Americold Realty Trust Announces Second Quarter 2019 Results

ATLANTA–(BUSINESS WIRE)–Americold Realty Trust (NYSE: COLD) (the “Company”), the world’s largest publicly traded REIT focused on the ownership, operation and development of temperature-controlled warehouses, today announced financial and operating results for the second quarter ended June 30, 2019.

Fred Boehler, President and Chief Executive Officer of Americold Realty Trust, stated, “Due to the strength of our core operations, the second quarter was quite strong as Global Warehouse same store revenue grew 3.4% and same store segment NOI grew by 6.2%, both on a constant currency basis. At the same time, our team completed $1.3 billion of acquisitions during the second quarter, consisting of Cloverleaf Cold Storage and Lanier Cold Storage, and made rapid progress on the realization of synergies as we integrate all 24 facilities into our portfolio. We also made significant progress on our development pipeline, with groundbreaking at our builds in Atlanta and Savannah as well as three expansion projects associated with Cloverleaf. Finally, we successfully accessed the debt and equity markets to match fund this expansion activity.

As we look ahead, the supply and demand dynamics within our industry remain consistent and favorable to Americold. As demonstrated this quarter, we believe we can continue to leverage our scale and our Americold Operating System to enhance the value of each facility we acquire. Similarly, we expect to use our platform to take advantage of burgeoning opportunities within the market, including partnering with our customers as they pursue omni-channel distribution models. We remain committed to driving consistent long term growth in order to more efficiently and effectively serve current and new customers, and to continue to produce stable cash flows and create value for our shareholders.”

Second Quarter 2019 Highlights

  • Total revenue of $438.5 million, an 11.1% increase over the same quarter last year.
  • Total NOI of $121.1 million, a 23.3% increase over the same quarter last year.
  • Net income of $4.9 million, or $0.03 per diluted common share, compared to net income of $29.4 million in the same quarter last year.
  • Core EBITDA of $93.6 million, a 27.1% increase over the same quarter last year, or a 28.6% increase on a constant currency basis.
  • Core Funds from Operations (“Core FFO”) of $56.1 million, or $0.30 per diluted common share, compared to $43.1 million in the same quarter last year.
  • Adjusted Funds from Operations (“AFFO”) of $58.1 million, or $0.31 per diluted common share, compared to $39.8 million in the same quarter last year.
  • Global Warehouse segment revenue of $338.2 million, a 17.6% increase over the same quarter last year.
  • Global Warehouse segment NOI of $113.8 million, a 25.3% increase over the same quarter last year.
  • Global Warehouse segment same store revenue grew 1.5%, or 3.4% on a constant currency basis, with same store segment NOI improving 4.9%, or 6.2% on a constant currency basis.
  • Completed construction and continued to onboard customers at the Company’s Rochelle, IL expansion project.
  • Acquired privately-held Cloverleaf Cold Storage for $1.25 billion and Lanier Cold Storage for $82.6 million.
  • Announced and broke ground on a planned expansion and redevelopment program at the Company’s existing Atlanta major market campus. The Company also broke ground at its previously announced Savannah development project and reviewed and commenced work on three expansion projects associated with the Cloverleaf acquistion at Chesapeake, Virginia, Little Rock, Arkansas, and Columbus, Ohio.
  • Completed a follow-on public offering for net proceeds of approximately $1.21 billion, and entered into a forward sale agreement for 8,250,000 shares.
  • Closed an institutional private placement offering of $350 million of senior unsecured notes at an interest rate of 4.10% and a duration of 10.7 years.
  • Completed a land purchase in Sydney, Australia for $45.5 million, of which $4.4 million was paid as an initial deposit in 2018.

Year to Date 2019 Highlights

  • Total revenue increased 5.8% to $831.5 million.
  • Total NOI increased 12.4% to $219.8 million.
  • Net income of $0.3 million, or $0.00 per diluted common share, compared to net income of $20.8 million for the same period of the prior year.
  • Core EBITDA increased 13.3% to $164.7 million for the year to date 2019, or a 14.9% increase on a constant currency basis.
  • Core FFO of $96.0 million, or $0.57 per diluted common share for the year to date 2019.
  • AFFO of $102.4 million, or $0.60 per diluted common share for the year to date 2019.
  • Global Warehouse segment revenue of $627.8 million, a 9.3% increase over the prior period.
  • Global Warehouse segment NOI increased 13.4% to $204.6 million for the year to date 2019.
  • Global Warehouse segment same store revenue grew 1.0%, or 3.1% on a constant currency basis, with same store segment NOI improving 2.6%, or 3.9% on a constant currency basis, for the year to date 2019.

Second Quarter 2019 Total Company Financial Results

Total revenue for the second quarter of 2019 was $438.5 million, a 11.1% increase from the same quarter of the prior year. This growth was driven by the incremental revenue generated from two months of ownership of the Cloverleaf and Lanier portfolios during the second quarter of 2019 totalling $43.2 million, as well as improvements in contractual rate escalations, the later timing of the Easter holiday in 2019, the stabilization of the Clearfield, UT facility, the opening of the build-to-suit facility in Middleboro, MA, the incremental revenue associated with the Portfresh acquistion in January 2019, and the completion of the Rochelle, IL expansion. These factors were partially offset by unfavorable foreign currency exchange rates.

For the second quarter of 2019, the Company reported net income of $4.9 million, or $0.03 per diluted share, compared to $29.4 million for the same quarter of the prior year. Net income for the current quarter included the impact of costs associated with recent acquisition activity and the Company’s subsequent integration effort to realize synergies. Net income for the second quarter of 2018 included an $8.4 million gain from the sale of its Thomasville, GA facility.

Total NOI for the second quarter of 2019 was $121.1 million, an increase of 23.3% from the same quarter of the prior year.

Core EBITDA was $93.6 million for the second quarter of 2019, compared to $73.6 million for the same quarter of the prior year. This reflects a 27.1% increase over prior year, or 28.6% on a constant currency basis, largely impacted by increased Core EBITDA from acquisitions. This growth was offset by unfavorable foreign currency exchange rates and the impact of the benefit received in the second quarter of 2018 related to workers’ compensation. As a result, Core EBITDA margin increased by 269.5 basis points to 21.4%.

For the second quarter of 2019, Core FFO was $56.1 million, or $0.30 per diluted share, compared to $43.1 million for same quarter of the prior year. The year-over-year increase is driven primarily by increased FFO as a result of acquisitions.

For the second quarter of 2019, AFFO was $58.1 million, or $0.31 per diluted share, compared to $39.8 million for same quarter of the prior year. AFFO excludes certain expenses and income items that do not represent core expenses and income streams.

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

Second Quarter 2019 Global Warehouse Segment Results

For the second quarter of 2019, Global Warehouse segment revenues were $338.2 million, an increase of $50.5 million, or 17.6%, compared to $287.7 million for the second quarter of 2018. This growth was driven by the incremental revenue generated from two months of ownership of the Cloverleaf and Lanier portfolios, which totaled $40.0 million. This increase was also impacted by the same revenue growth factors mentioned above.

Warehouse segment NOI was $113.8 million, or 33.7% of segment revenue, for the second quarter of 2019, compared to $90.8 million, or 31.6% of segment revenue, for the prior year. This represents a 25.3% improvement in segment profitability over the second quarter of 2018 and an expansion of 208 basis points in segment margin period-over-period. The year-over-year growth was driven by incremental NOI of $15.3 million generated from acquisitions that closed in the second quarter of 2019, the aforementioned revenue trends, and operating efficiency gains driven by power savings, labor cost controls and the leveraging of the Company’s fixed expenses. This growth was offset by unfavorable foreign currency exchange rates and the impact of the $1.0 million benefit received in the second quarter of 2018 related to workers’ compensation. With respect to the segment margin, 60 basis points of the segment margin expansion can be attributed to acquisitions that closed in the second quarter of 2019.

The following tables summarize the global warehouse same store financial results and metrics for the three and six months ended June 30, 2019 and 2018:

Global Warehouse – Same Store

Three Months ended June 30,

 

Change

Dollars in thousands

2019 actual

 

2019 constant

currency(1)

 

2018 actual

 

Actual

 

Constant

currency

Number of same store sites

138

 

 

 

138

 

n/a

 

n/a

Global Warehouse same store revenues:

 

 

 

 

 

 

 

 

 

Rent and storage

$

123,298

 

 

$

125,336

 

 

$

122,903

 

 

0.3%

 

2.0%

Warehouse services

164,209

 

 

167,510

 

 

160,287

 

 

2.4%

 

4.5%

Total same store revenues

$

287,507

 

 

$

292,846

 

 

$

283,190

 

 

1.5%

 

3.4%

Global Warehouse same store contribution (NOI)

$

94,869

 

 

$

96,057

 

 

$

90,408

 

 

4.9%

 

6.2%

Global Warehouse same store margin

33.0

%

 

32.8

%

 

31.9

%

 

107 bps

 

88 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse same store rent and storage:

 

 

 

 

 

 

 

 

 

Occupancy

 

 

 

 

 

 

 

 

 

Average physical occupied pallets

2,235

 

 

2,235

 

 

2,333

 

 

(4.2)%

 

n/a

Average economic occupied pallets

2,366

 

 

2,366

 

 

2,434

 

 

(2.8)%

 

n/a

Average physical pallet positions

3,084

 

 

3,084

 

 

3,112

 

 

(0.9)%

 

n/a

Physical occupancy percentage

72.5

%

 

72.5

%

 

75.0

%

 

-249 bps

 

n/a

Economic occupancy percentage

76.7

%

 

76.7

%

 

78.2

%

 

-148 bps

 

n/a

Same store rent and storage revenues per physical occupied pallet

$

55.16

 

 

$

56.07

 

 

$

52.67

 

 

4.7%

 

6.4%

Same store rent and storage revenues per economic occupied pallet

$

52.11

 

 

$

52.97

 

 

$

50.50

 

 

3.2%

 

4.9%

Global Warehouse same store services:

 

 

 

 

 

 

 

 

 

Throughput pallets

6,440

 

 

6,440

 

 

6,521

 

 

(1.2)%

 

n/a

Same store warehouse services revenues per throughput pallet

$

25.50

 

 

$

26.01

 

 

$

24.58

 

 

3.7%

 

n/a

 

n/a = not applicable

 
 
Global Warehouse – Same Store

Six Months Ended June 30,

 

Change

Dollars in thousands

2019 actual

 

2019 constant

currency(1)

 

2018 actual

 

Actual

 

Constant

currency

Number of same store sites

137

 

 

 

137

 

n/a

 

n/a

Global Warehouse same store revenues:

 

 

 

 

 

 

 

 

 

Rent and storage

$

245,148

 

 

$

249,530

 

 

$

244,576

 

 

0.2%

 

2.0%

Warehouse services

323,663

 

 

331,128

 

 

318,798

 

 

1.5%

 

3.9%

Total same store revenues

$

568,811

 

 

$

580,658

 

 

$

563,374

 

 

1.0%

 

3.1%

Global Warehouse same store contribution (NOI)

$

182,595

 

 

$

184,964

 

 

$

177,983

 

 

2.6%

 

3.9%

Global Warehouse same store margin

32.1

%

 

31.9

%

 

31.6

%

 

51 bps

 

26 bps

Units in thousands except per pallet data

 

 

 

 

 

 

 

 

 

Global Warehouse same store rent and storage:

 

 

 

 

 

 

 

 

 

Occupancy

 

 

 

 

 

 

 

 

 

Average physical occupied pallets

2,237

 

 

2,237

 

 

2,331

 

 

(4.0)%

 

n/a

Average economic occupied pallets

2,367

 

 

2,367

 

 

2,436

 

 

(2.9)%

 

n/a

Average physical pallet positions

3,055

 

 

3,055

 

 

3,077

 

 

(0.7)%

 

n/a

Physical occupancy percentage

73.2

%

 

73.2

%

 

75.8

%

 

-255 bps

 

n/a

Economic occupancy percentage

77.5

%

 

77.5

%

 

79.2

%

 

-172 bps

 

n/a

Same store rent and storage revenues per physical occupied pallet

$

109.60

 

 

$

111.56

 

 

$

104.93

 

 

4.5%

 

6.3%

Same store rent and storage revenues per economic occupied pallet

$

103.58

 

 

$

105.43

 

 

$

100.39

 

 

3.2%

 

5.0%

Global Warehouse same store services:

 

 

 

 

 

 

 

 

 

Throughput pallets

12,814

 

 

12,814

 

 

13,070

 

 

(2.0)%

 

n/a

Same store warehouse services revenues per throughput pallet

$

25.26

 

 

$

25.84

 

 

$

24.39

 

 

3.6%

 

n/a

(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

For the second quarter of 2019, $232 million of the Company’s rent and storage revenues were derived from customers with fixed commitment storage contracts. This compares to $222 million for the first quarter of 2019 and $203 million for the second quarter of 2018. 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, 38.3% of rent and storage revenues were 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. At times, these customers may be paying for space that is not physically occupied. For the second quarter of 2019, economic occupancy for the total warehouse segment was 76.8% and warehouse segment same store pool was 76.7%, representing a 371 basis point and 424 basis point increase above physical occupancy, respectively. For the second quarter of 2019, physical occupancy for the total warehouse segment was 73.0% and warehouse segment same store pool was 72.5%.

Real Estate Portfolio

The Company’s total real estate portfolio consists of 178 facilities as of June 30, 2019. This includes the 21 warehouse facilities and one managed facility acquired from Cloverleaf, and two warehouse facilities acquired from Lanier, both during the second quarter. The Company ended the second quarter of 2019 with 166 facilities in its Global Warehouse segment portfolio. The Company’s same store population consists of 138 facilities as of June 30, 2019. During the second quarter of 2019, one recently stabilized facility was moved into the same store pool, and the total number of warehouses reflects recent acquisition activity as well as the sale of the Company’s last remaining idle asset. The remaining twenty-eight facilities include the 23 facilities in the warehouse segment that were recently acquired in the second quarter of 2019, or are in various stages of operational stabilization and are classified as “non-same store”.

Balance Sheet Activity and Liquidity

At June 30, 2019, the Company had total liquidity of approximately $1.5 billion, including cash and capacity on its revolving credit facility and $138 million and $236 million of net proceeds from its September 2018 and April 2019 equity forwards, respectively. Total debt outstanding was $1.90 billion (inclusive of $172.7 million of capital leases/sale lease-backs and exclusive of unamortized deferred financing fees), of which 75% was in an unsecured structure. The Company has no material debt maturities until 2022, assuming the one-year extension option is exercised on its revolver. At quarter end, its net debt to pro forma Core EBITDA was approximately 4.1x. Of the Company’s total debt outstanding, $1.73 billion relates to real estate debt, which excludes sale-leaseback and capitalized lease obligations. The Company’s real estate debt has a weighted average term of 6.9 years and carries a weighted average contractual interest rate of 4.49%. As of June 30, 2019, 80% of the Company’s total debt outstanding was at a fixed rate, inclusive of the $100 million interest rate swap on its term loan that was entered into during the first quarter of 2019.

Dividend

On May 23, 2019, the Company’s Board of Trustees declared a dividend of $0.20 per share for the second quarter of 2019, which was paid on July 15, 2019 to common shareholders of record as of June 28, 2019.

Highlights Subsequent to Quarter End

  • Extended the six million share equity forward issued in September 2018 by an additional 12 months, with a new outstanding settlement date of no later than September 2020.

2019 Outlook

The Company has revised select 2019 guidance based upon the impact of acquisitions, announced development, and capital markets activity completed subsequent to quarter end:

  • Global warehouse segment same store revenue growth to range between 2 and 4 percent on a constant currency basis and same store NOI growth to be 100 to 200 basis points higher than the associated revenue.
  • Selling, general, and administrative expense, as a percentage of total revenue, is expected to range between 7.0 and 7.2 percent.
  • Total recurring maintenance capital expenditures is expected in the range of $56 to $66 million.
  • Total expansion and development capital expenditures is expected to aggregate in a range of $220 to $250 million, which includes spending related to the Company’s announced projects in Chicago, IL, Savannah, GA, Australia, and Atlanta, GA as well as the three expansions associated with the Cloverleaf acquisition.
  • Anticipated AFFO payout ratio of 65 to 68 percent.
  • Full year weighted average diluted share count of 180 to 184 million shares.

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

Investor Webcast and Conference Call

The Company will hold a webcast and conference call on Thursday, August 8, 2019 at 5:00 p.m. Eastern Time to discuss second quarter 2019 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# 13692085. The telephone replay will be available starting shortly after the call until August 22, 2019.

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 and development of temperature-controlled warehouses. Based in Atlanta, Georgia, Americold owns and operates 178 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 (loss) 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 (loss) 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 adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry; general economic conditions; risks associated with the ownership of real estate and temperature-controlled warehouses in particular; defaults or non-renewals of contracts with customers; potential bankruptcy or insolvency of our customers; uncertainty of revenues, given the nature of our customer contracts; increased interest rates and operating costs; our failure to obtain necessary outside financing; risks related to, or restrictions contained in, our debt financing; decreased storage rates or increased vacancy rates; risks related to current and potential international operations and properties; 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 or developed properties or businesses, including but not limited to: Cloverleaf Cold Storage, Lanier Cold Storage and PortFresh Holdings, LLC; difficulties in identifying properties to be acquired and completing acquisitions; acquisition risks, including the failure of such acquisitions to perform in accordance with projections; risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns in respect thereof; difficulties in expanding our operations into new markets, including international markets; our failure to maintain our status as a REIT; our operating partnership’s failure to qualify as a partnership for federal income tax purposes; uncertainties and risks related to natural disasters and global climate change; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us; financial market fluctuations; actions by our competitors and their increasing ability to compete with us; labor and power costs; changes in real estate and zoning laws and increases in real property tax rates; the competitive environment in which we operate; our relationship with our employees, including the occurrence of any work stoppages or any disputes under our collective bargaining agreements; liabilities as a result of our participation in multi-employer pension plans; losses in excess of our insurance coverage; the cost and time requirements as a result of our operation as a publicly traded REIT; risks related to joint venture investments, including as a result of our lack of control of such investments; changes in foreign currency exchange rates; the potential dilutive effect of our common share offerings; 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.

Contacts

Americold Realty Trust

Investor Relations

Telephone: 678-459-1959

Email: investor.relations@americold.com

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