Lineage NASDAQ: LINE reported first-quarter 2026 results that came in ahead of management’s expectations, as the cold storage operator pointed to early signs of stabilization amid elevated industry supply and trade-related pressure. President and CEO Greg Lehmkuhl said the quarter “reinforces our view that the business is stabilizing as we manage through the industry headwinds we’ve highlighted over the past couple of quarters.”
Quarterly results and operating trends
Lehmkuhl said total revenue was flat year-over-year, while adjusted EBITDA increased 3.3% to $314 million. Total adjusted funds from operations (AFFO) were $201 million, or $0.78 per share, down year-over-year. He attributed the decline primarily to the expiration of prior-year interest rate hedges, noting the impact was consistent with the company’s 2026 guidance. Excluding that hedge impact, Lehmkuhl said AFFO per share was “essentially flat” compared with the prior year.
On occupancy, Lehmkuhl said same-store physical occupancy declined sequentially by 290 basis points to 76.4%, while economic occupancy was 82%. He said Lineage has worked with customers to “right-size guaranteed space” and described stabilizing occupancy trends as consistent with direct customer dialogue and recent commentary from food producers.
Pricing remained a positive contributor. Lehmkuhl said same-store rent, storage, and blast revenue per physical pallet increased 2.2%, the fourth consecutive quarter of year-over-year increases. He added that the company remains “positive about realizing net price increases of 1%-2% this year.” Later in the Q&A, Lehmkuhl said Lineage had secured 70% of its rate increases for the year, supporting that expectation.
Throughput was softer, reflecting trade impacts. Lehmkuhl said same-store throughput remained weak and container volumes declined 17% year-over-year in the quarter, following a 9% decline in the fourth quarter of 2025. He said imports were down sharply, in part due to a difficult comparison against first-quarter 2025, when import volumes were pulled forward ahead of tariff actions. Despite those headwinds, Lehmkuhl noted same-store NOI declined 0.9% year-over-year, which he characterized as an improvement from prior trends.
Segment performance: Warehousing ahead of expectations, GIS mixed
CFO Robb LeMasters said first-quarter total warehouse NOI increased 1.1% year-over-year to $364 million, while same-store NOI declined 0.9% to $347 million. Both were “ahead of our expectations,” he said. LeMasters added that same-store NOI benefited by approximately 250 basis points from favorable foreign exchange, which he said was contemplated in the company’s outlook.
LeMasters attributed the warehousing performance to strong international NOI growth and continued uptake of value-added services in multiple international geographies. Within the same-store warehouse pool, he said utilization was 76.4% and throughput volumes declined 3.3%, while services revenue per throughput pallet increased 50 basis points.
In Global Integrated Solutions (GIS), LeMasters said NOI was flat year-over-year at $57 million, while the NOI margin improved 190 basis points to 18.3%. He attributed the margin improvement to an improved mix after the divestiture of a lower-margin international transportation business last year. Management said U.S. transportation and food services showed positive momentum, though this was offset by lower drayage activity tied to suppressed container volumes.
Addressing a question about GIS revenue declines, Lehmkuhl said the revenue impact was driven by the European divestiture, calling the sold business “real low margin.” LeMasters added that excluding that transaction, the business grew slightly on the revenue side.
Guidance reiterated; cost timing and international mix drove Q1 upside
Lineage maintained its full-year 2026 guidance. Lehmkuhl said the company still expects same-store NOI contraction of -4% to -1% and AFFO of $2.75 to $3.00 per share, adding that the quarter increased management’s confidence in achieving the midpoint of the range.
LeMasters reiterated the broader guidance framework:
- Same-store NOI growth: -4% to -1%
- Total warehouse NOI growth: -2% to +1%
- GIS NOI growth: 0% to 2%
- Adjusted EBITDA: $1.25 billion to $1.3 billion
- AFFO: $2.75 to $3.00 per share
Management said the first-quarter outperformance reflected factors it wants to see persist before changing the outlook. In response to an analyst question, Lehmkuhl said results can swing with customer and service mix across a network of 500 locations and 15,000 customers in 19 countries, and he cited particular strength in international operations.
LeMasters said roughly one-third of the quarterly upside came from administrative expense timing and tighter controls, with some costs deferred into the second quarter and later in the year. He said administrative expense is expected to normalize to approximately $120 million to $125 million per quarter for the balance of 2026.
LeMasters said the other two-thirds of the upside was tied to international factors, including discrete customer programs and trade flow disruptions that increased handling activity in certain regions. He pointed to examples including a short-term export lift in Canada and customer-specific events in APAC and EMEA, but emphasized these items can vary quarter-to-quarter.
Balance sheet, portfolio review, and cost initiatives
LeMasters said Lineage ended the quarter with $7.9 billion of total net debt and $1.6 billion of liquidity. He said the company has approximately $600 million of debt maturing in 2026, which management believes is “very manageable.” Reported leverage stood at 6.0x, and LeMasters said the company remains committed to bringing leverage into its targeted 5.0x to 5.5x range. He also cited an “adjusted net debt to transaction adjusted EBITDA” metric of 5.3x, which he said is more comparable to peers and considers the development pipeline and intra-period transactions.
Management also discussed a strategic portfolio review aimed at enhancing financial flexibility. Lehmkuhl said the company is evaluating options ranging from individual asset sales to larger portfolio transactions and joint venture capital solutions. He said potential proceeds could be used for priorities including de-leveraging, funding development, pursuing acquisitions if market dislocations arise, or returning capital to shareholders. Lehmkuhl said the company is “encouraged by the progress to date,” but did not provide specifics.
In response to a question about international versus North America, LeMasters cautioned that the review is still early and that “no decisions have been made.” He said the goal is to build balance sheet capacity while maintaining Lineage’s investment-grade profile.
On costs, LeMasters said Lineage has identified a plan to remove $50 million or more from its administrative and indirect cost base, with approximately half of the savings expected in 2026 and the full benefit in 2027. He said the initiative includes centralizing indirect costs, internalizing third-party activities, and leveraging AI and digital transformation, and it requires a modest upfront investment of roughly $15 million that will be recorded below EBITDA in late 2026 and into 2027.
Industry backdrop: supply digestion, trade pressure, and development pipeline
Lehmkuhl described a U.S. cold storage market that has been absorbing new supply. He said from 2021 to 2025, U.S. public refrigerated warehouse supply increased about 15% on a square-foot basis, while consumer demand in served categories grew around 5%, implying roughly 10% excess capacity. He said Lineage delivered approximately 75% physical occupancy in 2025, down about 300 basis points from 2021.
He also said about 85% of the U.S. NOI in assets held consistently since 2021 is located in markets with limited new supply growth or markets where supply was delivered earlier and rents have adjusted and stabilized. Late-cycle supply markets represent about 15% of U.S. NOI and are facing competitive pressure, he said, but management expects a pattern similar to earlier-cycle markets over time.
Looking ahead, Lehmkuhl said new deliveries are expected to decline sharply in 2026 and that speculative development is less compelling in the current environment. He also said Lineage has been selectively idling facilities, having idled 10 in 2025 and planning “another handful” in 2026.
On capital investments, Lehmkuhl said Lineage invested $130 million of growth capital in the quarter, primarily in development. He said the company has 22 facilities under construction or ramping and has invested $1.2 billion in those projects, which are expected to deliver more than $150 million of incremental EBITDA to the current run rate once stabilized.
Asked about automated Tyson developments, Lehmkuhl said the projects are going as planned, adding that one Northeast distribution center has launched and is performing well. He said construction agreements have been locked in and Lineage does not expect incremental inflation pressure on those projects.
About Lineage NASDAQ: LINE
Lineage Logistics, Inc NASDAQ: LINE is a leading provider of temperature-controlled industrial real estate and supply chain solutions. The company specializes in refrigerated and frozen storage, transportation, and ancillary services designed to support the global perishable goods industry. From food manufacturers and distributors to retailers and foodservice operators, Lineage offers tailored temperature management solutions that help clients optimize inventory turnover, reduce waste, and maintain product quality throughout the cold chain.
Lineage's core services include ambient, refrigerated and frozen warehousing, cross-docking, transloading, and dedicated transportation.
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