Americold Realty Trust, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This filing reports annual results, not standalone fourth-quarter results. Americold is a REIT operating temperature-controlled warehouses and related transportation and management services. At year-end, it operated 242 warehouses with approximately 1.4 billion cubic feet of capacity.
Financial results and key metrics
- Revenue: $2.915 billion, up 7.4% from $2.715 billion in 2021. Warehouse revenue was $2.303 billion (+10.4%); transportation revenue was $313.4 million (+0.4%); third-party managed revenue was $298.4 million (-6.0%).
- Profitability: Operating income was $87.9 million, compared with $73.0 million in 2021. Net loss was $19.5 million, or $0.07 per diluted share, versus a $30.3 million net loss, or $0.12 per diluted share. Results include a $18.8 million income tax benefit.
- Segment performance: Warehouse contribution (NOI) was $636.2 million, up 8.5%, with a 27.6% margin (down 49 basis points). Transportation contribution was $47.4 million, up 61.4%, with a 15.1% margin versus 9.4%. Third-party managed contribution was $12.3 million, down 11.7%, with a 4.1% margin.
- Cash flow: Operating cash flow was $300.0 million, up from $273.1 million. Investing activities used $348.5 million; financing activities provided $23.3 million. Maintenance capital expenditures were $85.5 million, versus $76.0 million; growth and expansion capital expenditures were $228.0 million, versus $1.127 billion, which included substantially higher 2021 acquisition spending.
- Debt and liquidity: Cash and restricted cash totaled $53.1 million. Total debt and debt-like obligations were $3.331 billion, including $500.1 million of revolving credit borrowings, sale-leaseback obligations and finance leases. Net debt was $3.278 billion; net debt to pro-forma Core EBITDA was 6.6x, up from 6.1x. The effective debt interest rate at year-end was 3.95%; 85% of debt and debt-like obligations was fixed-rate. The company reported compliance with debt covenants.
- Distributions: The filing cites a current annualized distribution of $0.88 per share; future distributions remain subject to board discretion and cash availability.
Material changes versus 2021
- Warehouse revenue grew on pricing actions, contractual escalations, improved economic occupancy and acquisitions; constant-currency growth was 12.8%. Same-store economic occupancy rose to 80.5% from 77.0%, while same-store throughput declined 1.5%.
- Costs rose faster than reported warehouse revenue on a constant-currency basis: warehouse cost of operations increased 13.7%, versus revenue growth of 12.8%. Power expense rose 20.2% reported, and warehouse services contribution fell 49.1%, reflecting cost pressure and operating inefficiencies.
- Interest expense increased 17.1% to $116.1 million, and the average effective interest rate rose to 3.65% from 3.14% for the year. The company refinanced and expanded its credit facility in August and entered swaps to fix rates on term-loan borrowings.
- Corporate SG&A increased 26.9% to $231.1 million. Acquisition, litigation and other expenses declined to $32.5 million from $51.6 million.
- In the fourth quarter, Americold transitioned management of its largest third-party managed customer’s warehouses to another provider. That customer generated $264.2 million of 2022 revenue, most of it pass-through expense reimbursements; Americold says it will no longer provide the related management services.
Outlook, commentary and risks
- Management said food production and supply-chain conditions gradually improved during 2022, with storage levels nearing pre-pandemic levels by year-end. It expects long-term end-consumer food demand to remain consistent with historical levels, but gives no clear quantitative earnings or revenue guidance in the supplied filing text.
- Project Orion, announced in February 2023, is a multi-year technology and process transformation, including a new cloud-based ERP system. The company estimates approximately $100 million of aggregate investment—$50 million of capital investment and $50 million of one-time implementation and integration expenses—with work expected to be substantially complete within three years. Benefits and cost savings are expectations, not assured outcomes.
- Inflation, power and labor costs, labor availability, supply-chain disruption and higher interest rates could pressure margins and cash flows. Customer contracts may delay rate increases after cost increases, and only 41.9% of rent and storage revenue was generated from fixed-commitment contracts or leases on the filing’s annualized basis.
- Customer concentration remains significant: the 25 largest warehouse customers represented 47% of pro-forma warehouse segment revenue. Many contracts do not require customers to maintain minimum storage levels.
- The company estimated potential aggregate multiemployer pension withdrawal liability of up to $820.1 million; it estimates customers are contractually obligated to indemnify approximately $791.7 million, but recovery is not assured.
- Other material exposures include substantial indebtedness and refinancing needs, currency risk, power and refrigeration interruptions, environmental and food-safety obligations, cybersecurity and ERP implementation risks, and international and joint-venture risks. The company reported no material litigation expected by management to materially affect its business or financial condition. It recorded $7.4 million of impairment charges and a $5.7 million loss on a real estate sale in 2022.
Important facts for investors to verify
- Review the audited financial statements and notes for the drivers of the net loss, tax benefit, maintenance spending and reported non-GAAP measures.
- Track warehouse services margins, labor and power costs, occupancy, throughput, and the extent to which pricing offsets inflation.
- Assess leverage, floating-rate exposure, maturities, covenant headroom and the assumptions behind the 6.6x net-debt-to-pro-forma-Core-EBITDA ratio.
- Verify the financial and operating effects of the third-party managed customer transition and the expected timing and full cost of Project Orion.
- Assess customer concentration, fixed-commitment contract coverage, and the collectability of the estimated pension-plan indemnification.