Americold Realty Trust(COLD) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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] - 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][42][45] 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 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 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][339] 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] Non-GAAP Financial Measures 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 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] - 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] 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 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] - 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] Item 4. Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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][456] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 6. Exhibits 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]