Americold Realty Trust Q2 2025 Earnings Report

Americold Realty Trust EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.34
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.38

Americold Realty Trust Revenue Results

• Actual Revenue: $650.75 million
• Expected Revenue: $644.95 million
• Beat/Miss: Beat by +$5.80 million
• YoY Revenue Growth: -1.50%

Americold Realty Trust Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:00AM ET

Americold Realty Trust (NYSE:COLD), Inc. is a real estate investment trust, which focuses on the ownership, operation, development, and acquisition of temperature-controlled warehouses. It operates through the following segments: Warehouse, Third-Party Managed, Transportation, and Other. The Warehouse segment collects rent and storage fees from customers to store frozen and perishable food and other products within the firm's real estate portfolio. The Third-Party Managed segment manages warehouses on behalf of third parties and provides warehouse management services to food retailers and manufacturers in customer-owned facilities. The Transportation segment is involved in brokering and managing transportation of frozen and perishable food and other products. The Other segment includes ownership in a limestone quarry in Carthage, Missouri. The company was founded in 1931 and is headquartered in Atlanta, GA.

Americold Realty Trust Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Despite Q2 AFFO per share of $0.36 in line with expectations, the company cut full-year AFFO guidance to $1.39–$1.45 due to sustained demand headwinds.
• Negative Sentiment: Same-store economic occupancy declined in Q2 and the seasonal uplift was removed, with management now expecting occupancy to remain pressured through year-end.
• Positive Sentiment: Americold secured two new retail and QSR multiyear fixed-commitment contracts in Europe with major supermarket chains in Portugal and the Netherlands, boosting high-turn cash flow potential.
• Positive Sentiment: Three key development projects—Allentown expansion, Kansas City rail cross-dock and Dubai DP World JV—went live under budget and on schedule, showcasing strong execution and innovation.
• Neutral Sentiment: Pricing grew modestly, with rent and storage up ~1% per occupied pallet and services revenue up ~4% per throughput pallet, though U.S. pricing pressure is expected to persist.

Presentation

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

and thank you all for joining our second quarter twenty twenty five earnings conference call. This morning, I will provide an update on our four key priorities, our financial results for the quarter and current market conditions. Rob will then discuss our customer service initiatives and development activity. And finally, Jay will review our capital position on liquidity and discuss our outlook for the balance of the year.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Turning to our four key priorities and financial results for the quarter. We said Q2 would look a lot like Q1, and that's exactly how it unfolded. Starting with customer service. During the quarter, Amerifold was recognized as a top three PL in cold storage provider by Food Logistics Magazine. This award honors cold storage companies that are revolutionizing the global cold storage food supply chain and reliably delivering innovative and high quality solutions throughout the world.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

We are honored to be recognized, and I want to thank our incredible team for their continued dedication to providing our customers with best in class service. As anticipated, same store economic occupancy declined slightly in the second quarter versus the first quarter of the year. Q2 is typically the lowest seasonal quarter of the year for us, although it is difficult to define typical in the current environment. While we are pleased with the new business wins from our sales pipeline, occupancy gains have been slow to materialize given the ongoing demand headwinds. We recently had two new retail wins in Europe that are good examples of our strategy to expand our retail and QSR business across the globe and build on our leadership position.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

The profile of the retail and QSR businesses puts it near the top of our portfolio in terms of cash flow generation. Additionally, our rent and storage revenue from fixed to mid contracts came in at 60% for the quarter, reflecting the quality of our mission critical assets and the value we deliver to the customers who occupy them. Turning to labor. The investments we have made over the past few years in training, engagement and retention initiatives continue to pay dividends. During the quarter, our perm to temp hours ratio was 75.25, giving us the ability to flex labor with demand while benefiting from the enhanced productivity that comes from having a dedicated and well trained permanent workforce. You can see this reflected in the continued growth in our same store warehouse services margins, which improved by 90 basis points year over year to 13.3% for the quarter. This continues to be a bright spot for the company, and we remain confident in our ability to deliver service margin in excess of 12% for the full year. Turning to pricing.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

In the second quarter, our same store rent and storage revenue for economic occupied pallet increased approximately 1% versus the prior year, and same store services revenue for throughput pallet increased by 4%. While we expect to see continued pricing pressure across our U. S. Business, the team has done an excellent job of strategically defending our market share and maintaining our pricing architecture while ensuring that we receive fair value for the critical and diverse services we provide. We believe service and operational excellence will become an even more important differentiator for Americold in the future as customers seek to turn inventory faster in an effort to realize working capital efficiencies.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

As I mentioned last quarter, Americold is a trusted and experienced operator that delivers value to customers far beyond price propeller position. And therefore, we are more capable of balancing price and volume versus most competitors where price is their only lever. On the development front, we have several key projects that were completed in the second quarter, including Kansas City, our flagship development with CPKC, creating an efficient new way to move temperature controlled products across North America, our Allentown expansion, which was driven by strong customer demand in the region, and our flagship development in Dubai in partnership with DP World. Rob will discuss these further in just a moment, but these facilities are great examples of our ability to leverage our scale, expertise, and unique strategic partnerships to drive innovative new market solutions. Turning to our financial results for the quarter.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Q2 AFFO per share was $0.36 Our performance in the first half of the year has largely been on track, and the team continues to execute well. However, the combined impact of interest rates, tariffs, inflation, government benefit reductions and excess capacity continue to pressure occupancy rates across the industry. Based on our conversations with customers, we expect these headwinds will likely continue into the second half of the year as they remain hesitant to build inventory in an uncertain demand environment. With inventory levels low across the supply chain, we are also seeing customers taking the opportunity to leverage available capacity in their own infrastructure rather than utilizing third party storage providers. As a result of these continued headwinds, we are taking a more conservative view of the market for the second half of the year, removing the traditional seasonal inventory build that we had been forecasting and now expect occupancy levels to remain pressured for the balance of the year.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Despite these top line challenges, the team continues to execute well on our strategic priorities, and we remain focused on controlling what we can control, including lowering costs, improving efficiencies, and capturing new business. We are also actively pursuing alternative growth opportunities such as expanding our retail and QSR business, as I mentioned earlier, and focusing on investments in underserved geographies around the world in need of infrastructure. Additionally, because of the operating component of our business, we have more levers than a traditional REIT, and this quarter is a great example of our ability to manage the variable pieces of our business in a balanced approach to deliver AFFO results in line with expectations. This ability to manage the business tightly will be increasingly important in the second half of this year as we further adjust our cost structure to reflect the current demand levels. Jay will discuss these changes in more detail in a moment.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

But first, I will turn the call over to Rob so he can discuss our development projects and customer initiatives in greater detail.

[Robert Chambers, President at Americold Realty Trust]

Thank you, George, and good morning, everyone. Our commercial teams continue to execute well. And during the second quarter, same store rent and storage revenue for economic occupied pallet increased year over year by about 1%. And warehouse services revenue per throughput pallet increased by 4%.

[Robert Chambers, President at Americold Realty Trust]

Although we continue to see some irrational pricing moves by competitors, we have the tools and visibility to thread the needle balancing price and occupancy effectively while strategically defending our market share as appropriate. Our rent and storage revenue from fixed commitments came in at 60% for the quarter, maintaining the record that we set in the first quarter of the year. As a reminder, we believe 60% is the appropriate long term level for this metric given the composition of our customer base. Our top 100 customers represent approximately 70% of our total warehouse revenue, and the vast majority of these customers prefer having committed space. Balancing this with a more transactional nature of some of our smaller accounts led us to set the 50% area as our goal.

[Robert Chambers, President at Americold Realty Trust]

While there could be some slight variability around this level, we believe the benefits to both us and the customers are clear. Meeting end market demand is a top priority for our customers and having guaranteed space gives them the opportunity to reduce their per pallet cost as they turn more inventory, allowing them to realize cost savings. This type of arrangement is more aligned with that of a traditional real estate lease and allows them to leverage the space as they see fit. For Americold, we get the benefit of having the vast majority of our contracts commercialized with multiyear agreements and do not reset volume guarantees or rates on an annual basis. As a reminder, fixed commitments were approximately 40% of our revenue when we started this journey, and our progress over the past four years in transitioning our customer base to fixed commitments is a clear indication of the win win benefits of the structure and of our team leading the industry in commercial excellence. Within our global warehouse segment, we had no material changes to the composition of our top 25 customers who account for approximately 50% of our global warehouse revenue, and our churn rate remains below 4%. While the market remains competitive, we continue to win new business and have successfully converted on over 80% of the previously announced $200,000,000 probability weighted sales by The occupancy ramp for these new customers is taking longer than expected in the current environment, and the revenue benefits are somewhat muted by declines in the base business. But our overall sales pipeline remains healthy, and our wins continue to surpass where we were last year. As George mentioned, we recently had two significant wins in the Europe region that highlight our growing leadership position in the operationally intensive and services heavy retail segment of the market.

[Robert Chambers, President at Americold Realty Trust]

The first win is with one of the largest supermarket chains in Portugal to utilize our 34,000 pallet position facility in Lisbon. We will now be providing them with frozen storage space and case picking services under a multiyear fixed commitment agreement. Like most of our retail business, we expect the inventory to turn roughly 25x per year, making this an attractive cash flow business. The second win is with one of the largest supermarket operators in The Netherlands to utilize our 38,000 pallet position facility in Barnumville. They have ambitious growth plans over the next five years and will be utilizing our storage and case picking services under a multiyear agreement with similar inventory turn expectations.

[Robert Chambers, President at Americold Realty Trust]

Both the Lisbon and Barnabelle facilities will be operating at well over 90% occupancy as these customers ramp in the coming quarters. The international team has done an excellent job of leveraging both the Americold operating system and our retail expertise in The U. S. And Asia Pac to expand our market share in Europe with these two new customer wins. Now I'd like to give you an overview of our development activities, and we have three attractive projects that went live during the second quarter.

[Robert Chambers, President at Americold Realty Trust]

First is our Allentown, Pennsylvania expansion, which was completed in q two. This facility came in below budget at $79,000,000 compared to an initial estimate of $85,000,000 and adds 37,000 power positions and nearly 15,000,000 cubic feet to our network. Allentown is an ideal location to receive imports from the Philadelphia and New Jersey ports and is the largest transportation hub in the Northeast. After the expansion, this campus will have over a 100,000 paddle positions to serve as this key distribution market. This is an example of our low risk customer driven approach to expansion projects as our original facility in Allentown was approaching 100% occupancy, and the project was initiated due to demand from existing customers.

[Robert Chambers, President at Americold Realty Trust]

I'm happy to report that we had moved the stabilization date for the building up by two quarters due to the high demand we experienced for the space immediately upon opening. The management team at Allentown is one of the best in the business, and I'm excited to watch them service our customers with this increased capacity. Second is our Greenfield facility developed in collaboration with CPKC in Kansas City, Missouri, which also launched at the end of Q2. This facility was originally anticipated to be $127,000,000 and was also completed under budget at a $100,000,000. As a reminder, this facility is North America's only single line rail service for moving refrigerated shipments between The US, Canada and Mexico.

[Robert Chambers, President at Americold Realty Trust]

Customers of our new facility will be able to clear customs in Kansas City, bypassing the significant congestion and wait times that often occur at the border, resulting in faster delivery times, lower costs, and a much more environmentally friendly alternative to traditional over the road solutions. Much like a retail facility, this location will specialize in high turn cross dock operations, a complex and demanding component of the cold storage food supply chain that Americold is uniquely suited to handle. We are already seeing high demand for this space from our customers, which gives us confidence in our ability to deliver stabilization at the end of Q1 twenty twenty six, which is three to six months faster than a typical development project. Finally, our $35,000,000 state of the art flagship build with BP World in the port of Jebel Ali in Dubai also launched during the second quarter. This facility has 40,000 pallet positions and connects to DP World's best in class port logistics solutions.

[Robert Chambers, President at Americold Realty Trust]

This development was completed through our RSA joint venture and is another great example of Americold's ability to partner with multiple market leaders to identify new opportunities through our combined expertise. Additionally, we have several other expansion and development projects in process, all of which are on time on us. Domestically, we have our $150,000,000 50,000 pallet position automated expansion in Dallas Fort Worth, Texas. And internationally, we have our $30,000,000 13,000 power position expansion in Sydney, Australia, our $34,000,000 16,000 power position expansion in Clay Church, New Zealand, and finally, $79,000,000.22000 power position development in Port St. John, Canada in partnership with GP World and CPKC.

[Robert Chambers, President at Americold Realty Trust]

In May, I was honored to deliver the keynote speech at the Port St. John's Port Days event, where we also hosted a groundbreaking ceremony for our new facility. DP World and CPKC have made substantial infrastructure investments in Port St. John, which is Canada's largest Atlantic port by volume. The market is poised for significant growth, and our new world class facility will support temperature controlled food flows from Canada and the rest of the world.

[Robert Chambers, President at Americold Realty Trust]

Our building is located on the ground of the port facility, connecting us to the GP World Infrastructure and CPKC rail line to create a unique end to end logistics solution. For customers, this means a more efficient way to move temperature sensitive food through the port with reduced train designs and lower cost by shifting freight from trucks to rail. Longer term, we see this location as an important link in the supply chain ecosystem we are creating with CPKC to provide customers with an innovative and unique cold chain solution connecting Canada, The United States and Mexico. The reception and support could not have been more welcoming and enthusiastic, and we are excited to further deepen our relationship with this location and our strategic partners. Our Lancaster facility is ramping up aligned with our expectations, proving the effectiveness of our automated retail technology.

[Robert Chambers, President at Americold Realty Trust]

In order to prioritize the stabilization of the Lancaster site, we have modified the stabilization date of the Plainville facility to Q2 twenty twenty six. This also ensures we are fully stabilized for the ramp up of the retail season next year. Overall, our development pipeline remains healthy at approximately $1,000,000,000 in high quality, low risk opportunities, aligned with our strategy to focus on our customer dedicated new builds, customer driven expansions, and unique cold chain solutions that are supported by our strategic partnerships. Outside of the expansion underway in Dallas, which is driven by strong demand from our existing customers, most of our projects we currently have underway are focused on our international business. We continue to pursue attractive opportunities to support our customers in several of these underserved foreign markets, particularly in Asia Pacific, where occupancy rates are high and there's generally been less speculative development activity.

[Robert Chambers, President at Americold Realty Trust]

We also remain focused on opportunities at the plant adjacent and retail nodes of the cold chain where we can leverage our deep customer relationships and operational expertise in a segment of the market that is out of reach for many other cold storage providers. With that, I'll turn the call over to Jay.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Thank you, Rob, and good morning. As George and Rob had mentioned, the teams continued to execute well despite what has otherwise been a choppy overall market environment. During the second quarter, we continue to make progress on our key operational priorities and win new business by managing the business tightly. As a result of these efforts, AFFO per share for the quarter came in at $0.36 and our first half performance has been largely in line with expectations.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

However, we did not see the typical seasonal uptick in occupancy improved but materialized in either June or July. As a result, we are further muting our outlook for the second half of the year. We now expect same store economic occupancy levels for the year to decrease by approximately two fifty to four fifty basis points and same store throughput to decrease by one percent to 4%. Sequentially, we anticipate that throughput will lift slightly from Q2 to Q3, which will build occupancy levels modestly in Q4. As a result of these continued market headwinds, we are reducing our AFFO guidance to $1.39 to $1.45 per share.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

We continue to manage the business with an emphasis on AFFO. And because of the operating components of our business, we have more leverage to pull than our traditional REIT. Specifically, we are taking additional actions to reduce core SG and A and right size our cost structure in line with the current demand environment, while still ensuring we continue to provide the superb customer experience that we are known for in the industry. Additionally, we are lowering our range for maintenance capital expenditures in line with the slowdown in throughput as many of the preventative maintenance activities are based on utilization. Despite the current economic volatility, which has impacted cold storage occupancy levels, we remain firmly focused on driving shareholder value.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Based on a variety of different metrics, Americold is currently trading far below its asset value. Whether you look at capitalization rates, replacement costs or on a cost per pallet basis, we have over $10,000,000,000 of critical cold storage infrastructure deployed around the world. When combined with a robust Americold operating system and our dedicated and experienced team of associates serving customers in an industry that is complex and operationally challenging, we believe that we are uniquely prepared to maximize growth when industry volumes improve. Turning to our balance sheet. Our $400,000,000 public bond offering closed early in the second quarter, and the proceeds of that offering were used to repay a portion of our outstanding revolver borrowings.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Anticipated, we also executed the first of two twelve month extension options available under our $375,000,000 term loan facility. Total net debt outstanding at the end of the quarter was $3,900,000,000 with total liquidity of approximately $937,000,000 consisting of cash on hand and revolver availability. Net debt to pro form a core EBITDA was approximately 6.3 times. We currently have a number of development projects underway. And as they come online and stabilize, we expect the NOI generated from these facilities will allow us to deleverage throughout 2026 as we remain committed to managing the business to an investment grade profile.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

We also continue to rationalize our portfolio and sell off underperforming our nonstrategic assets. During the second quarter, we successfully completed three planned exits of idled facilities for total cash proceeds of $20,000,000 As a reminder, most of the facilities we are exiting this year are leased, and the majority of the customers' inventory can be relocated to nearby owned facilities, resulting in an accretive transaction for the company. We plan to exit six more facilities, including our Pleasant Hill, Georgia location, which was announced in early July. Additionally, as mentioned during our last call, we exited our minority ownership interest in the Superfrio joint venture in Brazil, resulting in approximately $28,000,000 of cash proceeds. We have a disciplined internal approach to capital allocation and use the same discipline to ensure that we are receiving an attractive return investments.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

We believe the actions we have taken to rationalize the portfolio so far this year will allow us to strategically redeploy capital into higher return projects and ultimately drive future growth and shareholder value. Now I would like to turn the call back to George for some closing remarks.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Thank you, Jay. While the external environment remains challenging from both the demand and supply perspective, we have the operating experience to manage our variable costs while still meeting customer expectations. We believe our previous investments in technology, our labor force and industry leading commercialization position us to weather this unique environment where multiple headwinds are simultaneously converging. Americold's value proposition remains unparalleled and uncompromised, which has proven itself through our unique customer solutions, dynamic offerings, disciplined capital deployment, and versatility through multiple operating environments.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

I wanna thank our 13,000 associates who work tirelessly all over the world each day to make our vision a reality. Your dedication, engagement, and enthusiasm are what make Americold the cold storage provider of choice around the world. With that, I'll turn the call back to the operator for questions. Operator?

[Operator]

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 that your line is in the question queue. You may press 2 if you would like to remove your question from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We ask that analysts limit themselves to one question and a follow-up so that others have an opportunity to do so as well. One moment please while we poll for questions. Our first question comes from Sameer Knaw with Bank of America. Please proceed with your question.

[Samir Khanal, Director - US REITs at Bank of America]

Hey, good morning, everyone. I I guess, George, you you talked about the ability to hold pricing, but, you know, give us an idea of how competitive this environment is right now. You know, you you've kind of used the word challenging a few times here. You talked about pricing pressure, but just any color would be helpful.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Samir, I would say the storage market remains very, very competitive when it comes to pricing, and we're even still seeing some moves into irrational, to be honest.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So we consider it to be under a amount of pressure. We expect it to remain under pressure for the balance of the year and quite frankly until occupancy growth returns. Customers see the value in our strong operational execution and customer service, and that's reflected in our low churn, still under 4%, as we mentioned on the call. The value add services we provide are a big differentiator when it comes to pricing. It makes us it makes the business very sticky.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

It makes it easier to get fair value for our services, and it makes it much more difficult to move the business. So so that's a strong, you know, an asset in our portfolio in terms of defending price. But it will remain under pressure for the second half of the year, and we are seeing it intensify in some cases as we move through the second half and often it remains challenged.

[Robert Chambers, President at Americold Realty Trust]

I I think, Sameer, the only the only thing I would add is is that, you know, at Americold, I mean, we have developed the the tools, and we we have the visibility to understand on a on a by service basis, customer by customer, you know, what our our margins, our profitability, and we we're using those tools. We're using that visibility that we've created to make sure that we do do the right thing to balance price and occupancy so that so that we're doing the best thing for the business on a go forward basis.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

And I think in in our guidance position, you'll see we've taken the storage pricing down. We haven't taken the handling pricing down, and that and that's very reflective of the value add services we provide, the stickiness that they put in the business and the fact that customers realize for many of the value add services we provide as they get incremental value that others can't provide. So that's a strong point. And maybe the last point on pricing is we're talking about a very US centric environment. Other geographies where we have 90 plus percent occupancy, less speculative development, investment opportunities.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

You know, we're fortunate we have a global business, and it provides us opportunities around the world when one area of the world may be going through some economic pressures. Others there aren't, and we're fortunate to have business in those geographies that we can continue to invest in.

[Samir Khanal, Director - US REITs at Bank of America]

Thank you for that. And I guess my second question is on fixed commits, the 60%. I think it's you've taking that number up, but I think it held sort of similar in that 60 range from last quarter.

[Samir Khanal, Director - US REITs at Bank of America]

Can you provide color on kind of how these contracts work? Do customers have the ability to restructure these contracts given the challenges here?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yes. I'll ask Rob to go through the details of the contracts. They are very, very structured, and I think we lead industry not only in in commercial excellence in general, but certainly in selling fixed committed space, not just selling, but the structure of it in a in a second.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

You know, 60% was the target we set a couple of years ago. We said we would we think that's an appropriate level for the business. But I'll just remind everybody, last quarter, we also said it's not going to remain pegged at 60% quarter in and quarter out. There could be some fluctuation, particularly when we talk about the first question you asked. So I'll turn it over to Rob to talk about the structure and the outlook.

[Robert Chambers, President at Americold Realty Trust]

Yes. Yes. We're very pleased we maintained the percentage at 60%. These contracts generally are structured as as multiyear arrangements. They are fixed monthly fees that include a commitment on pallet position that generally is paid at the the the peak amount of space that a customer is going to need for the year.

[Robert Chambers, President at Americold Realty Trust]

That's the the key value for our customers is that it it holds the space available for them during the the the seasonal the traditional seasonal peak when they they need the space the most. There are there are generally multiyear agreements anywhere between, call them, three to seven year agreements if you're going into existing infrastructure. They're much longer term agreements if you're going into dedicated infrastructure that we built on behalf of a customer, and they don't include annual volume resets. The the opportunity to reset the agreement is when those contracts expire. And we've had a lot of of success as as you've seen over the last couple of years even in a challenging environment of maintaining those those fixed commitment levels and and increasing them over the last couple of years.

[Robert Chambers, President at Americold Realty Trust]

Now that we're at that 60% range, I went through my prepared remarks why we feel like that's the the right goal. And as George said, there could be some variability quarter to quarter. But we continue to lead with that because it is a win win from a selling standpoint for both us and for our customers.

[Operator]

Our next question comes from Steve Sakwa with Evercore ISI. Please proceed with your question.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes. Thanks. Good morning. I guess we're not really surprised, George, by your commentary around cautiousness around the business and the outlook. But I guess when I look at kind of the first half results and revenue down 1.4% on a constant currency basis, to get to the low end of the revenue of minus 4%, you obviously have to have a pretty large drop in the back half of the year.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

And my thought was that you had had, I guess, easier comps coming in. And even if you didn't get the full seasonal build, it just would be hard to see things falling off that much from the revenue side. So can you maybe just help us walk through what's really pressuring the revenue growth in the back half of the year?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yes.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

I think, Steve, there's a few things suppressing revenue growth in the first in the back half of the year. First would be the discussion we just had around price. We talked about pricing pressure. We talked about irrational moves we see in the marketplace, and you see they've taken our pricing guide down. So that would be number one.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

But number two, we're facing a very unique situation when it comes to demand. There's probably five or six headwinds right now when you think of demand, whether it's interest rates, tariffs, inflation, potential snap cuts, GLP one drugs, excess capacity. I mean, any two of these, we could overcome and grow. The combination of five or six makes it very, very difficult, not only to grow, but to to forecast things like occupancy and price. So the the lower end of the range is a is a very we know do we think we're gonna get there?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

No. But we're guiding to the middle of the range, but price is under pressure and demand is under pressure. So we're trying to be as conservative as we can. And you're right. We we thought we'd see a seasonal lift in the second half of the year, and and we didn't see any.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So that that also factors into, you know, how we put the guidance together. So that's, you know, that's the outlook.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Yeah. And and, Steve, I mean, if you look at your sequentially first half of the year and second half of the year, revenue is growing sequentially. But what we have done and reason why it's down versus prior year, we have removed any seasonality except for certain harvests that are guaranteed from our forecast. But sequentially, first half to second half revenue is increasing.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Okay. And then maybe just talk

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

I guess, Rob did a pretty good job walking through the development pipeline. And I guess, how are you just thinking about new capital deployment and kind of return hurdles? It seems like you had pretty good success on some of the developments, bringing costs in much lower. Maybe what drove those substantial savings? And then how do you think about new capital commitments and kind of return hurdles on new deals going forward?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yes. I'll just make a few comments and turning over the raw. We don't see an issue on return hurdles. I mean, when we deploy capital, we have to have a return that's reasonable for the risk we take, and we think the 10% to 12% is that range. Is it conceivable we would do one under 10%?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Would it would require special circumstances that we would communicate. But in the main, we are still gonna develop to the 10 to 12% hurdle rate. And I I don't know.

[Robert Chambers, President at Americold Realty Trust]

Yeah. I mean, we as as I outlined, Steve, I mean, first of all, we're we're very focused on new developments being in the three core priorities that that we've outlined, which which we feel are, you know, the lowest risk of development types of projects.

[Robert Chambers, President at Americold Realty Trust]

So when we're talking about customer dedicated projects, we're talking about expansions in major markets where we already know and and have aggregated demand that that exceeds current capacity or these strategic partnerships that are about building an ecosystem that, you know, drive tremendous value for our customers. So, you know, future projects are are really focused around this low risk deals that we think will generate a traditional, you know, 10 to 12% return on invested capital margins that we put out there for for a while now. We're very pleased with the progress of our existing development. That's that's relaunched this quarter all on time and under budget is is a testament to the team that we've built here in our development capabilities. We were able to bring those in under budget for a variety of reasons, a lot of enhanced procurement processes that we've talked about over the last few years that we've implemented through through some of our operational improvements and and project Orion.

[Robert Chambers, President at Americold Realty Trust]

We also went out and we're able to secure incentives with with with some of the local governments that in the municipalities where we were building, so very favorable there. Moving up the stabilization date in facility in like Allentown is really a big win for us. So we're very pleased with the development, and we see that as a continued growth lever going forward.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

And Steve, I'll just add what I've mentioned earlier, which is a global company. We have markets right now in our portfolio where we have a significant amount of assets at 90% plus occupancy and in a market that doesn't have a lot of speculative development that we can build today.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

And so there's still opportunities out there to build with customers, obviously, with our partners and expansions in markets that we know have the demand and lack of supply that makes it attractive to invest in. So there's no shortage of opportunities, and I think the pipeline remains intact, quite frankly. It's just that many of them are not going to be in The US. That's all.

[Operator]

Our next question comes from Greg McGinnis with Scotiabank. I

[Greg Mcginniss, Director at Scotiobank]

just wanted to touch back on the lack seasonal uplift. Are you able to provide some greater context around your occupancy expectations in both Q3 and Q4 and help us understand how far below prior expectations occupancy sits today?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Well, I think what we said was we don't expect any seasonality in the second half. And quite frankly, I mentioned on the call, Q2 looked a lot like Q1. I think that the second half is going to look a lot like the first half. You know, q three, I think, might be a little overstated when you think of that's that's our highest quarter for power cost, and we think power cost might be a little higher than we forecasted. However, we think pull up order is a couple of pennies too low.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So in the main, would view the first half and the second half very analogous on almost every metric. Jay, don't know if you

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

want to add. And really, the change in our forecast, obviously, we had talked in the last call that we were expecting 200 bps sequential build in occupancy on seasonality. And based on how we saw, you know, July and fall where we saw no seasonal lift, we basically eliminated that 200 bps sequential improvement in occupancy from our forecast.

[Greg Mcginniss, Director at Scotiobank]

Okay. Thank you. And then you you spoke about the factors impacting demand, whether it's interest rates, tariffs, inflation, what have you. Are you is there anything that could get your customers more confident to be increasing inventory levels, independent of those items? Or is this gonna be kind of completely macroeconomic driven?

[Greg Mcginniss, Director at Scotiobank]

And so we really just need to see some improvement from that standpoint before the business starts to, you know, improve again.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Well, I mentioned five or six individual headwinds that are affecting negatively affecting demand. And the fact that we could overcome one or two of them, but the combination of five or six is very, very challenging. Some components I mentioned are transitory. So if you think of interest rates, tariffs, inflation, those are things that should improve over time. We don't know when they're going to improve.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

We've tried to forecast the improvements in those macroeconomic parameters, and we haven't been very successful. So Jay mentioned, we just removed the seasonality for the remainder of the year. But those are transitory in nature. They will improve over time. And when they improve over time, consumer demand will improve over time, and that's when we believe we'll start to see the occupancy gains.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

The others are a little more longer term, but I would say the others are more surmountable. I mean, excess inventory will work its way through the system over time, etcetera. So it takes some of those five metrics to improve, at least the macroeconomic ones, the transitory ones I mentioned, and then I think consumers' health improves, and then I think demand improves. When that happens, I can't predict. As I said, we've tried to predict that and we've been unsuccessful a few times.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

The last thing I'll say though is that we're not standing still. I mean, we're actively pursuing the alternative growth opportunities Rob and I both mentioned in retail and QSR. We have a very unique market position there to sell these services, and we're making a lot of progress. I mentioned that's amongst the highest quick cash flow portfolio in our business, and and we're excited to grow it. And I also mentioned again, you know, this is a very US centric problem.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

We have opportunities around the world that are very, very attractive to invest in and and will turn our capital deployment probably in that direction other than the partnerships we support. But the point is our portfolio is large enough, but we still have very attractive opportunities even in times like this.

[Operator]

Our next question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

[Todd Thomas, MD & Senior Equity Research Analyst at KeyBanc Capital Markets]

Yeah. Hi. Thanks. Good morning. George, you know, I I think you you said in your prepared comments that certain customers are integrating or taking control of their cold chain needs as opposed to utilizing third party warehouses.

[Todd Thomas, MD & Senior Equity Research Analyst at KeyBanc Capital Markets]

Can you elaborate on that comment a little bit? Did that impact the 4% churn rate that you saw? And is there any way to sort of quantify that impact on demand? And what segment are you seeing that most prevalent in? Just curious if you could talk about that a little bit as well.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yes. I'd say it's it's another factor. I'd I'd classify it as a a relatively minor factor, but but many of our large customers operate a significant cold storage platform within their own company. And it's normal course of business to ensure that their own assets are full before they move product out to a to a three p l.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So that's not new. What's a little bit different is they're maximizing cold storage space within their operation, which would they may not normally use for storing the product they're using it for. So there's a little bit they're they're being more aggressive because, quite frankly, their their balance sheet is a little stretched at the moment, and their p and l is a little stretched at the moment. So it's slightly more aggressive behavior. I I mentioned it within the context of what we're seeing in The US market.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

I'm not saying it's a significant driver or adder to to the issues we face on demand. And I would expect it to turn around very, very quickly when demand returns because the space that most manufacturers would use right now to store storage is not normally used for that. And and once demand returns, I'm confident it'll come back. But think of it as more of an indicator as to how the environment is reacting right now and and less as an impact on our business.

[Todd Thomas, MD & Senior Equity Research Analyst at KeyBanc Capital Markets]

Okay. Got it. So it sounds like as their inventory levels normalize, they'll they'll increase, you know, capacity in their warehouses first and then look back towards third party warehouses and and operators.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Which which is normal course. Yeah. Which is normal course. So Okay. Again again, think about it as giving you more context as for the environment more than a a significant impact on our financials.

[Todd Thomas, MD & Senior Equity Research Analyst at KeyBanc Capital Markets]

Understood. And then I wanted to also ask about the noncore dispositions of the planned exits. What's the buyer profile of these assets? And is it your sense that they'll continue to operate as cold storage facilities?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yeah. Most most of it are leased assets. The buyer is the owner, essentially. We're we're we're returning leases. We have sold a couple of assets, Jay, I think you have the details.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Yeah. No. I mean, George got it right at the ballpark. Just leases that we're exiting, and we're able to move the inventory to to an own facility nearby. The street sales that I talked about, all very small sites.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

You can tell, you know, roughly 20,000,000 of proceeds for the three sites. One was related to to actually our our transportation business over in Europe, and the other were just two small properties that we actually idled a while ago. And we found, you know, not I would say, non cold storage type in individuals to buy in.

[Operator]

Our next question comes from Craig Nauman with Citi. Please proceed with your question.

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

Hey, guys. Jay, can you just tell us what was that 5,700,000.0 in other income?

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Oh, the the 5,700,000.0 in other income. What I don't normally get questions on other income on this call. But, you know, what you saw there was, you know, it was the benefit of some of the sale transactions. It was some some hedging transactions that that we benefited benefited from. I would say, was was the bulk of the the two items and other income.

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

Alright. And that flow through the AFFO?

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

Yes. Because the hedging transactions are are are offset higher up, so it's it's on different lines of the p and l that nets down to when you get to to AFFO.

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

K. And then just the second question, George, you know, I I I don't wanna beat a dead horse here on on the macro and demand, I guess. But and I know it's a little bit early to start thinking about 02/1926. But, you know, when you look at the environment, and we're all trying to figure out sort of the growth algorithm for next year outside of the developments that you guys underway, potential acquisitions, from a from a core perspective, I mean, are there any near term catalyst that you guys are seeing to shift the the mindset of tenants to where we would see a a reacceleration inventory restocking? Or should we just kind of think for next year baseline occupancy is bounces around these levels because demand doesn't improve?

[Craig Mailman, Director & Equity Research Analyst at Citigroup]

Or then just include the benefit of maybe capital deployment as we think about kind of trying to forecast?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Well, I think that's the big question we're all asking ourselves, Craig, what does it take to spur demand? I mentioned we now have multiple headwinds to demand. It's not a single factor by any means. And it's very difficult to handicap the effect of one demand driver on a percentage basis versus another versus another. So what we know is the cumulative effect is hard to come by.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So what would have to happen is some of those drivers would have to improve. Again, we can overcome one or two of them. Think we can grow through one or two of them. We can't grow through four or five of them. So something would have to change.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

What I can tell you, customers are trying very hard to create demand. They're spending money behind promotions. They're spending money behind incentive plans and rebates. It's not lack of trying on the on behalf of customers. They're just having very, very difficult times in finding the right price points to drive volume where they're comfortable and retailers are comfortable.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

So the gap is still very wide. So I would say, one, not for a lack of trying on customer test, but two, with all the pressures on demand, we need to see some of them improve before we can reliably say that occupancy will improve with it.

[Robert Chambers, President at Americold Realty Trust]

And then this is where, you know, I think for us as a as a as a business that has a a big operating component, this this is where we have the opportunity to use all the levers and and the tools in our tool tool belt to focus on earnings per share growth even even in an environment where, you know, occupancy is challenged. This this is where we continue to drive productivity. We're we're focused on adding incremental value added services into the business.

[Robert Chambers, President at Americold Realty Trust]

We're we're focused on improving business mix by by generating new business wins and the the retail and QSR business that are higher cash flowing. So our customers aren't standing still, we certainly aren't standing still. We're pulling every lever that we have to continue to drive this business forward even in a challenged environment.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

And I I think the last part of the question was capital allocation. I wasn't sure of the context of it, Craig.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

But what I will say is we have opportunities to deploy capital, and and we will in areas of the world where they're not faced with the challenges we've been talking about. Our Asia Pac business, for instance, is doing exceedingly well. It's 90 plus percent occupied. It is very retail and QSR based, so investments down there make a lot of sense. And just making the point that with a global company, we still have very attractive areas to invest in.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

We have two very strong partners in CPKC and DP World who are growing also. So a lot of those are non demand driven opportunities to invest in,

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

and and we intend to take full advantage of those as well. Yeah. And and, Craig, follow-up on other income. As I said, part was from gain on sale, part was from other income. 2,400,000.0 was from the SuperFrio disposition that was adjusted out of AFFO, and the other was just, you know, different types of hedging unwinds that that just offset a line item higher ups. So that's more specific numbers for you.

[Operator]

Our next question comes from Blaine Heck with Wells Fargo. Please proceed with your question.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Great. Thanks. Good morning. Just to follow-up on Todd's earlier question. Do you have any sense of how much additional capacity your customers have within their own infrastructure, just the store inventory?

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Is this a situation in which they're running at pretty full capacity and any incremental inventory build is gonna come to you? Or do you think they have significant additional underutilized space to kind of absorb before that spills over to the third third party?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

No. I don't. And and again, we I made that comment for context purposes in terms of where we are.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

But our largest manufacturing customers have their own cold storage networks that they you know, in their business. It would be normal course of business to keep those 100% full at all times at all times. Right? Why would you ever, under good times or bad, pay for space when you have free space that you own? So this isn't a new thing, and there's not a lot of capacity left.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

It's it's just an example of how difficult the times are to grow demand and volume. And one anecdotal comment around the level of that that pressure and how some large manufacturers are taking even more aggressive tech using space they wouldn't normally use for this type of thing to to do that. So again, very unusual circumstances. When when demand comes back, I I think that all of that inventory moves back out because they'll need that space to perform operations in their in their normal business to ramp up demand or ramp up production. So it's not a it's not a big deal.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

It's not a headwind we're particularly concerned about, but I I put it in the script and and talked about it only to provide context around what is going on with demand and the pressures that that are out there.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Okay. Got it. That's helpful. And George, we've been dealing with tariffs for several months at this point.

[Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities]

Can you talk about any specific direct or indirect impact to the business that you would attribute to the tariffs in place? And maybe any concerns about specific products or trading partners looking forward?

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Right. As we've said in the past, the direct impacts are very, very small in our business. I I can't give you a particular product or or category.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

I mean, everybody knows that protein exports have been under pressure for a while now, as you said, so etcetera. But it's it's the indirect impact that hurt us the most. It's the fear of inflation. It's the lack of consumer confidence. It's everything we said among a quarter or so ago.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

The indirect impact on overall consumer health impact our business far, far more than the direct impact of of tariffs on our business. And I think that's true. The total food business is not you know, outside of exporting raw materials and importing raw materials, there's not a lot of finished goods that get sent around the world. And, you know, I I think the indirects far outweigh the direct impacts on our business with respect to tariffs. But it's it's all noise and it's all turmoil, and it all impacts demand at the end of the day, and that's why we have it on the list.

[Operator]

Our next question comes from Ki Bin Kim with Truist Securities.

[Ki Bin Kim, MD - US REIT Equity Research at Truist]

Going back to your second half occupancy guidance that you're calling for basically flat, you know, I'm just curious about that because, you know, part of what drives that seasonality is the holiday season. Right? The Thanksgiving, Christmas season. So and we're already at lower occupancy level. So I'm just curious why there wouldn't be some type of seasonal uplift.

[Ki Bin Kim, MD - US REIT Equity Research at Truist]

Or do you think there might be more customer churn? Are you do you are you will you lose some business in the second half? I'm just trying reconcile those statements.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Yes. I understand.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

Keep in second half of the year, by the way, occupancy is up because of the agricultural harvest that will occur, as Jay mentioned earlier. But if you remove those annual events, occupancy is flat. We have removed seasonality around the holidays, and we've done it because we didn't see any seasonality around the summer. So with maybe it's an overly conservative approach, we are not anticipating losing any business. We think our churn will remain well below 4%.

[George Chappelle, Chief Executive Officer at Americold Realty Trust]

We don't see any customer losses in the second half of the year. So it's not driven by any of that. Driven by we haven't seen any seasonality through the summer, and we asked ourselves the question, should we plan, should we forecast seasonality in the second half of the year? And we came to the conclusion that perhaps a conservative approach, but prudent in our opinion is to not not forecast it. It's that simple.

[Ki Bin Kim, MD - US REIT Equity Research at Truist]

Okay. And just one more question on your development. So I'm looking at page 20 of your supplemental. You have a lot of projects here that are coming online, various stages. I just wanna make sure that we don't we don't double count the growth from this platform next year.

[Ki Bin Kim, MD - US REIT Equity Research at Truist]

And just given that you don't really show how much NOI you're already capturing in the run rate, I was wondering if could provide some color on what the incremental NOI growth could look like here on out.

[Jay Wells, Executive VP & Chief Financial Officer at Americold Realty Trust]

I mean, you can look at that. These are all in our non same store pool. So you can see that, you know, generating minimal NOI currently. If you look at our guide, it does dip a little bit as we go into q three because with with Kansas City coming online, with Allentown coming online, you have the start up costs associated with with starting. So, you know, overall, if you look at the stabilization date, you apply you apply the return and you offset by by the small amount of NOI you see in non same store. That's how I would model it.

[Operator]

We have reached the end of our q and a session, which now concludes today's teleconference. You may disconnect your lines at this time. Thank you for participating.

Participants

Executives

• George Chappelle, Chief Executive Officer
• Robert Chambers, President
• Jay Wells, Executive VP & Chief Financial Officer

Analysts

• Samir Khanal, Director - US REITs at Bank of America
• Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI
• Greg Mcginniss, Director at Scotiobank
• Todd Thomas, MD & Senior Equity Research Analyst at KeyBanc Capital Markets
• Craig Mailman, Director & Equity Research Analyst at Citigroup
• Blaine Heck, Executive Director & Senior Equity Research Analyst at Wells Fargo Securities
• Ki Bin Kim, MD - US REIT Equity Research at Truist