Americold Realty Trust(US:COLD)2022-08-05 02:24Financial Data and Key Metrics Changes - The company reported total revenue of $730 million for Q2 2022, reflecting an 11% year-over-year increase, with total NOI at $168 million, an 8% increase [43] - AFFO per share was $0.27, compared to $0.28 in the prior year quarter [45] - Core EBITDA was $120 million, a 1.6% year-over-year increase, with a core EBITDA margin decrease of 160 basis points to 16.5% [45] Business Line Data and Key Metrics Changes - Global Warehouse segment revenue was $564 million, a 12% increase year-over-year, driven by pricing initiatives and economic occupancy improvement [46] - Same-store Global Warehouse segment revenue increased by 5.9% year-over-year, with economic occupancy at 78.1%, up 288 basis points from the previous year [50] - Same-store warehouse services revenue increased by 3.9% year-over-year, with a 7.9% increase in revenue per throughput pallet [53] Market Data and Key Metrics Changes - Economic occupancy improvement was noted, with a significant increase in physical and economic occupancy due to increased production by food manufacturers and changes in consumer buying behavior [15][16] - The company experienced inflationary pressures primarily in power and warehouse supply costs, impacting overall costs and margins [18][19] Company Strategy and Development Direction - The company is focused on repricing its Warehouse business to offset inflationary pressures, with a commitment to cover all known inflation incurred through Q1 [8] - A new joint venture in Latin America was formed, focusing on high-growth food production, with a total equity commitment of just under $300 million [20][21] - The company aims to differentiate its platform by providing best-in-class customer service and optimizing labor management to reduce turnover rates [10][13] Management Comments on Operating Environment and Future Outlook - Management indicated that full recovery in the labor market is not expected this year, with improvements seen as a trickle rather than a constant flow [68] - The company anticipates continued inflationary pressures and a potential decline in throughput volumes due to changing consumer habits [26][27] - Guidance for AFFO per share remains in the range of $1 to $1.10, with expectations for same-store revenue growth to exceed previous guidance [25][58] Other Important Information - The company reported a total debt outstanding of $3.2 billion, with total liquidity of $597 million [56] - The company is maintaining its focus on ESG initiatives, having submitted to the Carbon Disclosure Project and GRESB for 2022 [29] Q&A Session Summary Question: Concerns about revenue guidance and challenges in the second half of the year - Management noted that pricing initiatives ramped up late in Q3, making year-over-year comparisons tougher [65] Question: Trajectory of recovery and stabilization for the business - Management indicated that full recovery is not expected this year, with labor improvements being gradual [68] Question: Impact of inflation on consumer habits - Management acknowledged that inflation is affecting consumer spending, leading to smaller basket sizes and less pantry stocking [71] Question: Clarification on guidance and potential disconnect with previous year's AFFO - Management explained that higher interest expenses and currency translation impacts are contributing to the lower AFFO guidance [74] Question: Ability to negotiate higher prices with customers due to rising costs - Management confirmed that they can negotiate price increases as needed, having done so multiple times already [77] Question: Impact of rising interest rates on guidance - Management indicated that a 100-basis-point increase in interest rates would result in approximately $10 million of incremental cost [85]