Americold Realty Trust Announces First 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 first quarter ended March 31, 2019.

First Quarter 2019 Highlights

  • Total revenue of $393.1 million, a 0.5% increase over the same quarter
    last year, or a 2.8% increase on a constant currency basis
  • Global Warehouse segment revenue of $289.6 million, a 1.1% increase
    over the same quarter last year, or a 3.4% increase on a constant
    currency basis
  • Total contribution (NOI) of $98.7 million, a 1.4% increase over the
    same quarter last year, or a 3.0% increase on a constant currency basis
  • Global Warehouse segment contribution (NOI) of $90.8 million, a 1.4%
    increase over the same quarter last year, or a 2.7% increase on a
    constant currency basis
  • Net loss of $4.6 million, or $0.03 per diluted common share, compared
    to net loss of $8.6 million in the same quarter last year
  • Core EBITDA of $71.1 million, a 0.8% decrease over the same quarter
    last year, or a 0.7% increase on a constant currency basis
  • Core Funds from Operations (“Core FFO”) of $39.9 million, or $0.26 per
    diluted common share, compared to $34.8 million in the same quarter
    last year
  • Adjusted Funds from Operations (“AFFO”) of $44.3 million, or $0.29 per
    diluted common share, compared to $39.9 million in the same quarter
    last year
  • Global Warehouse segment same store revenue grew 0.4%, or 2.7% on a
    constant currency basis, with same store segment contribution (NOI)
    improving 0.2%, or 1.5% on a constant currency basis
  • Acquired privately-held PortFresh, consisting of a
    temperature-controlled operator servicing fresh produce trade through
    the Port of Savannah and 163 acres of entitled land, for approximately
    $35.9 million. Concurrently announced plans to build a new,
    approximately 15 million cubic foot state-of-the-art
    temperature-controlled storage facility in Savannah, Georgia

Fred Boehler, President and Chief Executive Officer of Americold Realty
Trust, stated, “We made strong progress to start 2019 as we leveraged
our unique position as the world’s largest and only publicly traded REIT
focused on the ownership, operation and development of
temperature-controlled warehouses. We continue to drive internal growth
through the steady execution of our business. Our core operations remain
strong, and fundamentals within the industry remain extremely favorable
as we look ahead.

We completed our first sizable, strategic acquisition by acquiring
privately-held Cloverleaf Cold Storage, which added 22 mission critical,
turnkey facilities in key protein markets in a transaction that is
immediately accretive to our financial results. This was a rare
opportunity to leverage our cost of capital and add complimentary scale,
which positions us to create value with the full integration onto our
proprietary Americold Operating System. We also completed a “tuck-in”
acquisition of two additional facilities through our acquisition of
Lanier Cold Storage. With these acquisitions complete, our total network
now exceeds one billion refrigerated cubic feet. Further, our plans to
expand our key Atlanta major market campus, including the addition of
fully and semi-automated facilities and in combination with our
acquisition and development in Savannah, will enhance our efficiency and
further grow capacity, allowing us to better serve current and new
customers.”

Mr. Boehler continued, “Finally, to fund this transformational growth,
we were pleased with our successful follow on offering in April and debt
private placement in May. We are very proud of our team’s hard work
during this busy start to the year, and believe these transactions
position us to drive shareholder value for years to come.”

First Quarter 2019 Total Company Financial
Results

Total revenue for the first quarter ended March 31, 2019 was $393.1
million, a 0.5% increase from the same quarter of the prior year, or a
2.8% increase on a constant currency basis. This growth was largely
driven by net new business, improvements in commercial terms and
contractual rate escalations, the maturation of the Clearfield, Utah
facility, the opening of the build-to-suit facility in Middleboro,
Massachusetts at the end of the third quarter of 2018, and the
incremental revenue associated with the PortFresh acquisition in January
2019, all within the Global Warehouse segment. These factors were
partially offset by unfavorable foreign currency exchange rates, the
exit of two sites in the second quarter of 2018, the impact of one less
business day in the first quarter of 2019 as compared to the first
quarter of 2018, and the later timing of the Easter holiday in 2019.

For the first quarter of 2019, the Company reported a net loss of $4.6
million, or $0.03 per diluted share, compared to a net loss of $8.6
million for the same quarter of the prior year. Net loss for the current
quarter included the impact of approximately $12.6 million of asset
impairment charges stemming from the announcement of its Atlanta Major
Market Strategy, which includes the redevelopment of an existing
facility, and the potential future sale of an idle facility during the
second quarter of 2019.

Total contribution (NOI) for the first quarter ended March 31, 2019 was
$98.7 million, an increase of 1.4% from the same quarter of the prior
year, or a 3.0% increase on a constant currency basis.

Core EBITDA was $71.1 million for the first quarter of 2019, compared to
$71.7 million for the same quarter of the prior year. This reflects a
0.8% decrease over prior year largely impacted by unfavorable foreign
currency exchange rates and year-over-year higher workers’ compensation
and healthcare costs. As a result, Core EBITDA margin contracted by 24.3
basis points to 18.1%. On a constant currency basis, Core EBITDA was
$72.2 million, an increase of $0.5 million or 0.7%.

For the first quarter of 2019, Core FFO was $39.9 million, or $0.26 per
diluted share, compared to $34.8 million for same quarter of the prior
year. The year-over-year increase is driven primarily by the decrease in
interest expense as a result of the reduction in our weighted average
contractual rate of real estate debt.

For the first quarter of 2019, AFFO was $44.3 million, or $0.29 per
diluted share, compared to $39.9 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.

First Quarter 2019 Global Warehouse Segment
Results

For the first quarter of 2019, Global Warehouse segment revenues were
$289.6 million, an increase of $3.1 million, or 1.1%, compared to $286.5
million for the first quarter of 2018. This growth was primarily driven
by the same factors mentioned above.

Warehouse segment contribution (NOI) was $90.8 million, or 31.4% of
segment revenue, for the first quarter of 2019, compared to $89.6
million, or 31.3% of segment revenue, for the prior year. This
represents a 1.4% improvement in segment profitability over the first
quarter of 2018 and an expansion of 10 basis points in segment margin
period-over-period. As previously mentioned, growth was largely impacted
by unfavorable foreign currency exchange rates and the later timing of
Easter in 2019 as compared to 2018. Additionally, the year-over-year
profit growth was strained by higher workers’ compensation and health
care costs. As a reminder, during the first quarter of 2018, the Company
had a $1 million benefit related to workers’ compensation. Despite these
items, the year-over-year growth was driven by the aforementioned
revenue trends, combined with operating efficiency gains driven by power
savings and the leveraging of its fixed expenses.

The Company ended the first quarter of 2019 with 144 total facilities in
its Global Warehouse segment portfolio. Of the 144 total facilities, 137
meet the Company’s definition of facilities with at least 24 months of
consecutive “normalized operations” and are reported as “same store.”
The remaining seven facilities are in various stages of operations and
are classified as “non-same store.”

The following tables summarize the first quarter 2019 Global Warehouse
full segment and same store metrics compared to the same period a year
ago:

       
Global Warehouse – Total Three Months Ended March 31, Change
Dollars in thousands 2019 actual   2019 constant currency(1)   2018 actual Actual   Constant currency
Global Warehouse revenues:
Rent and storage $ 126,380 $ 128,727 $ 125,727 0.5% 2.4%
Warehouse services 163,235   167,400   160,790   1.5% 4.1%
Total Warehouse revenues $ 289,615 $ 296,127 $ 286,517 1.1% 3.4%
Global Warehouse contribution (NOI) $ 90,819 $ 92,011 $ 89,570 1.4% 2.7%
Global Warehouse margin 31.4 % 31.1 % 31.3 % 10 bps -19 bps
 
Units in thousands except per pallet data
Global Warehouse rent and storage:
Occupancy
Average physical occupied pallets 2,374 2,374 2,447 (3.0)% (3.0)%
Average economic occupied pallets 2,507 2,507 2,561 (2.1)% (2.1)%
Average physical pallet positions 3,182 3,182 3,212 (0.9)% (0.9)%
Physical occupancy percentage 74.6 % 74.6 % 76.2 % -158 bps -158 bps
Economic occupancy percentage 78.8 % 78.8 % 79.7 % -93 bps -93 bps
Total rent and storage revenues per physical occupied pallet $ 53.25 $ 54.24 $ 51.38 3.6% 5.6%
Total rent and storage revenues per economic occupied pallet $ 50.41 $ 51.35 $ 49.09 2.7% 4.6%
Global Warehouse services:
Throughput pallets 6,521 6,521 6,643 (1.8)% (1.8)%
Total warehouse services revenues per throughput pallet $ 25.03 $ 25.67 $ 24.20 3.4% 6.1%
 
       
Global Warehouse – Same Store Three Months Ended March 31, Change
Dollars in thousands 2019 actual   2019 constant currency(1)   2018 actual Actual   Constant currency
Global Warehouse same store revenues:
Rent and storage $ 122,559 $ 124,905 $ 122,356 0.2% 2.1%
Warehouse services 159,455   163,621   158,511   0.6% 3.2%
Total same store revenues $ 282,014 $ 288,526 $ 280,867 0.4% 2.7%
Global Warehouse same store contribution (NOI) $ 88,251 $ 89,443 $ 88,108 0.2% 1.5%
Global Warehouse same store margin 31.3 % 31.0 % 31.4 % -8 bps -37 bps
 
Units in thousands except per pallet data
Global Warehouse same store rent and storage:
Occupancy
Average physical occupied pallets 2,276 2,276 2,364 (3.7)% (3.7)%
Average economic occupied pallets 2,405 2,405 2,474 (2.8)% (2.8)%
Average physical pallet positions 3,061 3,061 3,076 (0.5)% (0.5)%
Physical occupancy percentage 74.3 % 74.3 % 76.8 % -249 bps -249 bps
Economic occupancy percentage 78.6 % 78.6 % 80.4 % -186 bps -186 bps
Same store rent and storage revenues per physical occupied pallet $ 53.86 $ 54.89 $ 51.77 4.0% 6.0%
Same store rent and storage revenues per economic occupied pallet $ 50.95 $ 51.93 $ 49.46 3.0% 5.0%
Global Warehouse same store services:
Throughput pallets 6,384 6,384 6,549 (2.5)% (2.5)%
Same store warehouse services revenues per throughput pallet $ 24.98 $ 25.63 $ 24.21 3.2% 5.9%

(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.

Fixed Commitment Rent and Storage Revenue

For the first quarter of 2019, 43.0% of rent and storage revenues are
derived from customers with fixed commitment storage contracts, an
increase of 20 basis points from the fourth quarter 2018 and 410 basis
points over the first quarter of 2018.

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 first quarter of 2019, economic occupancy for the total warehouse
segment was 78.8% and warehouse segment same store pool was 78.6%,
representing a 420 basis point and 424 basis point increase above
physical occupancy, respectively. For the first quarter of 2019,
physical occupancy for the total warehouse segment was 74.6% and
warehouse segment same store pool was 74.3%.

Real Estate Portfolio

The Company’s real estate portfolio consists of 155 facilities as of
March 31, 2019. During the first quarter of 2019, it purchased
privately-held PortFresh Holdings, LLC, consisting of a
temperature-controlled operator servicing fresh produce trade through
the Port of Savannah and 163 acres of entitled land, for approximately
$35.9 million, which it funded with available cash. Concurrently, the
Company announced plans to build a new, approximately 15 million cubic
foot state-of-the-art temperature-controlled storage facility in
Savannah, Georgia with anticipated development spending of $55 to $65
million. Within the Third-Party Managed segment the management agreement
for one facility that the Company operated expired and was not renewed
during the first quarter of 2019.

The Company’s same store population consists of 137 facilities as of
March 31, 2019. During the first quarter of 2019, two warehouses were
moved from the non-same store population to the same-store population as
a result of achieving normalized operations. One of these sites was
acquired and redeveloped in 2016, and one of these sites experienced an
event in 2015 that resulted in an extended period of business
interruption. Finally, one warehouse was reclassified from the same
store to the non-same store population in anticipation of its lease
expiration in the third quarter of 2019, which the Company does not
intend to renew as part of its ongoing portfolio management and focus to
own assets. As a result of this activity, the Company’s non-same store
population consists of seven facilities as of March 31, 2019.

Balance Sheet Activity and Liquidity

At March 31, 2019, the Company had total liquidity of approximately
$943.6 million, including cash and capacity on its revolving credit
facility. Total debt outstanding was $1.52 billion (inclusive of $159.1
million of capital leases/sale lease-backs and exclusive of deferred
financing fees and unamortized debt discounts), of which 71% 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 Core EBITDA was approximately
4.4x. Of the Company’s total debt outstanding, $1.36 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 6.1 years and carries a weighted average contractual interest rate of
4.66%. At March 31, 2019, 75% 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 March 7, 2019, the Company’s Board of Trustees declared a dividend of
$0.20 per share for the first quarter of 2019, which was paid on April
15, 2019 to common shareholders of record as of March 29, 2019.

Highlights Subsequent to Quarter End

  • Closed on acquisition of privately-held Cloverleaf Cold Storage for
    $1.24 billion, consisting of 22 temperature-controlled facilities, of
    which 21 are owned and one is managed, totaling 132 million
    refrigerated cubic feet.
  • Closed on acquisition of Lanier Cold Storage for $82 million,
    consisting of two temperature-controlled facilities and 14 million
    refrigerated cubic feet.
  • Announced a planned expansion and redevelopment program at the
    Company’s existing Atlanta major market campus for a total investment
    of approximately $126 million to $136 million.
  • Completed follow-on public offering of 50,312,500 common shares at
    $29.75 per share, of which 42,062,500 shares were issued and sold by
    the Company for net proceeds of approximately $1.21 billion, and
    entered into a forward sale agreement for 8,250,000 shares.
  • Priced $350 million of senior unsecured notes in an institutional
    private placement offering at an interest rate of 4.10% and a duration
    of 10.7 years in order to finance a portion of the previously
    announced acquisitions.
  • In April, the Company completed a land purchase in Sydney, Australia
    for $43.4 million, of which $4.7 million was paid as an initial
    deposit in 2018. The Company continues to work with its customer on
    the detailed design phase of the project.

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 6.8 and 7.2 percent.
  • Total recurring maintenance capital expenditures is expected in the
    range of $56 to $66 million.
  • Total growth and expansion capital expenditures is expected to
    aggregate in a range of $275 to $350 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 Cloverleaf.
  • Anticipated AFFO payout ratio of 67 to 70 percent.
  • Full year weighted average fully diluted share count of 182 to 186
    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 Tuesday, May 7,
2019 at 5:00 p.m. Eastern Time to discuss first 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#
13689713. The telephone replay will be available starting shortly after
the call until May 21, 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 179
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 (loss) income
available to common stockholders 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 (loss)
income available to common stockholders 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; difficulties in identifying
properties to be acquired and completing acquisitions; acquisition
risks, including the failure of such acquisitions to perform in
accordance with projections; our failure to realize the intended
benefits from, 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; 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 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.

Contacts

Americold Realty Trust
Investor Relations
Telephone:
678-459-1959
Email: investor.relations@americold.com

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