Americold Realty Trust(COLD) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated AFFO of approximately $100 million or$ 0.35 per share, an increase of over 11% from Q3 of last year [8] - Same-store NOI was approximately $201 million in the quarter, up 11% from the prior year, and remains on track for double-digit growth for the full year [8] - Services margins were higher in Q3, partly due to an over-delivery on throughput volumes, with a new base for annual warehouse services margins set at 12% [11][12] Business Line Data and Key Metrics Changes - Same-store rent and storage revenue per economic occupied pallet on a constant currency basis increased by almost 4% versus the prior year, while same-store services revenue per throughput pallet increased by 11% [22][28] - The company achieved an incremental$ 100 million of warehouse services NOI versus the prior year through workforce hiring, retention, and productivity [10] Market Data and Key Metrics Changes - Economic occupancy dipped in Q3 to approximately 77%, with rent and storage revenue derived from fixed commitment storage contracts at approximately 58% [18][30] - The churn rate remains low at approximately 3% of total warehouse revenues, consistent with historical rates [29] Company Strategy and Development Direction - The company is focused on expanding its services to organically grow and provide more supply chain capabilities to customers [20] - Plans for a $148 million automated expansion in the Dallas-Fort Worth market were announced, which will add 50,000 pallet positions and 19 million cubic feet to the portfolio [32] - The company is maintaining its current AFFO per share guidance range of$ 1.44 to $1.50, representing an approximately 16% increase from 2023 [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while a full recovery of consumer demand is expected, it may take longer than originally anticipated due to inflationary pressures [15][16] - The company continues to control its operations and grow earnings through productivity and an organic sales pipeline, setting up for outsized growth as consumer demand recovers [16][19] Other Important Information - The company reported an increase in its GRESB score to 81 out of 100, finishing first in its peer group, highlighting its commitment to sustainability [25] - The company has a robust development pipeline exceeding$ 1 billion in projects across expansions, customer-dedicated builds, and partnership-focused builds [42] Q&A Session Summary Question: What is the outlook on occupancy? - Management indicated that the primary driver of occupancy decline is broad-based consumer demand, not related to a specific sector or region [62] Question: Are there any issues with fixed commitment contracts? - Management reported continued growth in fixed commitments, achieving a 14th consecutive quarterly record [63][64] Question: What is the expectation for service margins going forward? - Management stated that 12% is the new base for service margins going forward, with expectations for continued improvement as volumes return [70] Question: What needs to happen for an inflection in occupancy? - Management emphasized that moderating inflation and interest rates are crucial for increasing consumer disposable income, which would spur demand [112]