Americold Realty Trust(US:COLD)2024-05-10 02:44Financial Data and Key Metrics Changes - The company reported an AFFO of $104.9 million or $0.37 per share, representing an increase of over 28% on a per share basis year-over-year [80] - Same-store constant currency services margin improved to 10.7%, a record for the first quarter, resulting in an incremental $22 million of NOI or roughly $0.08 of AFFO per share year-over-year [13][28] - The company raised its full year 2024 AFFO per share guidance to a range of $1.38 to $1.46, an increase of approximately 12% from 2023 [16] Business Line Data and Key Metrics Changes - Same-store rent and storage revenue per economic occupied pallet on a constant currency basis increased by 3.9% year-over-year, while same-store services revenue per throughput pallet increased by 10.8% [3][14] - Rent and storage revenue derived from fixed commitment storage contracts reached 54.2%, a 24% increase over the first quarter of 2023 [30] - The churn rate remained low at approximately 3% of total warehouse revenues, consistent with historical rates [20] Market Data and Key Metrics Changes - Economic occupancy was approximately 81%, with a 345 basis point decrease compared to the prior year, aligning with expectations [29][51] - The company anticipates a relatively benign environment associated with inflation-based rate actions in the second half of the year [15] Company Strategy and Development Direction - The company is focused on strategic partnerships, including a $127 million project with Canadian Pacific Kansas City and a $35 million project with DP World in Dubai [2][21] - The company aims to optimize temperature-sensitive food flows and create value through collaborations with global leaders in adjacent supply chain areas [36] - The company is committed to enhancing its labor management, achieving a perm-to-temp hours ratio of 78:22, which is a 3 percentage point year-over-year increase [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 9% services margin for the full year of 2024, accelerated by process improvements and a stable workforce [48][61] - The company noted that early returns from its ERP implementation are expected to drive productivity and organic growth [11][73] - Management highlighted that consumer demand has been receding, but investments in new systems and processes will prepare the company for faster and more sustainable growth when demand accelerates [71] Other Important Information - The company reported total net debt outstanding of $3.2 billion and total liquidity of $732.5 million at the end of the quarter [38] - The company expects to announce development starts aggregating between $200 million to $300 million in 2024 [45] Q&A Session Summary Question: What was the occupancy level in Q1 compared to expectations? - The occupancy ended up 345 basis points below the prior year, which was in line with expectations, and the company believes a 400 basis point increase is achievable in the next three quarters [51] Question: How is throughput expected to perform in the second quarter? - The company noted a year-over-year improvement in throughput for the first time in April, which was earlier than expected, but maintained that the overall guidance remains unchanged [66][68] Question: Can you elaborate on the ERP rollout and its expected benefits? - The ERP system went live recently, and the company saw at least $2 million in benefits from process improvements prior to the rollout, with further benefits expected as the system is fully integrated [70][74] Question: What are the drivers behind the expected service margin trends? - The service margin improvement is driven by pricing increases and enhanced productivity from a more stable workforce, with no material one-time benefits affecting the margins in Q1 [105][114]