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]

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.