Q1 2025 Americold Realty Trust Inc Earnings Call

May 8, 2025

Session will follow the formal presentation.

As a reminder, this conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host Kevin Reed Vice President of Investor Relations. Thank you Sir you may begin.

Sandra: Greetings and welcome to the Maricold Realty Trust first quarter 2025 earnings call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Speaker Change: Good morning, Thank you for joining us today for Americold Realty Trust first quarter 2025 earnings Conference call.

Speaker Change: In addition to the press release distributed this morning, we have filed a supplemental package with additional detail on our results, which is available in the Investor Relations section of our website at Www IR Dot Americold dotcom.

Sandra: Morning, Thanks for joining us today for Americold Realty Trust first quarter 2025 earnings Conference call. In addition to the press release distributed this morning, we have filed a supplemental package with additional detail on our results, which is available on the Investor Relations section on our website at Www IR.

Speaker Change: This mornings conference call is hosted by Medical's, Chief Executive Officer, George Chappelle, President of Americas, Rob Chambers, and Chief Financial Officer, Jay Wells, Matt.

Speaker Change: Management will make some prepared comments after which we will open up the call to your questions.

Speaker Change: On today's call management's prepared remarks may contain forward looking statements.

Sandra: They're called Dotcom.

George: This mornings conference call is hosted by Medical's, Chief Executive Officer, George <unk>, President of Americas, Rob Chambers, and Chief Financial Officer, Jay Wells management will make some prepared comments after which we will open up the call for your questions.

Speaker Change: Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.

Speaker Change: A number of factors could cause actual results to differ materially from those anticipated.

George: On today's call management's prepared remarks may contain forward looking statements forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.

Speaker Change: Forward looking statements are based on current expectations assumptions and beliefs as well as information available to us at this time and speak only as of the date that they are made and management undertakes no obligation to update publicly any of them in light of new information or future events.

George: A number of factors could cause actual results to differ materially from those anticipated.

Speaker Change: During this call, we will discuss certain non-GAAP financial measures, including core EBITDA and a S. S L.

George: Forward looking statements are based on current expectations assumptions and beliefs as well as information available to us at this time and speak only as of the day to day ever made and management undertakes no obligation to update publicly any of them in light of new information or future events.

Speaker Change: Definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the supplemental information package available on the company's website.

George Chappelle: Now I will turn the call over to George.

George: During this call, we will discuss certain non-GAAP financial measures, including core EBITDA and <unk>.

George Chappelle: Thank you Kevin and thank you all for joining our first quarter 2025 earnings Conference call. This morning, I am pleased to provide an update on our four key priorities our financial results for the quarter and some key operational metrics.

George: Definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained supplemental information package available on the company's website.

George: Now I will turn the call over to George.

George Chappelle: Rob will then discuss our customer service initiatives and development activity.

George: Thank you Kevin and thank you all for joining our first quarter 2025 earnings Conference call. This morning, I am pleased to provide an update on our four key priorities.

George Chappelle: And finally, Jerry will summarize our capital position and liquidity.

Speaker Change: As well as provide additional details on our outlook for the year.

Speaker Change: Before we dive into the quarter I want to briefly discuss our current view.

George: Financial results for the quarter and some key operational metrics.

Speaker Change: On the potential impacts of tariffs on our business.

George: Rob will then discuss our customer service initiatives and development activity.

Speaker Change: Based on our team's research.

George: And finally, Jerry will summarize our capital position and liquidity as.

Speaker Change: <unk> the direct impacts of relatively modest although this is obviously somewhat of a moving target.

Jerry: As well as provide additional details on our outlook for the year.

Speaker Change: Total import export activity in our business is generally small in the single digits in terms of a percentage of our revenue and primarily within North America.

Jerry: Before we dive into the quarter I want to briefly discuss our current view on the potential impacts of tariffs on our business.

Jerry: Based on our team's research we believe the direct impacts of relatively modest. Although this is obviously somewhat of a moving target.

Speaker Change: In addition, it appears that U S. M. C. A compliant goods that includes food grown in produce in Canada, and Mexico are exempt from the national emergency tariffs.

Jerry: Total import export activity in our business is generally small in the single digits in terms of a percentage of our revenue and primarily within North America.

Speaker Change: On a product basis.

Speaker Change: <unk> is the largest imported category into the U S, but fresh and frozen produce is only approximately 1% and 4% of our revenue respectively and most is domestically sourced as very little of our business is import export.

Jerry: In addition, it appears that U S. MCA compliant goods that includes food grown and produced in Canada, and Mexico are exempt from the national emergency tariffs.

Jerry: On a product basis produces the largest imported category into the U S, but fresh and frozen produce is only approximately 1% and 4% of our revenue respectively and most is domestically sourced as very little of our business is import export.

Speaker Change: Seafood is the second largest imported category in total and here too we have very limited exposure in our product mix in general our products tend to be center of the plate relying heavily on proteins potatoes, and prepared foods. These.

Speaker Change: These products historically have been more insulated from demand fluctuations than more expensive higher end steak and seafood products.

Jerry: Seafood is the second largest imported category in total and here too we have very limited exposure in our product mix in general our products tend to be center of the plate relying heavily on proteins potatoes, and prepared foods. These.

Speaker Change: However, beyond the direct impacts the ongoing trade rhetoric and changing tariff situation has already had an impact on consumer confidence, causing our customers to adjust their product portfolios and driving inventory levels down.

Jerry: These products historically has been more insulated from demand fluctuations.

Jerry: More expensive higher end steak and seafood products.

Speaker Change: In fact, the Michigan consumer sentiment index, a monthly survey that expresses how consumers feel about their finances, the general business environment and the economies future is now below the levels seen during the 2008 financial crisis and nearing levels last seen during the peak of Covid.

Jerry: However, beyond the direct impacts the ongoing trade rhetoric and changing tariff situation has already had an impact on consumer confidence, causing our customers to adjust their product portfolios and driving inventory levels down.

Jerry: In fact, the Michigan consumer sentiment index, a monthly survey that expresses how consumers feel about their finances, the general business environment and the economies future is now below the levels seen during the 2008 financial crisis and nearing levels last seen during the peak of Covid.

Speaker Change: Yeah.

Speaker Change: This was reinforced with the recent contraction in the first quarter GDP.

Speaker Change: The timing and magnitude of these indirect impacts are nearly impossible to quantify at this point and largely outside of our control.

Speaker Change: Given these increased headwinds we thought it was prudent to adjust our outlook for the year to reflect these risks.

Jerry: It.

Jerry: This was reinforced with the recent contraction in the first quarter GDP.

Speaker Change: Despite these near term challenges our team continues to execute very well and we delivered a strong start to the year largely due to the many improvements we have made to the business over the past few years.

Jerry: The timing and magnitude of these indirect impacts are nearly impossible to quantify at this point and largely outside of our control.

Jerry: Given these increased headwinds we thought it was prudent to adjust our outlook for the year to reflect these risks.

Speaker Change: As always we remain laser focused on our four key operational priorities.

Jerry: Despite these near term challenges our team continues to execute very well and we delivered a strong start to the year largely due to the many improvements we have made to the business over the past few years.

Speaker Change: Continuing to control, what we can control and partnering with customers to win their business every day.

Speaker Change: Now let me discuss the progress we've made on these priorities starting with customer service.

Jerry: As always we remain laser focused on our four key operational priorities.

Speaker Change: On last quarter's call. We highlighted several of the awards and recognition that we have received from customers over the past year.

Jerry: Continuing to control, what we can control and partnering with customers to win their business every day.

Speaker Change: Continuing to provide best in class service and unparalleled value is especially critical during a time when customers are holding lower levels of inventory and wanting to turn it faster.

Jerry: Now let me discuss the progress we've made on these priorities starting with customer service.

Jerry: On last quarter's call. We highlighted several of the awards and recognition that we have received from customers over the past year.

Speaker Change: As anticipated same store economic occupancy in the first quarter declined approximately 270 basis points sequentially from Q4 of 2024, reflecting a return to normal seasonality and ongoing market softness.

Jerry: Continuing to provide best in class service and unparalleled value is especially critical during a time when customers are holding lower levels of inventory and wanting to turn it faster.

Jerry: As anticipated same store economic occupancy in the first quarter declined approximately 270 basis points sequentially from Q4 of 2024, reflecting a return to normal seasonality and ongoing market softness.

Speaker Change: Notably our rent and storage revenue from fixed commitment contracts increased again this quarter to 60% achieving our previously stated goal.

Speaker Change: As a reminder, three years ago. This metric was under 40%.

Speaker Change: Reflecting over 2000 basis points of growth since we identified this as a top priority.

Jerry: Notably our rent and storage revenue from fixed commitment contracts increased again this quarter to 60%.

Speaker Change: This is a testament to our industry leadership and commercial excellence.

Jerry: <unk>, our previously stated goal.

Speaker Change: And reflects the collaborative sales approach, we take with customers to create a win win environment.

Jerry: As a reminder, three years ago. This metric was under 40%.

Speaker Change: Customers value, having fixed commitment contracts that ensure availability of space for their products.

Jerry: Reflecting over 2000 basis points of growth since we identified this as a top priority.

Speaker Change: Additionally, we continue to make progress capturing new business within our sales pipeline, which Rob will discuss later in the call.

Jerry: This is a testament to our industry leadership and commercial excellence and reflects the collaborative sales approach, we take with customers to create a win win environment.

Speaker Change: Turning to labor.

Speaker Change: Our efforts to improve hiring practices training and engagement that resulted in a much more stable and productive workforce.

Jerry: Customers value, having fixed commitment contracts that ensure availability of space for their products.

Jerry: Additionally, we continue to make progress capturing new business within our sales pipeline, which Rob will discuss later in the call.

Speaker Change: For example, we increased our perm to temp hours the ratio to 70 822.

Speaker Change: Up sequentially from 70 525 in the fourth quarter.

Jerry: Turning to labor our efforts to improve hiring practices training and engagement have resulted in a much more stable and productive workforce.

Speaker Change: This ties our previous record set in Q1 of last year.

Speaker Change: Associate turnover continues to come down and finished the quarter at 29% an improvement of approximately 300 basis points from 32% in the fourth quarter.

Jerry: For example, we increased our perm to temp hours ratio to 70 822.

Jerry: Up sequentially from $75 25 in the fourth quarter.

Speaker Change: Our third metric the percentage of associates with less than 12 months of service also improved 200 basis points from the prior quarter to 20%.

Jerry: This ties our previous record set in Q1 of last year.

Jerry: Associate turnover continues to come down and finished the quarter at 29% an improvement of approximately 300 basis points from 32% in the fourth quarter.

Speaker Change: The continued progress across all three of these labor metrics demonstrate the success of our focus on employees.

Jerry: Our third metric the percentage of associates with less than 12 months of service also improved 200 basis points from the prior quarter to 20%.

Speaker Change: As a result, our same store warehouse services margins in the quarter improved by 110 basis points year over year to 11, 2%.

Jerry: The continued progress across all three of these labor metrics demonstrate the success of our focus on employee retention.

Speaker Change: Which based on the seasonality of our business keeps us on track to deliver service margins in excess of 12% for the year.

Jerry: As a result, our same store warehouse services margins in the quarter improved by 110 basis points year over year to 11, 2%.

Speaker Change: Turning to pricing for the first quarter, our same store rent and storage revenue per economic occupied pallet.

Jerry: Which based on the seasonality of our business keeps us on track to deliver service margins in excess of 12% for the year.

Speaker Change: On a constant currency basis increased approximately 2% versus the prior year.

Speaker Change: And same store services revenue per throughput pallet increased over 3%.

Jerry: Turning to pricing for the first quarter.

Jerry: Our same store rent and storage revenue per economic occupied pallet.

Speaker Change: This is exceptional performance in a market, where we see other competitors trying to use price as a way to win business.

Jerry: On a constant currency basis increased approximately 2% versus the prior year.

Speaker Change: We deliver far more value with the best operator in the industry and as such are more capable of balancing price and volume versus our competitors where prices they're only lever.

Jerry: And same store services revenue per throughput pallet increased over 3%.

Jerry: This is exceptional performance in a market, where we see other competitors trying to use price as a way to win business.

Speaker Change: While we realize the pricing is under pressure and will certainly defend our market share as appropriate. We are also committed to maintaining fair value for our mission critical infrastructure and the outstanding service our associates provide to ensure our customers' products are handled safely and act.

Jerry: We deliver far more value with the best operator in the industry and as such are more capable of balancing price and volume versus our competitors where prices they're only lever.

Jerry: While we realize the pricing is under pressure and will certainly defend our market share as appropriate. We are also committed to maintaining fair value for our mission critical infrastructure and the outstanding service our associates provide to ensure our customers' products are handled safely and accurately.

Speaker Change: Or at least every day.

Speaker Change: On the development front, we continue to manage a high quality low risk pipeline.

Speaker Change: Of about $1 billion and opportunities.

Speaker Change: At the end of January we announced the development project in Port St John Canada.

Jerry: With me every day.

Speaker Change: With our strategic partners C. P T a C and D P world.

Jerry: On the development front, we continue to manage a high quality low risk pipeline.

Speaker Change: This facility will be the first of its kind globally to bring together a miracle warehouse solutions with the maritime logistics capabilities of DP World and the rail logistics solutions of C. P. K C.

Jerry: Of about $1 billion and opportunities.

Jerry: At the end of January we announced the development project in Port St John Canada.

Jerry: With our strategic partners C. P T a C and D P world.

Speaker Change: We are very excited about the potential for this combination at Americold will be recognized as the keynote speaker at the Port St. John Port days event later this month.

Jerry: This facility will be the first of its kind globally to bring together a miracle warehouse solutions with the maritime and logistics capabilities of DP World and the rail logistics solutions of C. P. K C.

Speaker Change: In March we also announced an expansion at our Christchurch New Zealand facilities.

Speaker Change: Doubling the site's capacity to support the growth requirements of an existing retail customer.

Jerry: We are very excited about the potential for this combination and americold will be recognized as the keynote speaker at the Port St. John Port days event later this month.

Speaker Change: In the U S. We continue to see progress with our two automated retail distribution facilities in Lancaster, Pennsylvania, and Plainville, Connecticut.

Jerry: In March we also announced an expansion at our Christchurch New Zealand facility.

Speaker Change: As a reminder, these facilities are fully dedicated to alcohol delhaize under a long term lease agreement and will serve approximately 750 of their stores in the northeast and mid Atlantic regions. Americold is uniquely qualified to handle this retail business.

Jerry: Doubling the site's capacity to support the growth requirements of an existing retail customer.

Jerry: In the U S. We continue to see progress with our two automated retail distribution facilities in Lancaster, Pennsylvania, and Plainville, Connecticut.

Speaker Change: Which is operationally complex and fast turning.

Jerry: As a reminder, these facilities are fully dedicated to alcohol delhaize under a long term lease agreement and will serve approximately 750 of their stores in the northeast and mid Atlantic regions.

Speaker Change: These facilities are under fully fixed commitment contracts, reflecting 100% economic occupancy as soon as the product inbounds, we remain on track to stabilize Lancaster in Q3, and plainville by the end of the year.

Jerry: Americold is uniquely qualified to handle this retail business.

Jerry: Which is operationally complex and fast turning.

Speaker Change: I also want to highlight the acquisition in Houston that we completed in March Rob will share with you. The specific details, but this transaction was driven by a significant retail customer wins from our new business pipeline.

Jerry: These facilities are under fully fixed commitment contracts, reflecting a 100% economic occupancy as soon as the product and bumps we remain on track to stabilize Lancaster in Q3, and plainville by the end of the year.

Speaker Change: The purchase of this facility allowed us to move inventory from an existing location.

Speaker Change: Over to the newly purchased site so that we could accommodate the new customer agreement at the existing site.

Speaker Change: We expect the asset utilization to be stabilized in Q1 of 2027.

Speaker Change: This transaction highlights our strategy to creatively deploy capital in a way that unlocks customer growth opportunities and our sales pipeline.

Speaker Change: The purchase of this facility allowed us to move inventory from an existing location.

Speaker Change: Over to the newly purchased site so that we could accommodate the new customer agreement at the existing site.

Speaker Change: Turning to our financial results for the quarter.

Speaker Change: We expect the asset utilization to be stabilized in Q1 of 2027.

Speaker Change: Our Q1 2025 <unk> per share was 34 cents in line with expectations. As a reminder, we were lapping unusually high counter cyclical inventory levels.

Speaker Change: This transaction highlights our strategy to creatively deploy capital in a way that unlocks customer growth opportunities and our sales pipeline.

Speaker Change: Last year during what is typically one of our lowest quarters of the year. Additionally.

Speaker Change: Turning to our financial results for the quarter.

Speaker Change: Our Q1 2025 <unk> per share was 34 cents inline with expectations. As a reminder, we were lapping unusually high counter cyclical inventory levels.

Speaker Change: As well as $3 million of expense and labor costs that could be capitalized last year as part of project Orion.

Speaker Change: Last year during what is typically one of our lowest quarters of the year. Additionally.

Speaker Change: Additionally, as Jay mentioned last quarter, we also had incremental licensing expense of approximately $4 million in the quarter associated with our new technology environment as well as $3 million of expense labor costs that could be capitalized last year as part of project Orion.

Speaker Change: I'm also pleased to announce that during the first quarter. Our board approved an increase in our quarterly dividend by approximately 5% to 23 per share.

Speaker Change: This reflects our ongoing confidence in americold operational resilience and cash flow generation as well as the long term attractive fundamentals of the cold storage industry.

Speaker Change: I'm also pleased to announce that during the first quarter. Our board approved an increase in our quarterly dividend by approximately 5% to 23 cents per share.

Rob Chambers: Now I'd like to turn the call over to Rob. So he can further discuss our customer service operational and development initiatives in greater detail.

Speaker Change: This reflects our ongoing confidence in americold operational resilience and cash flow generation as well as the long term attractive fundamentals of the cold storage industry now.

Rob Chambers: Thank you George.

Rob Chambers: Our unparalleled focus on customer service remains our top priority to accelerate market share growth over the next several years.

Rob: Now I'd like to turn the call over to Rob. So he can further discuss our customer service operational and development initiatives in greater detail.

Rob Chambers: We look forward to continuing to deliver unique value creation opportunities through initiatives like our strategic partnerships with C. P. K C and D P World.

Rob: Thank you George.

Rob Chambers: The innovative solutions created by our supply chain solution group.

Rob: Our unparalleled focus on customer service remains our top priority to accelerate market share growth over the next several years.

Rob Chambers: Our newly launched project Orion system in North America, and APAC, which is expanding into Europe next.

Rob: We look forward to continuing to deliver unique value creation opportunities through initiatives like our strategic partnerships with C. P Casey and DP World.

Rob Chambers: In the first quarter same store rent and storage revenue per economic occupied pallet on it.

Rob Chambers: Constant currency basis increased by approximately 2% versus the prior year.

Rob: The innovative solutions created by our supply chain solution group and our newly launched project Orion system in North America, and APAC, which is expanding into Europe next.

Rob Chambers: Same store constant currency services revenue per throughput pallet increased by over 3%.

Rob Chambers: These results are in line with expectations and reflect the great progress we have made over the past couple of years, ensuring that our pricing reflects the quality of service.

Rob: In the first quarter same store rent and storage revenue for economic occupied pallet on a constant currency basis increased by approximately 2% versus the prior year.

Rob Chambers: Marigold offers we.

Rob Chambers: We will continue to remain disciplined in our approach to pricing, while also balancing competitive pressures from those less sophisticated in this area.

Rob: Same store constant currency services revenue per throughput pallet increased by over 3%.

Rob: These results are in line with expectations and reflect the great progress we have made over the past couple of years, ensuring that our pricing reflects the quality of service that Americold offers.

Rob Chambers: Within our global warehouse segment, we had no material changes to the composition of our top 25 customers, who account for approximately 52% of our global warehouse revenue on a pro forma basis.

Rob: We will continue to remain disciplined in our approach to pricing, while also balancing competitive pressures from those less sophisticated in this area.

Rob Chambers: Our churn rate remains low at less than 4%.

Rob Chambers: We continue to be successful in converting customers to fixed commitment contracts for the first quarter rent and storage revenue derived from fixed commitment storage contracts increased to 60% our 16th straight quarterly record.

Rob: Within our global warehouse segment, we had no material changes to the composition of our top 25 customers, who account for approximately 52% of our global warehouse revenue on a pro forma basis.

Rob: Our churn rate remains low at less than 4%.

Rob Chambers: The fact that we have grown this metrics so significantly over the past four years are a testament to our approach the peace of mind customers get from having committed space for their products and their willingness to commit and grow with providers. They trust.

Rob: We continue to be successful in converting customers to fixed commitment contracts for the first quarter rent and storage revenue derived from fixed commitment storage contracts increased to 60%.

Rob Chambers: Achieving our stated goal of 60% represents a major milestone for Americold as we continue to lead the industry and commercial excellence.

Rob: <unk> straight quarterly record.

Rob: The fact that we have grown this metrics so significantly over the past four years, a testament to our approach the peace of mind customers get from having committed space for their products and their willingness to commit and grow with providers. They trust.

Rob Chambers: As a reminder, the vast majority of our fixed commitments are commercialized under longer term agreements and do not involve annual resets.

Rob: Achieving our stated goal of 60% represents a major milestone for Americold as we continue to lead the industry and commercial excellence.

Rob Chambers: This is a key difference between our customer commitments and those of other providers and further highlights our commercial leadership in the industry.

Rob: As a reminder, the vast majority of our fixed commitments are commercialized under longer term agreements and do not involve annual resets.

Rob Chambers: Americold offers the ability to support our customers at every node in the supply chain.

Rob Chambers: And with a wide offering of value added services.

Rob Chambers: These value add they're going to be critical as customers look for efficiencies across our supply chain.

Rob: This is a key difference between our customer commitments and those of other providers and further highlights our commercial leadership in the industry.

Rob Chambers: This quality of service has been instrumental in capitalizing on new business opportunities as.

Rob: Americold offers the ability to support our customers at every node in the supply chain.

Rob Chambers: As you remember, we entered the year with a $200 million probability weighted pipeline.

Rob: And with a wide offering of value added services. These value add they're going to be critical as customers look for efficiencies across our supply chain.

Rob Chambers: And we have already successfully close on approximately half of these opportunities.

Rob Chambers: And a roughly 40% ahead of where we were at this time last year.

Rob: This quality of service has been instrumental in capitalizing on new business opportunities.

Rob Chambers: As a reminder, the inventory typically takes a few months to transition into our warehouses. After an agreement is signed and in an environment like today this could take longer.

Rob: As you remember, we entered the year with a $200 million probability weighted pipeline.

Rob: And we have already successfully close on approximately half of these opportunities.

Rob Chambers: Growth in our retail business continues to be a key driver in the success of converting our sales pipeline.

Rob: And a roughly 40% ahead of where we were at this time last year.

Rob Chambers: Retail business tends to be the most challenging and labor intensive business in the cold chain and the continued growth in retail demonstrates americold capability as a top operator, given our outsize share in this space.

Rob: As a reminder, the inventory typically takes a few months to transition into our warehouses. After an agreement is signed and in an environment like today this could take longer.

Rob: Growth in our retail business continues to be a key driver in the success of converting our sales pipeline.

Rob Chambers: Next let me provide some additional details regarding the acquisition in Houston that George mentioned earlier as it highlights several elements of our strategy.

Rob: Retail business tends to be the most challenging and labor intensive business in the cold chain and the continued growth in retail demonstrates americold capability as a top operator, given our outsized share in this space.

Rob Chambers: We are investing a total of $127 million.

Rob Chambers: Including both the purchase price as well as planned equipment upgrades. Additionally.

Rob Chambers: Additionally.

Rob Chambers: The price include land for potential future expansion opportunities.

Rob: Next let me provide some additional details regarding the acquisition in Houston that George mentioned earlier as it highlights several elements of our strategy.

Rob Chambers: This increases our capacity in the Houston market by approximately 36000 pallet positions with.

Rob: We are investing a total of $127 million.

Rob Chambers: The facility was constructed in 2022.

Rob: Including both the purchase price as well as planned equipment upgrades. Additionally.

Rob Chambers: The catalyst for this acquisition was a new fixed commitment contract with one of the worlds largest retailers are significant went from our sales pipeline.

Rob: Additionally.

Rob: The price include land for potential future expansion opportunities.

Rob: This increases our capacity in the Houston market by approximately 36000 positions.

Rob Chambers: The purchase of this facility allowed us to move inventory from an existing location into the newly acquired low occupancy site opening space for the new fixed commitment customer.

Rob: The facility was constructed in 2022.

Rob: The catalyst for this acquisition was a new fixed commitment contract with one of the worlds largest retailers are significant went from our sales pipeline.

Rob Chambers: Retail business as I mentioned earlier is a key focus for us.

Rob Chambers: America rigorous operational standards are well suited to the needs of this customer which has high turning an operationally intensive.

Rob: The purchase of this facility allowed us to move inventory from an existing location into the newly acquired low occupancy site opening space for the new fixed commitment customer.

Rob Chambers: In addition, our flexible network allowed for an efficient allocation of inventory to maximize occupancy across both sites and accommodate this new customer growth.

Rob: Retail business as I mentioned earlier is a key focus for us miracles rigorous operational standards are well suited to the needs of this customer which has high turning an operationally intensive.

Rob Chambers: This building requires some capital investment in order to accommodate our customers' profiles and meet Americold operating standards, but we anticipate that once it is fully stabilized and will generate returns between 10% to 12%.

Rob: In addition, our flexible network allowed for an efficient allocation of inventory to maximize occupancy across those sites and accommodate this new customer growth.

Rob Chambers: We anticipate seeing some NOI benefit from the acquisition in the later part of the year.

Rob: This building requires some capital investment in order to accommodate our customers' profiles and meet Americold operating standards, but we anticipate that once it is fully stabilized and will generate returns between 10% to 12%.

Rob Chambers: In the non same store pool. However, the additional interest expense for this project will result in no change to <unk> for this year.

Rob Chambers: Now, let me comment on three projects going live in Q2, Kansas.

Rob: We anticipate seeing some NOI benefit from the acquisition in the later part of the year.

Rob Chambers: Kansas City, Missouri, Allentown, Pennsylvania, and our RSA JV development in Dubai.

Rob: In the non same store pool. However, the additional interest expense for this project will result in no change to <unk> for this year.

Rob Chambers: Starting with Kansas City. This is $127 million Greenfield facility being developed in collaboration with CDK see on one of their major railways.

Rob: Now, let me comment on three projects going live in Q2, Kansas City, Missouri, Allentown, Pennsylvania, and our RSA JV development in Dubai Star.

Rob Chambers: This facility supports C Pkc's, Mexico Midwest Express premium intermodal service.

Rob Chambers: Which is North America is the only single line rail service offering for our refrigerated shippers between U S Midwest markets in Mexico.

Rob: Starting with Kansas City. This is $127 million Greenfield facility being developed in collaboration with CDK see on one of their major railroads.

Rob Chambers: This resulted in customers being able to clear customs in Kansas City, and bypass significant truck congestion at the Mexico border, thereby reducing transit times transportation costs and food waste for.

Facilities support C P Casey's, Mexico Midwest Express premium intermodal service.

Rob: Which is North America is the only single line rail service offering for our refrigerated shippers between U S Midwest markets in Mexico.

Rob Chambers: The facility will be opening later this quarter and this deployment could not have come at a better time, given our customers' increased desire to optimize their north American supply chains wherever possible.

Rob: This resulted in customers being able to clear customs in Kansas City, and bypass significant truck congestion at the Mexico border, thereby reducing transit times transportation costs in food waste.

Rob Chambers: Secondly, our $85 million of Allentown expansion, which was the result of very strong demand from our customer base. In this key distribution market. This expansion will add approximately 37000 pallet positions and approximately 15 million cubic feet.

Rob: The facility will be opening later this quarter and this deployment could not have come at a better time, given our customers' increased desire to optimize their north American supply chains wherever possible.

Rob Chambers: As a reminder expansion projects are our lowest risk highest return development projects.

Rob: Secondly, our $85 million of Allentown expansion, which was the result of very strong demand from our customer base in this key distribution market.

Rob Chambers: Due to our embedded customer base local market knowledge and the ability to leverage our existing operating platform and infrastructure.

Rob: Expansion will add approximately 37000 pallet positions and approximately 15 million cubic feet.

Rob Chambers: Finally, our $35 million Sandy art flagship build with DP World and the Port of Jebel Ali in Dubai will also launch in the second quarter.

Rob: As a reminder expansion projects, our lowest risk highest return development projects due to our embedded customer base local market knowledge and the ability to leverage our existing operating platform and infrastructure.

Rob Chambers: This facility is 40000 pallet positions and offers multi temperature capabilities connecting a DP world's best in class logistics solutions.

Rob: Finally, our $35 million Saturday, our flagship build with DP world and the Port of Jebel Ali in Dubai will also launch in the second quarter.

Rob Chambers: This was completed through our RSA joint venture, which is a scalable operating platform for market entry and expansion throughout the middle East.

Rob: This facility is 40000 pallet positions and offers multi temperature capabilities connecting a DP world's best in class logistics solutions.

Rob Chambers: Additionally, we have several other active expansion and development projects in process and all projects continue to be on time and on budget.

Rob Chambers: Our $30 million 13000, pallet position expansion in Sydney, Australia are 150 million dollar 50000 pallet position automated expansion in Dallas Fort Worth Texas.

Rob: This was completed through our RSA joint venture, which is a scalable operating platform for market entry and expansion throughout the middle East.

Rob: Additionally, we have several other active expansion and development projects in process and all projects continue to be on time and on budget.

Rob Chambers: $34 million 16000, pallet position expansion in Christchurch New Zealand.

Rob Chambers: Finally, our $79 million 22000, pallet position development in Port St John and partnership with both DP World and C. P. Casey.

Rob: Our $30 million 13000, pallet position expansion in Sydney, Australia are 150 million dollar 50000 pallet position automated expansion in Dallas Fort Worth Texas.

Rob Chambers: In total this represents approximately $500 million of active expansion and development projects.

Rob: Our $34 million 16000, pallet position expansion in Christchurch New Zealand.

Rob Chambers: Our development pipeline remains strong at about $1 billion, and we continue to identify top notch opportunities with that I'll turn it over to Jay.

Finally, our $79 million 22000, pallet position development in Port St John and partnership with both DP World and C. P. Casey.

Jay Wells: Thank you Rob the first quarter was in line with expectations, reflecting strong continued execution by our sales and operations teams.

Rob: In total this represents approximately $500 million of active expansion and development projects.

Jay Wells: With respect to our full year 2025 guidance since providing our initial guidance. The macroeconomic environment continues to change in unprecedented ways with higher tariffs increased risks of inflation federal spending cuts and lower consumer confidence along with other factors.

Rob: Our development pipeline remains strong at about $1 billion, and we continue to identify top notch opportunities with that I'll turn it over to Jay.

Speaker Change: Thank you Rob the first quarter was in line with expectations, reflecting strong continued execution by our sales and operations teams.

Jay: With respect to our full year 2025 guidance since providing our initial guidance. The macroeconomic environment continues to change in unprecedented ways with higher tariffs increased risks of inflation federal spending cuts and lower consumer confidence along with other factors.

Jay Wells: Based on the macroeconomic environment and ongoing discussions with customers. We now expect <unk> per share to be between $1 42, and $1 52 for the year.

Jay Wells: Now turning to the individual components of our <unk> guidance and starting with our global warehouse segment. We expect full year 2025 same store constant currency revenue growth to be in the range of flat to up 2%.

Jay: Based on the macroeconomic environment and ongoing discussions with customers. We now expect <unk> per share to be between $1 42, and $1 52 for the year.

Jay Wells: Let me provide more detail around the key drivers behind this guide.

Jay: Now turning to the individual components of our <unk> guidance and starting with our global warehouse segment. We expect full year 2025 same store constant currency revenue growth to be in the range of flat to up 2%.

Jay Wells: With respect to occupancy and throughput volumes, we now expect economic occupancy to be in the range of negative 200 basis points to flat compared to 2024 and throughput volume to be in the range of negative 1% to positive 1%.

Jay: Let me provide more detail around the key drivers behind this guide with respect to occupancy and throughput volumes. We now expect economic occupancy to be in the range of negative 200 basis points to flat compared to 2024 and throughput volume to be in the range of negative 1% to positive 1%.

Jay Wells: As a reminder, we are still lapping some counter cyclical build up inventory through the first half of this year and have sequentially returned to more normal seasonal inventory trends with Q2 expected to be similar to Q1.

Jay Wells: Claude by sequential growth in the back half of the year, however, somewhat muted due to the current environment.

Jay: As a reminder, we are still lapping some counter cyclical build up inventory through the first half of this year. It has sequentially returned to more normal seasonal inventory trends with Q2 expected to be similar to Q1, followed by sequential growth in the back half of the year, However, somewhat muted due to.

Jay Wells: These assumptions include the benefits of our recent customer wins, but are not assuming a recovery in the U S economic conditions.

Jay Wells: With respect to pricing, we now expect constant currency rent and storage revenue per economic occupied pallet growth to be in the range of 1% to 2% in constant currency services revenue per throughput pallet growth to also be in the range of 1% to 2%.

Jay: The current environment.

Jay: These assumptions include the benefits of our recent customer wins, but are not assuming a recovery in the U S economic conditions.

Jay Wells: This assumes the positive impact of our contractual annual general rate increases, although we have dampened our pricing expectations given the unusual pricing activities. We have observed in the market by some of our competitors.

Jay: The pricing, we now expect constant currency rent and storage revenue per economic occupied pallet growth to be in the range of 1% to 2% in constant currency services revenue per throughput pallet growth to also be in the range of 1% to 2%.

Jay Wells: For the full year, our same store constant currency NOI growth is forecasted to be in the range of one 3%.

Jay: This assumes the positive impact of our contractual annual general rate increases, although we have dampened our pricing expectations given the unusual pricing activities. We have observed in the market by some of our competitors.

Jay Wells: This reflects the more conservative occupancy and revenue assumptions I mentioned earlier, partially offset by a continued focus on tight cost controls across the business and a continued focus on efficiencies.

Jay: For the full year, our same store constant currency NOI growth is forecasted to be in the range of one 3%.

Speaker Change: On the services side, our 2025 same store pool services margins were approximately 12% in 2024 and as George mentioned, we believe we can grow services margins in excess of 12% for the full year 2025, aided by our continued productivity initiatives.

Jay: This reflects the more conservative occupancy and revenue assumptions I mentioned earlier, partially offset by a continued focus on tight cost controls across the business and a continued focus on efficiencies.

Jay Wells: And the benefits from project Orion.

Jay Wells: With regards to the 2025 non same store pool for the full year, we expect the non same store pool to generate NOI in the range of $7 million to $13 million, an increase from our previous outlook to reflect the Houston acquisition as well as our forecasted ramp of our plainville and Lancaster facilities.

George: And the benefits from project Orion.

George: With regards to the 2025 non same store pool for the full year, we expect the non same store pool to generate NOI in the range of $7 million to $13 million, an increase from our previous outlook to reflect the Houston acquisition as well as our forecasted ramp of our plainville and Lancaster facilities at.

Jay Wells: At the end of the here.

Jay Wells: Also as mentioned during last quarter's earnings call. We are strategically exiting five facilities. This year. The majority of which are leased as a reminder, a significant amount of that business in each of these facilities can be consolidated into other owned locations reducing cost significantly.

George: The end of the year.

George: Also as mentioned during last quarter's earnings call. We are strategically exiting five facilities. This year. The majority of which are at least as a reminder, a significant amount of that business in each of these facilities can be consolidated into other owned locations reducing cost significantly.

Jay Wells: Completed wanted these strategic exits during the first quarter and we remain on track to exit the additional facilities throughout 2025.

Jay Wells: Additionally, we identified two other facilities that are candidates for a strategic exit and have moved these two facilities to our non same store pool.

George: We completed one of these strategic exits during the first quarter and we remain on track to exit the additional facilities throughout 2025.

Jay Wells: A significant amount of the business and these two facilities will also be relocated to nearby facilities generating meaningful cost savings.

George: Additionally, we identified two other facilities that are candidates for a strategic exit and have moved these two facilities to our non same store pool.

Jay Wells: We expect the manage and transportation segments NOI to be in the range of $40 million to $44 million.

Jay Wells: We expect core SG&A to now be in the range of $230 million to $236 million for the year.

George: A significant amount of the business and these two facilities will also be relocated to nearby facilities generating meaningful cost savings.

Jay Wells: Well, we will have incremental licensing and cyber security expense. This year as discussed during the previous call. We have been able to partially offset these increases by identifying a number of targeted cost reduction initiatives.

George: We expect the manage and transportation segments NOI to be in the range of $40 million to $44 million.

George: We expect core SG&A to now be in the range of $230 million to $236 million for the year.

Jay Wells: That don't compromise our ability to service our customers.

Jay Wells: For the full year interest expense is expected to be in the range of $153 million to $157 million updated for the impact of the Houston acquisition, and our recent bond offering which I will discuss in just a moment.

George: We will have incremental licensing and cyber security expense. This year as discussed during the previous call. We have been able to partially offset these increases by identifying that number of targeted cost reduction initiatives.

George: That don't compromise our ability to service our customers.

Full year cash taxes is expected to be in the range of $8 million to $10 million with maintenance capital expenditures of $80 million to $85 million in development starts in the range of $200 million to $300 million.

George: For the full year interest expense is expected to be in the range of $153 million to $157 million updated for the impact of the Houston acquisition, and our recent bond offering which I will discuss in just a moment.

Jay Wells: Please keep in mind that our guidance does not include the impact of acquisitions dispositions or capital markets activity beyond that which has been previously announced.

George: Full year cash taxes is expected to be in the range of $8 million to $10 million with maintenance capital expenditures of $80 million to $85 million in development starts in the range of $200 million to $300 million.

Jay Wells: Turning to the balance sheet at quarter end total net debt outstanding was $3 $7 billion with total liquidity of approximately $651 million consisting of cash on hand and revolver availability.

George: Please keep in mind that our guidance does not include the impact of acquisitions dispositions or capital markets activity beyond that which has been previously announced.

Jay Wells: Net debt to pro forma core EBITDA was approximately five nine times.

George: Turning to the balance sheet at quarter end total net debt outstanding was $3 $7 billion with total liquidity of approximately $651 million consisting of cash on hand and revolver availability.

Jay Wells: Additionally, during this quarter, we completed a public bond offering of $400 million with an interest rate of five 6% and a maturity date in 2032.

Jay Wells: The proceeds were used to repay a portion of our revolver borrowings and a seven year maturity fits nicely into our existing debt maturity ladder.

George: Net debt to pro forma core EBITDA was approximately five nine times.

George: Additionally, during this quarter, we completed a public bond offering of $400 million with an interest rate of five 6% and a maturity date in 2032.

Jay Wells: This bond was price during Q1, but closed and was funded during Q2.

Jay Wells: This is another example of America the ability to quickly take advantage of market opportunities.

George: The proceeds were used to repay a portion of our revolver borrowings and a seven year maturity fits nicely into our existing debt maturity ladder.

Jay Wells: Also during the quarter, we entered into an agreement to exit our minority ownership interest in the Super Frio joint venture in Brazil.

George: This bond was price during Q1, but closed and was funded during Q2.

Jay Wells: The sale price was approximately $27 $5 million and the proceeds were received in late April.

George: This is another example of America the ability to quickly take advantage of market opportunities.

Jay Wells: This sale in addition to the strategic exits we intend to make this year, our disciplined efforts to rationalize our portfolio and allow us to strategically redeploy capital in higher returning projects to drive maximum shareholder value now, let me turn the call back to George for some closing remarks.

George: Also during the quarter, we entered into an agreement to exit our minority ownership interest in the Super Frito joint venture in Brazil.

George: The sale price was approximately $27 $5 million and the proceeds were received in late April.

George: This sale in addition to the strategic exits we intend to make this year, our disciplined efforts to rationalize our portfolio and allow us to strategically redeploy capital in higher returning projects to drive maximum shareholder value now, let me turn the call back to George for some closing remarks.

George Chappelle: Thank you Jay our business Foundation remains strong and we remain confident in our ability to continue to offer long term unique value creation opportunities for our customers.

George Chappelle: We have a proven operating model and are leveraging the benefits from our recent investments over the past couple of years.

George: Thank you Jay our business Foundation remains strong and we remain confident in our ability to continue to offer long term unique value creation opportunities for our customers we.

George Chappelle: Timing of our recent initiatives could not have been better.

In America today benefits from improved operating efficiencies.

George Chappelle: Upgraded systems.

George Chappelle: Unique strategic partnerships strengthen customer relationships and a high quality development pipeline.

Speaker Change: We have a proven operating model and are leveraging the benefits from our recent investments over the past couple of years.

George Chappelle: These benefits will continue to grow when volume ultimately returns driving value for our shareholders.

George: Timing of our recent initiatives could not have been better.

George: In Americold today benefits from improved operating efficiencies.

George Chappelle: Our industry is full of Aggregators, but has very few operators.

George: Graded systems.

George: Unique strategic partnerships.

George Chappelle: Americold is a trust.

George: Strengthen customer relationships and a high quality development pipeline.

Speaker Change: <unk>, operator that delivers value far beyond price per pallet position, which is why we can take a more balanced approach to how we operate our business over the long term.

George: These benefits will continue to grow when volume ultimately returns driving value for our shareholders.

George: Our industry is full of Aggregators, but has very few operators.

Speaker Change: I could not pick a better group of individuals to have on our team and want to extend a heartfelt. Thank you to the 14000 associates, who work tirelessly each day to bring our vision to life.

George: Americold is a trusted and experienced operator that delivers value far beyond price per pallet position, which is why we can take a more balanced approach to how we operate our business over the long term.

Speaker Change: I will now turn the call over to the operator for questions operator.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

George: I could not pick a better group of individuals to have on our team and want to extend a heartfelt. Thank you to the 14000 associates, who work tirelessly each day to bring our vision to life.

Speaker Change: We ask analysts to limit themselves to one question and a follow up so that others may have the opportunity to keep so as well you.

George: I will now turn the call over to the operator for questions operator.

Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

George: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: One moment, please while we poll for questions.

George: We ask analysts to limit themselves to one question and a follow up so that others may have the opportunity to keep you.

Speaker Change: Our first question comes from Samir Khanal with Bank of America. Please proceed with your question.

George: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Hey, good morning, everybody.

George Chappelle: Hey, George I know on the one hand, you said.

Speaker Change: The impact from tariffs.

Speaker Change: Should be modest, but the demand seems to be really impacted here, maybe you can sort of separate the conversation.

Speaker Change: Our first question comes from Samir Khanal with Bank of America. Please proceed with your question.

Speaker Change: You are having with customers sort of that let's call. It before April two.

Samir Khanal: Hey, good morning, everybody.

Speaker Change: And post <unk>.

Speaker Change: Hey, George I know on the one hand, you said.

Speaker Change: And at what point did you really start to see a slowdown in demand I mean, you reported in <unk>.

Speaker Change: The impact from tariffs.

Speaker Change: Towards the end of February to walk us through the conversations that started sort of in March.

Speaker Change: Should be modest, but the demand seems to be really impacted here, maybe you can sort of separate the conversations.

Speaker Change: You know, let's call. It early April in late April.

Speaker Change: You are having with customers sort of that let's call. It before April two.

Speaker Change: Yeah. Good morning, Sameer are what I would say is that our what we said in the script was the direct impacts of terrorists are relatively modest however, the indirect impacts including the impact on consumer confidence is significant.

Speaker Change: And post <unk>.

Speaker Change: And at what point did you really start to see a slowdown in demand I mean, you reported in <unk>.

Speaker Change: Towards the end of February to walk us through the conversations that started sort of in March.

Speaker Change: Let's call it early April.

Speaker Change: And that's driven by inflation fears that the new tariffs are driving so I would say the environment is completely different from when we first.

Speaker Change: Thanks.

Speaker Change: Yeah. Good morning, Sameer are what I would say is that our what we said in the script was the direct impacts of terrorists or relatively modest however, the indirect impacts including the impact on consumer confidence is significant.

Speaker Change: Announced our guidance for the year is changed drastically in the last 30 to 45 days for not just the miracle, but just about everybody out there and that's the number one driver of our revised guidance, our conversations with customers around slowing down plans for expansion slowing down plans for growth and waiting.

Speaker Change: And that's driven by inflation fears that the new tariffs are driving so I would say the environment is completely different from when we first.

Speaker Change: Announced our guidance for the year, it's changed drastically in the last 30 to 45 days for not just America, but just about everybody out there and that's the number one driver of our revised guidance, our conversations with customers around slowing down plans for expansion slowing down plans for growth and waiting.

Speaker Change: For the environment to stabilize we elected to revise our guidance because we thought it was the prudent thing to do given the environment. We see today for the reasons I just mentioned.

Speaker Change: Okay. Thank you and then I guess, just as a follow up on maybe talk around pricing.

Speaker Change: <unk> for the environment to stabilize.

Speaker Change: It seems like you're a little bit more optimistic than your peer that reported.

Speaker Change: We elected to revise our guidance because we thought it was the prudent thing to do given the environment. We see today for the reasons I just mentioned.

Speaker Change: Recently, what gives you the confidence in that sort of still having some growth in pricing.

Speaker Change: Given the demand headwinds.

Speaker Change: Okay. Thank you and then I guess, just as a follow up on maybe talk around pricing.

Speaker Change: Goodbye.

Speaker Change: Well the value we provide customers familiar has not diminished in the last 60 days. So we feel as though we create an environment, where there is a win win for our customers. They see the value in our customer service and we feel very confident that the pricing we have in the marketplace as appropriate now we did say that.

Speaker Change: It seems like you're a little bit more optimistic than your peer that reported.

Speaker Change: Recently, what gives you the confidence in that sort of still having some growth in pricing.

Speaker Change: Given the demand headwinds.

Speaker Change: Spoke about.

Speaker Change: As you referred to are our competitor reducing price, we're going to come under pricing pressure. We believe that we have the tools in place to balance price and occupancy. We think we know the market better than anybody we think we're better than anybody in communicating the value we provide to customers.

Speaker Change: And that's why you saw a price go up but maybe I'll hand, it over to Rob for a few comments as well considering he's he's closer to the customers on a daily basis.

Rob Chambers: Sure I mean, I think what what I, what I would add I mean, we came into the year end and we're doing exactly what we said we're gonna do we implemented our annual general rate increases at the beginning of the year those are contractual in nature, you'll see that reflected in our Q1 results where our storage revenue was up.

Speaker Change: And that's why you saw a price go up but maybe I'll hand, it over to Rob for a few comments as well considering he's he's closer to the customers on a daily basis.

Rob: Sure I mean, I think what what I, what I would add I mean, we came into the year end and we're doing exactly what we said we were gonna do we implemented our annual general rate increases at the beginning of the year. Those are you know.

Rob Chambers: Nearly 2% in our handling revenue per throughput pallet up over over 3%. So those all those will carry through to the end throughout the course of the year, we are pricing new business consistent with what we think is market rates and in most cases market rates, we believe or what exactly.

Rob: Contractual in nature, you'll see that reflected in our Q1 results, where our storage revenue was up.

Rob: Nearly 2% in our handling revenue per throughput pallet up over over 3%. So those all those will carry through to the end throughout the course of the year.

Rob Chambers: <unk> customers are paying and those facilities.

Rob Chambers: <unk>.

Rob Chambers: We said at the beginning of the year that we didn't think we'd be taking a lot of off cycle increases like we have in years past that that's consistent with what what we're doing at the moment and when we look at what what others are doing which is which is using price to drive volumes you know quite frankly, we would expect that.

Rob: We are pricing new business consistent with what we think is market rates and in most cases market rates. We believe are what existing customers are paying.

Rob: Those facilities.

Rob: We said at the beginning of the year that we didn't think we'd be taking a lot of off cycle increases like we have in years past that that's consistent with what we're doing at the moment and when we look at what what others are doing which is which is using price to drive volumes you know quite frankly, we would expect that from.

Rob Chambers: From some of the newer less established providers in the industry, where we're priced really is their only lever a they don't have the scale that americold has they don't have the technology that <unk> have they don't have a proven operating platform that Americold has you know to see other you know supposedly Morris <unk>.

Rob: Some of the newer <unk>.

Rob Chambers: <unk> providers following suit we would consider unusual.

Rob: Established providers in the industry, where where price really is their only lever a they don't have the scale that americold has they don't have the technology to a miracle to have they don't have a proven operating platform that americold has yet to see other you know supposedly more established providers following suit.

Rob Chambers: But I think that highlights our position as the commercial leader in the space. The rational player here and the one that offers the most value to our customers our customers are willing to pay for best in class offerings and Thats, what we bring.

Speaker Change: Our next question comes from Steve <unk> with Evercore ISI. Please proceed with your question.

Rob: Consider unusual, but I think that highlights our position as the commercial leader in the space. The rational player here and the one that offers the most value to our customers our customers are willing to pay for best in class offerings and that's what we bring.

Steve: Yeah. Thanks, Good morning, I guess following up on <unk> line of questioning.

Speaker Change: You know, we've seen kind of a further drop in and the physical occupancy that was down about 500 basis points economic was down like call for 'twenty, but that spread between economic and physical has kind of continued to widen out and I guess, given rob's comments about maybe customers maybe trying to keep inventory.

Steve <unk>: Our next question comes from Steve <unk> with Evercore ISI. Please proceed with your question.

Steve <unk>: Yeah. Thanks, Good morning, I guess following up on <unk> line of questioning.

Steve <unk>: We've seen kind of a further drop in physical occupancy that was down about 500 basis points economic was down like call for 'twenty, but that spread between economic and physical has kind of continued to widen out and I guess, given rob's comments about maybe customers maybe trying to keep.

Steve: He down I guess, how do you sort of.

Steve: Monitor or keep tabs on that spread and when does that get worried some where physical might not drop but the economic occupancy may come under more pressure as you redo these kind of multiyear agreements with customers.

Steve: Yeah, I'll just point out a couple of things Steve One is fixed commenced grew again this quarter I think it's 25 quarters in a row now or so its something 16 straight quarters of 16, right. If I was a little high there [laughter], but grew again to 60% of the revenue and.

Steve <unk>: <unk> down I guess, how do you sort of.

Steve <unk>: Monitor or keep tabs on that spread and when does that get worried some where physical might not drop but the economic occupancy may come under more pressure as you redo these kind of multiyear agreements with customers.

Steve: In our rent and storage area a target we set a couple of years ago and again achieved so despite the gap between economic and physical and despite how people may characterize it customers still sign up for fixed commits because that's the way we sell and that's the way we are.

Steve <unk>: Yeah, I'll just point out a couple of things Steve one is fixed commit grew again this quarter I think it's 25 quarters in a row now or so or something 16 straight quarters of 16, right. If I was a little high there [laughter], but drew again to 60% of the revenue.

Steve: Engage customers.

Rob Chambers: But let me turn it over to Rob again, because he's again very close to the commercial side of the business and also in talks to customers on a on a very frequent basis, but I just want to highlight again, while everybody points out the gap between physical and economic we continue to sell fixed commits.

Steve <unk>: In our rent and storage area a target we set a couple of years ago and again achieve so despite the gap between economic and physical and despite how people may characterize it customers still sign up for fixed commits because that's the way we sell and that's the way we are.

Rob Chambers: Very aggressively and customers continued to sign up for them and I think Steve again remember the point of these is to make sure that customers have their space when they needed during seasonal peaks and so to have a 10% gap between physical and economic occupancy as an example is is center of the fairway staffer.

Steve <unk>: Engage customers.

Steve <unk>: But let me turn it over to Rob again, because he is again very close to the commercial side of the business and also talks to customers on a on a very.

Steve <unk>: Frequent basis, but I just want to highlight again, while everybody points out the gap between physical and economic we continue to sell fixed commits ER.

Speaker Change: <unk> aggressively and customers continued to sign up for them and I think Steve again remember the point of these is to make sure that customers have their space when they needed during seasonal peaks and so.

Rob Chambers: For our customer I mean, you know again, if we use the example of somebody paying for 20000 pallet positions and they're occupying 18000 pallet positions.

Rob Chambers: To have a 2000 pallet flaccid is exactly what theyre looking for so we don't see that being a significant concern at this point most of our customers when they sign up sign up with the expectation of there being a gap between physical and economic occupancy.

Steve <unk>: You have a 10% gap between physical and economic occupancy as an example is as center of the fairway stuff for our customer I mean, you know again, if we use. The example, if somebody paying for 20000 pallet positions and they're occupying 18000 pallet positions you know if that to have a 2000 pallet flaccid.

Rob Chambers: Thank you know you look at our the way, we structure ours, which which are kind of akin to more traditional lease type structure. They don't they don't have annual resets. These are minimal or these are these are longer term contracts. They don't involve true ups at the end of the year and we think that's the best model in it and it actually in the end but puts.

Steve <unk>: <unk>, what they're looking for so we don't see that being a significant concern at this point most of our customers when they sign up sign up with the expectation of there being a gap between physical and economic occupancy you know I.

Steve <unk>: Thank you know you look at our the way, we structure ours, which which are kind of akin to a more traditional lease type structure. They they don't have annual resets. These are minimal or these are these are longer term contracts. They don't want evolve true ups at the end of the year and we think that's the best model in it and it actually in the end but puts.

Rob Chambers: Cost savings opportunities in our customers' hands, because they can turn their inventory faster and leverage that fixed base.

Rob Chambers: And so it's a nice win win structure for both I will just add one last thing Steve when a customer has the variable.

Rob Chambers: <unk> ability to have 2000 pallets available in a location a maybe a thousand extra and location be maybe 5000 in a particular market. They want that type of space. They view that as a good deal because they are buying partial.

Steve <unk>: Cost savings opportunities in our customers' hands, because they can turn their inventory faster and leverage that fixed space.

Speaker Change: And so it's a nice win win structure for both I would just add one last thing Steve when a customer has the the variable storage ability to have 2000 pallets available in location, a maybe a thousand extra and location be maybe 5000 in a particular market. They want that type of space. They view that as a good deal.

Rob Chambers: Components of a warehouse they'd have to otherwise own. So that's the type of flexibility. They appreciate it gives them a nice.

Rob Chambers: Nice buffer, let's say.

Rob Chambers: That in their view offsets capital they would need to build that type of capability. So it's not nearly as seen as the financial burden.

Speaker Change: Because they are buying partial.

Rob Chambers: That may be others have described it as.

Speaker Change: Components of a warehouse they'd have to otherwise zone. So that's the type of flexibility. They appreciate it gives them a nice a nice buffer let's say.

Rob Chambers: Okay. Thanks, and then maybe just as a follow up on the development I guess, Ken given your commentary about customers somewhat being cautious George on the outlook, how does that affect your lease up expectations on the development projects and I guess I did notice there is still a fair amount of cost to complete.

Speaker Change: That in their view offsets capital they would need to build that type of capability. So it's not nearly as seen as the financial burden.

Speaker Change: That maybe others have described it as.

Speaker Change: Okay. Thanks, and then maybe just as a follow up on the development I guess, Ken given your commentary about customers somewhat being cautious George on the outlook, how does that affect your lease up expectations on the development projects and I guess I did notice there is still a fair amount of cost to complete.

Rob Chambers: On some of the projects like Kansas City that are opening up effectively this quarter. So I just wasn't sure why there was still so much money to spend kind of at the you know when you were kind of at the five yard line of these projects and then how do you think about the timing of stabilization.

Speaker Change: Yeah. So we have five properties coming online this year, Steve I think we went through them on the call are many of them are not demand driven let me give you. An example, the Kansas City bills in the Port St. John built those are not demand driven bills. They are just better ways for product to travel cheaper more reliable greener.

Speaker Change: On some of the projects like Kansas City that are opening up effectively this quarter. So I just wasn't sure why there was still so much money to spend kind of at the.

Speaker Change: You were kind of at the five yard line that these projects and then how do you think about the timing of stabilization.

Rob Chambers: Ways for product to travel.

Rob Chambers: And the way they traveled today. So there's a we would say in many of those bills are concluding the Apple builds which is a 100% fixed commenced there's no risk to the ramp up at least that's the way we feel and.

Rob Chambers: We're again, Rob runs our development group, let me turn it over to him to answer a few questions. Yes, I think you know, Georgia spot on there you look at that.

Rob Chambers: Have.

Rob Chambers: The partnership builds which are which are about you know more effective supply chain solutions, we have.

Rob Chambers: Our expansion in which are largely going to be committed by existing customers.

Rob Chambers: And then we have others that were customer dedicated which are which are the fixed commitments.

Rob Chambers: When you think about why we would have incremental or or maybe outsized spend last based on how close we are to completion. It it's because we commercialize our agreements with our development partners and vendors.

Rob Chambers: And in a way that is that we also think is best in class, which is they get paid upon completion of these projects. So we don't you know we don't we outlay our cash in a in a way that's consistent with the delivery of these facilities. We think that's best in class that aligned our interest with our partners interest in it.

Speaker Change: Think about why we would have incremental or maybe outsized spend left based on how close we are to completion, it's because we commercialize our agreements with our development partners and vendors.

Rob Chambers: The buildings get completed our partners are you know are paid commensurately.

Speaker Change: Get paid upon completion of these projects so we don't.

Speaker Change: You know, we don't we we outlay our cash in a in a way that's consistent with the delivery of these facilities. We think that's best in class that aligns our interest with our partners interest and those buildings get completed our partners you know are.

Speaker Change: Our next question comes from Greg Mcginniss with Scotiabank. Please proceed with your question.

Greg Mcginniss: Hey, good morning.

Greg Mcginniss: With regards to the guidance how did Q1 results compared to initial underwriting how much of a slowdown are you seeing in current inventory levels and throughput in Q2, thus far.

Greg McGinnis: Our next question comes from Greg Mcginnis with Scotiabank. Please proceed with your question Hey, good morning.

Greg Mcginniss: We're trying to get a sense for how much of this change in occupancy throughput and renting surfaces rate guidance is based on business to date versus some conservatism or additional conservatism built into our future demand.

Greg McGinnis: With regards to the guidance how did Q1 results compared to initial underwriting how much of a slowdown are you seeing in current inventory levels and throughput in Q2, thus far I guess, we're we're trying to get a sense for how much of this change I.

Greg Mcginniss: I'll I'll take one and you can pick that up in the morning, you look at Q1 I would say, it's fair that much came in spot on to what we were expecting so our change in full year guidance, Yeah, I have nothing to do with the operations. In Q1, you look at Q2, we're forecasting that to be very similar to Q1, but it was.

Greg McGinnis: And services rate guidance is based on business to date versus some conservatism or additional conservatism built into a future demand.

Greg Mcginniss: Really the overall seasonality built in the back half of the year and the timing of the new business coming on the sales pipeline, what we did based on the current environment, we viewed it.

Greg McGinnis: Good morning, you look at Q1, I would say it fair enough came and spot on to what we were expecting so our change in full year guidance had nothing to do with the operations. In Q1, you look at Q2 or forecast and that to be very similar to Q1, but it was really the overall season.

Greg Mcginniss: Those expectations, a little bit in the back half of the year. So that's what really brought down the guidance.

Greg Mcginniss: Okay. Thank you.

Greg Mcginniss: For a follow up maybe.

Greg McGinnis: Back half of the year and the timing of of the new business coming on the sales pipeline. What we did based on the current environment, we muted those expectations a little bit in the back half of the year. So that's what really brought down the guidance. Okay. Thank you.

Greg Mcginniss: Maybe another way to ask about the physical and economic occupancy gap that we all seem to be focusing on did you see renewals in Q1 from customers that have a 10% plus gap currently are on their usage versus what they've signed for I'm just thinking you know what the law.

Speaker Change: For a follow up maybe another way to ask about the the physical economic occupancy gap that we all seem to be focusing on did you see renewals in Q1 from customers that have a 10% plus gap currently on their usage versus what they signed for.

Greg Mcginniss: On their contracts in place with a lack of annual renewals maybe.

Greg Mcginniss: Maybe it's just something that we haven't seen so far as customers decided to reset.

Greg Mcginniss: Those levels of fixed commit yeah, yeah, no I mean, Joe so.

Greg Mcginniss: When we report our the number of fixed commitments. It's the combination of new deals that are signed under fixed commitments.

Speaker Change: With the longer contracts he in place for the lack of annual renewals, maybe it's just something that we haven't seen so far as customers decide to reset those levels of fixed commit.

Greg Mcginniss: Renewals that didn't occur and then any and then any gaps that there are any changes that may have occurred at a renewal date and again were up not just in percentage, but were up in absolute dollar value of revenue under fixed commitment. So we saw a mix right. We saw new customers get added under.

Speaker Change: So so yeah. When we report our the number of fixed commitments. It's the combination of new deals that are signed under fixed commitments any renewal that didn't occur and then any.

Greg Mcginniss: Fixed commitments, we saw existing customers upon their renewal increase their fixed commitments and then we saw if you go the other way. So the net was a was a positive as it has been now for 16 straight quarters.

Speaker Change: And then any gaps there are any changes that may have occurred at a renewal date and again, we're up not just in percentage, but we're up in absolute dollar value of of revenue under fixed commitment. So you know we we saw a mix right. We saw a new customers get added under.

Greg Mcginniss: Thank you.

Speaker Change: Our next question comes from Mike Mueller with Jpmorgan. Please proceed with your question.

Speaker Change: Hours upon their renewal increase their fixed commitments and then we saw a few go the other way. So the net was a was a positive as it has been now for for 16 straight quarters. Thank you.

Mike Mueller: Can you give us a sense as to what you think.

Mike Mueller: Third party stabilized acquisition multiples are today.

Mike Mueller: Hi.

Speaker Change: I'm not sure I can answer that question, Mike I I don't know what multiples are doing today I know what expectations were I don't know that they have changed I think theyre very unrealistic, given where we are today, but I couldnt put a number on it.

Speaker Change: Our next question comes from Mike Mueller with J P. Morgan. Please proceed with your question.

Mike Mueller: Yeah, Hi, can you give us a sense as to what you think you know third party stabilized acquisition multiples are today.

Mike Mueller: Okay.

Mike Mueller: I'm not sure I can answer that question, Mike I don't know what multiples are doing today I know what expectations were I don't know that they've changed I think they're very unrealistic, given where we are today, but I couldn't put a number on it.

Mike Mueller: And then I guess, maybe on the development front, maybe along the same lines of returns can you talk a little bit about how your underwriting return requirements have changed and what youre expecting on spot new developments today compared to say.

Mike Mueller: A year or two ago.

Mike Mueller: Yes, I mean, our underwriting expectations haven't changed right I think that we have a.

Mike Mueller: Okay, and then I guess, maybe on the development front, maybe along the same lines of returns can you talk a little bit about how you're underwriting returns of changed and what you're expecting on spot new developments today compared to say a year.

Mike Mueller: Focused our development in the three areas that we've talked about that we believe are the the best three areas, which are our partnership builds expecting a low risk expansion and customer data dedicated build.

Mike Mueller: When we do those types of developments, we think the returns associated with those or are much more.

Mike Mueller: Writing expectations haven't changed right you know I think that we have focused our development in the three areas that we've talked about that we believe are the the best three areas, which are our partnership builds low risk expansions and customer data.

Mike Mueller: The low risk category, then Neil the type of speculative development that you've seen out there in the industry. So we're going to focus on those and our return expectations have not changed.

Mike Mueller: When when we do those types of developments, we think the returns associated with those are are much more in the low risk category than you know the type of speculative development that you've seen out there in the industry. So we're going to focus on those and our.

Speaker Change: Our next question comes from Kevin Kim with <unk> Securities. Please proceed with your question.

Mike Mueller: Thank you good morning.

Speaker Change: So going back to your internal operations this quarter.

Speaker Change: Hey, you guys hold on to pricing a little bit more on your peers.

Mike Mueller: Our next question comes from Kebin, Kim with Trust Securities. Please proceed with your question. Thank you. Good morning, so going back to your internal operations. This quarter of the security you guys hold on.

Mike Mueller: Right.

Mike Mueller: When you think about the business cadence during the quarter was it just all your customers a little bit less business or did you actually have some churn.

Mike Mueller: And if there was any difference between your more restaurants oriented customers or grocers. Thank you.

Mike Mueller: So when you think about the business. It is quarter was it just all your customers.

Mike Mueller: No I'd say customer churn stayed I think we said in line or on the call and I'll ask Rob to go into a little more detail, but in general keep in what we're seeing is exactly what we referred to in the last quarter and even four years before that just a general lowering of inventory across the entire system.

Mike Mueller: Cook or did you actually have some turn and if there was any difference between your more restaurants oriented customers or grocers. Thank you.

Mike Mueller: No I'd say customer churn stayed I think we said in line on the call and I'll ask we're off to go into a little more detail, but in general keeping what we're seeing is exactly what we referred to in the last quarter and even 40 before that just.

Mike Mueller: Based on the lower demand.

Mike Mueller: Then when we gave guidance last quarter due to the tariff situation and it is exacerbating a fee.

Rob Chambers: Fears of inflation driving consumer confidence are pretty far down as we referenced in our prepared remarks. So I'll just turn it over to Rob for a little more color, yeah, and the only thing that I would go deeper on it just to say if you were to look at our customer mix. As we said you know we didn't have any change in the composition of our large customer base.

Mike Mueller: Inventory across the entire system based on lower demand than when we gave guidance last quarter due to the tariff situation and it it exacerbating fears of inflation driving consumer confidence pretty far.

Rob Chambers: You know as far as the churn goes you generally see that in some of the smaller.

Mike Mueller: In our prepared remarks, so I'll just turn it over to Rob for the more color yeah. The only thing that I would go deeper on is just to say if you were to look at our customer mix. As we said you know we didn't have any change in the composition of our large customer base.

Rob Chambers: More price sensitive customers that carry you know smaller piles of inventory and are more transient.

Rob Chambers: Okay.

Speaker Change: And how about any difference between the restaurant had broker.

Mike Mueller: You know as far as the churn goes you generally see that and some of the smaller more price sensitive customers that carry you know smaller piles of inventory and are more transient.

Rob Chambers: I would say.

Rob Chambers: When it comes to a restaurant, we break it into quick serve and kind of broad line distribution I would say.

Rob Chambers: It's more different by geography and line of business. So in the U S. I would say that the client is consistent across the board, but if you look at other parts of the world, particularly our Asia Pac business <unk> and retail are doing great occupancy is 90 plus percent. So I'd say, it's a U S phenomenon.

Speaker Change: Okay, and how about any difference between restaurant and grocers.

Speaker Change: I would say I you know when it comes to a restaurant we break it into a quick serve and and kind of broadline distribution I would say, it's more different by geography than line of business. So in the U S. I would say the decline is consistent across the board, but if you look at other part.

Rob Chambers: And it is across every aspect of the business right now.

Speaker Change: Our next question comes from Michael Carroll with RBC. Please proceed with your question.

Speaker Change: Business Q, SR and retail are doing great occupancy is 90 plus percent. So I'd say, it's a U S phenomenon and it is across every aspect of the business right now.

Michael Carroll: Yeah. Thanks, George maybe asked another way on some of these inventory questions I mean, I know historically or at least the past few quarters. The prevailing view is that customers have cut their inventories as much as they probably could cut them I mean, a is that true.

Michael Carroll: Our next question comes from Michael Carroll with RBC. Please proceed with your question.

Michael Carroll: And if so why are they able to cut them more or are you seeing inventories drop further from where we saw them at the end of last year kind of coming to the beginning of this year.

Michael Carroll: Yeah. Thanks, George maybe asked another way on some of these inventory questions I mean, I know historically or at least the past few quarters of prevailing view is that customers have cut their inventories as much as they probably could cut them I mean, a is that true and if.

Michael Carroll: Well demand drives inventory levels like we've talked about that before that's how every system in the food industry works.

Michael Carroll: And demand is.

Michael Carroll: Is down.

Michael Carroll: Able to cut them more or you seeing inventories drop further from where we saw them at the end of last year kind of coming to the beginning of this year well demand drives inventory levels, Mike we've talked about that before that's how every system in the food industry works and demand is down.

Michael Carroll: Again coming back to the tariff situation and inflation fears associated with them, we quoted that mission.

Michael Carroll: Consumer confidence study and consumer confidence is lower than it has been.

Michael Carroll: So that's what's driving down inventory levels.

Michael Carroll: I still believe and we still have in our plan our seasonal build in the second half of the year, albeit muted as Jay mentioned, but I don't believe we can get through a summer at these inventory levels I think we need some modest sequential build in inventory to do that we have a conservative view of that in our plan.

Michael Carroll: Again coming back to the tariff situation and inflation fears associated with them. We quoted that Michigan Institute consumer confidence study in consumer confidence is lower than it. It has been so that's what's driving down inventory levels I still believe.

Michael Carroll: As Jay mentioned in his part of the script.

Speaker Change: Plan, a seasonal build in the second half of the year, albeit muted as Jay mentioned, but I don't believe we can get through a summer at these inventory levels I think we need some modest sequential building in inventory to do that we have a conservative.

That's where we are but this is demand related it is it's not about how lower company can run their inventory I'm sure every company in the food industry would like to sell more versus cut their inventory.

Michael Carroll: And we just need an environment, where consumers feel comfortable spending more money.

Michael Carroll: Like I've said over the past quarter that our normal seasonality sequential movement of inventory from Q4 to Q1, it's two to 300 pitch. We came in at 270 bps sequentially. So basically came in or expected generally Q2 was flattish.

Speaker Change: And we just need an environment with.

Michael Carroll: We're still forecasting it was more the seasonal holiday build of inventory, we're just becoming more conservative on based on the conditions. So it's not lowering current levels more it's not building as much for the holiday season, and slightly changed our or our forecast on.

Speaker Change: So basically came in.

Speaker Change: How much.

Speaker Change: Okay, Great and then Rob can you provide some color on the sales pipeline I believe you were saying in the prepared remarks that you executed what 40% to 50% of that pipeline already but at the same time I think you guys are saying that customers are delaying decisions and are unwilling to kind of make expansionary type plants.

Speaker Change: H R R.

Speaker Change: Okay, Great and then Rob can you provide some color on the sales pipeline I believe you were staying in the prepared remarks that you executed at 40% to 50% of that pipeline already but at the same time I think you guys are saying that customers are delaying decisions that are.

Speaker Change: Can you tie those two comments together, it's like how are you executing on our sales pipeline if customers are generally not willing to make decisions.

Speaker Change: Yeah.

Speaker Change: So our sales pipeline that we came into the year, whereas youre right. Mike like we said, we're executing that very well and we're ahead of not only where we were this time last year, but we've closed you know close to 50% of that year.

Rob: Make expansionary type plans, maybe can you tie those two comments together like how are you executing on the sales pipeline if customers are generally not willing to make decisions yeah, well. So our sales pipeline that we came into the year with your you're right Mike like we said.

Speaker Change: Year to date, so we're very pleased with that we'd like to see that inventory for deals that we have one come into our system faster.

Speaker Change: Some of that.

Rob: Not very well and we're ahead of not only where we were this time last year, but we've closed you know close to 50% of that year to date. So we're very pleased with that we'd like to see that inventory for deals that we have won come.

Speaker Change: It does take you know we always know it takes time once you close the piece of business for that that volume the transition into your Ah.

Speaker Change: And to your network and I think in this environment that can take a little bit longer and so that's some of the impact of what work, we talked about being more muted in the back half of the year. So you know and then we're always focused on refilling that the next.

Rob: Some of that the it does take you know we always know it takes time once you close a piece of business for that that volume to transition into your into your network and you know I think in this environment that can take a little bit longer and and so that's some of the impact of.

Speaker Change: Tranche of our pipeline and that's where you see you know you've got customers that we're having dialogue with which you know the next deals up.

Speaker Change: There is some level of uncertainty around those but the pipeline that we came into the year with we feel very good about where executing a strong.

Rob: Talked about being more muted in the back half of the year. So and then we're always focused on refilling. The the next tranche of our our pipeline and that's where you see you know you've got customers that we're having dialogue with which you know the next deal's up.

Speaker Change: And we know that business will come just albeit a little bit slower.

Speaker Change: Our next question comes from Nick <unk> with Baird. Please proceed with your question.

Nick: Good morning, maybe I wanted to touch a little bit on some of the non same store assets and kind of the components of that.

Rob: Around those but the pipeline that we came into the year with we feel very good about we're executing it strong and you know we know that business will come just albeit a little bit slower.

Speaker Change: Those maybe the profile of those kind of eight leases you the four year leasing before youre looking to sell.

Speaker Change: Our next question comes from Nick Thilman with Baird. Please proceed with your question Hey, Good morning, maybe you wanted to touch a little bit on some of the non same store assets and kind of the components of that.

Nick: Are these older Capex profiles.

Our underutilized assets <unk> markets or you just don't like just a little bit more color on those specific instances would be helpful.

Nick: Yeah. So there's a lot of these are facilities first of all where we have other owned infrastructure in the existing.

Speaker Change: On those maybe the profile of those kind of eight leases you. The four year leasing the four you're looking to sell are these older capex profiles or under underutilized assets Andor markets that you just don't like just a little bit more color on those specific instances would be helpful.

Nick: Geography or in the same geography, and we think it's most prudent to move some of that existing inventory into owned assets. So that we can shed some of those leases a lot of those leases do have.

Speaker Change: Yeah. So so a lot of these are facilities first of all where we have other owned infrastructure in the existing.

Nick: Capital requirements that that we think is best spent on facilities that we own and so it become it ends up becoming a very good scenario for us where we're able to move business into owned infrastructure.

Nick: And locations, where we already have facilities and shadows leases longer term, that's the the major catalyst behind that and when you look at our non same store NOI guide that.

Nick: That has been increased mostly for the Houston acquisition.

Speaker Change: It become it ends up becoming a very good scenario for us where we're able to move business into owned infrastructure in locations, where we already have facilities and shed those leases longer term, that's the major catalyst behind it and when you look at our non same store N.

Nick: Little bit of an improvement on the ramping of Lancaster in Plainville, but it's also been offset a bit by when we moved these sites and there's cost that goes through non same store NOI until we shut down the operations Theyre fully so when you really look at the new guidance. We provided on non same store we're not.

Speaker Change: It has been increased mostly for the Houston acquisition, a little bit of improvement on the ramping of Lancaster and plainville, but it's also been been offset a bit by when we moved these sites in there's costs that go through.

Nick: Going to see a lot of positive NOI.

Nick: For the next two quarters, but as you.

Nick: Plainville Black has become fully ramped as the costs associated with Allentown, Kansas City opening go away as we fully exit the operations in these sites. It's really you see the predominant benefit of non same store NOI in Q4, Let me let me just add to the discussion on.

Speaker Change: Shut down the operation fair fully so when you really look at the new guidance. We provided on non same store, we're not going to see a lot of of positive N O I for the next two quarters, but as you know plainville Lancast, we can fully wrap as the.

Nick: Disposing assets et cetera are getting out of leases that were just setting out we're optimizing our portfolio mix setting ourselves up for when volume comes back to maximize NOI. That's that's the objective of the team working on our portfolio and obviously exiting some leases and growing the.

Speaker Change: Town, and Kansas City opening go away and as we fully exit the operations in these sites. It's really you see the predominant benefit of non same store NOI in Q4, Let me let me just add to the discussion on disposing a.

Nick: Inventory in our own facilities.

Speaker Change: Setting up we're optimizing our portfolio Nick setting ourselves up for when volume comes back to maximize N O Y that that's the objective of the team working on our portfolio in obviously exiting some leases and and growing the.

Nick: Not just for the Capex reason, but obviously the margins are higher when we're not paying rent it sets us up really well to grow very fast when volume comes back.

Nick: No that's helpful and in before that Youre looking to sell do you have like a rough guideline of the potential proceeds you could get from that.

Nick: They're all negotiated deals and everybody who holds the lease has a different view on how long they want to hold it and how the deal will work, we'll do nothing nothing that isn't accretive and nothing that doesn't fulfill the objective I just mentioned, but it's impossible to predict given how many lease holders.

Speaker Change: Not just for the Capex reason, but obviously the margins are higher when we're not paying rent it sets us up really well to grow very fast when volume comes back.

Speaker Change: No that's helpful and the four that you're looking to sell do you have like a rough guideline of the potential proceeds you could get from that they're all negotiated deals and everybody who holds a lease has a different view on how long they want to hold it and how the deal will work.

Nick: There are and what their motivations are.

Speaker Change: Our next question comes from Vince <unk> with Green Street. Please proceed with your question.

Speaker Change: Nothing nothing that is an accretive and nothing that doesn't fulfill the objective I just mentioned, but it's impossible to predict given how many leaseholders there are and and what their motivations are.

Speaker Change: Hi, Good morning, I wanted to follow up on the comments that your fixed commitment contracts don't involve annual resets. So just wanted to get a sense of what is the weighted average term of these agreements typically when they are signed and also what is the weighted average remaining term and then also how our price changes structured.

Speaker Change: Our next question comes from Vince Bone with Green Street. Please proceed with your question.

Vince Bone: Hi, Good morning, I wanted to follow up on the comments that you're fixed commitment contracts don't involve annual resets. So just wanted to get a sense of what is the weighted average term of these agreements typically when they're signed and also what is there weighted average remaining term.

Speaker Change: For the multi year agreements.

Speaker Change: Yes, so if you're a customer going into existing infrastructure or are fixed commitments tend to be between three and seven years. When we sign them. Originally so you can take that as an average of five if youre going into a new build that we dedicated them on your behalf those those can be 15.

Vince Bone: Structured for the multiyear agreements yeah. So so if you're a customer going into existing infrastructure, our our fixed commitments tend to be between three and seven years when when we sign originally so you can take that.

Speaker Change: The 20 year fixed agreements.

Speaker Change: So I would I would think about that as we as we sign new deals we do disclose in our supplemental our fixed commitment maturity schedule. So I'd I'd refer you to that for the the existing weighted average.

Vince Bone: Going into a new bill that we dedicated on your behalf. Those those can be 15 to 20 year fixed agreements. So you know I would I would think about that as we as we sign new deals we do disclose in our you know.

Speaker Change: And when you think about our pricing our pricing generally our agreements are signed with what we call annual general rate increases those general rate increases are pre negotiated.

Vince Bone: 30 schedule. So I'd refer you to that for the the existing weighted average and when you think about pricing you know our pricing generally our agreements are signed with what we call annual general rating increases those general.

Speaker Change: They've been in the low single digits for a number of years now and then there's protections in there and in our agreements for cost changes beyond our control. So you know they're there they're we do a lot of things to keep our cost structure low and provide the best rates to our customers, but there are certain things that are outside of our control and if our.

Vince Bone: They they they've been in the low single digits for for a number of years now and then there's protections in there in in our agreements for cost changes beyond our control. So you know there there we do a lot of things to keep our cost structure low and and provide.

Speaker Change: Our annual general rate increases don't compensate for that we have the right.

Speaker Change: To go back and adjust pricing based on those changes.

Speaker Change: After that that we think we lead the industry on and we would consider best in class.

Vince Bone: The best rates to our customers, but there are certain things that are outside of our control and if our annual general rate increases don't compensate for that we have the right and adjust pricing based on those changes. It's a structure that that we think we lead the industry on.

Speaker Change: No. That's really helpful. I mean, how should we think about though maybe future price changes when those agreements roll so I mean.

Speaker Change: Hard to know exactly how market rents function that's industry from our seat but is there a risk that as you know some of these agreements roll in 'twenty six.

Your best in class.

Speaker Change: No. That's really helpful. I mean, how should we think about though you know maybe future price changes when those agreements roll. So I mean, it's it's hard to know exactly how market rents function in this industry from our seat, but you know is there a risk that as.

Speaker Change: It's kind of the price change is gonna be delayed if theres broader pressure in.

Speaker Change: In the industry today, but maybe it was not seen in your metrics. If you have more protection than your peer.

Speaker Change: But like we said Vince I mean, we we have the tools, we have the visibility to understand profitability.

Speaker Change: It's kind of the price change is gonna be delayed if there's broader pressure in the you know industry today, but maybe we're just not seeing in your metrics. If if you know you have more protection than your peer like like we said.

Speaker Change: At a customer level at a site level at a program level and we think we should be paid fairly for the service and the value that we provide and that's how we think about pricing everyday as we go through these conversations with our customers. We certainly have to defend our market share against some of the competitive pressure.

Speaker Change: C have the tools, we have the visibility to understand profitability at a customer level at a site level at a program level and we think we should be paid fairly for the the service and the value that we provide and that.

Speaker Change: But at the same time I think you've seen that we've you know we've been very very rational over a long period of time, it's not.

Speaker Change: Our first rodeo through a tough cycle, we've been in a cycle, where where there's been you.

Speaker Change: Every day as we go through these conversations with our customers. We certainly have to defend our our market share against some of the competitive pressure, but at the same time I think you've seen that we've you know we've been very very rational over a long period of time, it's not our first.

Speaker Change: You know additional capacity here for a while and I think we've held the line pretty well. So our expectation is that we get paid and compensated fairly for the service and the value. We bring we have the tools to be able to do that and we're going to continue to do that and Vince what what I would say is the moat around this business when it comes to price.

Speaker Change: Rodeo through a tough cycle, we've been in a cycle, where where there's been you know additional capacity here for a while and I think we've held the line pretty well. So our expectation is that we get paid in compensated fairly for the service and the value.

Vince: Two things one is the customer service that we provide which I would argue is best in the industry and I think our pricing reflects that and two is the scope of value added services you provide our scope is very very wide. So that's another way of saying that as our customers get much more value than just storing a pallet in our facility and they expect that.

Vince Bone: We have the tools to be able to do that and we're going to continue to do that and Vince what I would say is the mode around this business. When it comes to price is two things one is the customer service that we provide which I would argue is best in the industry and I think our pricing reflects that and two is.

Vince: Value because we offer the broadest range of services in the industry. So those are the motes around pricing.

Vince: Last quarter this business didn't get any easier to run and we and we do.

Vince Bone: Evaluated services you provide our scope is very very wide. So that another way of saying that is our customers get much more value than just storing a palate in our facility and they expect that value because we offer the broadest range of services in the industry. So those are.

We delivered the value we deliver every quarter.

Speaker Change: In theory price should not decline and it didn't in our business. It doesn't mean it won't in the future because as Rob said, we need we need to protect our market share but.

Vince: Where we are now I think our reputation in the industry is helping our price more than anything else.

Speaker Change: You know last quarter this business didn't get any easier to run and we and we and we delivered the value we deliver every quarter. So in theory price should not decline and it didn't in our business. It doesn't mean it won't in the future because as Rob said, we need we need to protect our market share.

Speaker Change: We have reached the end of our question and answer session, which concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: Where we are now I think our reputation in the industry is helping our price more than anything else.

Speaker Change: We have reached the end of our question and answer session, which concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Q1 2025 Americold Realty Trust Inc Earnings Call

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