Americold Realty Trust — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are to Q1 2021 unless noted. Americold is a global temperature-controlled warehouse REIT. At quarter-end it operated 249 warehouses across North America, Europe, Asia-Pacific and South America, and held minority interests in two Brazilian joint ventures.
Financial results
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $705.7 million | $634.8 million |
| Operating income | $8.0 million | $14.3 million |
| Net loss attributable to Americold | $17.4 million | $14.4 million |
| Loss per share, basic and diluted | $0.06 | $0.06 |
| Cash from operating activities | $15.6 million | $46.5 million |
| Cash used in investing activities | $94.2 million | $143.7 million |
| Cash from (used in) financing activities | $46.3 million | $(235.5) million |
Revenue increased 11.2%. Warehouse revenue rose 11.4%, including contributions from 2021 acquisitions and rate escalations; third-party managed revenue increased 17.5%, largely reflecting pass-through costs; transportation revenue increased 3.5%. Despite warehouse revenue growth, warehouse segment contribution (NOI) was nearly unchanged at $146.3 million, as operating costs rose 16.3%, faster than revenue. Warehouse NOI margin fell to 27.0% from 30.1%; warehouse services margin declined to 2.0% from 6.3%. Transportation NOI increased 27.2% to $8.5 million and margin improved to 10.8% from 8.8%. Third-party managed NOI declined 20.1% to $3.5 million.
Corporate SG&A increased 27.9% to $57.6 million, while acquisition, litigation and other costs decreased to $10.1 million from $20.8 million. Interest expense was $25.8 million, nearly flat. Non-GAAP NAREIT FFO was $35.9 million versus $38.3 million; Core FFO was $46.3 million versus $62.5 million; Adjusted FFO was $68.9 million versus $75.9 million. These supplemental measures are not GAAP earnings or cash flow measures.
Balance sheet, debt and liquidity
At March 31, 2022, total assets were $8.21 billion and total liabilities were $4.24 billion. Cash, cash equivalents and restricted cash totaled $51.0 million, down from $83.0 million at year-end 2021. Principal debt, including revolving borrowings, was $2.95 billion; debt and debt-like obligations including sale-leaseback and financing lease obligations totaled $3.22 billion. Revolver borrowings were $513.8 million, up from $399.3 million. The company reported a 3.06% effective interest rate, 72% fixed-rate debt, and an approximately 5.8-year weighted average term to initial maturity assuming extension options. It was in compliance with debt covenants.
Operating cash flow fell $30.9 million year over year, primarily due to higher receivables from slower collections and higher SG&A. Property, buildings and equipment additions were $93.0 million; distributions paid were $59.9 million. Management said current funding sources—including operating cash flow, cash, revolving credit, and potential debt or equity issuance—were expected to meet short- and long-term needs. Approximately $809.4 million remained available under the $900 million ATM equity program; there was no ATM activity in the quarter.
Changes, outlook and risks
- Same-store economic occupancy was 77.6%, up 22 basis points, while physical occupancy was 70.7%, essentially flat. Same-store throughput declined 0.6%. Same-store NOI fell 4.7% (3.6% in constant currency) as cost growth outpaced revenue growth.
- Management cited persistent COVID-related supply-chain and food-production disruption, labor shortages and absenteeism, inflation in power, labor and other operating costs, and transportation capacity constraints. Rate increases had been implemented or were expected, but management cautioned that they might not fully offset inflation; some contracts require sustained cost increases before rate remedies can be used.
- Management expected food demand to remain consistent over the long term, but said occupancy and throughput could remain below pre-pandemic levels until customers restore production and rebuild inventories. The filing provides no quantified full-year earnings or revenue guidance.
- Russia-Ukraine-related uncertainty could affect inflation, commodity prices, supply chains, currency, cyber risk and capital markets. Other disclosed exposures include interest-rate increases, customer defaults or non-renewals, labor disputes, foreign exchange, environmental matters and acquisition/development execution.
- Material litigation includes Kansas settlement-related claims and Preferred Freezer Services litigation; management said liabilities could not be reasonably estimated for the cited matters and did not expect a material adverse impact. Nominal environmental liabilities were recorded, with no material unrecorded environmental liabilities reported.
Investor facts to verify
- Whether pricing actions and operational efficiencies can catch up with inflation, especially labor and power cost growth.
- Trends in same-store throughput, economic and physical occupancy, and warehouse services margins.
- Receivables collection, operating cash flow recovery, and bad-debt allowance adequacy; the allowance was $20.7 million.
- Revolver usage, variable-rate exposure and refinancing needs; a 100-basis-point rate increase was estimated to add about $8.9 million to annual interest expense.
- Progress, spending and returns on development and expansion projects, alongside distributions and potential equity issuance.
- Developments in the Kansas and PFS litigation and any changes in the company’s assessment of their potential financial effects.