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Americold Realty Trust Announces Second Quarter 2020 Results

August 06, 2020

ATLANTA--(BUSINESS WIRE)-- Americold Realty Trust (NYSE: COLD) (the “Company”), the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses, today announced financial and operating results for the second quarter ended June 30, 2020.

Fred Boehler, President and Chief Executive Officer of Americold Realty Trust, stated, “While uncertainty and volatility exists in the market due to the COVID-19 pandemic, we are very pleased with our second quarter results, which continue to prove out the stability and durability of our business model to own and operate mission critical temperature-controlled warehouse infrastructure. We delivered total company revenue growth and NOI growth of 10.0% and 6.0%, respectively, driven by our strategic acquisitions, growth in our same store portfolio, our recently delivered developments and the ongoing elevated retail activity. This growth was further supported by our leadership position in the temperature-controlled warehouse supply chain and the diversity of our portfolio by geography, customer, commodity, sector, facility type and node in the supply chain, despite seeing the expected slow down in volume following the first quarter surge in retail activity. Within our warehouse segment, we delivered same store revenue and NOI growth of 3.0% and 0.7%, both on a constant currency basis. These results include a front-line appreciation bonus, which represents our gratitude for their dedication and efforts amid this COVID-19 pandemic. Adjusting for this bonus, our same store NOI growth would have been 4.0% on a constant currency basis.”

Mr. Boehler continued, “Also during the quarter, we continued to grow externally and optimize our portfolio, with the commencement of two retail distribution, build-to-suit facilities and continued progress toward reaching stabilization for recently delivered expansion and development projects, including strong customer demand for our newly delivered space. We also opportunistically sold our Boston facility at a 4.8% cap rate and, subsequent to quarter end, we entered into a definitive purchase agreement to buy AM-C Warehouses, in the Dallas-Fort Worth market, which further enhances our penetration into this key logistics corridor. Finally, our balance sheet remains in a strong position to continue to drive growth in our business. While this year has been unprecedented in nature and the path for the full reopening of the countries we serve remains unclear, we remain true to our mission to support our customers as we seek to ensure the integrity and efficiency of the food supply chain. We know our continued success in these efforts will drive outsized shareholder value for the long term.”

Second Quarter 2020 Highlights

  • Total revenue increased 10.0% to $482.5 million for the second quarter 2020.
  • Total NOI increased 6.0% to $128.3 million for the second quarter 2020.
  • The Company paid an appreciation bonus of $4.3 million to front-line associates for their dedication and efforts through the COVID-19 pandemic late in the second quarter.
  • Core EBITDA increased 7.4% to $100.5 million, or 8.6% on a constant currency basis, for the second quarter 2020.
  • Net income of $32.7 million, or $0.16 per diluted common share for the second quarter 2020.
  • Core FFO of $55.1 million, or $0.27 per diluted common share for the second quarter 2020.
  • AFFO of $61.1 million, or $0.30 per diluted common share for the second quarter 2020. Excluding the front-line appreciation bonus, our AFFO per diluted common share would have been $0.32.
  • Global Warehouse segment revenue increased 10.1% to $372.4 million for the second quarter 2020.
  • Global Warehouse segment NOI increased 5.5% to $120.1 million for the second quarter 2020.
  • Global Warehouse segment same store revenue grew 1.5%, or 3.0% on a constant currency basis, with same store segment NOI declining by 0.5%, or increasing by 0.7% on a constant currency basis for the second quarter 2020. Excluding the front-line appreciation bonus of $3.1 million for our same store sites, our NOI growth would have been 4.0%.
  • Under its 2020 ATM Equity Program, the Company issued 3,094,431 shares for gross proceeds of $110.4 million during the second quarter of 2020, and entered into a forward sale agreement to sell 472,551 common shares for gross proceeds of $17.2 million, which must be settled by July 1, 2021.
  • Received certificate of occupancy and continued to onboard customers at its completed Savannah facility.
  • Announced and broke ground on two fully-automated facilities for a leading global grocery retailer.
  • Completed the sale of its Boston facility for $27.0 million, resulting in a gain on sale of real estate of $19.4 million.
  • Recognized a second quarter impairment charge of $3.7 million on our Quarry segment assets, as the fair market value was lower than the carrying value. This charge was in anticipation of the sale of the Quarry segment for $9.0 million, which subsequently closed on July 1, 2020.

Year to Date 2020 Highlights

  • Total revenue increased 16.2% to $966.6 million.
  • Total NOI increased 20.0% to 263.7 million.
  • Core EBITDA increased 24.3% to $204.6 million, or 25.4% on a constant currency basis.
  • Net income of $56.2 million, or $0.27 per diluted common share.
  • Core FFO of $115.2 million, or $0.56 per diluted common share.
  • AFFO of $128.3 million, or $0.63 per diluted common share.
  • Global Warehouse segment revenue increased 20.0% to $753.5 million.
  • Global Warehouse segment NOI increased 20.7% to $246.9 million.
  • Global Warehouse segment same store revenue grew 3.3%, or 4.9% on a constant currency basis, with same store segment NOI improving 4.6%, or 5.8% on a constant currency basis. Excluding the impact of the front-line appreciation bonus, same-store segment NOI growth would have been 7.5% on a constant currency basis.

Second Quarter 2020 Total Company Financial Results

Total revenue for the second quarter of 2020 was $482.5 million, a 10.0% increase from the same quarter of the prior year. This growth was driven by the incremental revenue from the recently completed acquisitions, increased economic occupancy, continued strength in the retail sector and contractual rate escalations. These factors were partially offset by the translation impact of the strengthening US dollar, by the temporary closing of certain protein production plants and lower food service volumes.

As previously highlighted, a front-line appreciation bonus was paid of $4.3 million, which is not expected to recur. In addition to the bonus, the Company incurred incremental expenses to address the risks and challenges of COVID-19. These incremental COVID-19 expenses include higher sanitation costs of $1.3 million and higher personal protective equipment (“PPE”) costs of $0.4 million. The Company has experienced certain inefficiencies due to social distancing, staggered schedules, and other changes to processes, all of which it expects to incur going forward. The Company expects to recover these costs through ongoing revenue as it signs new business and renews existing business. The Company’s results include the impact of these items, as well as the front-line appreciation bonus.

For the second quarter of 2020, the Company reported net income of $32.7 million, or $0.16 per diluted share, compared to net income of $4.9 million, or $0.03 per diluted share, for the same quarter of the prior year.

Total NOI for the second quarter of 2020 was $128.3 million, an increase of 6.0% from the same quarter of the prior year. Excluding the front-line appreciation bonus, total NOI would have been $132.6 million, a 9.5% increase year over year.

Core EBITDA was $100.5 million for the second quarter of 2020, compared to $93.6 million for the same quarter of the prior year. This reflects a 7.4% increase over prior year, or 8.6% on a constant currency basis, largely impacted by increased Core EBITDA from acquisitions and organic growth. This growth was also driven by previously discussed items. These increases were partially offset by the translation impact of the strengthening US dollar, the previously mentioned incremental costs incurred in response to COVID-19, and the front-line appreciation bonus of $4.3 million. Excluding this bonus, Core EBITDA would have been $104.8 million, an increase of 12.0% year-over-year. Core EBITDA margin decreased by 52 basis points to 20.8%, or would have increased by 37 basis points to 21.7%, excluding the front-line appreciation bonus.

For the second quarter of 2020, Core FFO was $55.1 million, or $0.27 per diluted share, compared to $56.1 million, or $0.30 per diluted share, for same quarter of the prior year. The year-over-year decrease in Core FFO is driven by incremental COVID-19 expenses and the front-line appreciation bonus, partially offset by the recent acquisitions described above. Excluding the impact of the appreciation bonus, Core FFO per diluted share would have been $0.29.

For the second quarter of 2020, AFFO was $61.1 million, or $0.30 per diluted share, compared to $58.1 million, or $0.31 per diluted share, for the same quarter of the prior year. Excluding the impact of the front-line appreciation bonus, AFFO per diluted share would have been $0.32.

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.

Second Quarter 2020 Global Warehouse Segment Results

For the second quarter of 2020, Global Warehouse segment revenue was $372.4 million, an increase of $34.2 million, or 10.1%, compared to $338.2 million for the second quarter of 2019. This growth was driven by the same revenue growth factors mentioned above.

Warehouse segment NOI was $120.1 million for the second quarter of 2020, which reflects growth of 5.5%. Global Warehouse segment margin was 32.3% for the second quarter of 2020, an 139 basis point decrease compared to the same quarter of the prior year. The year-over-year growth in segment NOI was driven by the previously mentioned revenue trends. These increases were partially offset by the translation impact of the strengthening US dollar, the incremental costs incurred in response to COVID-19 including sanitation, supplies and inefficiencies resulting from social distancing requirements, and the front-line appreciation bonus. Excluding the front-line appreciation bonus, Global Warehouse segment NOI would have been $124 million, which reflects growth of 9.3%. Excluding this bonus, our Global Warehouse segment NOI margin would have been 33.4%, a 24 basis point decrease.

The following tables summarize the global warehouse and same store financial results and metrics for the three and six months ended June 30, 2020 and 2019:

 

 

Three Months Ended June 30,

 

Change

Dollars in thousands

2020 actual

 

2020 constant

currency(1)

 

2019 actual

 

Actual

 

Constant

currency

 

 

 

 

 

 

 

 

 

 

TOTAL WAREHOUSE SEGMENT

 

 

 

 

 

 

 

 

 

Number of total warehouses

 

172

 

 

 

 

 

166

 

 

n/a

 

 

n/a

 

Global Warehouse revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

163,664

 

 

$

166,593

 

 

$

142,026

 

 

15.2

%

 

17.3

%

Warehouse services

 

208,747

 

 

 

212,379

 

 

 

196,205

 

 

6.4

%

 

8.2

%

Total revenue

$

372,411

 

 

$

378,972

 

 

$

338,231

 

 

10.1

%

 

12.0

%

Global Warehouse contribution (NOI)

$

120,132

 

 

$

122,321

 

 

$

113,817

 

 

5.5

%

 

7.5

%

Global Warehouse margin

 

32.3

%

 

 

32.3

%

 

 

33.7

%

 

-139 bps

 

-137 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse rent and storage metrics:

 

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

3,165

 

 

 

n/a

 

 

 

2,770

 

 

14.3

%

 

n/a

 

Average physical occupied pallets

 

2,891

 

 

 

n/a

 

 

 

2,636

 

 

9.7

%

 

n/a

 

Average physical pallet positions

 

4,049

 

 

 

n/a

 

 

 

3,609

 

 

12.2

%

 

n/a

 

Economic occupancy percentage

 

78.2

%

 

 

n/a

 

 

 

76.8

%

 

142 bps

 

n/a

 

Physical occupancy percentage

 

71.4

%

 

 

n/a

 

 

 

73.0

%

 

-163 bps

 

n/a

 

Total rent and storage revenue per economic occupied pallet

$

51.71

 

 

$

52.64

 

 

$

51.27

 

 

0.9

%

 

2.7

%

Total rent and storage revenue per physical occupied pallet

$

56.60

 

 

$

57.62

 

 

$

53.88

 

 

5.0

%

 

6.9

%

Global Warehouse services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

7,716

 

 

 

n/a

 

 

 

7,365

 

 

4.8

%

 

n/a

 

Total warehouse services revenue per throughput pallet

$

27.05

 

 

$

27.52

 

 

$

26.64

 

 

1.5

%

 

3.3

%

 

 

 

 

 

 

 

 

 

 

SAME STORE WAREHOUSE

 

 

 

 

 

 

 

 

 

Number of same store warehouses

 

135

 

 

 

 

 

135

 

 

n/a

 

 

n/a

 

Global Warehouse same store revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

125,515

 

 

$

127,046

 

 

$

119,826

 

 

4.7

%

 

6.0

%

Warehouse services

 

160,521

 

 

 

163,126

 

 

 

161,848

 

 

(0.8

)%

 

0.8

%

Total same store revenue

$

286,036

 

 

$

290,172

 

 

$

281,674

 

 

1.5

%

 

3.0

%

Global Warehouse same store contribution (NOI)

$

93,456

 

 

$

94,647

 

 

$

93,960

 

 

(0.5

)%

 

0.7

%

Global Warehouse same store margin

 

32.7

%

 

 

32.6

%

 

 

33.4

%

 

-68 bps

 

-74 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse same store rent and storage metrics:

 

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

2,387

 

 

 

n/a

 

 

 

2,301

 

 

3.7

%

 

n/a

 

Average physical occupied pallets

 

2,142

 

 

 

n/a

 

 

 

2,178

 

 

(1.6

)%

 

n/a

 

Average physical pallet positions

 

3,027

 

 

 

n/a

 

 

 

3,021

 

 

0.2

%

 

n/a

 

Economic occupancy percentage

 

78.9

%

 

 

n/a

 

 

 

76.2

%

 

270 bps

 

n/a

 

Physical occupancy percentage

 

70.8

%

 

 

n/a

 

 

 

72.1

%

 

-132 bps

 

n/a

 

Same store rent and storage revenue per economic occupied pallet

$

52.58

 

 

$

53.22

 

 

$

52.07

 

 

1.0

%

 

2.2

%

Same store rent and storage revenue per physical occupied pallet

$

58.59

 

 

$

59.31

 

 

$

55.02

 

 

6.5

%

 

7.8

%

Global Warehouse same store services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

6,149

 

 

 

n/a

 

 

 

6,346

 

 

(3.1

)%

 

n/a

 

Same store warehouse services revenue per throughput pallet

$

26.10

 

 

$

26.53

 

 

$

25.50

 

 

2.4

%

 

4.0

%

 

 

Three Months Ended June 30,

 

Change

Dollars in thousands

2020 actual

 

2020 constant

currency(1)

 

2019 actual

 

Actual

 

Constant

currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-SAME STORE WAREHOUSE

 

 

 

 

 

 

 

 

 

Number of non-same store warehouses

 

37

 

 

 

 

 

31

 

 

n/a

 

 

n/a

 

Global Warehouse non-same store revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

38,149

 

 

$

39,547

 

 

$

22,200

 

 

71.8

%

 

78.1

%

Warehouse services

 

48,226

 

 

 

49,253

 

 

 

34,357

 

 

40.4

%

 

43.4

%

Total non-same store revenue

$

86,375

 

 

$

88,800

 

 

$

56,557

 

 

52.7

%

 

57.0

%

Global Warehouse non-same store contribution (NOI)

$

26,676

 

 

$

27,674

 

 

$

19,857

 

 

34.3

%

 

39.4

%

Global Warehouse non-same store margin

 

30.9

%

 

 

31.2

%

 

 

35.1

%

 

-423 bps

 

-395 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse non-same store rent and storage metrics:

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

778

 

 

 

n/a

 

 

 

469

 

 

65.9

%

 

n/a

 

Average physical occupied pallets

 

749

 

 

 

n/a

 

 

 

458

 

 

63.5

%

 

n/a

 

Average physical pallet positions

 

1,022

 

 

 

n/a

 

 

 

588

 

 

73.8

%

 

n/a

 

Economic occupancy percentage

 

76.1

%

 

 

n/a

 

 

 

79.7

%

 

-364 bps

 

n/a

 

Physical occupancy percentage

 

73.3

%

 

 

n/a

 

 

 

77.9

%

 

-460 bps

 

n/a

 

Non-same store rent and storage revenue per economic occupied pallet

$

49.05

 

 

$

50.85

 

 

$

47.32

 

 

3.7

%

 

7.5

%

Non-same store rent and storage revenue per physical occupied pallet

$

50.92

 

 

$

52.78

 

 

$

48.43

 

 

5.1

%

 

9.0

%

Global Warehouse non-same store services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

1,567

 

 

 

n/a

 

 

 

1,019

 

 

53.7

%

 

n/a

 

Non-same store warehouse services revenue per throughput pallet

$

30.77

 

 

$

31.43

 

 

$

33.70

 

 

(8.7

)%

 

(6.8

)%

 
 

 

Six Months Ended June 30,

 

Change

Dollars in thousands

2020 actual

 

2020 constant

currency(1)

 

2019 actual

 

Actual

 

Constant

currency

 

 

 

 

 

 

 

 

 

 

TOTAL WAREHOUSE SEGMENT

 

 

 

 

 

 

 

 

 

Number of total warehouses

 

172

 

 

 

 

 

166

 

 

n/a

 

 

n/a

 

Global Warehouse revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

325,973

 

 

$

331,853

 

 

$

268,406

 

 

21.4

%

 

23.6

%

Warehouse services

 

427,506

 

 

 

435,733

 

 

 

359,440

 

 

18.9

%

 

21.2

%

Total revenue

$

753,479

 

 

$

767,586

 

 

$

627,846

 

 

20.0

%

 

22.3

%

Global Warehouse contribution (NOI)

$

246,905

 

 

$

251,363

 

 

$

204,636

 

 

20.7

%

 

22.8

%

Global Warehouse margin

 

32.8

%

 

 

32.7

%

 

 

32.6

%

 

18 bps

 

15 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse rent and storage metrics:

 

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

3,211

 

 

 

n/a

 

 

 

2,639

 

 

21.7

%

 

n/a

 

Average physical occupied pallets

 

2,970

 

 

 

n/a

 

 

 

2,505

 

 

18.6

%

 

n/a

 

Average physical pallet positions

 

4,028

 

 

 

n/a

 

 

 

3,395

 

 

18.6

%

 

n/a

 

Economic occupancy percentage

 

79.7

%

 

 

n/a

 

 

 

77.7

%

 

200 bps

 

n/a

 

Physical occupancy percentage

 

73.7

%

 

 

n/a

 

 

 

73.8

%

 

-4 bps

 

n/a

 

Total rent and storage revenue per economic occupied pallet

$

101.53

 

 

$

103.36

 

 

$

101.72

 

 

(0.2

)%

 

1.6

%

Total rent and storage revenue per physical occupied pallet

$

109.75

 

 

$

111.73

 

 

$

107.15

 

 

2.4

%

 

4.3

%

Global Warehouse services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

15,916

 

 

 

n/a

 

 

 

13,887

 

 

14.6

%

 

n/a

 

Total warehouse services revenue per throughput pallet

$

26.86

 

 

$

27.38

 

 

$

25.88

 

 

3.8

%

 

5.8

%

 

 

 

 

 

 

 

 

 

 

SAME STORE WAREHOUSE

 

 

 

 

 

 

 

 

 

Number of same store warehouses

 

135

 

 

 

 

 

135

 

 

n/a

 

 

n/a

 

Global Warehouse same store revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

250,839

 

 

$

253,938

 

 

$

239,727

 

 

4.6

%

 

5.9

%

Warehouse services

 

326,270

 

 

 

332,267

 

 

 

319,098

 

 

2.2

%

 

4.1

%

Total same store revenue

$

577,109

 

 

$

586,205

 

 

$

558,825

 

 

3.3

%

 

4.9

%

Global Warehouse same store contribution (NOI)

$

190,510

 

 

$

192,832

 

 

$

182,190

 

 

4.6

%

 

5.8

%

Global Warehouse same store margin

 

33.0

%

 

 

32.9

%

 

 

32.6

%

 

41 bps

 

29 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse same store rent and storage metrics:

 

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

2,435

 

 

 

n/a

 

 

 

2,341

 

 

4.0

%

 

n/a

 

Average physical occupied pallets

 

2,220

 

 

 

n/a

 

 

 

2,217

 

 

0.1

%

 

n/a

 

Average physical pallet positions

 

3,028

 

 

 

n/a

 

 

 

3,027

 

 

%

 

n/a

 

Economic occupancy percentage

 

80.4

%

 

 

n/a

 

 

 

77.3

%

 

308 bps

 

n/a

 

Physical occupancy percentage

 

73.3

%

 

 

n/a

 

 

 

73.2

%

 

8 bps

 

n/a

 

Same store rent and storage revenue per economic occupied pallet

$

103.02

 

 

$

104.29

 

 

$

102.41

 

 

0.6

%

 

1.8

%

Same store rent and storage revenue per physical occupied pallet

$

113.00

 

 

$

114.40

 

 

$

108.15

 

 

4.5

%

 

5.8

%

Global Warehouse same store services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

12,605

 

 

 

n/a

 

 

 

12,632

 

 

(0.2

)%

 

n/a

 

Same store warehouse services revenue per throughput pallet

$

25.88

 

 

$

26.36

 

 

$

25.26

 

 

2.5

%

 

4.4

%

 

 

Six Months Ended June 30,

 

Change

Dollars in thousands

2020 actual

 

2020 constant

currency(1)

 

2019 actual

 

Actual

 

Constant

currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-SAME STORE WAREHOUSE

 

 

 

 

 

 

 

 

 

Number of non-same store warehouses

 

37

 

 

 

 

 

31

 

 

n/a

 

 

n/a

 

Global Warehouse non-same store revenue:

 

 

 

 

 

 

 

 

 

Rent and storage

$

75,134

 

 

$

77,915

 

 

$

28,679

 

 

162.0

%

 

171.7

%

Warehouse services

 

101,236

 

 

 

103,466

 

 

 

40,342

 

 

150.9

%

 

156.5

%

Total non-same store revenue

$

176,370

 

 

$

181,381

 

 

$

69,021

 

 

155.5

%

 

162.8

%

Global Warehouse non-same store contribution (NOI)

$

56,395

 

 

$

58,531

 

 

$

22,446

 

 

151.2

%

 

160.8

%

Global Warehouse non-same store margin

 

32.0

%

 

 

32.3

%

 

 

32.5

%

 

-55 bps

 

-25 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse non-same store rent and storage metrics:

 

 

 

 

 

 

 

 

Average economic occupied pallets

 

776

 

 

 

n/a

 

 

 

298

 

 

160.5

%

 

n/a

 

Average physical occupied pallets

 

750

 

 

 

n/a

 

 

 

288

 

 

160.2

%

 

n/a

 

Average physical pallet positions

 

1,000

 

 

 

n/a

 

 

 

369

 

 

171.3

%

 

n/a

 

Economic occupancy percentage

 

77.6

%

 

 

n/a

 

 

 

80.8

%

 

-321 bps

 

n/a

 

Physical occupancy percentage

 

75.0

%

 

 

n/a

 

 

 

78.2

%

 

-320 bps

 

n/a

 

Non-same store rent and storage revenue per economic occupied pallet

$

96.85

 

 

$

100.43

 

 

$

96.30

 

 

0.6

%

 

4.3

%

Non-same store rent and storage revenue per physical occupied pallet

$

100.15

 

 

$

103.85

 

 

$

99.45

 

 

0.7

%

 

4.4

%

Global Warehouse non-same store services metrics:

 

 

 

 

 

 

 

 

 

Throughput pallets

 

3,311

 

 

 

n/a

 

 

 

1,255

 

 

163.8

 

 

n/a

 

Non-same store warehouse services revenue per throughput pallet

$

30.58

 

 

$

31.25

 

 

$

32.15

 

 

(4.9

)%

 

(2.8

)%

 

(1) The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.

(n/a = not applicable)

Fixed Commitment Rent and Storage Revenue

As of June 30, 2020, $270.0 million of the Company’s annualized rent and storage revenue were derived from customers with fixed commitment storage contracts. This compares to $258.5 million at the end of the first quarter of 2020 and $231.6 million at the end of the second quarter of 2019. The Company’s recent acquisitions had a lower percentage of fixed committed contracts as a percentage of rent and storage revenue. On a combined pro forma basis, assuming a full twelve months of acquisitions revenue, 41.4% of rent and storage revenue were generated from fixed commitment storage contracts, which is a 130 basis point increase over the first quarter of 2020.

Economic and Physical Occupancy

Contracts that contain fixed commitments are designed to ensure the Company’s customers have space available when needed. For the second quarter of 2020, economic occupancy for the total warehouse segment was 78.2% and warehouse segment same store pool was 78.9%, representing a 676 basis point and 810 basis point increase above physical occupancy, respectively. For the second quarter of 2020, physical occupancy for the total warehouse segment was 71.4% and warehouse segment same store pool was 70.8%.

Real Estate Portfolio

As of June 30, 2020, the Company’s portfolio consists of 183 facilities, the same as what was reported as of the quarter ended March 31, 2020. The Company ended the second quarter of 2020 with 172 facilities in its Global Warehouse segment portfolio and 11 facilities in its Third-party managed segment. During the second quarter of 2020, the Company completed the construction of its Savannah site which was built upon land acquired in connection with the PortFresh acquisition and was added to the non-same store population. Additionally, the Company completed the sale of a facility which was previously included in the same store population. The same store population consists of 135 facilities for the quarter ended June 30, 2020. The remaining 37 non-same store population includes the 31 facilities that were acquired since the beginning of 2019 and six legacy facilities.

Balance Sheet Activity and Liquidity

As of June 30, 2020, the Company had total liquidity of approximately $1.2 billion, including cash and capacity on its revolving credit facility and $150.6 million of net proceeds available from equity forward contracts. Total debt outstanding was $2.0 billion (inclusive of $186.5 million of financing leases/sale lease-backs and exclusive of unamortized deferred financing fees), of which 77% was in an unsecured structure. The Company has no material debt maturities until 2023. At quarter end, its net debt to pro forma Core EBITDA was approximately 4.1x. Of the Company’s total debt outstanding, $1.8 billion relates to real estate debt, which excludes sale-leaseback and capitalized lease obligations. The Company’s real estate debt has a remaining weighted average term of 6.3 years and carries a weighted average contractual interest rate of 3.60%. As of June 30, 2020, 86% of the Company’s total debt outstanding was at a fixed rate, inclusive of interest rate swaps.

Dividend

On May 27, 2020, the Company’s Board of Trustees declared a dividend of $0.21 per share for the second quarter of 2020, which was paid on July 15, 2020 to common shareholders of record as of June 30, 2020.

Subsequent Events

  • Signed definitive purchase agreement to acquire AM-C Warehouses business, located in the Dallas-Fort Worth market, for $85.0 million, which is expected to close in early September 2020.
  • On July 16, 2020, we purchased two facilities which we previously leased in Auckland, New Zealand for an aggregate $12.3 million New Zealand dollars.
  • Quarry segment sale completed on July 1, 2020, for $9.0 million.

2020 Outlook

The Company is revising its AFFO per share guidance from $1.22 - $1.30 to $1.24 - $1.30 for 2020. Certain components are updated as follows:

  • Deferred income tax benefit of $2 million - $4 million.
  • Non-real estate amortization and depreciation expense of $70 million - $72 million.
  • Maintenance capital expenditures of $65 million - $73 million.
  • Development starts of $400 million - $500 million.
  • Please refer to its supplemental for currency translation rates embedded in this guidance.

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, August 6, 2020 at 5:00 p.m. Eastern Time to discuss second quarter 2020 results. A live webcast of the call will be available via the Investors 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# 13706764. The telephone replay will be available starting shortly after the call until August 20, 2020.

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

About the Company

Americold is the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. Based in Atlanta, Georgia, Americold owns and operates 183 temperature-controlled warehouses, with over 1 billion 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.

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 shareholders 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 shareholders 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 the following: adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry; general economic conditions; uncertainties and risks related to natural disasters, global climate change and public health crises, including ongoing COVID-19 pandemic; 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; or the inability of our customers to otherwise perform under their contracts, including as a result of the ongoing COVID-19 pandemic; uncertainty of revenues, given the nature of our customer contracts; increased interest rates and operating costs, including as a result of the COVID-19 pandemic; our failure to obtain necessary outside financing; risks related to, or restrictions contained in, our debt financings; decreased storage rates or increased vacancy rates; risks related to current and potential international operations and properties; our failure to realize the intended benefits from our recent acquisitions including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions; our failure to successfully integrate and operate acquired properties or businesses, including but not limited to: Cloverleaf Cold Storage, Lanier Cold Storage, MHW Group, Inc., Nova Cold Logistics, Newport Cold Storage and PortFresh Holdings, LLC; 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 within expected time frames, or at all, in respect thereof; difficulties in expanding our operations into new markets, including international markets; risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections; our failure to maintain our status as a REIT; our Operating Partnership’s failure to qualify as a partnership for federal income tax purposes; 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 applicable governmental regulations and taxation schemes;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 and employment related litigation; 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; 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, of our common shares; the potential dilutive effect of our common share offerings; and risks related to any forward sale agreement, including the forward sale agreement we entered into with an affiliate of BofA Securities, Inc. in September 2018, as amended, or the 2018 forward sale agreement, and the forward sale agreements we entered into in connection with our ATM Equity Program in June 2020, including substantial dilution to our earnings per share or substantial cash payment obligations.

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 document include, among others, statements about our expected acquisition and 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, 2019, in our Quarterly Report for the quarter ended March 31, 2020 and in our Form 8-K filed April 16, 2020, 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 (Unaudited)

(In thousands, except shares and per share amounts)

 

June 30,

2020

 

December 31,

2019

Assets

 

 

 

Property, buildings and equipment:

 

 

 

Land

$

523,620

 

 

$

526,226

 

Buildings and improvements

 

2,889,402

 

 

 

2,696,732

 

Machinery and equipment

 

879,837

 

 

 

817,617

 

Assets under construction

 

132,793

 

 

 

108,639

 

 

 

4,425,652

 

 

 

4,149,214

 

Accumulated depreciation and depletion

 

(1,301,706

)

 

 

(1,216,553

)

Property, buildings and equipment – net

 

3,123,946

 

 

 

2,932,661

 

 

 

 

 

Operating lease right-of-use assets

 

70,890

 

 

 

77,723

 

Accumulated depreciation – operating leases

 

(23,154

)

 

 

(18,110

)

Operating leases – net

 

47,736

 

 

 

59,613

 

 

 

 

 

Financing leases:

 

 

 

Buildings and improvements

 

13,657

 

 

 

11,227

 

Machinery and equipment

 

94,873

 

 

 

76,811

 

 

 

108,530

 

 

 

88,038

 

Accumulated depreciation – financing leases

 

(34,823

)

 

 

(29,697

)

Financing leases – net

 

73,707

 

 

 

58,341

 

 

 

 

 

Cash and cash equivalents

 

298,709

 

 

 

234,303

 

Restricted cash

 

33,131

 

 

 

6,310

 

Accounts receivable – net of allowance of $10,481 and $6,927 at June 30, 2020 and December 31, 2019, respectively

 

200,603

 

 

 

214,842

 

Identifiable intangible assets – net

 

352,100

 

 

 

284,758

 

Goodwill

 

385,285

 

 

 

318,483

 

Investments in partially owned entities

 

22,102

 

 

 

 

Other assets

 

75,457

 

 

 

61,372

 

Total assets

$

4,612,776

 

 

$

4,170,683

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

Liabilities:

 

 

 

Accounts payable and accrued expenses

$

335,651

 

 

$

350,963

 

Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $14,295 and $12,996, in the aggregate, at June 30, 2020 and December 31, 2019, respectively

 

1,824,406

 

 

 

1,695,447

 

Sale-leaseback financing obligations

 

113,974

 

 

 

115,759

 

Financing lease obligations

 

72,571

 

 

 

58,170

 

Operating lease obligations

 

50,092

 

 

 

62,342

 

Unearned revenue

 

15,266

 

 

 

16,423

 

Pension and postretirement benefits

 

11,001

 

 

 

12,706

 

Deferred tax liability – net

 

50,177

 

 

 

17,119

 

Multiemployer pension plan withdrawal liability

 

8,632

 

 

 

8,736

 

Total liabilities

 

2,481,770

 

 

 

2,337,665

 

Shareholders’ equity:

 

 

 

Common shares of beneficial interest, $0.01 par value – 325,000,000 and 250,000,000 authorized shares; 203,615,707 and 191,799,909 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

2,036

 

 

 

1,918

 

Paid-in capital

 

2,932,040

 

 

 

2,582,087

 

Accumulated deficit and distributions in excess of net earnings

 

(767,027

)

 

 

(736,861

)

Accumulated other comprehensive loss

 

(36,043

)

 

 

(14,126

)

Total shareholders’ equity

 

2,131,006

 

 

 

1,833,018

 

Total liabilities and shareholders’ equity

$

4,612,776

 

 

$

4,170,683

 

 

Americold Realty Trust and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

Rent, storage and warehouse services

$

372,411

 

 

$

338,231

 

 

$

753,479

 

 

$

627,846

 

Third-party managed services

 

72,954

 

 

 

61,515

 

 

 

137,875

 

 

 

125,651

 

Transportation services

 

34,861

 

 

 

36,492

 

 

 

70,778

 

 

 

73,588

 

Other

 

2,296

 

 

 

2,222

 

 

 

4,459

 

 

 

4,454

 

Total revenues

 

482,522

 

 

 

438,460

 

 

 

966,591

 

 

 

831,539

 

Operating expenses:

 

 

 

 

 

 

 

Rent, storage and warehouse services cost of operations

 

252,279

 

 

 

224,414

 

 

 

506,574

 

 

 

423,210

 

Third-party managed services cost of operations

 

69,655

 

 

 

58,711

 

 

 

130,807

 

 

 

119,588

 

Transportation services cost of operations

 

30,089

 

 

 

32,286

 

 

 

61,201

 

 

 

65,026

 

Cost of operations related to other revenues

 

2,161

 

 

 

1,930

 

 

 

4,269

 

 

 

3,918

 

Depreciation, depletion and amortization

 

52,399

 

 

 

40,437

 

 

 

104,003

 

 

 

70,533

 

Selling, general and administrative

 

32,340

 

 

 

32,669

 

 

 

69,233

 

 

 

63,786

 

Acquisition, litigation and other

 

2,801

 

 

 

17,964

 

 

 

4,489

 

 

 

26,457

 

Impairment of long-lived assets

 

3,667

 

 

 

930

 

 

 

3,667

 

 

 

13,485

 

(Gain) loss from sale of real estate

 

(19,414

)

 

 

34

 

 

 

(21,875

)

 

 

34

 

Total operating expenses

 

425,977

 

 

 

409,375

 

 

 

862,368

 

 

 

786,037

 

 

 

 

 

 

 

 

 

Operating income

 

56,545

 

 

 

29,085

 

 

 

104,223

 

 

 

45,502

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

 

(23,178

)

 

 

(24,098

)

 

 

(47,048

)

 

 

(45,674

)

Interest income

 

261

 

 

 

2,405

 

 

 

848

 

 

 

3,408

 

Bridge loan commitment fees

 

 

 

 

(2,665

)

 

 

 

 

 

(2,665

)

Loss on debt extinguishment and modifications

 

 

 

 

 

 

 

(781

)

 

 

 

Foreign currency exchange gain (loss), net

 

315

 

 

 

(83

)

 

 

(177

)

 

 

(23

)

Other income (expense), net

 

44

 

 

 

(591

)

 

 

915

 

 

 

(758

)

(Loss) income from investments in partially owned entities

 

(129

)

 

 

(68

)

 

 

(156

)

 

 

54

 

Income (loss) before income tax (expense) benefit

 

33,858

 

 

 

3,985

 

 

 

57,824

 

 

 

(156

)

Income tax (expense) benefit:

 

 

 

 

 

 

 

Current

 

(2,163

)

 

 

(2,446

)

 

 

(4,720

)

 

 

(3,994

)

Deferred

 

967

 

 

 

3,352

 

 

 

3,069

 

 

 

4,412

 

Total income tax (expense) benefit

 

(1,196

)

 

 

906

 

 

 

(1,651

)

 

 

418

 

 

 

 

 

 

 

 

 

Net income

$

32,662

 

 

$

4,891

 

 

$

56,173

 

 

$

262

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

201,787

 

 

 

182,325

 

 

 

201,294

 

 

 

165,869

 

Weighted average common shares outstanding – diluted

 

205,298

 

 

 

186,117

 

 

 

204,587

 

 

 

169,305

 

 

 

 

 

 

 

 

 

Net income per common share of beneficial interest - basic

$

0.16

 

 

$

0.03

 

 

$

0.28

 

 

$

0.00

 

Net income per common share of beneficial interest - diluted

$

0.16

 

 

$

0.03

 

 

$

0.27

 

 

$

0.00

 

 
 

Reconciliation of Net Income to NAREIT FFO, Core FFO, and AFFO

(In thousands, except per share amounts - unaudited)

 

 

Three Months Ended

 

 

 

Q2 20

 

Q1 20

 

Q4 19

 

Q3 19

 

Q2 19

 

YTD 20

Net income

$

32,662

 

$

23,511

 

$

20,809

 

$

27,091

 

$

4,891

 

 

$

56,173

 

Adjustments:

 

 

 

 

 

 

 

Real estate related depreciation and depletion

 

35,558

 

 

35,442

 

 

32,555

 

 

31,238

 

 

28,518

 

 

 

71,000

 

Net (gain) loss on sale of real estate, net of withholding taxes

 

(19,414

)

 

(2,096

)

 

 

 

 

 

34

 

 

 

(21,510

)

Net (gain) loss on asset disposals

 

(3

)

 

 

 

237

 

 

7

 

 

 

 

 

(3

)

Impairment charges on certain real estate assets

 

3,181

 

 

 

 

 

 

 

 

 

 

 

3,181

 

Real estate depreciation on partially owned entities

 

(34

)

 

34

 

 

 

 

232

 

 

269

 

 

 

 

Our share of reconciling items related to partially owned entities

 

156

 

 

 

 

 

 

 

 

 

 

 

156

 

NAREIT Funds from operations

$

52,106

 

$

56,891

 

$

53,601

 

$

58,568

 

$

33,712

 

 

$

108,997

 

Adjustments:

 

 

 

 

 

 

 

Net (gain) loss on sale of non-real estate assets

 

(252

)

 

(165

)

 

227

 

 

212

 

 

167

 

 

 

(417

)

Non-real estate impairment

 

486

 

 

 

 

 

 

 

 

930

 

 

 

486

 

Acquisition, litigation and other expenses

 

2,801

 

 

1,688

 

 

10,377

 

 

3,780

 

 

17,964

 

 

 

4,489

 

Share-based compensation expense, IPO grants

 

203

 

 

373

 

 

492

 

 

777

 

 

556

 

 

 

576

 

Bridge loan commitment fees

 

 

 

 

 

 

 

 

 

2,665

 

 

 

 

Loss on debt extinguishment and modifications

 

 

 

781

 

 

 

 

 

 

 

 

 

781

 

Foreign currency exchange (gain) loss

 

(315

)

 

492

 

 

(76

)

 

43

 

 

83

 

 

 

177

 

Gain from sale of partially owned entities

 

 

 

 

 

 

 

(4,297

)

 

 

 

 

 

Our share of reconciling items related to partially owned entities

 

79

 

 

 

 

 

 

 

 

 

 

 

79

 

Core FFO applicable to common shareholders

$

55,108

 

$

60,060

 

$

64,621

 

$

59,083

 

$

56,077

 

 

$

115,168

 

Adjustments:

 

 

 

 

 

 

 

Amortization of deferred financing costs and pension withdrawal liability

 

1,196

 

 

1,546

 

 

1,524

 

 

1,526

 

 

1,522

 

 

 

2,742

 

Amortization of below/above market leases

 

 

 

76

 

 

37

 

 

38

 

 

38

 

 

 

76

 

Straight-line net rent

 

(108

)

 

(109

)

 

(83

)

 

(150

)

 

(151

)

 

 

(217

)

Deferred income tax (benefit) expense

 

(967

)

 

(2,102

)

 

1,520

 

 

(7,809

)

 

(3,352

)

 

 

(3,069

)

Share-based compensation expense, excluding IPO grants

 

4,261

 

 

3,934

 

 

3,210

 

 

2,593

 

 

2,628

 

 

 

8,195

 

Non-real estate depreciation and amortization

 

16,841

 

 

16,162

 

 

15,194

 

 

13,828

 

 

11,919

 

 

 

33,003

 

Non-real estate depreciation and amortization on partially owned entities

 

(22

)

 

22

 

 

 

 

108

 

 

107

 

 

 

 

Maintenance capital expenditures (a)

 

(15,284

)

 

(12,438

)

 

(26,307

)

 

(16,772

)

 

(10,734

)

 

 

(27,722

)

Our share of reconciling items related to partially owned entities

 

78

 

 

 

 

 

 

 

 

 

 

 

78

 

Adjusted FFO applicable to common shareholders

$

61,103

 

$

67,151

 

$

59,716

 

$

52,445

 

$

58,054

 

 

$

128,254

 

 
 

Reconciliation of Net Income to NAREIT FFO, Core FFO, and AFFO (continued)

(In thousands except per share amounts - unaudited)

 

 

Three Months Ended

 

 

Q2 20

Q1 20

Q4 19

Q3 19

Q2 19

YTD 20

 

 

 

 

 

 

 

NAREIT Funds from operations

$

52,106

$

56,891

$

53,601

$

58,568

$

33,712

$

108,997

Core FFO applicable to common shareholders

$

55,108

$

60,060

$

64,621

$

59,083

$

56,077

$

115,168

Adjusted FFO applicable to common shareholders

$

61,103

$

67,151

$

59,716

$

52,445

$

58,054

$

128,254

 

 

 

 

 

 

 

Reconciliation of weighted average shares:

 

 

 

 

 

 

Weighted average basic shares for net income calculation

 

201,787

 

200,707

 

192,393

 

192,325

 

182,325

 

201,294

Dilutive stock options, unvested restricted stock units, equity forward contracts

 

3,511

 

3,076

 

5,529

 

5,038

 

3,792

 

3,293

Weighted average dilutive shares

 

205,298

 

203,783

 

197,922

 

197,363

 

186,117

 

204,587

 

 

 

 

 

 

 

NAREIT FFO - basic per share

$

0.26

$

0.28

$

0.28

$

0.30

$

0.18

$

0.54

NAREIT FFO - diluted per share

$

0.25

$

0.28

$

0.27

$

0.30

$

0.18

$

0.53

 

 

 

 

 

 

 

Core FFO - basic per share

$

0.27

$

0.30

$

0.34

$

0.31

$

0.31

$

0.57

Core FFO - diluted per share

$

0.27

$

0.29

$

0.33

$

0.30

$

0.30

$

0.56

 

 

 

 

 

 

 

Adjusted FFO - basic per share

$

0.30

$

0.33

$

0.31

$

0.27

$

0.32

$

0.64

Adjusted FFO - diluted per share

$

0.30

$

0.33

$

0.30

$

0.27

$

0.31

$

0.63

 

(a)

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.

 

Reconciliation of Net Income to EBITDA, NAREIT EBITDAre, and Core EBITDA

(In thousands - unaudited)

 

Three Months Ended

Trailing

Twelve

Months

Ended

 

Q2 20

Q1 20

Q4 19

Q3 19

Q2 19

Q2 2020

Net income

$

32,662

 

$

23,511

 

$

20,809

 

$

27,091

 

$

4,891

 

$

104,073

 

Adjustments:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

52,399

 

 

51,604

 

 

47,750

 

 

45,065

 

 

40,437

 

 

196,818

 

Interest expense

 

23,178

 

 

23,870

 

 

23,827

 

 

24,907

 

 

24,098

 

 

95,782

 

Income tax expense (benefit)

 

1,196

 

 

91

 

 

2,236

 

 

(6,975

)

 

(906

)

 

(3,452

)

EBITDA

$

109,435

 

$

99,076

 

$

94,622

 

$

90,088

 

$

68,520

 

$

393,221

 

Adjustments:

 

 

 

 

 

 

Net (gain) loss on sale of real estate, net of withholding taxes

 

(19,414

)

 

(2,096

)

 

 

 

 

 

34

 

 

(21,510

)

Adjustment to reflect share of EBITDAre of partially owned entities

 

237

 

 

60

 

 

 

 

519

 

 

592

 

 

816

 

NAREIT EBITDAre

$

90,258

 

$

97,040

 

$

94,622

 

$

90,607

 

$

69,146

 

$

372,527

 

Adjustments:

 

 

 

 

 

 

Acquisition, litigation and other expenses

 

2,801

 

 

1,688

 

 

10,377

 

 

3,780

 

 

17,964

 

 

18,646

 

Bridge loan commitment fees

 

 

 

 

 

 

 

 

 

2,665

 

 

 

Loss from investments in partially owned entities

 

129

 

 

27

 

 

 

 

165

 

 

68

 

 

321

 

Gain from sale of partially owned entities

 

 

 

 

 

 

 

(4,297

)

 

 

 

(4,297

)

Asset impairment

 

3,667

 

 

 

 

 

 

 

 

930

 

 

3,667

 

(Gain) loss on foreign currency exchange

 

(315

)

 

492

 

 

(76

)

 

43

 

 

83

 

 

144

 

Share-based compensation expense

 

4,464

 

 

4,307

 

 

3,699

 

 

3,372

 

 

3,185

 

 

15,842

 

Loss on debt extinguishment and modifications

 

 

 

781

 

 

 

 

 

 

 

 

781

 

(Gain) loss on real estate and other asset disposals

 

(255

)

 

(165

)

 

464

 

 

218

 

 

168

 

 

262

 

Reduction in EBITDAre from partially owned entities

 

(237

)

 

(60

)

 

 

 

(519

)

 

(592

)

 

(816

)

Core EBITDA

$

100,512

 

$

104,110

 

$

109,086

 

$

93,369

 

$

93,617

 

$

407,077

 

 

Revenue and Contribution by Segment

(in thousands - unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2020

 

2019

 

2020

 

2019

Segment revenues:

 

 

 

 

Warehouse

$

372,411

 

$

338,231

 

$

753,479

 

$

627,846

 

Third-party managed

 

72,954

 

 

61,515

 

 

137,875

 

 

125,651

 

Transportation

 

34,861

 

 

36,492

 

 

70,778

 

 

73,588

 

Other

 

2,296

 

 

2,222

 

 

4,459

 

 

4,454

 

Total revenues

 

482,522

 

 

438,460

 

 

966,591

 

 

831,539

 

 

 

 

 

 

Segment contribution:

 

 

 

 

Warehouse

 

120,132

 

 

113,817

 

 

246,905

 

 

204,636

 

Third-party managed

 

3,299

 

 

2,804

 

 

7,068

 

 

6,063

 

Transportation

 

4,772

 

 

4,206

 

 

9,577

 

 

8,562

 

Other

 

135

 

 

292

 

 

190

 

 

536

 

Total segment contribution

 

128,338

 

 

121,119

 

 

263,740

 

 

219,797

 

 

 

 

 

 

Reconciling items:

 

 

 

 

Depreciation, depletion and amortization

 

(52,399

)

 

(40,437

)

 

(104,003

)

 

(70,533

)

Selling, general and administrative expense

 

(32,340

)

 

(32,669

)

 

(69,233

)

 

(63,786

)

Acquisition, litigation and other

 

(2,801

)

 

(17,964

)

 

(4,489

)

 

(26,457

)

Impairment of long-lived assets

 

(3,667

)

 

(930

)

 

(3,667

)

 

(13,485

)

Gain (loss) from sale of real estate

 

19,414

 

 

(34

)

 

21,875

 

 

(34

)

Interest expense

 

(23,178

)

 

(24,098

)

 

(47,048

)

 

(45,674

)

Interest income

 

261

 

 

2,405

 

 

848

 

 

3,408

 

Bridge loan commitment fees

 

 

 

(2,665

)

 

 

 

(2,665

)

Loss on debt extinguishment and modifications

 

 

 

 

 

(781

)

 

 

Foreign currency exchange gain (loss)

 

315

 

 

(83

)

 

(177

)

 

(23

)

Other income (expense), net

 

44

 

 

(591

)

 

915

 

 

(758

)

(Loss) income from investments in partially owned entities

 

(129

)

 

(68

)

 

(156

)

 

54

 

Income (loss) before income tax (expense) benefit

$

33,858

 

$

3,985

 

$

57,824

 

$

(156

)

 

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.

In addition to our primary business segments, we owned a limestone quarry in Carthage, Missouri. We do not view the operation of the quarry as an integral part of our business, and as a result this business segment was subsequently sold on July 1, 2020.

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 our share of reconciling items of partially owned entities. 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, non-real estate asset impairment, acquisition, litigation and other expenses, share-based compensation expense for the IPO retention grants, bridge loan commitment fees, loss on debt extinguishment and modification and foreign currency exchange gain or loss. We also adjust for the impact of Core FFO attributable to partially owned entities. We have elected to reflect our share of Core FFO attributable to partially owned entities since the Brazil JV is a strategic partnership which we continue to actively participate in on an ongoing basis. The previous joint venture, the China JV, was considered for disposition during the periods presented. 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 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 financing costs, pension withdrawal liability and above or below market leases, straight-line net 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, excluding IPO grants, non-real estate depreciation and amortization, and maintenance capital expenditures. We also adjust for AFFO attributable to our portion of reconciling items of partially owned entities. 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 acquisition, litigation and other expenses, impairment of long-lived assets, loss or gain on other asset disposals, bridge loan commitment fees, loss on debt extinguishment and modifications, share-based compensation expense, foreign currency exchange gain or loss, loss or income 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 EBITDA but which we do not believe are indicative of our core business operations. EBITDA and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDA and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDA and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDA and Core EBITDA have limitations as analytical tools, including:

  • these measures do not reflect our historical or future cash requirements for 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 22 of our financial supplement reconciles 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

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