Core Insights - Lineage, Inc. provided an update on long-term initiatives and the expected financial contribution from its proprietary warehouse execution system, LinOS [1][4] Company Performance - Demand for temperature-controlled warehousing remains muted due to high food costs affecting customer inventory levels [2] - Lineage's occupancy rate across its nearly 500 warehouses is down 300 basis points from 2021, currently at 75% [3] Market Conditions - The temperature-controlled warehousing market has 9.5% excess capacity, with square footage growing 10.5% from 2021 to 2024 [3] - Supply is expected to increase by 4% this year and 1.5% next year [3] Operational Initiatives - Lineage is implementing several initiatives to streamline operations, including digital uniformity, enhanced decision-making algorithms, and energy optimization efforts [4] - The company expects to generate $110 million in incremental annual EBITDA over the next three to five years as LinOS is rolled out to over 250 locations by 2029 [4][6] Technology and Efficiency - The LinOS system automates warehouse operations in real time, improving routing and maximizing forklift operations [5] - High-reach-operations pilots have shown over 30% improvement in hourly movements and a 5% reduction in total labor per pallet [6] Financial Outlook - Lineage has invested $250 million in LinOS, with an additional $200 million committed through 2030, forecasting a 24% return on invested capital [6] - The company reported last-12-month adjusted EBITDA of $1.3 billion, with a potential $110 million increase from labor cost reductions and value-added services [6]

Core Insights - The presentation focuses on Lineage's warehouse productivity initiatives, particularly the LinOS platform, which is expected to differentiate the company from its peers [1][2] Company Overview - Lineage's executive leadership team has extensive experience, with most members having over a decade of service at the company [2] - The new CFO, Robb LeMasters, has recently joined the team and will provide insights on financial impacts and opportunities related to LinOS [2] Industry Positioning - The agenda includes discussions on the state of the industry and how Lineage is strategically positioned for long-term success [2] - The presentation will cover warehouse productivity achievements and the company's approach to enhancing people and processes [2] Technology and Innovation - The Chief Information Officer will discuss Lineage's technological advantages and the journey towards digital enablement [2] - The Vice President and Chief Data Scientist will provide an in-depth look at the LinOS platform [2]

Summary of Lineage's Update / Briefing (December 08, 2025) Company Overview - **Company**: Lineage (NasdaqGS:LINE) - **Industry**: Cold storage and logistics - **Key Metrics**: - Largest company in the cold storage industry - 3.1 billion cubic feet of warehousing capacity - Generated approximately $1.3 billion in EBITDA last year - Operates 488 facilities across 19 countries, totaling 86 million sq ft [3][4] Core Points and Arguments Warehouse Productivity Initiatives - Introduction of **LinOS**, a next-generation warehouse execution platform aimed at enhancing productivity and operational efficiency [1][2] - Labor expenses account for 60% of total operating expenses, with a focus on improving productivity as a key lever for cost control [4] - Lineage estimates it transports or stores about 30% of temperature-controlled food in the U.S. [4] Supply and Demand Dynamics - Public refrigerated warehouse supply grew by approximately 14.5% from 2021 to 2025, but is expected to slow to 1.5% in 2026 [6] - Demand for food categories stored in Lineage's warehouses grew cumulatively by 5% during the same period, despite high consumer price inflation [7] - Estimated excess capacity in the U.S. market is about 9.5%, with an average physical occupancy of 75% in 2025 [8] Competitive Landscape - New supply is concentrated in select U.S. markets, while European and Asia-Pacific markets are not experiencing similar pressures [9] - Anticipation of new competitors exiting the market due to high operational complexities and costs [11] Digital Transformation and Technology - Lineage has invested significantly in technology and digital enablement over the last decade, focusing on unifying data and modernizing systems [22] - LinOS serves as a real-time decision engine that optimizes labor dispatching, pallet routing, and dock allocation, leading to increased throughput [25][26] - The platform has shown a 30% lift in high-reach operator productivity and a 5% reduction in total labor costs across pilot sites [49][50] Value Creation Levers - Focus on customer excellence, capital allocation, and network effects as key drivers for shareholder value [14][59] - Anticipated annualized EBITDA impact of $110 million from LinOS initiatives over the next three to five years, with a projected 24% return on invested capital (ROIC) [65][74] Other Important Insights - Lineage's approach to continuous improvement through a lean operating system has resulted in over 50% reduction in employee turnover [17] - The company has implemented a stock ownership program to foster an owner mindset among employees [17] - The use of AI-driven controls for energy optimization is expected to lower operating costs significantly [24] - The company is strategically positioned with a diversified real estate portfolio, making it difficult for competitors to replicate its scale and efficiency [12][13] This summary encapsulates the key points discussed during the briefing, highlighting Lineage's strategic initiatives, market dynamics, and technological advancements aimed at enhancing productivity and shareholder value.

Company Overview - Lineage operates 488 warehouses with 3.1 billion cubic feet of space and approximately 86 million square feet across 19 countries[10] - The company's annual operating expense is $2.4 billion, including $1.4 billion in labor and $0.2 billion in energy[10] - Lineage's 2024 Adjusted EBITDA was $1.3 billion[10] Market Dynamics - The estimated US new PRW (Public Refrigerated Warehouse) supply from 2021-2025 is projected to increase by 14.5%[15] - Estimated demand is at 5%, resulting in an excess capacity of 9.5%[15] - Lineage's total physical occupancy is at 78%[15] LinOS and Technology - Lineage expects LinOS to deliver $180 million of NOI (Net Operating Income) upside by 2030[64] - The company plans to implement LinOS at over 250 warehouses by 2029[55] - Initial High Reach Operations (HRO) pilots have driven a +30% average unit per hour improvement[98] Labor and Productivity - Team member turnover has decreased from 56% in 2022 to 25% YTD in 2025[34] - LinOS implementation has shown a 5% average improvement in total labor/throughput pallet[98] Investment and Returns - The total cumulative project investment in LinOS is projected to be approximately $450 million[113] - The base case estimate for annualized savings in 3-5 years is $110 million, with a 24% ROIC (Return on Invested Capital)[113]

Core Insights - Lineage, Inc. is currently viewed as one of the worst-performing stocks to invest in, with RBC Capital reducing the price target from $51 to $45 while maintaining an "Outperform" rating due to ongoing market softness impacting near-term performance [1][2] Financial Performance - The company reported a total revenue increase of 3.1% to $1,377 million in Q3 2025, with significant growth in the Total Global Warehousing segment, which rose to $1.01 billion from $972 million year-over-year [3] - Adjusted EBITDA grew by 2.4% to $341 million, while AFFO increased by 6.3% to $221 million, indicating resilience despite challenging market conditions [4] Future Outlook - The rollout of the LinOS system is expected to accelerate into 2026, with management prepared to provide more information, suggesting potential for future growth [2]

Financial Data and Key Metrics Changes - Total revenue increased by 3% year-over-year, while adjusted EBITDA rose by 2% to $341 million, marking a quarterly record for the company [5] - Total AFFO grew by 6% year-over-year, with AFFO per share at $0.85, reflecting a 6% decline year-over-year [5] - Same store physical occupancy improved by 50 basis points sequentially to 75%, although same store NOI declined by 3.6% year-over-year [5][6] Business Segment Data and Key Metrics Changes - Global warehousing segment revenue grew by 4%, with total NOI slightly increasing to $384 million, while same warehouse NOI declined by 3.6% [13] - Global integrated solutions segment saw flat revenue, but NOI grew by 16% to $65 million, with an NOI margin increase of 250 basis points to 17.9% [16] Market Data and Key Metrics Changes - The U.S. market is experiencing a 20% decline in import-export container volumes, impacting revenue and occupancy [26][27] - Despite excess supply, the company maintains a total estimated average physical occupancy of 75% for 2025, down only 3 percentage points from 2021 [10] Company Strategy and Development Direction - The company is focused on driving competitive differentiation through customer success, leveraging network effects, and enhancing warehouse productivity [20] - The proprietary warehouse execution system, LinOS, has been deployed in seven sites, showing double-digit productivity improvements [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term headwinds due to tariff uncertainties and lower U.S. new business expectations, but remains optimistic about long-term growth as the food industry normalizes [7][23] - The company expects a lower fourth quarter than previously anticipated, moving to the lower end of full-year guidance for both EBITDA and AFFO per share [19] Other Important Information - The company ended the quarter with total net debt of $7.55 billion and total liquidity of $1.3 billion [10] - Management is actively managing interest rate exposure and anticipates a total interest expense of $340 million to $360 million in 2026, approximately $80 million higher than the current year [18] Q&A Session Summary Question: Discussion on expected lower U.S. new business in Q4 - Management noted that tariff uncertainty is impacting import-export volumes, particularly in the West U.S. business unit, leading to a forecast of lower new business in Q4 [26][27] Question: Update on pricing strategy during the quarter - Management confirmed that there was no change to the pricing strategy, with a net price increase between 1% and 2% expected for the year [32] Question: Expectations on physical occupancy and excess capacity - Management indicated that new supply is trickling in, with expectations that it will remain low, and they are optimistic about key markets absorbing new capacity [35][36] Question: Concerns about the impact of SNAP benefits lapse - Management stated that even if SNAP benefits were eliminated, the impact on total food consumption would be minimal, around 1% [76][77] Question: Insights on international performance versus U.S. - Management highlighted that international markets are performing better due to lower competitive pressure and better occupancy levels compared to the U.S. [54][55] Question: Acquisition strategy and market opportunities - Management remains disciplined in capital deployment and is monitoring market opportunities, but is not interested in issuing equity at undervalued levels [57][58] Question: Update on fresh and frozen demand trends - Management referenced third-party data indicating continual growth in fresh and frozen food categories, despite elevated food inflation [61][62]

Company Overview - Lineage Logistics (NASDAQ:LINE) is the global leader in cold storage with 3.1 billion cubic feet of dedicated real estate and has seen its stock price drop from $78 at IPO in June 2024 to $59.66 [1][3] - The current valuation at $59.66 represents a 17X multiple on consensus 2025 AFFO of $3.51, indicating that the stock has become more interesting at this lower price [3] Industry Overview - Demand for cold storage has been steadily increasing, driven by global food demand and a higher share of food distributed via temperature control [6][7] - The USDA projects continued growth in global food demand through 2050, influenced by population and income growth [7] - The cold storage industry is currently experiencing oversupply due to a significant increase in capacity (over 40% since 2019) and a slowdown in new building projects due to higher interest rates [18][24] Growth Potential - Lineage Logistics is positioned for growth through three main sources: occupancy recovery, margin expansion, and accretive consolidation [20][21] - Current physical pallet occupancy is at 78%, with potential for significant improvement as inventory levels normalize [19][25] - The company has a margin of 39%, with opportunities for improvement through operational efficiencies and automation [27][29] Operational Efficiency - Lineage is implementing a proprietary software called LinOS to optimize warehouse operations, which is expected to enhance efficiency and reduce labor costs [30][31] - The company currently has 82 out of 488 warehouses automated, with plans for further automation to improve margins [30] Market Position - As the market leader, Lineage has synergies in its customer network and can spread overhead costs over a larger revenue base, enhancing its competitive advantage [29] - The fragmented nature of the cold storage industry presents opportunities for Lineage to acquire smaller competitors and improve their operational efficiency [32] Long-term Outlook - The long-term fundamental outlook for cold storage remains strong, with Lineage's market leadership and operational efficiencies positioning it for potentially explosive growth [40] - The company anticipates a return to normal seasonality in inventory levels, which could significantly impact occupancy rates and overall performance [25][26]