Americold Realty Trust — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited. Americold is a global temperature-controlled warehouse, logistics and services REIT. It reported 241 warehouses and approximately 1.5 billion cubic feet of refrigerated capacity.
Financial and operating results
Amounts below are in U.S. dollars; financial statement amounts are rounded to millions.
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Total revenue | $665.0 million | $676.5 million |
| Operating income | $41.8 million | $32.3 million |
| Net income (loss) | $9.8 million | ($2.6 million) |
| Net income (loss) attributable to Americold | $9.7 million | ($2.6 million) |
| Basic and diluted earnings (loss) per share | $0.03 | ($0.01) |
| Cash from operating activities | $62.0 million | $41.5 million |
| Cash used in investing activities | $39.3 million | $87.6 million |
| Cash and restricted cash at quarter-end | $59.2 million | $47.2 million |
- Warehouse revenue rose 0.4% reported and 2.0% in constant currency; warehouse segment contribution (NOI) increased 12.8% reported and 14.4% in constant currency, to $197.1 million. Warehouse segment margin improved to 33.0% from 29.4%.
- Same-store economic occupancy fell to 80.9% from 84.4%; physical occupancy was 70.2%, down from 77.8%. Same-store throughput declined 7.6%, while constant-currency revenue per throughput pallet increased 10.8%, reflecting rate escalations.
- Transportation revenue declined 16.5% reported, primarily from the UK shift to a third-party logistics model and softer demand. Segment contribution was nearly flat at $11.5 million, while margin increased to 20.3% from 17.1%.
- Third-party managed revenue decreased 22.0%; contribution increased to $2.2 million from $1.1 million, with improved margins.
- Reported warehouse cost reductions supported operating income growth. Depreciation and amortization rose 8.3% to $92.1 million; selling, general and administrative expense rose 4.1% to $65.4 million.
- Supplemental non-GAAP measures: NAREIT FFO was $62.8 million versus $53.1 million; Core FFO was $77.3 million versus $60.8 million; Adjusted FFO was $104.9 million versus $79.9 million. These measures are not substitutes for GAAP results or operating cash flow.
Debt, liquidity and capital
- Principal senior unsecured notes, term loans and revolver borrowings totaled $3.045 billion; debt and debt-like obligations, including sale-leaseback and financing lease obligations, totaled $3.280 billion. Cash and restricted cash was $59.2 million.
- Revolver borrowings increased to $455.9 million from $392.2 million at year-end. The filing does not provide a clear revolver availability figure in the supplied text.
- Management reported an effective interest rate of 4.0%, 86.1% fixed-rate debt exposure, and a weighted-average debt maturity of approximately 4.9 years assuming extension options. The company was in compliance with debt covenants.
- Management said available funding sources are expected to meet short- and long-term needs. Sources include operating cash flow, cash balances, the revolver and potential debt or equity issuance. No shares were sold through the current ATM program in Q1.
- Cash distributions paid were $63.0 million. Maintenance capital expenditures were $17.9 million; growth and expansion capital expenditures were $30.9 million.
Material changes, outlook and notable items
- Net income improved year over year, but included non-routine items: an $8.3 million acquisition-related representations-and-warranties settlement benefit in “Other, net”; $15.0 million of acquisition, cyber incident and other costs, including $7.8 million for Project Orion and $2.7 million of cyber-related costs net of insurance; and a $5.2 million debt-extinguishment and derivative termination loss, including $4.7 million associated with purchasing two previously sale-leaseback-accounted facilities. The company also recorded a $3.5 million gain on a facility sale.
- Project Orion is a multiyear technology and process transformation that includes a cloud-based ERP system. The company reported $84.1 million of cumulative implementation costs, of which $59.4 million was deferred in other assets; it expects the program to be substantially complete within three years.
- Management attributed lower same-store occupancy and throughput to softer food production and end-consumer demand. It cited contractual rate escalations and cost efficiencies as offsets. Seasonality typically brings lower occupancy in May and June and higher power costs in the third and fourth quarters.
- The filing references a 2024 outlook but the supplied text does not provide a clear numerical guidance value. Management discussed migrating customers toward fixed-commitment storage contracts to reduce seasonal volatility.
- Cyber incident claims remain a contingency: the company accrued $5.2 million for customer reimbursement claims as of March 31, 2024. It also identified exposure to labor and power costs, inflation and interest rates, construction and development execution, customer contract changes, cybersecurity and ERP implementation, foreign exchange, environmental matters and real-estate market conditions.
- A federal trade-secret claim brought by Preferred Freezer Services was dismissed on March 18, 2024; the court also dismissed remaining state-law claims without prejudice. The federal case is closed. Management reported no other material litigation expected to materially affect the business.
- Disclosure controls and procedures were concluded effective as of March 31, 2024. The filing reported no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether occupancy and throughput stabilize, and whether fixed-commitment contracts offset weaker physical utilization.
- Whether warehouse cost savings and pricing gains persist, particularly as seasonal power costs rise later in the year.
- Current revolver availability, future borrowing needs and covenant headroom; the supplied text does not state available capacity.
- Project Orion’s remaining costs, implementation progress and realized operating benefits.
- Potential changes in cyber-related customer claims and the adequacy of the $5.2 million accrual.
- The recurring earnings and cash-flow contribution excluding the acquisition settlement and other unusual items, and the company’s subsequent 2024 guidance.