Americold Realty Trust(US:COLD)2024-05-10 20:04Operations and Facilities - The company operates 241 temperature-controlled warehouses globally, totaling approximately 1.5 billion cubic feet, with 196 in North America, 25 in Europe, 18 in Asia-Pacific, and 2 in South America as of March 31, 2024[109]. - The company has exited less strategic markets and sold certain warehouse assets as part of its cost reduction initiatives, focusing on streamlining operations and enhancing profitability[112]. - The company has invested in energy efficiency projects, including LED lighting and thermal energy storage, to reduce facility costs and energy consumption[116]. Financial Performance - Total warehouse segment revenues for Q1 2024 were $597.7 million, a 0.4% increase compared to Q1 2023, with a constant currency growth of 2.0%[161]. - Warehouse segment cost of operations decreased by $13.1 million, or 3.1%, during Q1 2024 compared to the same period in the prior year[156]. - Warehouse segment contribution (NOI) increased by 12.8% to $197.1 million in Q1 2024, with a constant currency increase of 14.4%[161]. - Same store revenues decreased by 0.7% to $576.7 million in Q1 2024, while same store contribution (NOI) increased by 8.6% to $200.6 million[160]. - Non-same store revenues increased by $7.2 million due to recent expansion and acquisitions, including the Ormeau acquisition in July 2023 and the Safeway acquisition in October 2023[165]. - Total warehouse segment margin improved to 33.0%, up from 29.4% in the prior year, reflecting a 360 basis points increase[153]. - Same store services contribution (NOI) saw a significant increase of 172.3%, reaching $34.7 million in Q1 2024[160]. - Net income for Q1 2024 was $9.8 million, compared to a net loss of $2.6 million in Q1 2023[201]. - NAREIT FFO for Q1 2024 was $62.8 million, up from $53.1 million in Q1 2023[201]. - Core FFO applicable to common stockholders increased to $77.3 million in Q1 2024, compared to $60.8 million in Q1 2023[201]. - Adjusted FFO applicable to common stockholders was $104.9 million in Q1 2024, compared to $79.9 million in Q1 2023[201]. - Core EBITDA for Q1 2024 was $155.8 million, an increase from $133.1 million in Q1 2023[208]. Project Orion - Project Orion, launched in February 2023, aims to enhance technology systems and business processes, with $84.1 million incurred in implementation costs to date, of which $59.4 million is deferred as of March 31, 2024[114]. - The company expects benefits from Project Orion to include revenue and margin improvements, cost reductions in finance and human resources, and enhanced operational efficiency[114]. Economic Occupancy and Performance Metrics - Economic occupancy, defined as the sum of physically occupied and contractually committed pallets, is a key driver of financial results, with a strategy to establish fixed storage commitments to mitigate seasonal impacts[133]. - The company experienced a decline in economic occupancy in same store storage revenue, which decreased by $2.6 million on a constant currency basis[163]. - Economic occupancy for the same store pool decreased to 80.9%, down 352 basis points from the prior year, primarily due to a slowdown in food production levels[167]. - Average occupied economic pallets decreased by 4.7% to 4,242 compared to 4,453 in the prior year[166]. - Same store rent and storage revenues per average economic occupied pallet increased by 1.9% to $60.42, while constant currency revenues increased by 3.9% to $61.63[166][168]. - Throughput pallets for the same store pool decreased by 7.6% to 8,682, reflecting a decline in end-consumer demand[167][168]. Transportation and Third-Party Services - Transportation services revenue is influenced by third-party carrier costs, which are affected by driver and equipment availability, impacting overall operational costs[142]. - Transportation revenues decreased by 16.5% to $56.9 million, with a constant currency decrease of 14.4% to $58.3 million, attributed to a strategic transition in the UK and softening demand[171][172]. - Third-party managed revenues decreased by 22.0% to $10.4 million, with a constant currency decrease of 20.3%[176]. - Third-party managed segment contribution (NOI) increased by 102.3% to $2.2 million, driven by operational improvements in Australia and North America[179]. Expenses and Income - Depreciation and amortization expense increased by 8.3% to $7.1 million, primarily due to acquisitions and expansions[180]. - Corporate-level acquisition, cyber incident, and other expenses increased by 109.9% to $15.0 million, largely due to Project Orion costs and cyber incident-related expenses[182]. - A gain of $3.5 million was recorded from the sale of real estate related to the strategic sale of a facility[184]. - Interest expense decreased to $33.4 million for Q1 2024, down 2.9% from $34.4 million in Q1 2023[187]. - Loss on debt extinguishment increased to $5.2 million in Q1 2024, compared to $0.5 million in Q1 2023, primarily due to the purchase of two failed sale-leaseback facilities[188]. - Loss from investments in partially owned entities rose to $0.9 million in Q1 2024, a 46.5% increase from $0.6 million in Q1 2023, attributed to lower occupancy rates and loss of a customer[189]. - Other net income was $9.5 million in Q1 2024, an increase of $8.1 million from $1.4 million in Q1 2023, mainly due to an $8.3 million settlement related to a prior acquisition[190]. - Income tax expense for Q1 2024 was $2.0 million, an increase of $3.6 million from an income tax benefit of $1.6 million in Q1 2023, driven by improved operating results[192]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $62.0 million for the three months ended March 31, 2024, an increase of $20.5 million compared to $41.5 million for the same period in 2023[244]. - The Company used $39.3 million in investing activities for the three months ended March 31, 2024, compared to $87.6 million in the same period of 2023[245]. - The Company purchased two facilities for total consideration of $20.4 million during the three months ended March 31, 2024, resulting in a loss on debt extinguishment of $4.7 million[238]. - Net cash used in financing activities was $22.5 million for the three months ended March 31, 2024, compared to net cash provided of $38.9 million for the same period in 2023[247]. - Cash used in financing activities for the current period included $126.0 million in repayments to the Senior Unsecured Revolving Credit Facility and $63.0 million in dividend payments[247]. - Maintenance capital expenditures for the three months ended March 31, 2024, totaled $17.9 million, an increase from $16.2 million in the same period of 2023[230]. - The Company incurred repair and maintenance expenses of $30.9 million for the three months ended March 31, 2024, compared to $30.7 million for the same period in 2023[233]. - Expansion and development capital expenditures for the three months ended March 31, 2024, amounted to $30.9 million, down from $39.1 million in the prior year[242]. Debt and Interest Rates - The Company has a total outstanding indebtedness of $3,280.1 million as of March 31, 2024, with 86.1% being fixed-rate debt[220]. - The aggregate principal amount of indebtedness due in 2026 is $200.0 million, with $830.9 million due in 2027 and $1,559.3 million due thereafter[224]. - As of March 31, 2024, the company had $645.0 million of outstanding USD-denominated variable-rate debt and C$250.0 million of CAD-denominated variable-rate debt[253]. - The company entered into interest rate swaps to lock in floating rates on USD-denominated term loans at a weighted average rate of 4.2% and CAD-denominated term loans at 4.5%[253]. - A 100 basis point increase in market interest rates would result in an increase in annual interest expense of approximately $4.6 million[254]. - As of March 31, 2024, one-month term and daily SOFR was approximately 5.3%, and one-month CDOR was also approximately 5.3%[254]. - The company had $104.0 million and various amounts in other currencies outstanding under the Senior Unsecured Revolving Credit Facility[254]. Accounting and Estimates - There were no material changes to critical accounting estimates and assumptions during the period covered by the Quarterly Report[249]. - New accounting pronouncements are discussed in Note 1 of the Condensed Consolidated Financial Statements included in the Quarterly Report[250].