Americold Realty Trust, Inc. (NYSE: COLD) — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Americold is a REIT focused on temperature-controlled warehouses and related logistics, operating 245 warehouses with approximately 1.5 billion cubic feet of capacity.
Financial performance
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $2.673 billion | $2.915 billion |
| Operating income (loss) | $(108.3) million | $87.9 million |
| Net income (loss) | $(336.3) million | $(19.5) million |
| Net loss per diluted share | $(1.22) | $(0.07) |
| Cash from operating activities | $366.2 million | $300.0 million |
| Cash used in investing activities | $(357.1) million | $(348.5) million |
| Cash from (used in) financing activities | $(0.3) million | $23.3 million |
- Revenue and segment contribution: Warehouse revenue was $2.391 billion, with contribution NOI of $722.6 million and a 30.2% margin, up from $636.2 million and 27.6%. Transportation revenue was $239.7 million and contribution NOI was $42.0 million. Third-party managed revenue fell to $42.6 million from $298.4 million, primarily following the prior-year exit from a major customer’s operations.
- Warehouse occupancy and pricing: Same-store economic occupancy averaged 84.3%, up 433 basis points; physical occupancy averaged 76.5%. Same-store rent and storage revenue grew 9.7% on a constant-currency basis, while throughput pallets declined 6.9%.
- Debt and liquidity: Total debt and debt-like obligations were $3.263 billion; cash, cash equivalents and restricted cash were $60.4 million. Net debt was $3.203 billion, and net debt to pro forma Core EBITDA was 5.6x, compared with 6.6x in 2022. The company reported an effective debt rate of 4.02%, with 88% of debt fixed-rate, and a 5.3-year weighted-average maturity assuming extension options. It stated that funding sources were adequate for short- and long-term needs.
- REIT measures: Core FFO was $277.7 million and Adjusted FFO was $351.6 million. These are non-GAAP measures and should be considered alongside GAAP results and cash flows.
- Capital returns: Distributions paid were $242.2 million. The filing states a current annualized distribution of $0.88 per share; future distributions remain at the board’s discretion. The company issued 13.2 million shares through its ATM program for net proceeds of $412.6 million, used to repay revolver borrowings.
Changes versus 2022
- Total revenue declined about 8.3%, largely because of the third-party managed customer transition and lower transportation revenue; warehouse revenue increased 3.8% on a reported basis.
- Warehouse contribution NOI rose 13.6% and its margin expanded 259 basis points, supported by pricing, rate escalations and improved economic occupancy. Higher labor, insurance, taxes and maintenance costs partly offset these gains.
- Transportation contribution NOI declined 11.3%; management cited the shift to a third-party logistics model in the U.K., softer demand and cyber-related order cancellations. Margin nevertheless improved to 17.5% from 15.1%.
- Operating and net results were sharply lower, principally reflecting a $236.5 million Europe warehouse goodwill impairment and significant Comfrio-related charges. Interest expense increased 20.6% to $140.1 million, reflecting higher rates and average borrowings.
- Operating cash flow increased 22.1% to $366.2 million, which management attributed mainly to higher warehouse contribution and improved receivables collection.
Outlook, commentary and notable risks
- Outlook: The filing provides no specific 2024 revenue, earnings or FFO guidance. Management expects Project Orion, a global technology and process transformation, to be substantially complete within three years; estimated total investment is approximately $100 million. It expects benefits including process efficiencies, improved pricing analytics, cost reductions and working-capital improvements.
- Cybersecurity incident: The April 2023 incident disrupted facility operations and systems; all locations had resumed normal operations by June 30. The company recorded $28.9 million of incident-related charges, net of insurance recoveries, and estimated lost revenue of $15.0 million and lost warehouse NOI of $9.0 million. It accrued $5.2 million for customer claims. Insurance reimbursement remains subject to coverage terms and possible disputes. The investigation also identified unauthorized access to personal information; regulatory inquiries and purported class-action lawsuits are disclosed.
- Other unusual items: The company recorded a $56.6 million loss on the Comfrio put option and impaired a Comfrio related-party loan by $22.0 million; Comfrio was sold in 2023 and reported as discontinued operations. It also recorded a $2.5 million pension settlement loss and $64.1 million of acquisition, cyber incident and other net expenses.
- Principal risks: Customer concentration and non-fixed storage commitments, inflation and labor costs, power-price volatility, interest rates and refinancing, execution of acquisitions and developments, cybersecurity and ERP implementation, competition, foreign exchange, environmental and climate exposures, and REIT qualification and distribution requirements. The top 25 warehouse customers generated approximately 49% of warehouse segment revenue.
- Contingencies and controls: Management said ordinary-course legal matters were not expected to have a material impact, while disclosing the cyber-related claims and litigation. Management and the auditor concluded internal control over financial reporting was effective as of year-end; management reported that cyber-related control deficiencies had been remediated.
Important facts for investors to verify
- Review the assumptions behind the $236.5 million Europe goodwill impairment and the region’s operating performance and occupancy.
- Track cyber-incident insurance recoveries, customer claims, privacy notifications, regulatory inquiries and litigation outcomes.
- Assess whether warehouse pricing and occupancy gains can offset lower throughput and rising labor, facility and financing costs.
- Verify debt maturities, covenant headroom, revolver availability, interest-rate exposure and the sustainability of the 5.6x net-debt-to-pro-forma-Core-EBITDA ratio.
- Monitor Project Orion’s remaining costs, implementation risks and realized benefits, as well as dilution and capital allocation under the ATM program.
- Compare reported GAAP results with Core FFO and Adjusted FFO, noting their adjustments and the filing’s recast figures for comparability.