Americold Realty Trust, Inc. (COLD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals: while there are improvements in NOI, Core EBITDA, and margins, concerns persist about flat net sales growth, economic occupancy declines, and excess supply in the cold storage market. The Q&A reveals management's cautious approach to providing specific guidance and ongoing deleveraging efforts. Despite some positive developments, such as cost savings and strategic partnerships, the overall sentiment remains neutral due to the lack of strong growth catalysts and uncertainties in the market.
Key Financial Performance
AFFO (Adjusted Funds From Operations) Fourth quarter AFFO was $0.38 per share, slightly ahead of expectations, marking a year-over-year increase. Full year AFFO was $1.43 per share, in line with expectations. The increase was attributed to a sequential rise in occupancy, cost reductions, and portfolio management initiatives.
NOI (Net Operating Income) Quarterly NOI increased year-over-year for the first time since Q3 2024. This was driven by improved occupancy and cost management.
Core EBITDA Core EBITDA saw a year-over-year increase in the fourth quarter. This was supported by cost reductions and operational improvements.
Services Margins Fourth quarter services margins were nearly 14%, and the full year margin was 12.7%, up nearly 1,000 basis points over the past two years. This improvement was due to labor initiatives and operational efficiencies.
Economic Occupancy Economic occupancy increased 280 basis points sequentially in the fourth quarter, driven by seasonal harvest, better holiday volumes, and portfolio management. However, year-over-year economic occupancy showed a decline, though it improved progressively throughout the year.
Storage Revenue Per Pallet Storage revenue per pallet increased modestly by 0.3% year-over-year in the fourth quarter, reflecting competitive market pressures.
Services Revenue Per Pallet Services revenue per pallet increased by 2.4% year-over-year in the fourth quarter, attributed to efforts to protect margins and ensure fair compensation for services.
Cost Savings The company executed a plan to unlock $30 million in annualized cost savings in indirect labor and SG&A during the second half of 2025. This initiative is largely complete and contributed to improved financial performance.
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Operating Highlights
New Expansion and Development Projects: Delivered 3 new projects globally, including Allentown expansion, Kansas City, and Dubai facilities, all completed on time and on budget.
New Sector Entry: Entered the gas and convenience store sector in Australia with On The Run, supporting nearly 600 locations with tri-temperature warehousing and integrated solutions.
New Retail Presence: Expanded retail presence into Europe with supermarket operators in Portugal and the Netherlands.
New Wins in Floral Sector: Closed new deals in the floral sector, showcasing adaptability to new product categories.
Geographic Expansion: Expanded operations into Europe and Australia, entering new markets like Portugal, Netherlands, and Australia.
Customer Diversification: Focused on diversifying customer base by entering underpenetrated sectors such as pet food, floral, e-commerce, and pharmacy.
Cost Reduction: Achieved $30 million in annualized cost savings in indirect labor and SG&A, and reduced Project Orion-related cash spend by $50 million.
Service Margins: Improved service margins to nearly 14% in Q4 and 12.7% for the full year, up 1,000 basis points over two years.
Portfolio Management: Exited or idled 10 low-profit sites in 2025, reallocating inventory and improving profitability.
Deleveraging Balance Sheet: Initiated efforts to deleverage balance sheet through joint ventures or asset sales, with strong investor interest.
Focus on Organic Growth: Prioritized organic growth by leveraging value propositions in new sectors and geographies.
Inorganic Growth Discipline: Limited near-term development spend to lower-risk, customer-driven projects, with 4 developments on time and on budget.
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Risk or Challenges
Demand and Supply Headwinds: The company anticipates continued pressure on revenue throughout 2026 due to demand and supply headwinds, particularly in the forward distribution node, which has seen speculative development in recent years.
Competitive Pricing Environment: The company faces challenges in navigating a competitive pricing environment, which impacts storage revenue per pallet and overall profitability.
Customer Space Reevaluation: Customers are closely evaluating their space requirements as contracts come up for renewal, leading to potential declines in economic occupancy and revenue.
Leverage and Balance Sheet: The company’s leverage at the end of Q4 2025 was 6.8x, and there is a need to deleverage the balance sheet to maintain its investment-grade profile. This requires strategic capital raises or asset sales.
Portfolio Management Challenges: The company is actively managing its portfolio to maximize profitability, including exiting or idling low-profit facilities. However, this process involves operational and financial risks.
Cost Structure and Inflationary Pressures: While the company is implementing cost-cutting measures, it continues to face inflationary pressures, particularly in labor and other operational costs.
Macroeconomic Environment: Food inflation and cautious customer demand outlooks are creating challenges for the company, with customers managing inventory tightly and struggling to grow volumes on core SKUs.
Inorganic Growth Limitations: The company is limiting near-term development spend until balance sheet leverage is reduced, which could constrain growth opportunities.
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Guidance & Outlook
2026 AFFO Guidance: Americold expects full year 2026 AFFO to be between $1.20 and $1.30 per share. The company anticipates sequential increases in AFFO throughout the year, with the first quarter being the lowest.
Revenue and Occupancy Projections: Same-store revenue is expected to range between $2.2 billion and $2.27 billion, with economic occupancy flat to down by as much as 300 basis points. Revenue per pallet is projected to decline by 100 to 200 basis points.
Same-Store NOI: Same-store NOI is forecasted to be between $735 million and $785 million for 2026, reflecting pricing and occupancy pressures offset by cost-cutting initiatives.
Total Company NOI: Total company NOI is expected to range from $780 million to $845 million, including contributions from the Transportation segment and non-same-store warehouses.
Core SG&A and Cost Reductions: Core SG&A is projected to be between $218 million and $228 million, reflecting a reduction of nearly $7 million at the midpoint. The company has identified $30 million in cost savings from indirect labor and SG&A.
Interest Expense: Interest expense is forecasted to be between $170 million and $180 million for the full year.
Maintenance CapEx: Maintenance CapEx is expected to range between $60 million and $70 million for 2026, consistent with 2025 levels.
Portfolio Management and Asset Optimization: Americold plans to continue its portfolio management initiatives, including exiting or idling underperforming sites and reallocating inventory to more profitable locations. Nine sites have been identified for potential closure in 2026.
Strategic Capital Raise: The company is pursuing a strategic capital raise to delever its balance sheet, potentially through joint ventures or asset sales. This initiative aims to reduce leverage from the current 6.8x level and provide funding for future growth.
Development Projects: Four in-process developments in Port Saint John, Dallas-Fort Worth, Christchurch, and Sydney are on track for completion on time and on budget. The Port Saint John project is expected to open later in 2026.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are customers' expectations for net sales growth in 2026?
A:Customers expect net sales growth to be relatively flat in 2026, with prices up low to mid-single digits and volumes down low to mid-single digits. They are not predicting large inflections in consumer demand.
Q:What steps are customers taking to drive volume growth?
A:Customers are focusing on brand investments, promotional dollars, and innovation, including new product launches in 2026, to drive volume growth.
Q:What is the company's approach to economic occupancy for 2026?
A:The company expects economic occupancy to be flat to down 300 basis points in 2026, slightly more favorable than the previous quarter's guidance of down 200 to 300 basis points. This is due to portfolio management activities, new business sales, and favorable contract renewals.
Q:Are asset sales or deleveraging included in the 2026 AFFO guidance?
A:No, any unannounced asset sales or deleveraging activities are not included in the 2026 AFFO guidance.
Q:What is the company's stance on its international presence?
A:The company is reviewing its international portfolio in Europe, Asia Pacific, and the Middle East to ensure focus on markets where it can win long-term. However, no specific details were provided at this time.
Q:What is the company's deleveraging target?
A:The company aims to reduce leverage to a level that maintains an investment-grade balance sheet, targeting leverage below 6.
Q:What is the expected retention rate for fixed contracts expiring in 2026?
A:The company expects a high retention rate for fixed contracts, with customers renewing at slightly lower levels to align physical and economic occupancy.
Q:What is the company's approach to potential joint ventures or transactions?
A:The company is evaluating various options for deleveraging, including potential joint ventures or transactions, but specific details will be provided midyear.
Q:What is the current supply picture in the cold storage market?
A:Excess supply is concentrated in the U.S., with over 15% incremental capacity added in recent years, mainly by new market entrants. Announcements of new capacity have slowed down.
Q:How many warehouses were mothballed in 2025, and what is the plan for 2026?
A:The company exited or idled approximately 10 warehouses in 2025 and plans to take action on 9 more in 2026.
Q:What is the company's dividend policy?
A:The company aims to maintain its investment-grade rating and dividend while focusing on deleveraging and rationalizing its development portfolio.
Q:What is the company's view on physical occupancy trends?
A:The company believes physical occupancy has stabilized and expects it to remain flat on a seasonally adjusted basis for the full year.
Q:What are the cost structure differences between North America and international assets?
A:The European and North American portfolios are consistent in cost structure, while the Asia Pacific portfolio has higher labor costs due to a focus on retail operations.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the international portfolio review, potential joint ventures or transactions, and the earnings dilution from deleveraging initiatives. Additionally, they did not break out the impact of portfolio management initiatives on 2026 occupancy or provide detailed guidance on physical occupancy trends.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chief Investment
Interim
Investment Officer
Properties
QSR
Run
SGA
accomplishment
asset investor
balance sheet
brand
cash spend
commitment contract
component outlook
estate
evidence ability
goal venture
headwind
increase
initiative
interest asset
investment grade
labor
lease opportunity
level trend
midpoint
momentum
opportunity goal
pressure
priority investment
proceeds
profitability use
sector
share expectation
sheet leverage
space requirement
store support
surface
transparency
variety opportunity
volume portfolio
win
COLD Transcript
Americold Realty Trust, Inc. (COLD) Q4 2025 Earnings Call Transcript
Unknown2-19
The earnings call presents mixed signals: while there are improvements in NOI, Core EBITDA, and margins, concerns persist about flat net sales growth, economic occupancy declines, and excess supply in the cold storage market. The Q&A reveals management's cautious approach to providing specific guidance and ongoing deleveraging efforts. Despite some positive developments, such as cost savings and strategic partnerships, the overall sentiment remains neutral due to the lack of strong growth catalysts and uncertainties in the market.
Americold Realty Trust, Inc. (COLD) Q3 2025 Earnings Call Transcript
Unknown11-6
The earnings call presents a mixed picture, with several negative indicators outweighing positives. The decrease in occupancy and throughput, reduced AFFO guidance, and potential pricing adjustments imply challenges. Despite strong new business wins, slower materialization and lower contract amounts are concerns. Portfolio rationalization and cost management efforts are positive, but the gradual economic occupancy erosion and lack of clear guidance add uncertainty. The Q&A section reveals hesitance about inventory and market conditions, suggesting potential headwinds. Overall, the sentiment leans negative due to these factors.
Americold Realty Trust, Inc. (COLD) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call summary reveals challenges such as competitive pricing pressure, flat revenue growth, and lack of seasonal uplift, indicating a challenging environment. Although there are positive aspects like strong fixed contracts and strategic capital deployment, the Q&A highlights uncertainties and management's reluctance to provide clear guidance on demand improvement. The combination of these factors, along with lowered guidance and flat occupancy expectations, suggests a negative outlook for the stock price over the next two weeks.
Americold Realty Trust, Inc. (COLD) Q1 2025 Earnings Call Transcript
Unknown5-8
The earnings call presents a mixed picture. Financial performance is stable with a 5% dividend increase and improved margins, but concerns arise from increased interest expenses and labor challenges. The Q&A reveals uncertainty in demand due to tariffs and customer caution, though management remains confident. Overall, the stable financials and cautious optimism in guidance balance out the negative aspects, leading to a neutral sentiment.
COLD Slides
COLD Report
Frequently Asked Questions
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