, 2020, were valued using Level 2 inputs - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[155](index=155&type=chunk) - Derivative instruments are valued using **Level 2 inputs**, while mortgage notes, senior unsecured notes, and term loans are disclosed at fair value using **Level 3 inputs**[157](index=157&type=chunk)[160](index=160&type=chunk) Fair Value Hierarchy of Assets and Liabilities | Asset/Liability | Fair Value Hierarchy | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------- | :------------------- | :--------------------------- | :------------------------------- | | Interest rate swap asset | Level 2 | $0 | $2,936 | | Interest rate swap liability | Level 2 | $18,565 | $3,507 | | Cross-currency swap asset | Level 2 | $9,768 | $1,404 | | Mortgage notes, senior unsecured notes and term loans (disclosed) | Level 3 | $2,002,183 | $1,783,463 | [10. Dividends and Distributions](index=43&type=section&id=10.%20Dividends%20and%20Distributions) As a REIT, Americold is required to distribute at least 90% of its taxable income annually For the six months ended June 30, 2020, total distributions declared were $85.8 million, with $81.0 million paid This represents an increase in declared dividends per common share from $0.40 in the first half of 2019 to $0.42 in the first half of 2020 - As a REIT, the company is generally required to distribute at least **90% of its REIT taxable income** annually[161](index=161&type=chunk) Dividends and Distributions | Metric | 6 Months Ended June 30, 2020 (in thousands, except per share) | 6 Months Ended June 30, 2019 (in thousands, except per share) | Change (YoY) | | :----- | :---------------------------------------------------------- | :---------------------------------------------------------- | :----------- | | Distributions declared per common share | $0.42 | $0.40 | +5.0% | | Total Distributions Declared | $85,839 | $68,999 | +24.4% | | Total Distributions Paid | $80,976 | $58,206 | +39.1% | [11. Share-Based Compensation](index=45&type=section&id=11.%20Share-Based%20Compensation) Total share-based compensation charges were $8.8 million for the six months ended June 30, 2020, comparable to $8.9 million in the prior year The 2017 Equity Incentive Plan, approved by shareholders, allows for various equity and cash-based awards, including a retirement provision for continued vesting Unrecognized share-based compensation expense totaled $28.2 million as of June 30, 2020, to be recognized over a weighted-average period of 2.1 years Aggregate Share-Based Compensation Charges | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Aggregate share-based compensation charges | $8,800 | $8,900 | -1.1% | - As of June 30, 2020, there was **$28.2 million of unrecognized share-based compensation expense** related to stock options and restricted stock units, to be recognized over a weighted-average period of **2.1 years**[174](index=174&type=chunk) - The 2017 Equity Incentive Plan includes a **retirement provision** allowing for continued vesting of outstanding equity-based awards if participants meet specific age and service criteria[178](index=178&type=chunk) [12. Income Taxes](index=50&type=section&id=12.%20Income%20Taxes) Income tax expense for the six months ended June 30, 2020, was $1.7 million, an increase from a $0.4 million benefit in the prior year, primarily due to increased earnings from domestic and foreign operations The CARES Act is not expected to have a material impact, though the company filed for a $1.9 million refund of previously paid alternative minimum taxes Deferred tax liabilities from the Nova Cold acquisition were reduced by $7.5 million in Q2 2020, resulting in an opening deferred tax liability of $34.5 million Income Tax Expense (Benefit) | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Income tax (expense) benefit | $(1,651) | $418 | N/A | - The CARES Act is not expected to have a material impact on the condensed consolidated financial statements, but the company filed for a **$1.9 million refund** of previously paid alternative minimum taxes[199](index=199&type=chunk)[201](index=201&type=chunk) - The opening deferred tax liability for the Nova Cold acquisition was reduced by **$7.5 million** in Q2 2020, resulting in a **$34.5 million liability** as of June 30, 2020[203](index=203&type=chunk) [13. Variable Interest Entities](index=51&type=section&id=13.%20Variable%20Interest%20Entities) Americold assumed a New Market Tax Credit (NMTC) financing arrangement in May 2019, which is structured to monetize state and federal tax credits for a cold storage warehouse The company determined it is the primary beneficiary of the associated Variable Interest Entity (VIE) and has consolidated it As of June 30, 2020, the deferred contribution liability related to this arrangement was $4.8 million - The company assumed a New Market Tax Credit (NMTC) financing arrangement in May 2019, which monetizes state and federal tax credits for a cold storage warehouse[206](index=206&type=chunk) - Americold is the **primary beneficiary** of the associated Variable Interest Entity (VIE) and has consolidated it, with a deferred contribution liability of **$4.8 million** as of June 30, 2020[210](index=210&type=chunk)[212](index=212&type=chunk) [14. Employee Benefit Plans](index=53&type=section&id=14.%20Employee%20Benefit%20Plans) Net pension benefit cost for the six months ended June 30, 2020, was $298,000, a decrease from $1.03 million in the prior year, primarily due to lower expected return on plan assets and amortization of net loss The company expects to contribute $2.5 million to all plans in 2020, with $1.2 million already contributed Americold also contributes to multi-employer plans and recognized a withdrawal liability of $13.7 million (undiscounted) in 2017 for exiting a significantly underfunded fund, which is being repaid over 30 years Net Pension Benefit Cost | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net pension benefit cost | $298 | $1,034 | -71.2% | - The company expects to contribute an aggregate of **$2.5 million** to all plans in 2020, with **$1.2 million** contributed through June 30, 2020[222](index=222&type=chunk) - In 2017, Americold recognized an estimated **$13.7 million (undiscounted) multi-employer pension plan withdrawal liability**, being repaid in interest-free monthly installments over **30 years**[224](index=224&type=chunk) [15. Commitments and Contingencies](index=56&type=section&id=15.%20Commitments%20and%20Contingencies) Details letters of credit, surety bonds, collective bargaining agreements, and ongoing legal proceedings Commitments | Commitment | June 30, 2020 (in millions) | December 31, 2019 (in millions) | | :--------- | :-------------------------- | :------------------------------ | | Letters of Credit | $22.8 | $23.0 | | Surety Bonds | $9.0 | $4.3 | - Approximately **48%** of the company's labor force is covered by collective bargaining agreements, with **less than 8%** set to expire by December 31, 2020[228](index=228&type=chunk) - The company is involved in significant legal proceedings, including the Kansas Breach of Settlement Agreement Litigation, Preferred Freezer Services, LLC Litigation, and an Employment Putative Class Action (preliminarily settled for **$2.5 million**)[237](index=237&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk) Management believes these will not have a **material adverse impact**[246](index=246&type=chunk) [16. Accumulated Other Comprehensive Loss](index=60&type=section&id=16.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss increased to $36.0 million at June 30, 2020, from $17.0 million at June 30, 2019 This change was primarily driven by a significant unrealized loss on foreign currency translation of $15.2 million for the six months ended June 30, 2020, and unrealized losses on cash flow hedge derivatives Accumulated Other Comprehensive Loss | Metric | June 30, 2020 (in thousands) | June 30, 2019 (in thousands) | Change (YoY) | | :----- | :--------------------------- | :--------------------------- | :----------- | | Accumulated other comprehensive loss | $(36,043) | $(16,977) | +112.3% | | Net gain (loss) on foreign currency translation (6 months) | $(15,210) | $(1,036) | +1368.1% | | Net loss on designated derivatives (6 months) | $(4,380) | $(3,985) | +9.9% | [17. Segment Information](index=62&type=section&id=17.%20Segment%20Information) Provides financial data for Warehouse, Third-party managed, Transportation, and Other segments, highlighting revenue and contribution - Americold's reportable segments are Warehouse, Third-party managed, Transportation, and Other (Quarry, which was sold on **July 1, 2020**)[255](index=255&type=chunk)[259](index=259&type=chunk) Segment Revenues and Contribution (NOI) | Segment | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :------ | :---------------------------------------- | :---------------------------------------- | :----------- | | **Revenues:** | | | | | Warehouse | $753,479 | $627,846 | +20.0% | | Third-party managed | $137,875 | $125,651 | +9.7% | | Transportation | $70,778 | $73,588 | -3.8% | | Other | $4,459 | $4,454 | +0.1% | | **Total Revenues** | **$966,591** | **$831,539** | **+16.2%** | | **Contribution (NOI):** | | | | | Warehouse | $246,905 | $204,636 | +20.7% | | Third-party managed | $7,068 | $6,063 | +16.6% | | Transportation | $9,577 | $8,562 | +11.9% | | Other | $190 | $536 | -64.6% | | **Total Segment Contribution** | **$263,740** | **$219,797** | **+19.9%** | Segment Assets | Segment Assets | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | Change (YoY) | | :------------- | :--------------------------- | :------------------------------- | :----------- | | Warehouse | $3,992,807 | $3,684,391 | +8.4% | | Managed | $43,759 | $47,867 | -8.6% | | Transportation | $43,165 | $50,666 | -14.8% | | Other | $10,129 | $13,467 | -24.8% | | **Total Segment Assets** | **$4,089,860** | **$3,796,391** | **+7.7%** | [18. Earnings per Common Share](index=68&type=section&id=18.%20Earnings%20per%20Common%20Share) Basic weighted-average common shares outstanding increased to 201.3 million for the six months ended June 30, 2020, from 165.9 million in the prior year, while diluted shares increased to 204.6 million from 169.3 million This increase is primarily due to share issuances from equity offerings and share-based awards Weighted Average Common Shares Outstanding | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | Weighted average common shares outstanding – basic | 201,294 | 165,869 | +21.4% | | Weighted average common shares outstanding – diluted | 204,587 | 169,305 | +20.8% | [19. Revenue from Contracts with Customers](index=69&type=section&id=19.%20Revenue%20from%20Contracts%20with%20Customers) Details revenue growth from customer contracts, particularly in warehouse rent and services, and remaining performance obligations Revenues from Contracts with All Customers | Revenue Category | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Warehouse rent and storage | $314,571 | $257,580 | +22.1% | | Warehouse services | $427,505 | $359,449 | +18.9% | | Third-party managed | $137,875 | $125,633 | +9.7% | | Transportation | $70,778 | $73,588 | -3.8% | | Other | $4,448 | $4,433 | +0.3% | | **Total revenues from contracts with all customers** | **$966,591** | **$831,539** | **+16.2%** | - As of June 30, 2020, the company had **$593.4 million of remaining unsatisfied performance obligations** from non-cancellable contracts, with **14%** expected to be recognized in 2020 and the remaining **86%** over a weighted average period of **15.2 years** through 2038[283](index=283&type=chunk) [20. Subsequent Events](index=69&type=section&id=20.%20Subsequent%20Events) On July 1, 2020, Americold completed the sale of its quarry business, which resulted in an impairment charge of $3.7 million recorded during the three months ended June 30, 2020, as the sales price was below its carrying value - The company completed the sale of its quarry business on **July 1, 2020**[288](index=288&type=chunk) - An impairment charge of **$3.7 million** was recorded during the three months ended June 30, 2020, due to the sales price being below the quarry assets' carrying value[288](index=288&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Americold's financial condition, operational results, and liquidity, considering acquisitions, COVID-19, and strategic shifts [MANAGEMENT'S OVERVIEW](index=70&type=section&id=MANAGEMENT'S%20OVERVIEW) Provides an executive summary of Americold's business, global network, and segment operations - Americold Realty Trust is the **world's largest publicly traded REIT** focused on temperature-controlled warehouses[291](index=291&type=chunk) - As of June 30, 2020, the company operated a global network of **183 temperature-controlled warehouses** (161 in US, 6 in Australia, 7 in New Zealand, 2 in Argentina, 7 in Canada) and held a minority interest in **20 Brazilian warehouses**[291](index=291&type=chunk) - The company's primary business segments are Warehouse, Third-party managed, and Transportation The "Other" segment, which included a limestone quarry, was sold on **July 1, 2020**[291](index=291&type=chunk)[298](index=298&type=chunk) [Key Factors Affecting Our Business and Financial Results](index=72&type=section&id=Key%20Factors%20Affecting%20Our%20Business%20and%20Financial%20Results) Discusses recent acquisitions, the impact of COVID-19, and foreign currency translation on financial performance - Recent acquisitions include Nova Cold (**CAD $337.4 million**), Newport Cold (**$56.1 million**) in 2020, and PortFresh (**$35.2 million**), Cloverleaf (**$1.24 billion**), Lanier (**$81.9 million**), MHW (**$50.8 million**) in 2019, expanding the company's global network[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - The COVID-19 pandemic has caused economic disruptions and increased **labor and health/safety costs**, but Americold's "essential business" status has allowed operations to continue without significant disruption thus far The future impact remains **highly uncertain**[313](index=313&type=chunk)[314](index=314&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Foreign currency translation, particularly the **strengthening U.S. dollar** against the Australian dollar, New Zealand dollar, and Argentinian peso, had an **unfavorable impact** on reported revenues and expenses from international operations[316](index=316&type=chunk)[349](index=349&type=chunk)[406](index=406&type=chunk) [Focus on Our Operational Effectiveness and Cost Structure](index=75&type=section&id=Focus%20on%20Our%20Operational%20Effectiveness%20and%20Cost%20Structure) Outlines strategies for streamlining operations, reducing costs, and active portfolio management - The company focuses on streamlining business processes and reducing costs through initiatives like **centralizing operations, standardizing processes, and integrating new IT tools**[321](index=321&type=chunk) - Investments in **energy efficiency projects** (e.g., LED lighting, thermal energy storage, motion-sensor technology) aim to reduce kilowatt-hour consumption and energy spend[321](index=321&type=chunk) - Active portfolio management includes evaluating and exiting less strategic or profitable markets/business lines, such as the sale of certain warehouse assets, leased facilities, managed warehouse agreements, and the quarry business[322](index=322&type=chunk) [Strategic Shift within Our Transportation Segment](index=75&type=section&id=Strategic%20Shift%20within%20Our%20Transportation%20Segment) Describes the strategic pivot in the transportation segment towards higher-margin, value-added services - The transportation segment is strategically shifting focus from commoditized, low-margin services to more **profitable, value-added programs** like multi-vendor consolidation services[323](index=323&type=chunk) - This strategy 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[323](index=323&type=chunk) [Historically Significant Customer](index=75&type=section&id=Historically%20Significant%20Customer) Identifies a major customer contributing over 10% of total revenues, primarily in the managed segment - One customer accounted for **over 10% of total revenues** for the three and six months ended June 30, 2020 and 2019[324](index=324&type=chunk) Sales to Historically Significant Customer | Metric | 3 Months Ended June 30, 2020 (in millions) | 3 Months Ended June 30, 2019 (in millions) | 6 Months Ended June 30, 2020 (in millions) | 6 Months Ended June 30, 2019 (in millions) | | :----- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Sales to this customer | $64.4 | $49.8 | $120.0 | $103.6 | | Reimbursements for expenses | $59.8 | $45.9 | $110.8 | $95.9 | - The substantial majority of this customer's business relates to the **third-party managed segment**, where reimbursements for expenses are generally offset by corresponding costs, thus **not significantly affecting financial results**[324](index=324&type=chunk)[325](index=325&type=chunk) [Economic Occupancy of our Warehouses](index=76&type=section&id=Economic%20Occupancy%20of%20our%20Warehouses) Explains economic occupancy as a key metric, including physically occupied and contractually committed pallets - Economic occupancy is defined as the aggregate number of physically occupied pallets and any additional pallets otherwise **contractually committed** for a given period[327](index=327&type=chunk)[361](index=361&type=chunk)[418](index=418&type=chunk) - The company actively seeks contracts with **fixed storage commitments** to mitigate the impact of seasonality and other factors on physical occupancy, which is an important driver of financial results[327](index=327&type=chunk) [Throughput at our Warehouses](index=76&type=section&id=Throughput%20at%20our%20Warehouses) Defines throughput as pallet volume, a key driver of warehouse services revenues - Throughput, the volume of pallets entering and exiting warehouses, is a key factor impacting **warehouse services revenues**[328](index=328&type=chunk) - Higher throughput drives warehouse services revenues, and its levels are influenced by food manufacturers' production and shifts in consumer demand[328](index=328&type=chunk) [How We Assess the Performance of Our Business](index=76&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) Details key performance indicators like segment contribution (NOI) and same store analysis - Business performance is evaluated using '**segment contribution (NOI)**' (revenues less cost of operations, excluding depreciation, impairment, SG&A, and acquisition/litigation/other expenses) and '**segment contribution (NOI) margin**'[329](index=329&type=chunk)[330](index=330&type=chunk) - The Warehouse segment's performance is further analyzed by '**rent and storage contribution (NOI)**' and '**warehouse services contribution (NOI)**'[331](index=331&type=chunk) - A '**same store**' analysis, defined annually, includes properties owned or leased for the entirety of two comparable periods with at least twelve months of consecutive normalized operations, adjusted for **constant currency** to eliminate portfolio composition and currency fluctuation effects[334](index=334&type=chunk)[336](index=336&type=chunk) [RESULTS OF OPERATIONS](index=79&type=section&id=RESULTS%20OF%20OPERATIONS) Presents a detailed comparison of financial results for the three and six months ended June 30, 2020 and 2019 [Comparison of Results for the Three Months Ended June 30, 2020 and 2019](index=79&type=section&id=Comparison%20of%20Results%20for%20the%20Three%20Months%20Ended%20June%2030,%202020%20and%202019) Compares Q2 2020 and Q2 2019 results, highlighting revenue and contribution growth across segments, influenced by acquisitions and COVID-19 Segment Performance (3 Months) | Metric | 3 Months Ended June 30, 2020 (in thousands) | 3 Months Ended June 30, 2019 (in thousands) | Change (YoY) | Change (Constant Currency) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | :------------------------- | | Total warehouse segment revenues | $372,411 | $338,231 | +10.1% | +12.0% | | Warehouse segment contribution (NOI) | $120,132 | $113,817 | +5.5% | +7.5% | | Third-party managed revenues | $72,954 | $61,515 | +18.6% | +19.3% | | Third-party managed segment contribution (NOI) | $3,299 | $2,804 | +17.7% | +22.1% | | Transportation revenues | $34,861 | $36,492 | -4.5% | -2.5% | | Transportation segment contribution (NOI) | $4,772 | $4,206 | +13.5% | +14.4% | | Quarry revenues | $2,296 | $2,222 | +3.3% | N/A | | Quarry segment contribution (NOI) | $135 | $292 | -53.8% | N/A | - Warehouse segment revenue growth was driven by acquisitions (approx. **$32.6 million**), contractual rate escalations, and growth in fixed commitment storage contracts, partially offset by a slowdown in activity post-Q1 COVID-19 surge and declines in protein commodities[347](index=347&type=chunk)[349](index=349&type=chunk) - Warehouse segment costs increased due to acquisitions (approx. **$21.4 million**), a **$4.3 million appreciation bonus** to front-line associates, and incremental COVID-19 expenses (**$1.3 million sanitation, $0.4 million PPE**)[350](index=350&type=chunk) - Same store economic occupancy increased by **270 basis points to 78.9%**, driven by fixed storage contracts, while physical occupancy decreased by **132 basis points** due to lower protein occupancy from COVID-19 impacts[363](index=363&type=chunk) [Comparison of Results for the Six Months Ended June 30, 2020 and 2019](index=89&type=section&id=Comparison%20of%20Results%20for%20the%20Six%20Months%20Ended%20June%2030,%202020%20and%202019) Compares H1 2020 and H1 2019 results, showing strong revenue and contribution growth, driven by acquisitions and COVID-19 demand Segment Performance (6 Months) | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | Change (Constant Currency) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | :------------------------- | | Total warehouse segment revenues | $753,479 | $627,846 | +20.0% | +22.3% | | Warehouse segment contribution (NOI) | $246,905 | $204,636 | +20.7% | +22.8% | | Third-party managed revenues | $137,875 | $125,651 | +9.7% | +10.3% | | Third-party managed segment contribution (NOI) | $7,068 | $6,063 | +16.6% | +17.4% | | Transportation revenues | $70,778 | $73,588 | -3.8% | -1.6% | | Transportation segment contribution (NOI) | $9,577 | $8,562 | +11.9% | +13.9% | | Quarry revenues | $4,459 | $4,454 | +0.1% | N/A | | Quarry segment contribution (NOI) | $190 | $536 | -64.6% | N/A | - Warehouse segment revenue growth was driven by acquisitions (approx. **$110.0 million**), higher than seasonal grocery demand due to COVID-19, and increased storage revenue from the food services sector due to stay-at-home orders[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk) - Warehouse segment costs increased due to acquisitions (approx. **$69.5 million**), COVID-19 response efforts (labor, sanitation, PPE), and a **$4.3 million front-line appreciation bonus**[407](index=407&type=chunk) - Same store economic occupancy increased by **308 basis points to 80.4%**, driven by fixed storage contracts and higher average physical occupancy (up **8 basis points to 73.3%**)[420](index=420&type=chunk) [Non-GAAP Financial Measures](index=100&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP financial measures used to assess business performance - The company uses **FFO, Core FFO, Adjusted FFO, EBITDAre, and Core EBITDA** as supplemental non-GAAP financial measures[461](index=461&type=chunk) Non-GAAP Financial Measures | Metric | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----- | :---------------------------------------- | :---------------------------------------- | :----------- | | NAREIT Funds from operations (FFO) | $108,997 | $64,730 | +68.4% | | Core FFO applicable to common shareholders | $115,168 | $96,017 | +19.9% | | Adjusted FFO applicable to common shareholders | $128,254 | $102,369 | +25.3% | | NAREIT EBITDAre | $187,298 | $117,292 | +59.7% | | Core EBITDA | $204,622 | $164,673 | +24.2% | [LIQUIDITY AND CAPITAL RESOURCES](index=104&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses funding sources, capital expenditures, debt compliance, and overall financial flexibility - Primary funding sources include current cash balances, cash flows from operations, the 2018 forward sale agreement, the ATM Equity Program, and other debt/equity financings[472](index=472&type=chunk) - The company expects funding sources to be **adequate for short-term and long-term liquidity requirements**, including operating activities, capital expenditures, debt service, and quarterly shareholder distributions[473](index=473&type=chunk)[474](index=474&type=chunk) Cash Flow Activities | Cash Flow Activity | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Net cash provided by operating activities | $163,980 | $79,835 | +105.4% | | Net cash used in investing activities | $(443,025) | $(1,454,794) | -69.5% | | Net cash provided by financing activities | $374,312 | $1,488,022 | -74.8% | - The company maintains **investment-grade credit ratings** (BBB stable from Fitch and DBRS Morningstar, Baa3 stable from Moody's) and was in **compliance with all debt covenants** as of June 30, 2020[517](index=517&type=chunk)[515](index=515&type=chunk) Capital Expenditures | Capital Expenditure Type | 6 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2019 (in thousands) | Change (YoY) | | :----------------------- | :---------------------------------------- | :---------------------------------------- | :----------- | | Maintenance capital expenditures | $27,723 | $16,221 | +71.0% | | Repair and maintenance expenses | $29,343 | $27,910 | +5.1% | | Growth and expansion capital expenditures | $433,427 | $1,437,746 | -69.8% | [CRITICAL ACCOUNTING POLICIES UPDATE](index=116&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20UPDATE) Refers to Note 2 for updates on critical accounting policies - This section refers to **Note 2** of the condensed consolidated financial statements for updates on critical accounting policies[543](index=543&type=chunk) [NEW ACCOUNTING PRONOUNCEMENTS](index=116&type=section&id=NEW%20ACCOUNTING%20PRONOUNCEMENTS) Refers to Note 2 for information on new accounting pronouncements - This section refers to **Note 2** of the condensed consolidated financial statements for information on new accounting pronouncements[544](index=544&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=117&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Americold is exposed to interest rate risk on its variable-rate debt and foreign currency risk from international operations As of June 30, 2020, the company had $425 million USD-denominated and CAD $250 million variable-rate debt, with $325 million USD-denominated debt hedged by interest rate swaps A 100 basis point increase in market interest rates would increase interest expense by $2.8 million, while a 100 basis point decrease would increase it by $0.7 million due to a LIBOR floor on one swap Foreign currency risk exposure remained consistent with prior disclosures - As of June 30, 2020, the company had **$425 million USD-denominated** and **CAD $250 million variable-rate debt**[547](index=547&type=chunk) - **$325 million of USD-denominated variable-rate debt** is hedged by interest rate swaps, effectively locking the LIBOR rate for portions at **2.48% and 1.30%**[547](index=547&type=chunk) - A **100 basis point increase** in market interest rates would increase interest expense by approximately **$2.8 million**, while a **100 basis point decrease** would increase it by **$0.7 million** due to a LIBOR floor on one swap[548](index=548&type=chunk) - Foreign currency risk exposure at June 30, 2020, was **not materially different** from prior disclosures[549](index=549&type=chunk) [Item 4. Controls and Procedures](index=117&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2020 There were no material changes in internal control over financial reporting identified during the quarter - The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were **effective** as of June 30, 2020[550](index=550&type=chunk) - **No material changes** in internal control over financial reporting were identified during the quarter ended June 30, 2020[554](index=554&type=chunk) [PART II - OTHER INFORMATION](index=119&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Contains additional disclosures not covered in the financial information section [Item 1. Legal Proceedings](index=119&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to various legal proceedings in the ordinary course of business, but management believes no current litigation or threatened proceedings would have a material impact on its business, financial condition, results of operations, or cash flows Further details are provided in Note 15 to the financial statements - The company is involved in various legal proceedings arising in the ordinary course of business[556](index=556&type=chunk) - Management believes no current or threatened litigation would have a **material impact** on the company's business, financial condition, liquidity, results of operations, or prospects[556](index=556&type=chunk) [Item 1A. Risk Factors](index=119&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2019, and the Quarterly Report on Form 10-Q for March 31, 2020 - **No material changes** in risk factors from those previously disclosed in the Annual Report on Form 10-K for December 31, 2019, and the Quarterly Report on Form 10-Q for March 31, 2020[558](index=558&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=119&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports no unregistered sales of equity securities or use of proceeds [Item 3. Defaults Upon Senior Securities](index=119&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item reports no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=119&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information on mine safety violations and regulatory matters is included in Exhibit 95.1 - Information concerning mine safety violations and other regulatory matters is included in **Exhibit 95.1**[560](index=560&type=chunk) [Item 5. Other Information](index=119&type=section&id=Item%205.%20Other%20Information) This item reports no other information [Item 6. Exhibits](index=120&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, mine safety disclosures, and XBRL interactive data files - The exhibits include certifications (CEO, CFO), mine safety disclosures, and XBRL interactive data files for the financial statements[563](index=563&type=chunk) [SIGNATURES](index=121&type=section&id=SIGNATURES) Formal declaration by the company's authorized officer, affirming the report's accuracy and completeness - The report is signed by **Marc Smernoff, Chief Financial Officer and Executive Vice President**, on behalf of Americold Realty Trust[566](index=566&type=chunk)[567](index=567&type=chunk)