Temperature-controlled warehouse operator Lineage said the market is shaking off the effects of excessive facility construction and post-pandemic inventory destocking. Management from the Novi, Michigan-based company said Wednesday that new cold storage space grew 14.5% from 2021 through 2025 while demand increased only 5%. With the market roughly 10% oversupplied, management sees fundamentals firming as capacity is expected to increase by just 1.5% this year and customer inventories appear to be at troug ...

Americold Realty Trust (NYSE:COLD) Q4 2025 Earnings call February 19, 2026 08:00 AM ET Company ParticipantsBrendan Lynch - DirectorMichael Carroll - Managing DirectorNick Joseph - Head of U.S. Real Estate and Lodging Research TeamRich Leland - VP of Finance, Investor Relations, and Corporate TreasurerRob Chambers - CEOSamir Khanal - Director of U.S. REITsScott Henderson - EVP, Chief Investment Officer, and Interim CFOVince Tibone - Managing Director and Head of U.S. Industrial and Mall ResearchConference Ca ...

Financial Data and Key Metrics Changes - The company reported fourth quarter AFFO of $0.38 per share, slightly ahead of expectations, marking a year-over-year increase [6][22] - For the full year, AFFO was $1.43 per share, in line with expectations, with a year-over-year increase in fourth quarter core EBITDA and total company NOI [22] - Economic occupancy improved by 280 basis points sequentially in the fourth quarter, primarily due to seasonal harvest impacts and portfolio management [22] Business Line Data and Key Metrics Changes - The company achieved approximately 60% of rent and storage revenues from fixed commitment contracts, up from less than 40% previously [8][9] - Services revenue per pallet increased by 2.4%, while storage revenue per pallet rose by 0.3%, reflecting competitive market pressures [23] - Operationally, service margins were nearly 14% in the fourth quarter, with a full-year margin of 12.7%, up nearly 1,000 basis points over the past two years [10] Market Data and Key Metrics Changes - The company noted that the food distribution node has seen the most speculative development, impacting revenue [12] - The U.S. market is experiencing excess supply, particularly from new market entrants, while the European and Asia Pacific markets are performing well [71][72] - The company expects continued pressure on revenue due to demand and supply headwinds, particularly in the food distribution sector [12][20] Company Strategy and Development Direction - The company is focused on five key priorities for 2026, including deleveraging the balance sheet, maximizing profitability through portfolio management, and driving organic growth in underpenetrated sectors [12][19] - The company aims to maintain its investment-grade profile by evaluating opportunities for joint ventures or selling non-strategic assets [13][24] - The company is also exploring new sectors, such as convenience store distribution, to expand its customer base and revenue streams [39][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about customer demand, noting that many customers are focused on driving volume through innovation and new product launches [20][39] - The company expects AFFO for 2026 to be between $1.20 and $1.30 per share, reflecting a pragmatic view of the market environment [21][27] - Management acknowledged that while physical occupancy has stabilized, customers are managing inventory tightly and evaluating space requirements closely [20][27] Other Important Information - The company successfully exited or idled 10 sites in North America during 2025, generating cash proceeds and removing over 22 million cubic feet of capacity [25] - The company has identified nine sites for potential closure in 2026, with two already acted upon in the first quarter [26][77] - The company is committed to unlocking $30 million in annualized cost savings and reducing Project Orion-related cash spend by approximately $50 million [19][31] Q&A Session Summary Question: Customer demand outlook - Management noted that customers are experiencing flattish net sales growth, with price increases not expected to drive significant volume growth in 2026 [36][37] Question: Economic occupancy expectations - Management clarified that the expectation for economic occupancy is flat to down 300 basis points, with recent portfolio management activities contributing positively [42][44] Question: International presence and portfolio review - Management stated that international assets are performing well and are under thorough review to ensure long-term viability [50][52] Question: Deleveraging initiative details - Management emphasized the importance of achieving a leverage level below six to maintain an investment-grade rating, with ongoing evaluations of potential transactions [54][55] Question: Fixed contract retention rates - Management reported a high retention rate for fixed commitment contracts, with customers tightening their space requirements rather than stepping away from fixed commitments [56][58]

Core Insights - Americold Realty Trust reported a fourth-quarter AFFO per share of $0.38, a 3% increase year-over-year, indicating solid performance despite challenges in the cold storage industry [3][19] - The company achieved a full-year services margin improvement and met its long-term target of 60% for fixed commitment contracts, reflecting effective operational execution [3][6] - For 2026, Americold has outlined key priorities aimed at strengthening its balance sheet and enhancing profitability, while also expanding into high-value retail and adjacent sectors [3][8] Financial Performance - Total revenues for Q4 2025 were $658.5 million, a 1.2% decrease from $666.4 million in Q4 2024, primarily due to lower volumes in the Global Warehouse segment [6][13] - The company reported a net loss of $88.3 million, or $0.31 loss per diluted share, compared to a net loss of $36.2 million, or $0.13 per diluted share in Q4 2024 [17][11] - Adjusted FFO for Q4 2025 was $108.3 million, or $0.38 per diluted share, a 2.7% increase from $105.9 million, or $0.37 per diluted share in Q4 2024 [19][6] Operational Metrics - Global Warehouse segment same store revenues decreased by 1.1% on an actual basis and 1.5% on a constant currency basis compared to Q4 2024 [6][14] - The same store services margin increased to 13.9% from 12.7% in Q4 2024, indicating improved operational efficiency [31][6] - Global Warehouse segment contribution NOI for Q4 2025 was $206.9 million, a 2.7% increase from $201.4 million in Q4 2024, driven by lower operational costs [15][16] 2026 Outlook - The company expects AFFO per share for 2026 to be in the range of $1.20 to $1.30, reflecting a cautious approach amid ongoing industry challenges [3][8] - Guidance for warehouse segment same store revenues is projected between $2.20 billion and $2.27 billion, with total company NOI expected to range from $780 million to $845 million [8][7] - Core EBITDA is anticipated to be between $570 million and $620 million, indicating a focus on maintaining profitability [8][7] Balance Sheet and Liquidity - As of December 31, 2025, Americold had total liquidity of approximately $935.4 million, with total net debt outstanding around $4.2 billion [20][21] - The company's net debt to pro forma Core EBITDA ratio was approximately 6.8x, indicating a manageable level of leverage [21][20] - Approximately 86.6% of total debt was at a fixed rate, providing stability in interest expenses [21][20] Dividend Information - The Board of Directors declared a 5% increase in the dividend to $0.23 per share for Q4 2025, reflecting a commitment to returning value to shareholders [22][6]

Industry Overview - The broader cold storage industry is experiencing a decline due to oversupply [1] - Lineage (LINE) presents a compelling investment opportunity due to its technological leadership [1] Company Analysis - Lineage has structural cost advantages over competitors like Americold [1] - The company's technological advancements contribute to its competitive edge in the market [1]

Core Viewpoint - Americold Realty Trust has appointed two new independent directors and formed a Finance Committee to enhance shareholder value, while entering into a cooperation agreement with Ancora Group Holdings LLC to facilitate collaboration with significant shareholders [2][3][4]. Group 1: Board Appointments and Committee Formation - Joseph Reece and Stephen Sleigh have been appointed to Americold's Board of Directors, bringing valuable governance experience and expertise in corporate finance and shareholder engagement [2][3]. - A new Finance Committee has been established to review the company's portfolio and make recommendations regarding potential sales or divestitures, including international opportunities [3]. Group 2: Strategic Focus and Collaboration - The Finance Committee will also focus on reducing debt, maintaining dividends, and preserving core assets for long-term benefits [3]. - The collaboration with Ancora is aimed at enhancing governance and value creation, with Ancora agreeing to support the Board's full slate of directors at the 2026 Annual Meeting [4]. Group 3: Company Overview and Market Position - Americold is a leader in temperature-controlled logistics with over 230 facilities globally, ensuring efficient movement of refrigerated products [6][7]. - The company emphasizes its role in the global food supply chain, leveraging technology and sustainable practices to deliver value [8].

Core Viewpoint - A lawsuit is pending against Lineage, Inc. for alleged violations of securities laws related to its July 2024 IPO, claiming that the company misrepresented its financial health and market conditions [1] Summary by Relevant Sections Lawsuit Details - The lawsuit was filed by an investor on August 1, 2025, alleging that the registration statement for Lineage's IPO was false and misleading [1] - The plaintiff claims that Lineage was experiencing a decline in customer demand due to increased cold-storage supply and destocking of excess inventory from the COVID-19 pandemic [1] - It is alleged that Lineage's customers shifted to maintaining leaner cold-storage inventories, impacting the company's revenue and occupancy rates [1] Financial Performance Claims - The lawsuit asserts that instead of stable revenue growth and high occupancy rates as claimed, Lineage was facing stagnant or declining revenue, occupancy rates, and rent prices [1] - The company reportedly implemented price increases prior to the IPO that could not be sustained due to the weakening demand environment [1] - The plaintiff argues that Lineage was unable to counteract these adverse trends through operational efficiencies or competitive advantages [1]

Core Insights - Lineage Inc. is expanding its U.S. operations with the construction of an automated cold-storage facility in Hutchins, Texas, expected to open in late 2027, amid a challenging financial environment due to tariff pressures [1][2][5] Group 1: Expansion Plans - The new facility in Hutchins is the first of two next-generation automated warehouses designed for a long-time customer, enhancing Lineage's capabilities in a key market [2] - The location near Union Pacific's Dallas Intermodal Terminal allows Lineage to serve both domestic and cross-border markets effectively [3] - This expansion follows a recent increase in capacity at Lineage's Hobart, Indiana facility, which is now the largest in North America, adding 188,000 square feet and 58,000 pallet positions [4] Group 2: Financial Performance - Lineage reported a third-quarter net loss of $112 million, despite a 3% year-over-year increase in consolidated revenue to $1.38 billion [6] - Physical occupancy rates were at 75.2%, slightly below the previous year but showing sequential improvement [6] - The company has adjusted its full-year 2025 guidance downward due to ongoing tariff uncertainties and high food prices affecting inventory levels [5] Group 3: Market Dynamics - Despite challenges from tariffs and inflation, consumer demand for products within Lineage's network continues to grow [7]

Financial Data and Key Metrics Changes - The third-quarter AFFO per share was reported at $0.35, aligning with expectations despite ongoing industry challenges from lower consumer demand and increased supply [17][22] - Same-store economic occupancy decreased to 75.5%, reflecting continued demand pressure, while same-store throughput saw a slight sequential increase due to the annual agricultural harvest [22][23] - Same-store NOI contracted from the prior quarter primarily due to seasonal increases in power costs, although rent and storage revenue per economic pallet increased both sequentially and year-over-year [22][23] Business Line Data and Key Metrics Changes - Approximately 30% of capacity and revenue comes from production-attached facilities, which are viewed as valuable assets for future expansion [10] - Four distribution centers account for about 50% of capacity and 40% of revenue, facing pricing competition due to excess capacity [12] - Retail distribution centers represent about 10% of capacity and 20% of revenues, with growth expected as the company expands capabilities overseas [14] Market Data and Key Metrics Changes - The Asia-Pacific region's total warehouse NOI increased by approximately 16% year-to-date, with economic occupancy well over 90% [18] - The macro environment remains challenging, with customer commentary indicating constrained demand, particularly among lower-income consumers [19] - The company anticipates that excess capacity will take a couple of years to be fully absorbed, with pricing gains expected to moderate in the fourth quarter [26][54] Company Strategy and Development Direction - The company aims to grow market share in the fast-turning retail sector and expand its quick service restaurant business into new geographies [6] - A focus on maintaining fixed-commitment contracts is emphasized, as they provide stable cash flows and long-term customer relationships [8][23] - The company is actively managing its real estate portfolio, exiting low-occupancy facilities while evaluating triple-net lease arrangements to drive occupancy levels [20][24] Management's Comments on Operating Environment and Future Outlook - Management believes that current headwinds are largely transitory, with expectations for pricing and occupancy pressures in 2026 [19][25] - The company is confident in the long-term trajectory of the cold storage industry, citing unique value propositions and mission-critical infrastructure [21][27] - Management is focused on identifying new sales opportunities and expanding into potential new sectors, including both food and non-food categories [20][54] Other Important Information - The company has a development pipeline of approximately $1 billion in attractive opportunities, balancing capital allocation with maintaining dividends and an investment-grade profile [24][62] - The company is trading at a significant discount to intrinsic value, with a historically high cap rate of around 10% [29][30] Q&A Session Summary Question: How should we think about throughput over the next 12 months? - Management indicated that throughput is expected to remain challenged due to lower demand, particularly from lower and middle-income consumers, with muted seasonal demand anticipated [32][33] Question: What are you doing to control costs in the business? - Management highlighted effective cost control measures, including matching direct labor to throughput, which has helped maintain handling margins above 12% [35][37] Question: Should we expect more fixed commitment contracts to be up for renewal in the beginning of the year? - Management clarified that contract renewals are spread throughout the year based on when they are signed, rather than being concentrated in specific quarters [41] Question: What happens to low-occupancy facilities from a P&L perspective? - Management explained that costs associated with low-occupancy facilities are generally minimal and may be capitalized once removed from active status, with customers often moved to owned infrastructure [44] Question: How do you see the new competition in the industry? - Management noted that many new market entrants are struggling with unsustainable business models, which could lead to accelerated exits from the market [50][52]

Company Overview - Americold is a global leader in the cold storage industry, operating an integrated network of strategically located warehouses[6, 79] - The company possesses significant scale with a global footprint, including 1,232 million cubic feet of capacity in North America and 114 million cubic feet in Europe[10] - Americold has approximately 13,000 associates and serves around 3,000 customers[10] Financial Performance - The company's LTM PF Core EBITDA is $615 million[12] - Adjusted FFO has grown by 34%, from $299 million in 2021 to $406 million in LTM Q3 2025[14] - Total Segment Contribution NOI has grown by 40%, from $630 million in 2021 to $834 million in LTM Q3 2025[14] Strategic Initiatives - Americold focuses on designing solutions that fit customer needs, supported by an in-house design engineering team[21] - The company leverages strategic partnerships with CPKC and DP World to enhance its service offerings and expand its network[45] - Americold is implementing Project Orion to standardize processes, reduce manual work, and improve analytics[50] Market Position and Growth - Americold holds 18% of the North American cold storage market and 6% of the global market[56] - The company is transitioning from on-demand contracts to fixed storage committed contracts, which now account for 60% of total warehouse rent and storage revenues[63] - Americold is committed to sustainability initiatives, including reducing Scope 1 and 2 emissions by 9.48% from 2021, with a goal of 30% in 2030[75]