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Americold Realty Trust Announces First Quarter 2022 Results

May 05, 2022

ATLANTA, May 05, 2022 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Total revenue increased 11.2% to $705.7 million.
  • Total NOI increased 0.6% to $158.3 million.
  • Core EBITDA decreased 5.9% on an actual basis to $110.9 million., and decreased 2.2% on a constant currency basis.
  • Net loss of $17.4 million, or $0.06 loss per diluted common share.
  • Core FFO of $46.3 million, or $0.17 per diluted common share.
  • AFFO of $68.9 million, or $0.26 per diluted common share.
  • Global Warehouse segment revenue increased 11.4% to $540.9 million.
  • Global Warehouse segment NOI increased 0.1% to $146.3 million.
  • Global Warehouse segment same store revenue increased 4.5%, or 6.0% on a constant currency basis, Global Warehouse segment same store NOI decreased by 4.7%, or 3.6% on a constant currency basis.

First Quarter 2022 Total Company Financial Results
Total revenue for the first quarter of 2022 was $705.7 million, an 11.2% increase from the same quarter of the prior year. This growth was driven by the incremental revenue from acquisitions, including warehouse and transportation operations, our recently completed expansion and development projects, contractual and market-driven rate escalations and the timing of Easter in 2022 as compared to 2021. These increases are partially offset by the continued impacts of COVID-19 and resulting supply chain disruption which impacted our throughput and holdings across our network as food production has been unable to keep up with steady consumer demand.

Total NOI for the first quarter of 2022 was $158.3 million, an increase of 0.6% from the same quarter of the prior year. This increase is primarily as a result of the acquisitions completed during 2021, recently completed expansions and developments and contractual and market-driven rate escalations, offset by continued food production challenges, labor shortages and wage and other inflationary pressure on nearly all cost categories and across our global portfolio.

Core EBITDA was $110.9 million for the first quarter of 2022, compared to $117.8 million for the same quarter of the prior year. This reflects a 5.9% decrease over prior year on an actual basis, and 2.2% on a constant currency basis, driven primarily from an increase in selling, general and administrative costs.

For the first quarter of 2022, the Company reported net loss of $17.4 million, or $0.06 per diluted share, compared to net loss of $14.2 million, or $0.06 per diluted share, for the same quarter of the prior year.

For the first quarter of 2022, Core FFO was $46.3 million, or $0.17 per diluted share, compared to $62.5 million, or $0.39 per diluted share, for same quarter of the prior year.

For the first quarter of 2022, AFFO was $68.9 million, or $0.26 per diluted share, compared to $75.9 million, or $0.37 per diluted share, for the same quarter of the prior year.

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.

First Quarter 2022 Global Warehouse Segment Results
For the first quarter of 2022, Global Warehouse segment revenue was $540.9 million, an increase of $55.5 million, or 11.4%, compared to $485.5 million for the first quarter of 2021. This growth was driven by the recently completed acquisitions and ramp of recently completed development projects, paired with contractual and market-driven rate escalations and the timing of Easter in 2022 as compared to 2021, partially offset by the impact of continued food production challenges resulting in lower throughput in our same store portfolio.

Global Warehouse segment NOI was $146.3 million for the first quarter of 2022 as compared to $146.2 million for the first quarter of 2021. Global Warehouse segment NOI is flat period-over-period which is a result of our recently completed acquisitions, developments and expansions, paired with rate increases, largely offset by the impact of inflationary pressures across our portfolio, the impact of start-up costs for our developments and the unfavorable impact of foreign currency translation. Global Warehouse segment margin was 27.0% for the first quarter of 2022, a 307 basis point decrease compared to the same quarter of the prior year, due to inflationary cost pressures.

We had 215 same stores for the three months ended March 31, 2022. The following table presents revenues, cost of operations, contribution (NOI) and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the three months ended March 31, 2022. Results related to the Bowman Stores, ColdCo, KMT Brrr!, Lago Cold Stores, Liberty Freezers and Newark Facility Management acquisitions are reflected within non-same store.

  Three Months Ended March 31,   Change
Dollars in thousands 2022 actual   2022 constant currency (1)   2021 actual   Actual   Constant
currency
                   
TOTAL WAREHOUSE SEGMENT                  
Number of total warehouses (2)   240           233     n/a   n/a
Global Warehouse revenue:                  
Rent and storage $ 229,757     $ 232,445     $ 205,275     11.9 %   13.2 %
Warehouse services   311,168       316,277       280,176     11.1 %   12.9 %
Total revenue $ 540,925     $ 548,722     $ 485,451     11.4 %   13.0 %
Global Warehouse contribution (NOI) $ 146,258     $ 147,958     $ 146,181     0.1 %   1.2 %
Global Warehouse margin   27.0 %     27.0 %     30.1 %   -307 bps   -315 bps
Units in thousands except per pallet data                  
Global Warehouse rent and storage metrics:                  
Average economic occupied pallets   4,174     n/a     3,973     5.1 %   n/a
Average physical occupied pallets   3,804     n/a     3,627     4.9 %   n/a
Average physical pallet positions   5,437     n/a     5,159     5.4 %   n/a
Economic occupancy percentage   76.8 %   n/a     77.0 %   -25 bps   n/a
Physical occupancy percentage   70.0 %   n/a     70.3 %   -34 bps   n/a
Total rent and storage revenue per economic occupied pallet $ 55.05     $ 55.70     $ 51.67     6.5 %   7.8 %
Total rent and storage revenue per physical occupied pallet $ 60.39     $ 61.10     $ 56.59     6.7 %   8.0 %
Global Warehouse services metrics:                  
Throughput pallets   9,859     n/a     9,532     3.4 %   n/a
Total warehouse services revenue per throughput pallet $ 31.56     $ 32.08     $ 29.39     7.4 %   9.1 %
                   
SAME STORE WAREHOUSE                  
Number of same store warehouses   215           215     n/a   n/a
Global Warehouse same store revenue:                  
Rent and storage $ 204,273     $ 206,643     $ 194,203     5.2 %   6.4 %
Warehouse services   279,116       283,913       268,591     3.9 %   5.7 %
Total same store revenue $ 483,389     $ 490,556     $ 462,794     4.5 %   6.0 %
Global Warehouse same store contribution (NOI) $ 139,056     $ 140,604     $ 145,893     (4.7) %   (3.6) %
Global Warehouse same store margin   28.8 %     28.7 %     31.5 %   -276 bps   -286 bps
Units in thousands except per pallet data                  
Global Warehouse same store rent and storage metrics:                  
Average economic occupied pallets   3,797       n/a     3,768     0.8 %   n/a
Average physical occupied pallets   3,456       n/a     3,442     0.4 %   n/a
Average physical pallet positions   4,892       n/a     4,869     0.5 %   n/a
Economic occupancy percentage   77.6 %     n/a     77.4 %   22 bps   n/a
Physical occupancy percentage   70.7 %     n/a     70.7 %   -4 bps   n/a
Same store rent and storage revenue per economic occupied pallet $ 53.80     $ 54.43     $ 51.55     4.4 %   5.6 %
Same store rent and storage revenue per physical occupied pallet $ 59.10     $ 59.79     $ 56.43     4.7 %   6.0 %
Global Warehouse same store services metrics:                  
Throughput pallets   8,893     n/a     8,947     (0.6) %   n/a
Same store warehouse services revenue per throughput pallet $ 31.38     $ 31.92     $ 30.02     4.5 %   6.3 %


  Three Months Ended March 31,   Change
Dollars in thousands 2022 actual   2022 constant currency (1)   2021 actual   Actual   Constant currency
                   
                   
NON-SAME STORE WAREHOUSE                  
Number of non-same store warehouses (3)   25           18     n/a   n/a
Global Warehouse non-same store revenue:                  
Rent and storage $ 25,484     $ 25,802     $ 11,072     n/r   n/r
Warehouse services   32,052       32,364       11,585     n/r   n/r
Total non-same store revenue $ 57,536     $ 58,166     $ 22,657     n/r   n/r
Global Warehouse non-same store contribution (NOI) $ 7,202     $ 7,354     $ 288     n/r   n/r
Global Warehouse non-same store margin   12.5 %     12.6 %     1.3 %   n/r   n/r
Units in thousands except per pallet data                  
Global Warehouse non-same store rent and storage metrics:                
Average economic occupied pallets   377     n/a     205     n/r   n/a
Average physical occupied pallets   348     n/a     186     n/r   n/a
Average physical pallet positions   545     n/a     290     n/r   n/a
Economic occupancy percentage   69.2 %   n/a     70.7 %   n/r   n/a
Physical occupancy percentage   63.9 %   n/a     64.0 %   n/r   n/a
Non-same store rent and storage revenue per economic occupied pallet $ 67.62     $ 68.46     $ 53.97     n/r   n/r
Non-same store rent and storage revenue per physical occupied pallet $ 73.19     $ 74.11     $ 59.64     n/r   n/r
Global Warehouse non-same store services metrics:                  
Throughput pallets   966     n/a     584     n/r   n/a
Non-same store warehouse services revenue per throughput pallet $ 33.19     $ 33.51     $ 19.83     n/r   n/r

(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.
(2) Total warehouse count of 240 includes two warehouses acquired through the Lago acquisition on November 15, 2021 (one leased facility from the Lago Cold Stores acquisition was exited upon expiration during the first quarter of 2022), one recently leased warehouse in Australia, one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman Stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021 and three warehouses acquired through the Liberty acquisition on March 1, 2021. The results of these acquisitions are reflected in the results above since date of ownership.
(3) Non-same store warehouse count of 25 one recently leased warehouse in Australia, one recently constructed facility in Denver that we purchased in November 2021, two warehouses acquired through the Lago Cold Stores acquisition on November 15, 2021 (one leased facility from the Lago Cold Stores acquisition was exited upon expiration during the first quarter of 2022), one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, three remaining warehouses acquired through the Liberty Freezers acquisition on March 1, 2021 (one leased facility from the Liberty Freezers acquisition was exited during 2021), 11 warehouses in expansion or redevelopment and one warehouse which we ceased operations within as it is being prepared for lease to a third-party. The results of these acquisitions are reflected in the results above since date of ownership.
(n/a = not applicable)
(n/r = not relevant)

Fixed Commitment Rent and Storage Revenue
As of March 31, 2022, $367.4 million of the Company’s annualized rent and storage revenue were derived from customers with fixed commitment storage contracts. This compares to $356.5 million at the end of the fourth quarter of 2021 and $307.4 million at the end of the first quarter of 2021. While the Company’s recent acquisitions had a lower percentage of fixed committed contracts as a percentage of rent and storage revenue, we continue to make progress on commercializing business under this type of arrangement. On a combined pro forma basis, assuming a full twelve months of acquisitions revenue, 39.8% of rent and storage revenue was generated from fixed commitment storage contracts.

Economic and Physical Occupancy
Contracts that contain fixed commitments are designed to ensure the Company’s customers have space available when needed. For the first quarter of 2022, economic occupancy for the total warehouse segment was 76.8% and warehouse segment same store pool was 77.6%, representing a 679 basis point and 696 basis point increase above physical occupancy, respectively. Economic occupancy for the total warehouse segment decreased 25 basis points, and the warehouse segment same store pool increased 22 basis points as compared to the first quarter of 2021. Occupancy reflects the impact from the timing of the Easter holiday year over year, offset by ongoing food supply chain disruption as manufacturers have not yet increased production to levels in excess of demand in order to meaningfully increase inventory holdings.

Real Estate Portfolio
As of March 31, 2022, the Company’s portfolio consists of 249 facilities. The Company ended the first quarter of 2022 with 240 facilities in its Global Warehouse segment portfolio and nine facilities in its Third-party managed segment. During the first quarter of 2022, we completed the planned exited of a leased facility upon its expiration, which was recently acquired in connection with the Lago Cold Stores acquisition. The same store population consists of 215 facilities for the quarter ended March 31, 2022. The remaining 25 non-same store population includes the 12 facilities that were acquired in connection with the Bowman Stores, Brighton, ColdCo, KMT Brrr!, Lago Cold Stores, Liberty Freezers and Newark acquisitions, the recently leased facility in Australia, 11 facilities in expansion or redevelopment and a facility in which we ceased operations during the first quarter of 2022, in order to prepare for leasing to a third-party.

Balance Sheet Activity and Liquidity
As of March 31, 2022, the Company had total liquidity of approximately $657.0 million, including cash and capacity on its revolving credit facility. Total debt outstanding was $3.2 billion (inclusive of $268.7 million of financing leases/sale lease-backs and exclusive of unamortized deferred financing fees), of which 83% 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 6.6x. The Company’s total debt outstanding includes $2.9 billion of real estate debt, which excludes sale-leaseback and capitalized lease obligations. The Company’s real estate debt has a remaining weighted average term of 5.8 years and carries a weighted average contractual interest rate of 2.88%. As of March 31, 2022, 72% of the Company’s total debt outstanding was at a fixed rate.

Dividend
On March 10, 2022, the Company’s Board of Trustees declared a dividend of $0.22 per share for the first quarter of 2022, which was paid on April 15, 2022 to common shareholders of record as of March 31, 2022.

2022 Outlook
The Company maintained its 2022 annual AFFO per share guidance to within the range of $1.00 - $1.10. Refer to page 38 of this Financial Supplement for the details of our annual guidance. The Company’s guidance is provided for informational purposes based on current plans and assumptions and 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, May 5, 2022 at 5:00 p.m. Eastern Time to discuss first quarter 2022 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 1-844-826-3033 or 1-412-317-5185. The telephone replay can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing the conference ID# 10165351. The telephone replay will be available starting shortly after the call until May 19, 2022.

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 249 temperature-controlled warehouses, with approximately 1.5 billion refrigerated cubic feet of storage, in North America, Europe, Asia-Pacific, and South America. 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; same store segment revenue and contribution (NOI); real estate debt and maintenance capital expenditures. Definitions of these non-GAAP metrics are included beginning on page 39, and reconciliations of these non-GAAP measures to their most comparable GAAP metrics are included herein. Each of the non-GAAP measures included in this report has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of the Company’s results calculated in accordance with GAAP. In addition, because not all companies use identical calculations, the Company’s presentation of non-GAAP measures in this report may not be comparable to similarly titled measures disclosed by other companies, including other REITs.

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: the impact of supply chain disruptions, including, among others, the impact on labor availability, raw material availability, manufacturing and food production; construction materials and transportation; uncertainties and risks related to public health crises, including the ongoing COVID-19 pandemic; adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry; rising interest rates and inflation in operating costs, including as a result of the COVID-19 pandemic; general economic conditions; labor and power costs; labor shortages; risks associated with the ownership of real estate generally and temperature-controlled warehouses in particular; acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements; our failure to realize the intended benefits from our recent acquisitions, and including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions; 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; a failure of our information technology systems, systems conversions and integrations, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions or loss of confidential information; risks related to privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations; defaults or non-renewals of significant customer contracts, including as a result of the ongoing COVID-19 pandemic; uncertainty of revenues, given the nature of our customer contracts; 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; 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; 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; changes in applicable governmental regulations and tax legislation, including in the international markets; geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine; additional risks with respect to the addition of European operations and properties; changes in real estate and zoning laws and increases in real property tax rates; our relationship with our associates, 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; uninsured losses or losses in excess of our insurance coverage; the potential liabilities, costs and regulatory impacts associated with our in-house trucking services and the potential disruptions associated with our use of third-party trucking service providers to provide transportation services to our customers; 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; and the potential dilutive effect of our common share offerings.

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, 2021, 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.

Contacts:

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


Americold Realty Trust and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
  March 31,   December 31,
    2022       2021  
Assets      
Property, buildings and equipment:      
Land $ 811,442     $ 807,495  
Buildings and improvements   4,163,054       4,152,763  
Machinery and equipment   1,361,741       1,352,399  
Assets under construction   512,694       450,153  
    6,848,931       6,762,810  
Accumulated depreciation   (1,708,031 )     (1,634,909 )
Property, buildings and equipment – net   5,140,900       5,127,901  
       
Operating lease right-of-use assets   369,706       377,536  
Accumulated depreciation – operating leases   (61,359 )     (57,483 )
Operating leases – net   308,347       320,053  
       
Financing leases:      
Buildings and improvements   13,557       13,552  
Machinery and equipment   141,443       146,341  
    155,000       159,893  
Accumulated depreciation – financing leases   (56,471 )     (58,165 )
Financing leases – net   98,529       101,728  
Cash, cash equivalents and restricted cash   50,965       82,958  
Accounts receivable – net of allowance of $20,725 and $18,755 at March 31, 2022 and December 31, 2021, respectively   419,348       380,014  
Identifiable intangible assets – net   968,099       980,966  
Goodwill   1,068,479       1,072,980  
Investments in partially owned entities   43,526       37,458  
Other assets   109,676       112,139  
Total assets $ 8,207,869     $ 8,216,197  
Liabilities and equity      
Liabilities:      
Borrowings under revolving line of credit $ 513,824     $ 399,314  
Accounts payable and accrued expenses   535,617       559,412  
Mortgage notes, senior unsecured notes and term loans – net of deferred financing costs of $10,492 and $11,050 in the aggregate, at March 31, 2022 and December 31, 2021, respectively   2,422,570       2,443,806  
Sale-leaseback financing obligations   177,305       178,817  
Financing lease obligations   91,436       97,633  
Operating lease obligations   291,050       301,765  
Unearned revenue   28,349       26,143  
Pension and postretirement benefits   3,057       2,843  
Deferred tax liability – net   165,331       169,209  
Multiemployer pension plan withdrawal liability   8,091       8,179  
Total liabilities   4,236,630       4,187,121  
Equity      
Shareholders’ equity:      
Common shares of beneficial interest, $0.01 par value – 500,000,000 authorized shares; 268,672,465 and 268,282,592 issued and outstanding at March 31, 2022 and December 31, 2021, respectively   2,687       2,683  
Paid-in capital   5,177,642       5,171,690  
Accumulated deficit and distributions in excess of net earnings   (1,234,875 )     (1,157,888 )
Accumulated other comprehensive income (loss)   15,926       4,522  
Total shareholders’ equity   3,961,380       4,021,007  
Noncontrolling interests:      
Noncontrolling interests in operating partnership   9,859       8,069  
Total equity   3,971,239       4,029,076  
       
Total liabilities and equity $ 8,207,869     $ 8,216,197  


Americold Realty Trust and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
  Three Months Ended March 31,
    2022       2021  
Revenues:      
Rent, storage and warehouse services $ 540,925     $ 485,451  
Third-party managed services   85,860       73,072  
Transportation services   78,910       76,272  
Total revenues   705,695       634,795  
Operating expenses:      
Rent, storage and warehouse services cost of operations   394,667       339,270  
Third-party managed services cost of operations   82,359       68,690  
Transportation services cost of operations   70,381       69,569  
Depreciation and amortization   82,620       77,211  
Selling, general and administrative   57,602       45,052  
Acquisition, litigation and other, net   10,075       20,751  
Total operating expenses   697,704       620,543  
       
Operating income   7,991       14,252  
       
Other (expense) income:      
Interest expense   (25,773 )     (25,956 )
Loss on debt extinguishment, modifications and termination of derivative instruments   (616 )     (3,499 )
Other, net   245       176  
Loss before income tax benefit (expense)   (18,153 )     (15,027 )
Income tax benefit (expense)      
Current   (1,181 )     (1,211 )
Deferred   1,889       2,002  
Total income tax benefit (expense)   708       791  
       
Net loss $ (17,445 )   $ (14,236 )
Net (loss) income attributable to non controlling interests   (38 )     178  
Net loss attributable to Americold Realty Trust $ (17,407 )   $ (14,414 )
       
Weighted average common shares outstanding – basic   269,164       252,938  
Weighted average common shares outstanding – diluted   269,999       252,938  
       
Net loss per common share of beneficial interest - basic $ (0.06 )   $ (0.06 )
Net loss per common share of beneficial interest - diluted $ (0.06 )   $ (0.06 )


Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO, and AFFO
(In thousands, except per share amounts - unaudited)
  Three Months Ended
  Q1 22 Q4 21 Q3 21 Q2 21 Q1 21
Net (loss) income $ (17,445 ) $ (7,982 ) $ 5,308   $ (13,399 ) $ (14,236 )
Adjustments:          
Real estate related depreciation   52,200     54,816     48,217     44,871     52,280  
Net loss (gain) on asset disposals   63     65     (1 )   (13 )   (39 )
Impairment charges on real estate assets           224     1,528      
Our share of reconciling items related to partially owned entities   1,033     822     463     861     266  
NAREIT Funds from operations $ 35,851   $ 47,721   $ 54,211   $ 33,848   $ 38,271  
Adjustments:          
Net (gain) loss on sale of non-real estate assets   (235 )   861     (171 )   (304 )   (119 )
Acquisition, litigation and other   10,075     20,567     6,338     3,922     20,751  
Share-based compensation expense, IPO grants                   163  
Loss on debt extinguishment, modifications and termination of derivative instruments   616     638     627     925     3,499  
Foreign currency exchange (gain) loss   (325 )   294     349     140     (173 )
Our share of reconciling items related to partially owned entities   347     74     122     89     154  
Core FFO applicable to common shareholders $ 46,329   $ 70,155   $ 61,476   $ 38,620   $ 62,546  
Adjustments:          
Amortization of deferred financing costs and pension withdrawal liability   1,146     1,104     1,088     1,085     1,148  
Non-real estate asset impairment           1,560          
Amortization of below/above market leases   508     843     1,017     362     39  
Straight-line net rent   204     (302 )   411     (170 )   (155 )
Deferred income tax (benefit) expense   (1,889 )   (10,151 )   (3,562 )   6,568     (2,002 )
Share-based compensation expense, excluding IPO grants   8,349     9,112     4,291     5,467     4,867  
Non-real estate depreciation and amortization   30,420     32,785     22,352     39,588     24,931  
Maintenance capital expenditures(a)   (16,106 )   (20,808 )   (18,938 )   (20,488 )   (15,731 )
Our share of reconciling items related to partially owned entities   (107 )   (502 )   (100 )   711     278  
Adjusted FFO applicable to common shareholders $ 68,854   $ 82,236   $ 69,595   $ 71,743   $ 75,921  


Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO, and AFFO (continued)
(In thousands except per share amounts - unaudited)
  Three Months Ended
  Q1 22 Q4 21 Q3 21 Q2 21 Q1 21
           
NAREIT Funds from operations $ 35,851 $ 47,721 $ 54,211 $ 33,848 $ 38,271
Core FFO applicable to common shareholders $ 46,329 $ 70,155 $ 61,476 $ 38,620 $ 62,546
Adjusted FFO applicable to common shareholders $ 68,854 $ 82,236 $ 69,595 $ 71,743 $ 75,921
           
Reconciliation of weighted average shares:          
Weighted average basic shares for net income calculation   269,164   267,499   261,865   253,213   252,938
Dilutive stock options, unvested restricted stock units, equity forward contracts   835   680   685   3,544   3,226
Weighted average dilutive shares   269,999   268,179   262,550   256,757   256,164
           
NAREIT FFO - basic per share $ 0.13 $ 0.18 $ 0.21 $ 0.13 $ 0.15
NAREIT FFO - diluted per share $ 0.13 $ 0.18 $ 0.21 $ 0.13 $ 0.15
           
Core FFO - basic per share $ 0.17 $ 0.26 $ 0.23 $ 0.15 $ 0.25
Core FFO - diluted per share $ 0.17 $ 0.26 $ 0.23 $ 0.15 $ 0.24
           
Adjusted FFO - basic per share $ 0.26 $ 0.31 $ 0.27 $ 0.28 $ 0.30
Adjusted FFO - diluted per share $ 0.26 $ 0.31 $ 0.27 $ 0.28 $ 0.30


Reconciliation of Net (Loss) Income to EBITDA, NAREIT EBITDAre, and Core EBITDA  
(In thousands - unaudited)  
  Three Months Ended   Trailing
Twelve
Months
Ended
  Q1 22 Q4 21 Q3 21 Q2 21 Q1 21   Q1 2022
Net (loss) income $ (17,445 ) $ (7,982 ) $ 5,308   $ (13,399 ) $ (14,236 )   $ (33,518 )
Adjustments:              
Interest expense   25,773     21,339     25,303     26,579     25,956       98,994  
Income tax (benefit) expense   (708 )   (9,526 )   (226 )   8,974     (791 )     (1,486 )
Depreciation and amortization   82,620     87,601     70,569     84,459     77,211       325,249  
EBITDA $ 90,240   $ 91,432   $ 100,954   $ 106,613   $ 88,140     $ 389,239  
Adjustments:              
Adjustment to reflect share of EBITDAre of partially owned entities   3,198     4,625     1,854     1,838     649       11,515  
NAREIT EBITDAre $ 93,438   $ 96,057   $ 102,808   $ 108,451   $ 88,789     $ 400,754  
Adjustments:              
Acquisition, litigation and other   10,075     20,567     6,338     3,922     20,751       40,902  
Loss from investments in partially owned entities   2,112     753     490     61     700       3,416  
Asset impairment           1,784     1,528           3,312  
Foreign currency exchange (gain) loss   (325 )   294     349     140     (173 )     458  
Share-based compensation expense   8,349     9,112     4,291     5,467     5,030       27,219  
Loss on debt extinguishment, modifications and termination of derivative instruments   616     638     627     925     3,499       2,806  
(Gain) loss on real estate and other asset disposals   (172 )   926     (172 )   (317 )   (158 )     265  
Reduction in EBITDAre from partially owned entities   (3,198 )   (4,625 )   (1,854 )   (1,838 )   (649 )     (11,515 )
Core EBITDA $ 110,895   $ 123,722   $ 114,661   $ 118,339   $ 117,789     $ 467,617  


(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.


Revenue and Contribution (NOI) by Segment
(in thousands - unaudited)
  Three Months Ended March 31,
    2022       2021  
Segment revenues:      
Warehouse $ 540,925     $ 485,451  
Third-party managed   85,860       73,072  
Transportation   78,910       76,272  
Total revenues   705,695       634,795  
       
Segment contribution (NOI):      
Warehouse   146,258       146,181  
Third-party managed   3,501       4,382  
Transportation   8,529       6,703  
Total segment contribution (NOI)   158,288       157,266  
       
Reconciling items:      
Depreciation and amortization   (82,620 )     (77,211 )
Selling, general and administrative   (57,602 )     (45,052 )
Acquisition, litigation and other, net   (10,075 )     (20,751 )
Interest expense   (25,773 )     (25,956 )
Loss on debt extinguishment, modifications and termination of derivative instruments   (616 )     (3,499 )
Other, net   245       176  
Loss before income tax benefit (expense) $ (18,153 )   $ (15,027 )

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.

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, real estate asset impairment and our share of reconciling items for 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, acquisition, litigation and other, net, share-based compensation expense for the IPO retention grants, loss on debt extinguishment, modifications and termination of derivative instruments 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 joint ventures are strategic partnerships 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 deferred financing costs and pension withdrawal liability, non-real estate asset impairment, amortization of above or below market leases, straight-line net rent, provision or benefit from deferred income taxes, share-based compensation expense, excluding IPO grants, non-real estate depreciation and amortization, and maintenance capital expenditures. We also adjust for AFFO attributable to our share 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 and amortization and adjustment to reflect our share of EBITDAre of partially owned entities. 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, net, loss or income from investments in partially owned entities, asset impairment, foreign currency exchange gain or loss, share-based compensation expense, loss on debt extinguishment, modifications and termination of derivative instruments, loss or gain on real estate and asset disposals 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 and amortization are non-cash charges, the assets being depreciated 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 19 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.
 
We define our “same store” population once a year at the beginning of the current calendar year. Our same store population includes properties that were owned or leased for the entirety of two comparable periods and that have reported at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year. We define “normalized operations” as properties that have been open for operation or lease after development or significant modification, including the expansion of a warehouse footprint or a warehouse rehabilitation subsequent to an event, such as a natural disaster or similar event causing disruption to operations. In addition, our definition of “normalized operations” takes into account changes in the ownership structure (e.g., purchase of acquired properties will be included in the “same store” population if owned by us as of the first business day of each year, of the prior calendar year and still owned by us as of the end of the current reporting period, unless the property is under development). The “same store” pool is also adjusted to remove properties that were sold or entering development subsequent to the beginning of the current calendar year. As such, the “same store” population for the period ended March 31, 2022 includes all properties that we owned at January 3, which had both been owned and had reached “normalized operations” by January 3, 2022.
 
We calculate “same store revenue” as revenues for the same store population. We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other, net and gain or loss on sale of real estate). In order to derive an appropriate measure of period-to-period operating performance, we also calculate our same store contribution (NOI) on a constant currency basis to remove the effects of foreign currency exchange rate movements by using the comparable prior period exchange rate to translate from local currency into U.S. dollars for both periods. We evaluate the performance of the warehouses we own or lease using a “same store” analysis, and we believe that same store contribution (NOI) is helpful to investors as a supplemental performance measure because it includes the operating performance from the population of properties that is consistent from period to period and also on a constant currency basis, thereby eliminating the effects of changes in the composition of our warehouse portfolio and currency fluctuations on performance measures. Same store contribution (NOI) is not a measurement of financial performance under U.S. GAAP. In addition, other companies providing temperature-controlled warehouse storage and handling and other warehouse services may not define same store or calculate same store contribution (NOI) in a manner consistent with our definition or calculation. Same store contribution (NOI) should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. The tables beginning on page 30 provides reconciliations for same store revenues and same store contribution (NOI).
 
We define “maintenance capital expenditures” as 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. 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. Maintenance capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building or costs which are incurred to bring a building up to Americold’s operating standards. See the tables on page 28 for additional information regarding our maintenance capital expenditures.
 
We define “total real estate debt” as the aggregate of the following: mortgage notes, senior unsecured notes, term loans and borrowings under our revolving line of credit. We define “total debt outstanding” as the aggregate of the following: total real estate debt, sale-leaseback financing obligations and financing lease obligations. See the tables on page 20 for additional information regarding our indebtedness.
 
All quarterly amounts and non-GAAP disclosures within this filing shall be deemed unaudited.

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Source: Americold Realty Trust
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