Americold Realty Trust(COLD) - 2024 Q2 - Quarterly Results

Overview Corporate Profile Americold Realty Trust, Inc. (ART) is a global real estate investment trust (REIT) specializing in temperature-controlled warehouses - The company is a global leader in temperature-controlled storage, operating 239 warehouses totaling approximately 1.4 billion cubic feet[5] - ART's business is structured into three main segments: warehouse, transportation, and third-party managed, also holding minority interests in joint ventures in Brazil (SuperFrio) and Dubai (RSA)[5] - The company's shares are traded on the New York Stock Exchange under the symbol "COLD" and it holds investment-grade credit ratings from DBRS, Fitch, and Moody's[7][8] Earnings Release Americold announced strong Q2 2024 results, with double-digit same-store NOI growth and record services margins, raising full-year guidance Second Quarter 2024 Highlights Q2 2024 saw significant year-over-year growth, with Total Company NOI up 17.1% and Core EBITDA rising 22.9% - CEO George Chappelle highlighted that the strong organic growth is a result of building a productive, stabilized workforce and significant investments in technology, which have enhanced revenue capture and cost management[10] Q2 2024 Financial Highlights vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $661.0M | $649.6M | +1.7% | | Net Loss | ($64.4M) | ($104.8M) | Improved | | Total Company NOI | $215.5M | $184.1M | +17.1% | | Core FFO per Share | $0.33 | $0.23 | +43.5% | | AFFO per Share | $0.38 | $0.28 | +35.7% | | Core EBITDA | $165.5M | $134.7M | +22.9% | | Global Warehouse Same Store NOI (Constant Currency) | - | - | +19.3% | Financial Results and Portfolio Update Q2 2024 total revenue grew 1.7% to $661.0 million, with total NOI up 17.1% to $215.5 million, driven by pricing and cost control - Global Warehouse segment revenue grew 3.3% to $600.4 million, and its NOI increased 18.3% to $204.5 million, driven by pricing initiatives and strong cost controls which improved margins[27][28] - The company continues to increase its fixed commitment storage contracts, with annualized revenue from these contracts reaching $618.0 million, up from $521.3 million a year ago[29] - As of June 30, 2024, the company had total liquidity of $553.7 million, with net debt to pro forma Core EBITDA at 5.3x and no material debt maturities until 2026[33] - Economic occupancy for the total warehouse segment was 78.1%, a decrease of 634 basis points compared to Q2 2023, while physical occupancy was 67.8%[19][31] Selected Quarterly Financial Data This section presents key financial and operational data over the last five quarters, highlighting a trend of improving profitability and decreasing leverage Selected Quarterly Data (Q2 2023 - Q2 2024) | Metric (in thousands, except per share) | Q2 24 | Q1 24 | Q4 23 | Q3 23 | Q2 23 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $660,955 | $664,980 | $679,291 | $667,939 | $649,610 | | Net (Loss) Income | $(64,409) | $9,802 | $(226,800) | $(2,096) | $(104,802) | | Core EBITDA | $165,482 | $155,844 | $160,270 | $144,047 | $134,687 | | AFFO per Diluted Share | $0.38 | $0.37 | $0.38 | $0.32 | $0.28 | | Net Debt to pro forma Core EBITDA | 5.33x | 5.40x | 5.58x | 5.68x | 6.59x | Financial Information Condensed Consolidated Balance Sheets As of June 30, 2024, Americold reported total assets of $7.80 billion, a slight decrease from $7.87 billion at year-end 2023 Condensed Balance Sheet Data (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $7,802,453 | $7,869,252 | | Total Liabilities | $4,332,865 | $4,234,665 | | Total Equity | $3,469,588 | $3,634,587 | Condensed Consolidated Statements of Operations For the second quarter ended June 30, 2024, the company generated total revenues of $661.0 million and reported a net loss of $64.4 million, or $0.23 per share Q2 2024 Statement of Operations (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $660,955 | $649,610 | | Operating Income | $63,368 | $20,667 | | Net Loss | $(64,409) | $(104,802) | | Diluted Loss Per Share | $(0.23) | $(0.39) | Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO and Adjusted FFO For Q2 2024, Core FFO was $95.0 million ($0.33 per share) and Adjusted FFO (AFFO) was $109.4 million ($0.38 per share), both showing substantial year-over-year growth FFO Reconciliation Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (Loss) Income | $(64,409) | $(104,802) | | NAREIT FFO | $(7,528) | $(52,358) | | Core FFO | $95,023 | $62,497 | | Adjusted FFO (AFFO) | $109,397 | $75,557 | Reconciliation of Net (Loss) Income to NAREIT EBITDAre, and Core EBITDA The reconciliation shows a Q2 2024 Core EBITDA of $165.5 million, a 22.9% increase from $134.7 million in Q2 2023, with Core EBITDA margin expanding to 25.0% EBITDA Reconciliation Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (Loss) Income | $(64,409) | $(104,802) | | NAREIT EBITDAre | $57,444 | $17,542 | | Core EBITDA | $165,482 | $134,687 | | Core EBITDA Margin | 25.0% | 20.7% | Acquisition, Cyber Incident and Other, Net For Q2 2024, the net expense was $3.0 million, a significant reduction from $27.2 million in Q2 2023, primarily due to a $10.9 million net insurance recovery related to a prior cyber incident Breakdown of Costs (in thousands) | Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Project Orion expenses | $11,984 | $2,543 | | Acquisition and integration | $1,345 | $2,402 | | Severance costs | $1,030 | $2,793 | | Cyber incident costs, net | $(10,884) | $18,998 | | Total | $3,013 | $27,235 | Debt Detail and Maturities As of June 30, 2024, Americold had total debt outstanding of $3.38 billion with a weighted average remaining term of 4.6 years and a weighted average interest rate of 4.14% Debt Profile as of June 30, 2024 | Metric | Value | | :--- | :--- | | Total Debt Outstanding | $3.38 Billion | | Weighted Avg. Interest Rate | 4.14% | | Weighted Avg. Term | 4.6 years | | % Unsecured | 95% | | % Fixed Rate | 82% | Operations Overview Revenue and Contribution (NOI) by Segment The Warehouse segment continues to be the primary driver of the company's performance, generating $600.4 million in revenue and $204.5 million in contribution (NOI) for Q2 2024 Q2 2024 Revenue and NOI by Segment (in thousands) | Segment | Revenue | Contribution (NOI) | | :--- | :--- | :--- | | Warehouse | $600,387 | $204,531 | | Transportation | $50,637 | $8,850 | | Third-party managed | $9,931 | $2,102 | | Total | $660,955 | $215,483 | Global Warehouse Economic and Physical Occupancy Trend This section defines and differentiates between economic and physical occupancy, highlighting the stability provided by fixed commitment contracts - Economic occupancy includes both physically occupied pallets and contractually committed pallets, providing a more complete view of revenue-generating capacity[66] - The company has actively pursued fixed storage commitments to enhance revenue predictability, with 311 customers under such contracts as of Q2 2024[68] Global Warehouse Portfolio The company's global warehouse portfolio consists of 235 facilities totaling 1.43 billion cubic feet, with North America accounting for 86% of the portfolio's cubic feet Portfolio by Geography (Six Months Ended June 30, 2024) | Region | of Warehouses | Cubic Feet (M) | % of Total | Revenue (M) | Contribution (NOI) (M) | | :--- | :--- | :--- | :--- | :--- | :--- | | North America | 192 | 1,229.7 | 86% | $996.3 | $347.1 | | Europe | 25 | 114.7 | 8% | $89.1 | $25.6 | | Asia-Pacific | 16 | 76.0 | 5% | $106.7 | $27.0 | | South America | 2 | 9.7 | 1% | $6.0 | $2.0 | | Total | 235 | 1,430.1 | 100% | $1,198.1 | $401.7 | - By warehouse type, Distribution facilities account for 51% of revenue and 44% of NOI, making it the largest category[73][75] Fixed Commitment and Lease Maturity Schedules The company provides a schedule of expirations for its fixed storage commitments and leases, with total annualized committed revenue of $618.0 million as of June 30, 2024 - Total annualized committed rent and storage revenue from 571 fixed commitment contracts and leases is $618.0 million[77] - The company's facility leases to third parties have a weighted average remaining term of 44 months[79] Maintenance Capital Expenditures, Repair and Maintenance Expenses and External Growth, Expansion and Development Capital Expenditures In Q2 2024, the company invested $22.8 million in maintenance capital expenditures and $35.6 million on external growth, expansion, and development projects Q2 2024 Capital & Maintenance Spending (in thousands) | Category | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Maintenance Capital Expenditures | $22,832 | $22,590 | | Repair and Maintenance Expenses | $29,268 | $29,400 | | External Growth & Development CapEx | $35,640 | $82,112 | Total Global Warehouse Segment Financial and Operating Performance Global Warehouse Segment Financial Performance The Global Warehouse segment's financial performance improved significantly in Q2 2024, with NOI increasing 18.3% to $204.5 million, driven by a dramatic turnaround in warehouse services Global Warehouse Segment Performance (Q2 2024 vs Q2 2023) | Metric (in thousands) | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $600,387 | $581,170 | +3.3% | | Contribution (NOI) | $204,531 | $172,842 | +18.3% | | Warehouse Services Contribution (NOI) | $36,327 | $(5,177) | +801.7% | | Total Margin | 34.1% | 29.7% | +433 bps | | Warehouse Services Margin | 10.9% | (1.7)% | +1261 bps | Same-Store Financial Performance The same-store portfolio demonstrated strong organic growth in Q2 2024, with same-store NOI growing by an impressive 17.3% (19.3% constant currency), fueled by improved services margin Same-Store Performance (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change (Actual) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $582.7M | $563.6M | +3.4% | +5.3% | | Contribution (NOI) | $206.6M | $176.2M | +17.3% | +19.3% | | Total Margin | 35.5% | 31.3% | +419 bps | +417 bps | | Services Margin | 13.4% | 1.1% | +1221 bps | +1209 bps | Same-Store Key Operating Metrics In Q2 2024, same-store economic and physical occupancy declined, but strong pricing offset this, with rent and storage revenue per economic occupied pallet growing 4.8% Same-Store Operating Metrics (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Economic Occupancy % | 79.4% | 84.7% | -526 bps | | Physical Occupancy % | 68.9% | 77.7% | -875 bps | | Rent/Storage Revenue per Econ. Pallet | $61.94 | $59.12 | +4.8% | | Services Revenue per Throughput Pallet | $37.26 | $33.74 | +10.4% | Same-Store Historical Performance Trend This table provides a six-quarter historical view of same-store performance, illustrating a clear trend of improving profitability, with services margin rising from 1.1% in Q2 2023 to 13.4% in Q2 2024 Quarterly Same-Store Services Margin Trend | Quarter | Same-Store Services Margin | | :--- | :--- | | Q1 2023 | 4.0% | | Q2 2023 | 1.1% | | Q3 2023 | 3.5% | | Q4 2023 | 6.3% | | Q1 2024 | 10.8% | | Q2 2024 | 13.4% | External Growth and Capital Deployment External Growth and Capital Deployment The company details its active development pipeline and recent acquisitions, with new projects targeting a 10-12% stabilized NOI return on invested capital (ROIC) - Five major development and expansion projects were completed in 2023, adding significant capacity in the US and Australia[99] - Three expansion and development projects are currently in process in Allentown, PA; Kansas City, MO; and Sydney, Australia, with a total estimated cost of approximately $280-$300 million and expected stabilized NOI ROIC of 10-12%[100] - Two facilities were acquired in the second half of 2023 in Australia and New Jersey, with an expected stabilized NOI ROIC of 9-10%[101] Unconsolidated Joint Ventures (Investments in Partially Owned Entities) SuperFrio (Brazil) Americold holds a 14.99% equity share in SuperFrio, a Brazil-based temperature-controlled warehouse operator, with its pro rata share of the joint venture's NOI being approximately $1.1 million for Q2 2024 Americold's Pro Rata Share of SuperFrio Performance (Q2 2024) | Metric | Value (USD thousands) | | :--- | :--- | | Ownership | 14.99% | | Share of Debt | $19,466 | | Share of NOI | $1,059 | | Share of Net Loss | $(798) | RSA (Dubai) The company owns a 49% equity share in the RSA joint venture in Dubai, with Americold's pro rata share of the JV's NOI being a loss of $64,000 for Q2 2024 Americold's Pro Rata Share of RSA Performance (Q2 2024) | Metric | Value (USD thousands) | | :--- | :--- | | Ownership | 49% | | Share of Debt | $6,644 | | Share of NOI | $(64) | | Share of Net Loss | $(148) | 2024 Guidance 2024 Guidance Reflecting its strong first-half performance, Americold raised its full-year 2024 guidance, now expecting AFFO per share to be in the range of $1.44 to $1.50 Updated 2024 Full-Year Guidance | Metric | As of Aug 8, 2024 | As of May 9, 2024 | | :--- | :--- | :--- | | AFFO per share | $1.44 - $1.50 | $1.38 - $1.46 | | Warehouse same store revenue growth (CC) | 2.0% - 4.0% | 2.5% - 5.5% | | Warehouse same store NOI growth (CC) | 900-1000 bps higher than revenue | 700-750 bps higher than revenue | | Interest expense | $133M - $141M | $135M - $143M | Notes and Definitions Notes and Definitions This section defines key non-GAAP financial measures used in the report, including FFO, AFFO, and EBITDAre, providing clarity on supplemental performance metrics - Defines key non-GAAP metrics such as FFO, Core FFO, and Adjusted FFO (AFFO), explaining that they are used to provide supplemental performance measures by excluding items like real estate depreciation and certain non-core or volatile expenses[110] - Explains the calculation of EBITDAre and Core EBITDA, which are designed to measure operating results unaffected by differences in capital structure and certain non-core items[110] - Provides the methodology for determining the "same store" population, which includes properties owned for two full comparable periods with at least twelve months of normalized operations, used for analyzing organic growth[112]