Press Release Details

View all news

Americold Realty Trust Announces Fourth Quarter and Full Year 2018 Results

February 21, 2019

ATLANTA--(BUSINESS WIRE)-- Americold Realty Trust (NYSE:COLD) (the “Company”), the world’s largest owner and operator of temperature-controlled warehouses, today announced financial and operating results for the fourth quarter and year ended December 31, 2018.

Fourth Quarter and Full Year 2018 Highlights

  • Total revenue increased 3.5% to $415.8 million for the fourth quarter 2018; Total revenue increased 3.9% to $1.60 billion for the full year.
  • Global Warehouse segment revenue increased 2.6% to $305.5 million for the fourth quarter 2018; Global Warehouse segment revenue increased 2.7% to $1.18 billion for the full year.
  • Total contribution (NOI) increased 8.3% to $108.7 million for the fourth quarter 2018; Total contribution (NOI) increased 8.4% to $405.6 million for the full year.
  • Global Warehouse segment contribution (NOI) increased 7.0% to $100.5 million for the fourth quarter 2018; Global Warehouse segment contribution (NOI) increased 7.5% to $374.5 million for the full year.
  • Net income of $2.7 million, or $0.02 per diluted common share, and adjusted net income of $28.9 million for the fourth quarter 2018; Net income of $48.0 million, or $0.31 per diluted common share, and adjusted net income of $95.5 million for the full year.
  • Core EBITDA increased 7.6% to $84.7 million for the fourth quarter 2018; Core EBITDA increased 6.8% to $306.8 million for the full year.
  • Core Funds from Operations ("Core FFO") of $53.2 million, or $0.35 per diluted common share for the fourth quarter 2018; Core FFO of $175.0 million, or $1.21 per diluted common share for the full year.
  • Adjusted Funds from Operations (“AFFO”) of $49.3 million, or $0.33 per diluted common share for the fourth quarter 2018; AFFO of $170.4 million, or $1.18 per diluted common share for the full year.
  • Global Warehouse segment same store revenue grew 4.5% on a constant currency basis, with same store segment contribution (NOI) improving 6.9% on a constant currency basis for the fourth quarter 2018; Global Warehouse segment same store revenue grew 3.9% on a constant currency basis, with same store segment contribution (NOI) improving 7.4% on a constant currency basis for the full year.

“We are very proud of Americold’s accomplishments in 2018, our inaugural year as a public company. Our business remains strong and steady as we execute our strategy, having grown same store revenue and contribution in our Global Warehouse segment 3.9% and 7.4% on a constant currency basis, respectively, over the prior year. We continue to drive our customer mix, warehouse utilization and other productivity improvements, which served to push our total warehouse margins to 31.8% in 2018, a 140 basis point increase over the prior full year. We also continued to expand our footprint, having stabilized two facilities in Clearfield, UT and Middleboro, MA and made significant progress toward the completion of our fully automated expansion facility in Chicago, IL. Additionally, we signed a letter of intent to build and operate three automated facilities for a major customer and subsequent to year end, announced a new market for growth at the Port of Savannah, with the acquisition of PortFresh and our planned development. During the year, we also significantly expanded our access to capital. We accessed the public equity market through our IPO and our September follow-on offering, upsized our credit facility to $1.275 billion, achieved investment-grade ratings and accessed the debt markets in a private placement offering. Finally, we were recognized by the Global Cold Chain Alliance for Energy Excellence, having achieved Gold and Silver certifications at 56 sites.”

“As we look ahead to 2019 and beyond, we believe we are well positioned for future growth, as we remain the market leader within a fragmented, high barrier to entry industry that requires not only significant capital investment but deep operational and technical expertise and customer relationships. Our Americold Operating System allows us to drive continuous margin improvement on our standardized, company-wide platform, and when combined with our low-leveraged balance sheet, allows us to maximize the value of future acquisitions as we capitalize on our opportunity to be a consolidator in this industry. We believe our commitment to serving our diverse, global customer base and their growth needs will allow us to continue to offer shareholders an attractive combination of stable cash flows and attractive growth over the long term.” stated Fred Boehler, President and Chief Executive Officer of Americold Realty Trust.

Fourth Quarter 2018 Total Company Financial Results

Total revenue for the fourth quarter ended December 31, 2018 was $415.8 million, a 3.5% increase from the same quarter of the prior year. This growth was largely driven by net new business, improvements in our commercial terms and contractual rate escalations, and the maturation of the Clearfield, Utah facility and opening of the build-to-suit facility in Middleboro, Massachusetts at the end of the third quarter within the Global Warehouse segment.

For the fourth quarter of 2018, the Company reported net income of $2.7 million, or $0.02 per diluted share, compared to net income of $8.0 million for the same quarter of the prior year. Net income for the current quarter included the impact of approximately $22.0 million of one-time defeasance costs related to the repayment of its CMBS debt this quarter. Net income also included the impact of approximately $2.2 million due to the write-off of unamortized financing costs associated with the repayment of the Australia and New Zealand term loans, $1.8 million due to the termination of the related interest rate swaps on these loans, and other charges. Excluding the impact of loss on debt extinguishment, modifications and termination of derivative instruments, net income for the quarter would have been $28.9 million, or $0.19 per diluted share.

Total contribution (NOI) for the fourth quarter ended December 31, 2018 increased 8.3% to $108.7 million, compared to $100.4 million for the same quarter of the prior year.

Core EBITDA was $84.7 million for the fourth quarter of 2018, compared to $78.7 million for the same quarter of the prior year. This reflects a 7.6% increase over prior year driven by increased revenue, a more favorable customer mix, continued operating efficiency gains, as well as the contribution from the recently completed facilities in Clearfield, UT and Middleboro, MA. Core EBITDA margin expanded by 80 basis points to 20.4%, despite incurring incremental SG&A related to being a public company.

For the fourth quarter of 2018, Core FFO was $53.2 million, or $0.35 per diluted share, compared to $32.7 million for same quarter of the prior year.

For the fourth quarter of 2018, AFFO was $49.3 million, or $0.33 per diluted share, compared to $24.0 million for same quarter of the prior year. AFFO excludes certain expenses and income items that do not represent core expenses and income streams.

Please see the Company's supplemental financial information for the definitions and reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures.

Fourth Quarter 2018 Global Warehouse Segment Results

For the fourth quarter of 2018, Global Warehouse segment revenues were $305.5 million, an increase of $7.9 million, or 2.6%, compared to $297.6 million for the fourth quarter of 2017. This growth was primarily driven by the same factors mentioned above.

Warehouse segment contribution (NOI) was $100.5 million, or 32.9% of segment revenue, for the fourth quarter of 2018, compared to $93.9 million, or 31.6% of segment revenue, for the prior year. This represents a 7.0% improvement in segment profitability over the fourth quarter of 2017 and an expansion of 130 basis points in segment margin period-over-period. The year-over-year profit growth was driven primarily by the aforementioned revenue trends, combined with continued leveraging of fixed expenses, and labor and other productivity improvements.

The Company ended the fourth quarter of 2018 with 143 total facilities in its Global Warehouse segment portfolio. Of the 143 total facilities, 136 meet the Company’s definition of facilities with at least 24 months of consecutive "normalized operations" and are reported as "same store." The remaining seven facilities are in various stages of operations and are classified as "non-same store."

The following tables summarize the fourth quarter and year ended December 31, 2018 Global Warehouse full segment and same store metrics compared to the same periods a year ago:

   

Three Months Ended

       

Years Ended

   
Global Warehouse - Total

December 31,

Change

December 31,

 

Dollars in thousands 2018     2017 2018     2017

Change

Global Warehouse revenues:
Rent and storage $ 133,651 $ 131,695 1.5 % $ 514,755 $ 501,604 2.6 %
Warehouse services 171,808   165,903   3.6 % 662,157   644,058   2.8 %
Total Warehouse revenues $ 305,459 $ 297,598 2.6 % $ 1,176,912 $ 1,145,662 2.7 %
Global Warehouse contribution (NOI) $ 100,492 $ 93,929 7.0 % $ 374,534 $ 348,328 7.5 %
Global Warehouse margin 32.9 % 31.6 % 130 bps 31.8 % 30.4 % 140 bps
 
Units in thousands except per pallet data
Global Warehouse rent and storage:
Occupancy
Average occupied pallets 2,564 2,625 (2.3 )% 2,458 2,509 (2.0 )%
Average physical pallet positions 3,182 3,220 (1.2 )% 3,193 3,216 (0.7 )%
Occupancy percentage 80.6 % 81.5 % -90 bps 77.0 % 78.0 % -100 bps
Total rent and storage revenues per occupied pallet $ 52.13 $ 50.16 3.9 % $ 209.41 $ 199.96 4.7 %
Global Warehouse services:
Throughput pallets 6,963 6,956 0.1 % 26,945 27,626 (2.5 )%
Total warehouse services revenues per throughput pallet $ 24.67 $ 23.85 3.4 % $ 24.57 $ 23.31 5.4 %
 
 

Three Months Ended

Years Ended

Global Warehouse - Same Store

December 31,

Change

December 31,

Change
Dollars in thousands 2018 2017 2018 2017
Global Warehouse same store revenues:
Rent and storage $ 128,243 $ 126,535 1.3 % $ 496,860 $ 482,422 3.0 %
Warehouse services 165,923   160,448   3.4 % 642,038   624,221   2.9 %
Total same store revenues $ 294,166 $ 286,983 2.5 % $ 1,138,898 $ 1,106,643 2.9 %
Global Warehouse same store contribution (NOI) $ 97,042 $ 91,858 5.6 % $ 366,006 $ 342,422 6.9 %
Global Warehouse same store margin 33.0 % 32.0 % 100 bps 32.1 % 30.9 % 120 bps
 
Units in thousands except per pallet data
Global Warehouse same store rent and storage:
Occupancy
Average occupied pallets 2,448 2,519 (2.8 )% 2,361 2,407 (1.9 )%
Average physical pallet positions 3,052 3,066 (0.5 )% 3,059 3,062 (0.1 )%
Occupancy percentage 80.2 % 82.2 % -200 bps 77.2 % 78.6 % -140 bps
Same store rent and storage revenues per occupied pallet $ 52.39 $ 50.24 4.3 % $ 210.49 $ 200.43 5.0 %
Global Warehouse same store services:
Throughput pallets 6,703 6,734 (0.5 )% 26,084 26,797 (2.7 )%
Same store warehouse services revenues per throughput pallet $ 24.75 $ 23.82 3.9 % $ 24.61 $ 23.29 5.7 %
 

Fixed Commitment Rent and Storage Revenue

For the fourth quarter of 2018, 42.8% of rent and storage revenues are derived from customers with fixed commitment storage contracts, an increase of 100 basis points from the third quarter 2018 and 360 basis points over the fourth quarter of 2017.

Physical and Economic Occupancy

For the fourth quarter of 2018, physical occupancy for the total warehouse segment was 80.6% and warehouse segment same store pool was 80.2%. Contracts that contain fixed commitments are designed to ensure the Company's customers have space available when needed. At times, these customers may be paying for space that is not physically occupied. In an effort to help illustrate this concept, the Company has introduced a new economic occupancy metric, which is defined as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. For the fourth quarter 2018, economic occupancy for the total warehouse segment was 83.7% and warehouse segment same store pool was 83.3%, representing a 314 basis point and 311 basis point increase above physical occupancy, respectively.

Real Estate Portfolio

During the fourth quarter of 2018, the Company sold a vacant facility located in Bettendorf, Iowa for $1.0 million. Additionally, the Company purchased the remaining 50% leasehold at one of its facilities serving the Dallas / Fort Worth market for $13.8 million, representing a 9.5% cap rate on in-place rents.

Balance Sheet Activity and Liquidity

At December 31, 2018, the Company had total liquidity of approximately $978.5 million, including cash and capacity on its revolving credit facility. Total debt outstanding was $1.52 billion (inclusive of $159.7 million of capital leases/sale lease-backs and exclusive of deferred financing fees and unamortized debt discounts), of which 71% was in an unsecured structure. The Company has no material debt maturities until 2022, assuming the one-year extension option is exercised on its revolver. At quarter end, its net debt to Core EBITDA was approximately 4.3x. Of the Company's total debt outstanding, $1.36 billion relates to real estate debt, which excludes sale-leaseback and capitalized lease obligations. The Company's real estate debt has a weighted average term of 6.3 years and carries a weighted average contractual interest rate of 4.60%. At December 31, 2018, 69% of the Company's total debt outstanding was at a fixed rate. Subsequent to year end, the Company entered into an interest rate swap on its term loan, increasing the fixed rate portion of its total debt outstanding to 75%.

Dividend

On December 6, 2018, the Company's Board of Trustees declared a dividend of $0.1875 per share for the fourth quarter of 2018, which was paid on January 15, 2019 to common shareholders of record as of December 31, 2018.

Highlights Subsequent to Quarter End

  • Acquired privately-held PortFresh, consisting of a temperature-controlled operator servicing fresh produce trade through the Port of Savannah and 163 acres of entitled land, for approximately $35.2 million, funded with cash on hand. Concurrently announced plans to build a new, approximately 15 million cubic foot state-of-the-art temperature-controlled storage facility in Savannah, Georgia with anticipated development spending of $55 to $65 million.
  • Executed a $100 million swap to fix a portion of the Company's term loan from floating to fixed. As a result of this transaction, the Company's percentage of fixed rate debt increased to 75% from 69%.

2019 Outlook

The Company issued the following guidance:

  • Global warehouse segment same store revenue growth to range between 2 and 4 percent on a constant currency basis and Same Store NOI growth to be 100 to 200 basis points higher than the associated revenue.
  • Selling, general, and administrative expense, as a percentage of total revenue, is expected to range between 6.8 and 7.2 percent.
  • Total recurring maintenance capital expenditures is expected in the range of $50 to $60 million.
  • Total growth and expansion capital expenditures is expected to aggregate in a range of $225 to $325 million, which includes spending related to the Company's announced projects in Chicago, IL, Savannah, GA, and Australia, as well as anticipated projects that have yet to be announced.
  • Anticipated AFFO payout ratio of 65 to 68 percent.
  • Full year weighted average fully diluted share count of 155 to 157 million shares.

The Company's guidance is provided for informational purposes based on current plans and assumptions as is subject to change. The ranges for these metrics do not include the impact of acquisitions, dispositions, or capital markets activity beyond that which has been previously announced.

Investor Webcast and Conference Call

The Company will hold a webcast and conference call on Thursday, February 21, 2019 at 5:00 p.m. Eastern Time to discuss fourth quarter and full year 2018 results. A live webcast of the call will be available via the Investor Relations section of Americold Realty Trust's website at www.americold.com. To listen to the live webcast, please go to the site at least five minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Shortly after the call, a replay of the webcast will be available for 90 days on the Company’s website.

The conference call can also be accessed by dialing 1-877-407-3982 or 1-201-493-6780. The telephone replay can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing the conference ID# 13687102. The telephone replay will be available starting shortly after the call until March 8, 2019.

The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at http://ir.americold.com.

About the Company

Americold is the world’s largest owner and operator of temperature-controlled warehouses. Based in Atlanta, Georgia, Americold owns and operates 155 temperature-controlled warehouses, with approximately 918.7 million refrigerated cubic feet of storage, in the United States, Australia, New Zealand, Canada, and Argentina. Americold’s facilities are an integral component of the supply chain connecting food producers, processors, distributors and retailers to consumers. Americold serves approximately 2,400 customers and employs approximately 11,000 associates worldwide.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including FFO, core FFO, AFFO, EBITDAre, Core EBITDA and same store segment revenue and contribution. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to core FFO and AFFO, and definitions of FFO, and core FFO are included within the supplemental. A reconciliation from U.S. GAAP net income available to common stockholders to EBITDAre and Core EBITDA, a definition of Core EBITDA and definitions of net debt to Core EBITDA are included within the supplemental.

Forward-Looking Statements

This document contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry; general economic conditions; risks associated with the ownership of real estate and temperature-controlled warehouses in particular; defaults or non-renewals of contracts with customers; potential bankruptcy or insolvency of our customers; uncertainty of revenues, given the nature of our customer contracts; increased interest rates and operating costs; our failure to obtain necessary outside financing; risks related to, or restrictions contained in, our debt financing; decreased storage rates or increased vacancy rates; risks related to current and potential international operations and properties; difficulties in identifying properties to be acquired and completing acquisitions; acquisition risks, including the failure of such acquisitions to perform in accordance with projections; risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns in respect thereof; difficulties in expanding our operations into new markets, including international markets; our failure to maintain our status as a REIT; our operating partnership’s failure to qualify as a partnership for federal income tax purposes; uncertainties and risks related to natural disasters and global climate change; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us; financial market fluctuations; actions by our competitors and their increasing ability to compete with us; labor and power costs; changes in real estate and zoning laws and increases in real property tax rates; the competitive environment in which we operate; our relationship with our employees, including the occurrence of any work stoppages or any disputes under our collective bargaining agreements; liabilities as a result of our participation in multi-employer pension plans; losses in excess of our insurance coverage; the cost and time requirements as a result of our operation as a publicly traded REIT; risks related to joint venture investments, including as a result of our lack of control of such investments;changes in foreign currency exchange rates; the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our shareholders to replace our trustees and affect the price of our common shares of beneficial interest, $0.01 par value per share, or our common shares.

Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this documents include, among others, statements about our expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 and our other reports filed with the Securities and Exchange Commission, could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Americold Realty Trust and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except shares and per share amounts)
    December 31,
2018     2017
Assets
Property, plant, and equipment:
Land $ 385,232 $ 389,443
Buildings and improvements 1,849,749 1,819,635
Machinery and equipment 577,175 552,677
Assets under construction 85,983   48,868  
2,898,139 2,810,623
Accumulated depreciation and depletion (1,097,624 ) (1,010,903 )
Property, plant, and equipment – net 1,800,515 1,799,720
Capitalized leases:
Buildings and improvements 11,227 16,827
Machinery and equipment 49,276   59,389  
60,503 76,216
Accumulated depreciation (21,317 ) (41,051 )
Capitalized leases – net 39,186 35,165
Cash and cash equivalents 208,078 48,873
Restricted cash 6,019 21,090
Accounts receivable – net of allowance of $5,706 and $5,309 at December 31, 2018 and 2017, respectively 194,279 200,006
Identifiable intangible assets – net 25,056 26,645
Goodwill 186,095 188,169
Investments in partially owned entities 14,541 15,942
Other assets 58,659   59,287  
Total assets $ 2,532,428   $ 2,394,897  
Liabilities, Series B Preferred Shares and shareholders’ equity (deficit)
Liabilities:
Borrowings under revolving line of credit $ $
Accounts payable and accrued expenses 253,080 241,259
Construction loan - net of deferred financing costs of zero and $179 at December 31, 2018 and 2017, respectively 19,492
Mortgage notes, senior unsecured notes and term loans - net of discount and deferred financing costs of $13,943 and $31,996 in the aggregate, at December 31, 2018 and 2017, respectively 1,351,014 1,721,958
Sale-leaseback financing obligations 118,920 121,516
Capitalized lease obligations 40,787 38,124
Unearned revenue 18,625 18,848
Pension and postretirement benefits 16,317 16,756
Deferred tax liability - net 17,992 21,940
Multi-Employer pension plan withdrawal liability 8,938   9,134  
Total liabilities 1,825,673 2,209,027
Commitments and Contingencies
Preferred shares of beneficial interest, $0.01 par value – authorized 375,000 Series B Cumulative Convertible Voting and Participating Preferred Shares; aggregate liquidation preference of $375,000; zero and 375,000 shares issued and outstanding at December 31, 2018 and 2017, respectively 372,794
Shareholders’ equity (deficit):
Preferred shares of beneficial interest, $0.01 par value – authorized 1,000 Series A Cumulative Non-Voting Preferred Shares; aggregate liquidation preference of $125; zero and 125 issued and outstanding at December 31, 2018 and 2017, respectively
Common shares of beneficial interest, $0.01 par value – authorized 250,000,000 shares; 148,234,959 and 69,370,609 issued and outstanding at December 31, 2018 and 2017, respectively 1,482 694
Paid-in capital 1,356,133 394,082
Accumulated deficit (638,345 ) (581,470 )
Accumulated other comprehensive loss (12,515 ) (230 )
Total shareholders’ equity (deficit) 706,755   (186,924 )
Total liabilities, Series B Preferred Shares and shareholders’ equity (deficit) $ 2,532,428   $ 2,394,897  
 
 
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts - unaudited)
    Three Months Ended    

Years Ended

December 31,

December 31,

2018     2017 2018     2017
Revenues:
Rent, storage, and warehouse services revenues $ 305,458 $ 297,599 $ 1,176,912 $ 1,145,662
Third-party managed services 66,852 63,628 259,034 242,189
Transportation services 41,363 38,405 158,790 146,070
Other revenues 2,144   2,089   8,899   9,666  
Total revenues 415,817 401,721 1,603,635 1,543,587
Operating expenses:
Rent, storage, and warehouse services cost of operations 204,967 203,669 802,378 797,334
Third-party managed services cost of operations 63,281 60,485 244,274 229,364
Transportation services cost of operations 36,956 35,188 143,055 133,120
Cost of operations related to other revenues 1,935 2,011 8,279 9,664
Depreciation, depletion, and amortization 29,792 29,547 117,653 116,741
Selling, general and administrative 26,814 26,193 114,760 110,945
Loss (gain) from sale of real estate 901 (126 ) (7,471 ) (43 )
Impairment of long-lived assets   700   747   9,473  
Total operating expenses 364,646   357,667   1,423,675   1,406,598  
 
Operating income 51,171 44,054 179,960 136,989
 
Other expense:
Loss from investments in partially owned entities (745 ) (21 ) (1,069 ) (1,363 )
Impairment of investments in partially owned entities (6,496 )
Interest expense (23,054 ) (29,665 ) (93,312 ) (114,898 )
Interest income 1,387 289 3,996 1,074
Loss on debt extinguishment, modifications and termination of derivative instruments (26,174 ) (47,559 ) (986 )
Foreign currency exchange (loss) gain, net (43 ) 279 2,882 (3,591 )
Other expense, net (717 ) (898 ) (532 ) (1,944 )
Income before income tax benefit (expense) 1,825 14,038 44,366 8,785
Income tax benefit (expense):
Current (206 ) (5,317 ) 467 (13,051 )
Deferred 1,059   (721 ) 3,152   3,658  
Total income tax benefit (expense) 853 (6,038 ) 3,619 (9,393 )
       
Net income (loss) attributable to Americold Realty Trust $ 2,678   $ 8,000   $ 47,985   $ (608 )
Less distributions on preferred shares of beneficial interest - Series A (8 ) (1 ) (16 )
Less distributions on preferred shares of beneficial interest - Series B (7,109 ) (1,817 ) (28,436 )
Less accretion on preferred shares of beneficial interest - Series B   (210 )   (867 )
Net income (loss) attributable to common shares of beneficial interest $ 2,678   $ 673   $ 46,167   $ (29,927 )
 
Weighted average common shares outstanding – basic 148,592   70,051   141,415   70,022  
Weighted average common shares outstanding – diluted 151,524   109,918   144,338   70,022  
 
Net income (loss) per common share of beneficial interest - basic $ 0.02   $ 0.01   $ 0.31   $ (0.43 )
Net income (loss) per common share of beneficial interest - diluted $ 0.02   $ 0.01   $ 0.31   $ (0.43 )
 
 
Reconciliation of Net Earnings (Loss) to NAREIT FFO, Core FFO, and AFFO
(In thousands, except per share amounts - unaudited)
    Three Months Ended       Year Ended
Q418     Q318     Q218     Q118     Q417       FY 2018     FY 2017
Net income (loss) attributable to Americold Realty Trust $ 2,678     $ 24,540     $ 29,406     $ (8,639 )     $ 8,000       $ 47,985     $ (608 )
Adjustments:
Real estate related depreciation and depletion 22,405 21,903 21,764 22,174 22,041 88,246 86,478
Net loss (gain) on sale of depreciable real estate 913 (8,384 ) (126 ) (7,471 ) (43 )
Net gain on asset disposals (65 ) (65 )
Impairment charges on certain real estate assets 747 700 747 9,473
Real estate depreciation on China JV 398       292       242       270       302         1,202       1,183  
NAREIT Funds from operations 26,394 46,670 43,775 13,805 30,917 130,644 96,483
Less distributions on preferred shares of beneficial interest                   (1,817 )     (7,118 )       (1,817 )     (28,452 )
NAREIT Funds from operations attributable to common shareholders $ 26,394       $ 46,670       $ 43,775       $ 11,988       $ 23,799         $ 128,827       $ 68,031  
Adjustments:
Net loss (gain) on sale of non-real estate assets 110 (314 ) (387 ) (148 ) (168 ) (739 ) (599 )
Non-offering related equity issuance expenses (a) (34 ) 605 1,242 1,813
Non-recurring public company implementation costs (b) 544 496 162 1,202
Acquisition, diligence and other pursuit costs 599 21 48 3 671
Stock-based compensation expense, IPO grants 1,433 845 965 965 4,208
Severance and reduction in workforce costs (c) (73 ) 73 11 534 11 516
Terminated site operations costs (d) (1,870 ) 66 53 (1,804 ) 2,677
Strategic alternative costs (e) 3,770 8,136
Impairment of partially owned entities(i) 6,496
Loss on debt extinguishment, modifications and termination of derivative instruments 26,174 21,385 47,559 986
Inventory asset impairment 2,108
Foreign currency exchange loss (gain) 43 (734 ) (1,511 ) (680 ) (279 ) (2,882 ) 3,591
Excise tax settlement (128 ) 4,984 (128 ) 4,984
Multi-Employer pension plan withdrawal expense 9,167
Alternative Minimum Tax receivable from Tax Cuts & Jobs Act       (3,745 )                         (3,745 )      
Core FFO applicable to common shareholders $ 53,192       $ 43,917       $ 43,118       $ 34,766       $ 32,693         $ 174,993       $ 106,093  
Adjustments:
Amortization of deferred financing costs and debt discount 1,414 1,532 1,556 1,674 2,215 6,176 8,604
Amortization of below/above market leases 37 38 38 38 37 151 151
Straight-line net rent (86 ) (62 ) (26 ) (5 ) 3 (179 ) 101
Deferred income taxes (benefit) expense (1,059 ) 512 (1,449 ) (1,156 ) 721 (3,152 ) (3,658 )
Stock-based compensation expense, excluding IPO grants 994 1,226 701 3,553 598 6,474 2,358
Non-real estate depreciation and amortization 7,387 7,499 7,287 7,234 7,505 29,407 30,264
Non-real estate depreciation and amortization on China JV 107 132 143 156 155 538 609
Recurring maintenance capital expenditures (f) (12,652 )     (13,377 )     (11,563 )     (6,383 )     (19,915 )       (43,975 )     (49,906 )
Adjusted FFO applicable to common shareholders $ 49,334       $ 41,417       $ 39,805       $ 39,877       $ 24,012         $ 170,433       $ 94,616  
 
 
Reconciliation of Net Earnings (Loss) to NAREIT FFO, Core FFO, and AFFO (continued)
(In thousands except per share amounts - unaudited)
    Three Months Ended     Year Ended
Q418     Q318     Q218     Q118     Q417 FY 2018     FY 2017
                   
NAREIT Funds from operations $ 26,394 $ 46,670 $ 43,775 $ 13,805 $ 30,917 $ 130,644 $ 96,483
NAREIT Funds from operations attributable to common shareholders 26,394 46,670 43,775 11,988 23,799 128,827 68,031
Core FFO applicable to common shareholders 53,192 43,917 43,118 34,766 32,693 174,993 106,093
Adjusted FFO applicable to common shareholders $ 49,334 $ 41,417 $ 39,805 $ 39,877 $ 24,012 $ 170,433 $ 94,616
 
Reconciliation of weighted average and fully diluted shares:
Weighted average basic shares for net income calculation 148,592 144,948 143,499 124,433 n/a 141,415 n/a
Dilutive stock options and unvested restricted stock units 2,932   2,678   2,975   2,668   n/a 2,923   n/a
Weighted average dilutive shares for net income calculation 151,524 147,626 146,474 127,101 n/a 144,338 n/a
Common shares equivalents (g) 482   3,931   1,032   20,032   n/a 7,668   n/a
Fully diluted common shares outstanding (g) 152,006   151,557   147,506   147,133   n/a 152,006   n/a
 
NAREIT FFO - basic per share $ 0.18 $ 0.32 $ 0.31 $ 0.10 n/a $ 0.91 n/a
NAREIT FFO - diluted per share 0.17 0.32 0.30 0.09 n/a 0.89 n/a
NAREIT FFO - fully diluted per share(h) 0.17 0.31 0.30 0.08 n/a 0.85 n/a
. .
Core FFO - basic per share 0.36 0.30 0.30 0.28 n/a 1.24 n/a
Core FFO - diluted per share 0.35 0.30 0.29 0.27 n/a 1.21 n/a
Core FFO - fully diluted per share(h) 0.35 0.29 0.29 0.24 n/a 1.15 n/a
 
Adjusted FFO - basic per share 0.33 0.29 0.28 0.32 n/a 1.21 n/a
Adjusted FFO - diluted per share 0.33 0.28 0.27 0.31 n/a 1.18 n/a
Adjusted FFO - fully diluted per share(h) $ 0.32 $ 0.27 $ 0.27 $ 0.27 n/a $ 1.12 n/a
 
(a)   Represents one-time costs and professional fees associated with IPO and follow-on equity issuances.
(b) Represents one-time costs associated with the implementation of financial reporting systems and processes needed to convert the organization to a public company.
(c) Represents one-time severance from prior management team and reduction in workforce costs associated with exiting or selling non-strategic warehouses.
(d) Represents repair expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our statement of operations.
(e) Represents one-time operating costs associated with our review of strategic alternatives prior to the IPO.
(f) Recurring maintenance capital expenditures include capital expenditures made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology.
(g) Fully diluted common share equivalents outstanding at December 31, 2018.
(h) Assumes i) all post-IPO common shares were outstanding for the entire quarter, ii) the exercise of all outstanding stock options and conversion of all outstanding restricted stock units at the beginning of the quarter, and iii) the follow-on public offering of 4,000,000 common shares were outstanding for the entire quarter.
(i) For 2017, represents an impairment charge related to our investment in the China JV based on a determination that the recorded investment was no longer recoverable from the projected future cash distributions we expect to receive from the China JV.
 
 
Reconciliation of Net Earnings (Loss) to EBITDA, NAREIT EBITDAre, and Core EBITDA
(In thousands - unaudited)
    Three Months Ended       Year Ended
Q418     Q318     Q218     Q118     Q417       FY 2018     FY 2017
Net income (loss) attributable to Americold Realty Trust $ 2,678     $ 24,540     $ 29,406     $ (8,639 )     $ 8,000       $ 47,985     $ (608 )
Adjustments:
Depreciation, depletion and amortization 29,792 29,402 29,051 29,408 29,547 117,653 116,741
Interest expense 23,054 22,834 22,929 24,495 29,665 93,312 114,898
Income tax (benefit) expense (853 )     (2,551 )     (126 )     (89 )     6,038         (3,619 )     9,393  
EBITDA $ 54,671       $ 74,225       $ 81,260       $ 45,175       $ 73,250         $ 255,331       $ 240,424  
Adjustments:
Loss (gain) on disposal of depreciated property 913 (8,384 ) (7,471 )
Adjustment to reflect share of EBITDAre of partially owned entities(g) 250       265       592       557       429         1,664       2,212  
NAREIT EBITDAre $ 55,834       $ 74,490       $ 73,468       $ 45,732       $ 73,679         $ 249,524       $ 242,636  
Adjustments:
Severance and reduction in workforce costs (a) (73 ) 73 11 534 11 516
Terminated site operations cost (b) (1,870 ) 66 53 (1,804 ) 2,677
Non-offering related equity issuance expenses (c) (34 ) 605 1,242 1,813
Non-recurring public company implementation costs (d) 544 496 162 1,202
Acquisition, diligence, and other pursuit costs 599 21 48 3 671
Strategic alternative costs (e) 3,770 8,136
Loss (income) from investments in partially owned entities 745 437 (252 ) 139 21 1,069 1,363
Impairment of investments in partially owned entities (f) 6,496
Impairment of inventory and long-lived assets 747 700 747 11,581
Loss (gain) on foreign currency exchange 43 (734 ) (1,511 ) (680 ) (279 ) (2,882 ) 3,591
Stock-based compensation expense 2,429 2,070 1,666 4,518 595 10,683 2,358
Loss on debt extinguishment, modifications and termination of derivative instruments 26,174 21,385 47,559 986
Loss (gain) on real estate and other asset disposals 534 (379 ) (170 ) (137 ) 65 (152 ) (150 )
Reduction in EBITDAre from partially owned entities (250 ) (265 ) (592 ) (557 ) (429 ) (1,664 ) (2,212 )
Multiemployer pension obligation                                       9,167  
Core EBITDA $ 84,675       $ 76,814       $ 73,632       $ 71,656       $ 78,709         $ 306,777       $ 287,145  
 
(a)   Represents one-time severance from prior management team and reduction in workforce costs associated with exiting or selling non-strategic warehouses.
(b) Represents repair expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our statement of operations.
(c) Represents one-time costs and professional fees associated with IPO and follow-on public equity issuances.
(d) Represents one-time costs associated with the implementation of financial reporting systems and processes needed to convert the organization to a public company.
(e) Represents one-time operating costs associated with our review of strategic alternatives prior to the IPO.
(f) Represents an impairment charge related to our investment in the China JV based on a determination that the recorded investment was no longer recoverable from the projected future cash distributions we expect to receive from the China JV. We have not received any cash distributions from the China JV since the formation of the joint venture.
(g) Refers to EBITDA for Real Estate in accordance with the standards established by the Board of Governors of NAREIT adopted in the first quarter of 2018.
 
Revenue and Contribution by Segment
(In Thousands - unaudited)
    Three Months Ended    

Years Ended

December 31,

December 31,

2018     2017 2018     2017
Segment revenues:
Warehouse $ 305,458 $ 297,599 $ 1,176,912 $ 1,145,662
Third-Party Managed 66,852 63,628 259,034 242,189
Transportation 41,363 38,405 158,790 146,070
Quarry 2,144     2,089   8,899   9,666  
Total revenues 415,817 401,721 1,603,635 1,543,587
 
Segment contribution:
Warehouse 100,491 93,930 374,534 348,328
Third-Party Managed 3,571 3,143 14,760 12,825
Transportation 4,407 3,217 15,735 12,950
Quarry 209     78   620   2  
Total segment contribution 108,678 100,368 405,649 374,105
 
Reconciling items:
Depreciation, depletion, and amortization (29,792 ) (29,547 ) (117,653 ) (116,741 )
Selling, general and administrative expense (26,814 ) (26,193 ) (114,760 ) (110,945 )
(Loss) gain from sale of real estate (901 ) 126 7,471 43
Impairment of long-lived assets (700 ) (747 ) (9,473 )
Loss from investments in partially owned entities (745 ) (21 ) (1,069 ) (1,363 )
Impairment of investments in partially owned entities (6,496 )
Interest expense (23,054 ) (29,665 ) (93,312 ) (114,898 )
Interest income 1,387 289 3,996 1,074
Loss on debt extinguishment, modifications and termination of derivative instruments (26,174 ) (47,559 ) (986 )
Foreign currency exchange (loss) gain (43 ) 279 2,882 (3,591 )
Other expense, net (717 ) (899 ) (532 ) (1,944 )
Income (loss) before income tax benefit (expense) $ 1,825   $ 14,038   $ 44,366   $ 8,785  
 

We view and manage our business through three primary business segments—warehouse, third-party managed and transportation. Our core business is our warehouse segment, where we provide temperature-controlled warehouse storage and related handling and other warehouse services. In our warehouse segment, we collect rent and storage fees from customers to store their frozen and perishable food and other products within our real estate portfolio. We also provide our customers with handling and other warehouse services related to the products stored in our buildings that are designed to optimize their movement through the cold chain, such as the placement of food products for storage and preservation, the retrieval of products from storage upon customer request, blast freezing, case-picking, kitting and repackaging and other recurring handling services.

Under our third-party managed segment, we manage warehouses on behalf of third parties and provide warehouse management services to several leading food retailers and manufacturers in customer-owned facilities, including some of our largest and longest-standing customers. We believe using our third-party management services allows our customers to increase efficiency, reduce costs, reduce supply-chain risks and focus on their core businesses. We also believe that providing third-party management services to many of our key customers underscores our ability to offer a complete and integrated suite of services across the cold chain.

In our transportation segment, we broker and manage transportation of frozen and perishable food and other products for our customers. Our transportation services include consolidation services (i.e., consolidating a customer’s products with those of other customers for more efficient shipment), freight under management services (i.e., arranging for and overseeing transportation of customer inventory) and dedicated transportation services, each designed to improve efficiency and reduce transportation and logistics costs to our customers. We provide these transportation services at cost plus a service fee or, in the case of our consolidation services, we charge a fixed fee.

We also operate a limestone quarry on the land we own around our Carthage, Missouri warehouse, which contains substantial limestone deposits. We do not view the operation of the quarry as an integral part of our business.

Notes and Definitions

We calculate funds from operations, or FFO, in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss determined in accordance with U.S. GAAP, excluding extraordinary items as defined under U.S. GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a supplemental performance measure because it excludes the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, FFO can facilitate comparisons of operating performance between periods and among other equity REITs.

We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of gain or loss on the sale of non-real estate assets, severance and reduction in workforce costs, terminated site operations costs, expenses related to our review of the strategic alternatives for our company prior to the IPO, litigation settlements, non-recurring impairment charges arising from our joint venture in China, or the China JV, and impairment of partially owned entities, loss on debt extinguishment and modifications, inventory asset impairment charges, foreign currency exchange gain or loss, excise tax settlement, Tax Cuts and Jobs Act benefit, and multi-employer pension plan withdrawal expense. We believe that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core business operations. We believe Core FFO can facilitate comparisons of operating performance between periods, while also providing a more meaningful predictor of future earnings potential.

However, because FFO and Core FFO add back real estate depreciation and amortization and do not capture the level of recurring maintenance capital expenditures necessary to maintain the operating performance of our properties, both of which have material economic impacts on our results from operations, we believe the utility of FFO and Core FFO as a measure of our performance may be limited.

We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the effects of amortization of loan costs, debt discounts and above or below market leases, straight-line rent, provision or benefit from deferred income taxes, stock-based compensation expense from grants of stock options and restricted stock units under our equity incentive plans, non-real estate depreciation, depletion or amortization (including in respect of the China JV), and recurring maintenance capital expenditures. We believe that Adjusted FFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in our business and to assess our ability to fund distribution requirements from our operating activities.

FFO, Core FFO and Adjusted FFO are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO, Core FFO and Adjusted FFO should be evaluated along with U.S. GAAP net income and net income per diluted share (the most directly comparable U.S. GAAP measures) in evaluating our operating performance. FFO, Core FFO and Adjusted FFO do not represent net income or cash flows from operating activities in accordance with U.S. GAAP and are not indicative of our results of operations or cash flows from operating activities as disclosed in our consolidated statements of operations included in our annual and quarterly reports. FFO, Core FFO and Adjusted FFO should be considered as supplements, but not alternatives, to our net income or cash flows from operating activities as indicators of our operating performance. Moreover, other REITs may not calculate FFO in accordance with the NAREIT definition or may interpret the NAREIT definition differently than we do. Accordingly, our FFO may not be comparable to FFO as calculated by other REITs. In addition, there is no industry definition of Core FFO or Adjusted FFO and, as a result, other REITs may also calculate Core FFO or Adjusted FFO, or other similarly-captioned metrics, in a manner different than we do. The table above reconciles FFO, Core FFO and Adjusted FFO to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

We calculate EBITDA for Real Estate, or EBITDAre, in accordance with the standards established by the Board of Governors of NAREIT, defined as, earnings before interest expense, taxes, depreciation, depletion and amortization, gains or losses on disposition of depreciated property, including gains or losses on change of control, impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustment to reflect share of EBITDAre of unconsolidated affiliates. EBITDAre is a measure commonly used in our industry, and we present EBITDAre to enhance investor understanding of our operating performance. We believe that EBITDAre provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and useful life of related assets among otherwise comparable companies.

We also calculate our Core EBITDA as EBITDAre further adjusted for impairment charges on intangible and long-lived assets, gain or loss on depreciable real property asset disposals, severance and reduction in workforce costs, non-offering related IPO expenses, loss on debt extinguishment and modification, stock-based compensation expense, foreign currency exchange gain or loss, loss on partially owned entities, and reduction in EBITDAre from partially owned entities. We believe that the presentation of Core EBITDA provides a measurement of our operations that is meaningful to investors because it excludes the effects of certain items that are otherwise included in EBITDAre but which we do not believe are indicative of our core business operations. EBITDAre and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDAre and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDAre and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDAre and Core EBITDA have limitations as analytical tools, including:

  • these measures do not reflect our historical or future cash requirements for recurring maintenance capital expenditures or growth and expansion capital expenditures;
  • these measures do not reflect changes in, or cash requirements for, our working capital needs;
  • these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
  • these measures do not reflect our tax expense or the cash requirements to pay our taxes; and
  • although depreciation, depletion and amortization are non-cash charges, the assets being depreciated, depleted and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.

We use Core EBITDA and EBITDAre as measures of our operating performance and not as measures of liquidity. The table on page 12 reconcile EBITDA, EBITDAre and Core EBITDA to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

All quarterly amounts and non-GAAP disclosures within this filing shall be deemed unaudited.

Americold Realty Trust
Investor Relations
Telephone: 678-459-1959
Email: investor.relations@americold.com

Source: Americold Realty Trust

Categories: Press Releases
View all news