Americold Realty Trust(US:COLD)2021-11-04 16:00Warehouse 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].