Americold Realty Trust(US:COLD)2023-11-03 01:40Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.32, an increase of over 10% compared to the prior year's quarter [16] - Same-store economic occupancy increased to 84%, a 345 basis point increase year-over-year, but an 80 basis point decline sequentially from the second quarter [11][18] - The churn rate remained low at approximately 3.2% of total warehouse revenues, consistent with historical rates [22][50] Business Line Data and Key Metrics Changes - Rent and storage revenue from fixed commitment contracts increased to $551 million, compared to $379 million in the third quarter of 2022 [22] - Rent and storage revenue for economic occupied pallets increased by 3.5% year-over-year on a constant currency basis [23] - Service revenue per throughput pallet increased by 6.1% [23] Market Data and Key Metrics Changes - The company expects constant currency revenue growth in the same-store pool for the full year to be in the range of 3% to 5% [31] - Year-to-date throughput volumes decreased by 6.7%, with expectations for a decline of 6% to 7.5% for the full year [32] Company Strategy and Development Direction - The company announced an $85 million expansion of its Allentown, Pennsylvania facility, driven by strong demand from its customer base [7][52] - The company is focusing on three primary development areas: expansion projects, customer dedicated build-to-suit developments, and collaborations with CPKC and DP World [24][64] - A strategic tuck-in acquisition of Safeway Freezers for approximately $37 million was completed, enhancing the company's presence in New Jersey [15][55] Management's Comments on Operating Environment and Future Outlook - Management noted that throughput volumes are expected to rise sequentially in the fourth quarter due to seasonal demand [19] - The company is optimistic about managing variable costs effectively, despite the challenges posed by the current economic environment [45][119] - Management highlighted the importance of maintaining strong occupancy rates and pricing initiatives to offset inflationary pressures [6][23] Other Important Information - The company achieved a GRESB score of 80, improving its rank among peers [49] - The company raised its full year 2023 AFFO per share guidance to a midpoint of $1.27, reflecting improved economic occupancy and cost management [20][59] Q&A Session Summary Question: What is the strategy for pricing renewals? - Management emphasized that renewals are being priced to market rates, with annual general rate increases implemented in January [68] Question: What is driving the CapEx guidance change? - The change is directly related to throughput declines, leading to adjustments in preventative maintenance spending [70] Question: How long do throughput slowdowns typically last? - Management indicated that throughput is expected to improve sequentially through the holiday season, despite being down year-over-year [72][120] Question: What are the economics of the Safeway acquisition? - The acquisition is expected to yield a net entry NOI of approximately 9%, supporting the company's existing infrastructure in a strong market [111] Question: How does the company manage variable costs? - Management noted that about 50% of the cost structure is fixed, and effective management of variable costs is crucial for maintaining margins [118]