Americold Realty Trust Announces Fourth Quarter and Full Year 2018 Results

ATLANTA–(BUSINESS WIRE)–Americold Realty Trust (NYSE:COLD) (the “Company”), the world’s largest
owner and operator of temperature-controlled warehouses, today announced
financial and operating results for the fourth quarter and year ended
December 31, 2018.

Fourth Quarter and Full Year 2018 Highlights

  • Total revenue increased 3.5% to $415.8 million for the fourth quarter
    2018; Total revenue increased 3.9% to $1.60 billion for the full year.
  • Global Warehouse segment revenue increased 2.6% to $305.5 million for
    the fourth quarter 2018; Global Warehouse segment revenue increased
    2.7% to $1.18 billion for the full year.
  • Total contribution (NOI) increased 8.3% to $108.7 million for the
    fourth quarter 2018; Total contribution (NOI) increased 8.4% to $405.6
    million for the full year.
  • Global Warehouse segment contribution (NOI) increased 7.0% to $100.5
    million for the fourth quarter 2018; Global Warehouse segment
    contribution (NOI) increased 7.5% to $374.5 million for the full year.
  • Net income of $2.7 million, or $0.02 per diluted common share, and
    adjusted net income of $28.9 million for the fourth quarter 2018; Net
    income of $48.0 million, or $0.31 per diluted common share, and
    adjusted net income of $95.5 million for the full year.
  • Core EBITDA increased 7.6% to $84.7 million for the fourth quarter
    2018; Core EBITDA increased 6.8% to $306.8 million for the full year.
  • Core Funds from Operations (“Core FFO”) of $53.2 million, or $0.35 per
    diluted common share for the fourth quarter 2018; Core FFO of $175.0
    million, or $1.21 per diluted common share for the full year.
  • Adjusted Funds from Operations (“AFFO”) of $49.3 million, or $0.33 per
    diluted common share for the fourth quarter 2018; AFFO of $170.4
    million, or $1.18 per diluted common share for the full year.
  • Global Warehouse segment same store revenue grew 4.5% on a constant
    currency basis, with same store segment contribution (NOI) improving
    6.9% on a constant currency basis for the fourth quarter 2018; Global
    Warehouse segment same store revenue grew 3.9% on a constant currency
    basis, with same store segment contribution (NOI) improving 7.4% on a
    constant currency basis for the full year.

We are very proud of Americold’s accomplishments in 2018, our inaugural
year as a public company. Our business remains strong and steady as we
execute our strategy, having grown same store revenue and contribution
in our Global Warehouse segment 3.9% and 7.4% on a constant currency
basis, respectively, over the prior year. We continue to drive our
customer mix, warehouse utilization and other productivity improvements,
which served to push our total warehouse margins to 31.8% in 2018, a 140
basis point increase over the prior full year. We also continued to
expand our footprint, having stabilized two facilities in Clearfield, UT
and Middleboro, MA and made significant progress toward the completion
of our fully automated expansion facility in Chicago, IL. Additionally,
we signed a letter of intent to build and operate three automated
facilities for a major customer and subsequent to year end, announced a
new market for growth at the Port of Savannah, with the acquisition of
PortFresh and our planned development. During the year, we also
significantly expanded our access to capital. We accessed the public
equity market through our IPO and our September follow-on offering,
upsized our credit facility to $1.275 billion, achieved investment-grade
ratings and accessed the debt markets in a private placement offering.
Finally, we were recognized by the Global Cold Chain Alliance for Energy
Excellence, having achieved Gold and Silver certifications at 56 sites.”

As we look ahead to 2019 and beyond, we believe we are well positioned
for future growth, as we remain the market leader within a fragmented,
high barrier to entry industry that requires not only significant
capital investment but deep operational and technical expertise and
customer relationships. Our Americold Operating System allows us to
drive continuous margin improvement on our standardized, company-wide
platform, and when combined with our low-leveraged balance sheet, allows
us to maximize the value of future acquisitions as we capitalize on our
opportunity to be a consolidator in this industry. We believe our
commitment to serving our diverse, global customer base and their growth
needs will allow us to continue to offer shareholders an attractive
combination of stable cash flows and attractive growth over the long
term.” stated Fred Boehler, President and Chief Executive Officer of
Americold Realty Trust.

Fourth Quarter 2018 Total Company Financial
Results

Total revenue for the fourth quarter ended December 31, 2018 was $415.8
million, a 3.5% increase from the same quarter of the prior year. This
growth was largely driven by net new business, improvements in our
commercial terms and contractual rate escalations, and the maturation of
the Clearfield, Utah facility and opening of the build-to-suit facility
in Middleboro, Massachusetts at the end of the third quarter within the
Global Warehouse segment.

For the fourth quarter of 2018, the Company reported net income of $2.7
million, or $0.02 per diluted share, compared to net income of $8.0
million for the same quarter of the prior year. Net income for the
current quarter included the impact of approximately $22.0 million of
one-time defeasance costs related to the repayment of its CMBS debt this
quarter. Net income also included the impact of approximately $2.2
million due to the write-off of unamortized financing costs associated
with the repayment of the Australia and New Zealand term loans, $1.8
million due to the termination of the related interest rate swaps on
these loans, and other charges. Excluding the impact of loss on debt
extinguishment, modifications and termination of derivative instruments,
net income for the quarter would have been $28.9 million, or $0.19 per
diluted share.

Total contribution (NOI) for the fourth quarter ended December 31, 2018
increased 8.3% to $108.7 million, compared to $100.4 million for the
same quarter of the prior year.

Core EBITDA was $84.7 million for the fourth quarter of 2018, compared
to $78.7 million for the same quarter of the prior year. This reflects a
7.6% increase over prior year driven by increased revenue, a more
favorable customer mix, continued operating efficiency gains, as well as
the contribution from the recently completed facilities in Clearfield,
UT and Middleboro, MA. Core EBITDA margin expanded by 80 basis points to
20.4%, despite incurring incremental SG&A related to being a public
company.

For the fourth quarter of 2018, Core FFO was $53.2 million, or $0.35 per
diluted share, compared to $32.7 million for same quarter of the prior
year.

For the fourth quarter of 2018, AFFO was $49.3 million, or $0.33 per
diluted share, compared to $24.0 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.

Fourth Quarter 2018 Global Warehouse Segment
Results

For the fourth quarter of 2018, Global Warehouse segment revenues were
$305.5 million, an increase of $7.9 million, or 2.6%, compared to $297.6
million for the fourth quarter of 2017. This growth was primarily driven
by the same factors mentioned above.

Warehouse segment contribution (NOI) was $100.5 million, or 32.9% of
segment revenue, for the fourth quarter of 2018, compared to $93.9
million, or 31.6% of segment revenue, for the prior year. This
represents a 7.0% improvement in segment profitability over the fourth
quarter of 2017 and an expansion of 130 basis points in segment margin
period-over-period. The year-over-year profit growth was driven
primarily by the aforementioned revenue trends, combined with continued
leveraging of fixed expenses, and labor and other productivity
improvements.

The Company ended the fourth quarter of 2018 with 143 total facilities
in its Global Warehouse segment portfolio. Of the 143 total facilities,
136 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 fourth quarter and year ended
December 31, 2018 Global Warehouse full segment and same store metrics
compared to the same periods a year ago:

   

Three Months Ended

       

Years Ended

   
Global Warehouse – Total

December 31,

Change

December 31,

 

Dollars in thousands 2018     2017 2018     2017

Change

Global Warehouse revenues:
Rent and storage $ 133,651 $ 131,695 1.5 % $ 514,755 $ 501,604 2.6 %
Warehouse services 171,808   165,903   3.6 % 662,157   644,058   2.8 %
Total Warehouse revenues $ 305,459 $ 297,598 2.6 % $ 1,176,912 $ 1,145,662 2.7 %
Global Warehouse contribution (NOI) $ 100,492 $ 93,929 7.0 % $ 374,534 $ 348,328 7.5 %
Global Warehouse margin 32.9 % 31.6 % 130 bps 31.8 % 30.4 % 140 bps
 
Units in thousands except per pallet data
Global Warehouse rent and storage:
Occupancy
Average occupied pallets 2,564 2,625 (2.3 )% 2,458 2,509 (2.0 )%
Average physical pallet positions 3,182 3,220 (1.2 )% 3,193 3,216 (0.7 )%
Occupancy percentage 80.6 % 81.5 % -90 bps 77.0 % 78.0 % -100 bps
Total rent and storage revenues per occupied pallet $ 52.13 $ 50.16 3.9 % $ 209.41 $ 199.96 4.7 %
Global Warehouse services:
Throughput pallets 6,963 6,956 0.1 % 26,945 27,626 (2.5 )%
Total warehouse services revenues per throughput pallet $ 24.67 $ 23.85 3.4 % $ 24.57 $ 23.31 5.4 %
 
 

Three Months Ended

Years Ended

Global Warehouse – Same Store

December 31,

Change

December 31,

Change
Dollars in thousands 2018 2017 2018 2017
Global Warehouse same store revenues:
Rent and storage $ 128,243 $ 126,535 1.3 % $ 496,860 $ 482,422 3.0 %
Warehouse services 165,923   160,448   3.4 % 642,038   624,221   2.9 %
Total same store revenues $ 294,166 $ 286,983 2.5 % $ 1,138,898 $ 1,106,643 2.9 %
Global Warehouse same store contribution (NOI) $ 97,042 $ 91,858 5.6 % $ 366,006 $ 342,422 6.9 %
Global Warehouse same store margin 33.0 % 32.0 % 100 bps 32.1 % 30.9 % 120 bps
 
Units in thousands except per pallet data
Global Warehouse same store rent and storage:
Occupancy
Average occupied pallets 2,448 2,519 (2.8 )% 2,361 2,407 (1.9 )%
Average physical pallet positions 3,052 3,066 (0.5 )% 3,059 3,062 (0.1 )%
Occupancy percentage 80.2 % 82.2 % -200 bps 77.2 % 78.6 % -140 bps
Same store rent and storage revenues per occupied pallet $ 52.39 $ 50.24 4.3 % $ 210.49 $ 200.43 5.0 %
Global Warehouse same store services:
Throughput pallets 6,703 6,734 (0.5 )% 26,084 26,797 (2.7 )%
Same store warehouse services revenues per throughput pallet $ 24.75 $ 23.82 3.9 % $ 24.61 $ 23.29 5.7 %
 

Fixed Commitment Rent and Storage Revenue

For the fourth quarter of 2018, 42.8% of rent and storage revenues are
derived from customers with fixed commitment storage contracts, an
increase of 100 basis points from the third quarter 2018 and 360 basis
points over the fourth quarter of 2017.

Physical and Economic Occupancy

For the fourth quarter of 2018, physical occupancy for the total
warehouse segment was 80.6% and warehouse segment same store pool was
80.2%. 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.
In an effort to help illustrate this concept, the Company has introduced
a new economic occupancy metric, which is defined as the aggregate
number of physically occupied pallets and any additional pallets
otherwise contractually committed for a given period, without
duplication. For the fourth quarter 2018, economic occupancy for the
total warehouse segment was 83.7% and warehouse segment same store pool
was 83.3%, representing a 314 basis point and 311 basis point increase
above physical occupancy, respectively.

Real Estate Portfolio

During the fourth quarter of 2018, the Company sold a vacant facility
located in Bettendorf, Iowa for $1.0 million. Additionally, the Company
purchased the remaining 50% leasehold at one of its facilities serving
the Dallas / Fort Worth market for $13.8 million, representing a 9.5%
cap rate on in-place rents.

Balance Sheet Activity and Liquidity

At December 31, 2018, the Company had total liquidity of approximately
$978.5 million, including cash and capacity on its revolving credit
facility. Total debt outstanding was $1.52 billion (inclusive of $159.7
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
4.3x. 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 6.3 years and carries a weighted average contractual interest rate of
4.60%. At December 31, 2018, 69% of the Company’s total debt outstanding
was at a fixed rate. Subsequent to year end, the Company entered into an
interest rate swap on its term loan, increasing the fixed rate portion
of its total debt outstanding to 75%.

Dividend

On December 6, 2018, the Company’s Board of Trustees declared a dividend
of $0.1875 per share for the fourth quarter of 2018, which was paid on
January 15, 2019 to common shareholders of record as of December 31,
2018.

Highlights Subsequent to Quarter End

  • 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
    $35.2 million, funded with cash on hand. Concurrently 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.
  • Executed a $100 million swap to fix a portion of the Company’s term
    loan from floating to fixed. As a result of this transaction, the
    Company’s percentage of fixed rate debt increased to 75% from 69%.

2019 Outlook

The Company issued the following guidance:

  • 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 $50 to $60 million.
  • Total growth and expansion capital expenditures is expected to
    aggregate in a range of $225 to $325 million, which includes spending
    related to the Company’s announced projects in Chicago, IL, Savannah,
    GA, and Australia, as well as anticipated projects that have yet to be
    announced.
  • Anticipated AFFO payout ratio of 65 to 68 percent.
  • Full year weighted average fully diluted share count of 155 to 157
    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 Thursday,
February 21, 2019 at 5:00 p.m. Eastern Time to discuss fourth quarter
and full year 2018 results. A live webcast of the call will be available
via the Investor Relations 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#
13687102. The telephone replay will be available starting shortly after
the call until March 8, 2019.

The Company’s supplemental package will be available prior to the
conference call in the Investor Relations section of the Company’s
website at http://ir.americold.com.

About the Company

Americold is the world’s largest owner and operator of
temperature-controlled warehouses. Based in Atlanta, Georgia, Americold
owns and operates 155 temperature-controlled warehouses, with
approximately 918.7 million 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. Americold serves approximately 2,400 customers and employs
approximately 11,000 associates worldwide.

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 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 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; 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 of
beneficial interest, $0.01 par value per share, or our common shares.

Words such as “anticipates,” “believes,” “continues,” “estimates,”
“expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,”
“plans,” “potential,” “near-term,” “long-term,” “projections,”
“assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,”
“trends,” “should,” “could,” “would,” “will” and similar expressions are
intended to identify such forward-looking statements. Examples of
forward-looking statements included in this documents include, among
others, statements about our expected expansion and development pipeline
and our targeted return on invested capital on expansion and development
opportunities. We qualify any forward-looking statements entirely by
these cautionary factors. Other risks, uncertainties and factors,
including those discussed under “Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2017 and our other reports
filed with the Securities and Exchange Commission, could cause our
actual results to differ materially from those projected in any
forward-looking statements we make. We assume no obligation to update or
revise these forward-looking statements for any reason, or to update the
reasons actual results could differ materially from those anticipated in
these forward-looking statements, even if new information becomes
available in the future.

Americold Realty Trust and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except shares and per share amounts)
    December 31,
2018     2017
Assets
Property, plant, and equipment:
Land $ 385,232 $ 389,443
Buildings and improvements 1,849,749 1,819,635
Machinery and equipment 577,175 552,677
Assets under construction 85,983   48,868  
2,898,139 2,810,623
Accumulated depreciation and depletion (1,097,624 ) (1,010,903 )
Property, plant, and equipment – net 1,800,515 1,799,720
Capitalized leases:
Buildings and improvements 11,227 16,827
Machinery and equipment 49,276   59,389  
60,503 76,216
Accumulated depreciation (21,317 ) (41,051 )
Capitalized leases – net 39,186 35,165
Cash and cash equivalents 208,078 48,873
Restricted cash 6,019 21,090
Accounts receivable – net of allowance of $5,706 and $5,309 at
December 31, 2018 and 2017, respectively
194,279 200,006
Identifiable intangible assets – net 25,056 26,645
Goodwill 186,095 188,169
Investments in partially owned entities 14,541 15,942
Other assets 58,659   59,287  
Total assets $ 2,532,428   $ 2,394,897  
Liabilities, Series B Preferred Shares and shareholders’ equity
(deficit)
Liabilities:
Borrowings under revolving line of credit $ $
Accounts payable and accrued expenses 253,080 241,259
Construction loan – net of deferred financing costs of zero and $179
at December 31, 2018 and 2017, respectively
19,492
Mortgage notes, senior unsecured notes and term loans – net of
discount and deferred financing costs of $13,943 and $31,996 in the
aggregate, at December 31, 2018 and 2017, respectively
1,351,014 1,721,958
Sale-leaseback financing obligations 118,920 121,516
Capitalized lease obligations 40,787 38,124
Unearned revenue 18,625 18,848
Pension and postretirement benefits 16,317 16,756
Deferred tax liability – net 17,992 21,940
Multi-Employer pension plan withdrawal liability 8,938   9,134  
Total liabilities 1,825,673 2,209,027
Commitments and Contingencies
Preferred shares of beneficial interest, $0.01 par value –
authorized 375,000 Series B Cumulative Convertible Voting and
Participating Preferred Shares; aggregate liquidation preference of
$375,000; zero and 375,000 shares issued and outstanding at December
31, 2018 and 2017, respectively
372,794
Shareholders’ equity (deficit):
Preferred shares of beneficial interest, $0.01 par value –
authorized 1,000 Series A Cumulative Non-Voting Preferred Shares;
aggregate liquidation preference of $125; zero and 125 issued and
outstanding at December 31, 2018 and 2017, respectively
Common shares of beneficial interest, $0.01 par value – authorized
250,000,000 shares; 148,234,959 and 69,370,609 issued and
outstanding at December 31, 2018 and 2017, respectively
1,482 694
Paid-in capital 1,356,133 394,082
Accumulated deficit (638,345 ) (581,470 )
Accumulated other comprehensive loss (12,515 ) (230 )
Total shareholders’ equity (deficit) 706,755   (186,924 )
Total liabilities, Series B Preferred Shares and shareholders’
equity (deficit)
$ 2,532,428   $ 2,394,897  
 

Contacts

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

Read full story here

error: Content is protected !!