Lineage, Inc.(US:LINE)2025-04-30 12:00Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $1,290 million, down 3% compared to Q1 2024 [13] - Adjusted EBITDA decreased 7% to $304 million, with adjusted EBITDA margin down 110 basis points to 23.5% [13] - AFFO for the quarter increased 48% to $219 million, with AFFO per share up 6% to $0.86 [13] Business Line Data and Key Metrics Changes - Global warehousing segment revenue was down 3% to $348 million, with NOI also down 3% to $57 million, maintaining a flat NOI margin at 16.4% [18] - Same store warehouse NOI decreased by 7.9% [7] - The company reported a 6% growth in AFFO per share despite the overall revenue decline [7] Market Data and Key Metrics Changes - Same store physical occupancy remained strong at 76.5%, although impacted by lower revenue per throughput due to new business wins at lower rates [8] - The macroeconomic environment has led to customers pausing supply chain investments and maintaining lean inventory levels [8] Company Strategy and Development Direction - The company announced landmark agreements with Tyson Foods, involving approximately $1 billion in capital deployment, expected to generate over $100 million in annual EBITDA [4][23] - The acquisition of four cold storage warehouses from Tyson Foods for $247 million is expected to enhance the company's platform and global leadership position [4][23] - The company is focused on leveraging technology and automation to optimize supply chains and improve productivity [10][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment is characterized by high interest rates, shifting consumer sentiment, and macroeconomic uncertainty [8] - The company expects to maintain previous guidance for adjusted EBITDA and AFFO per share growth for the full year, with a return to same store warehouse growth anticipated in the second half [9][20] - Management expressed confidence in the company's ability to navigate the current challenges and highlighted the importance of strategic capital deployment [21][25] Other Important Information - The company has a strong balance sheet with net debt of $6.7 billion and total liquidity of $1.7 billion [19] - The leverage ratio at the end of the quarter was 5.2, indicating financial flexibility for future capital deployment opportunities [19] Q&A Session Summary Question: Can you clarify the throughput volume tied to import/export business? - Management clarified that 15% of throughput is directly tied to import/export, with the rest related to consumption [27][30] Question: What is the impact of tariffs on customer decision-making? - Management noted that tariffs have created significant uncertainty, leading customers to delay major supply chain decisions [31][34] Question: How is occupancy expected to trend throughout the year? - Management expects a return to normal seasonality in the second half of the year, despite current challenges [44][46] Question: What is driving the decline in storage and service rental rates? - Management indicated that the decline is due to inventory destocking and customers resetting volume guarantees at lower levels [51][53] Question: How are labor costs and productivity being managed? - Management reported stable labor productivity with wage increases in line with historical trends, and emphasized ongoing improvements in operational efficiency [94] Question: How does the company view capital deployment in the current economic climate? - Management believes that economic uncertainty may create more opportunities for strategic acquisitions and is maintaining a solid investment-grade balance sheet [90][119]