AMERICOLD REALTY TRUST [COLD] Filings

10-Q 1 art-20220930.htm 10-Q art-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to ,

Commission File Number: 001-34723

AMERICOLD REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland		93-0295215
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

10 Glenlake Parkway,	Suite 600, South Tower
Atlanta	Georgia	30328
(Address of principal executive offices)		(Zip Code)

(678) 441-1400

(Registrant’s telephone number, including area code)

_________________________

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)

Yes

☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

COLD

New York Stock Exchange

(NYSE)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at November 2, 2022
Common Stock, $0.01 par value per share						269,399,287

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TABLE OF CONTENTS
			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
Item 3. Quantitative and Qualitative Disclosures About Market Risk			76
Item 4. Controls and Procedures			76

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			78
Item 1A. Risk Factors			78
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			78
Item 3. Defaults Upon Senior Securities			78
Item 4. Mine Safety Disclosures			78
Item 5. Other Information			78
Item 6. Exhibits			79

SIGNATURES			80

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following:

•the impact of supply chain disruptions, including, among others, the impact on labor availability, raw material availability, manufacturing and food production, construction materials and transportation;

•uncertainties and risks related to public health crises, including the ongoing COVID-19 pandemic;

•adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;

•rising interest rates and inflation in operating costs, including as a result of the ongoing COVID-19 pandemic;

•labor and power costs;

•labor shortages;

•general economic conditions;

•risks associated with the ownership of real estate generally and temperature-controlled warehouses in particular;

•acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements;

•our failure to realize the intended benefits from our recent acquisitions and including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;

•risks related to expansions of existing properties and developments of new properties, including failure to meet target completion dates and budgeted or stabilized returns within expected time frames, or at all, in respect thereof;

•a failure of our information technology systems, systems conversions and integrations, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions or loss of confidential information;

•risks related to privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations;

•defaults or non-renewals of significant customer contracts, including as a result of the ongoing COVID-19 pandemic;

•uncertainty of revenues, given the nature of our customer contracts;

•our failure to obtain necessary outside financing;

•risks related to, or restrictions contained in, our debt financings;

•decreased storage rates or increased vacancy rates;

•risks related to current and potential international operations and properties;

•difficulties in expanding our operations into new markets, including international markets;

•risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections;

•our failure to maintain our status as a REIT;

•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;

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•financial market fluctuations;

•actions by our competitors and their increasing ability to compete with us;

•geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine;

•changes in applicable governmental regulations and tax legislation, including in the international markets;

•additional risks with respect to the addition of European operations and properties;

•changes in real estate and zoning laws and increases in real property tax rates;

•our relationship with our associates, the occurrence of any work stoppages or any disputes under our collective bargaining agreements and employment related litigation;

•liabilities as a result of our participation in multi-employer pension plans;

•uninsured losses or losses in excess of our insurance coverage;

•the potential liabilities, costs and regulatory impacts associated with our in-house trucking services and the potential disruptions associated with our use of third-party trucking service providers to provide transportation services to our customers;

•the cost and time requirements as a result of our operation as a publicly traded REIT;

•changes in foreign currency exchange rates;

•the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our stockholders to replace our directors and affect the price of our common stock, $0.01 par value per share; and

•the potential dilutive effect of our common stock offerings.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Quarterly Report on Form 10-Q. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Quarterly Report on Form 10-Q include, among others, statements about our expected acquisitions and expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” “our Company” and “the Company” refer to Americold Realty Trust, Inc., a Maryland corporation, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “our Operating Partnership” or “the Operating Partnership.”

In addition, unless otherwise stated herein, when we refer to “cubic feet” in one of our temperature-controlled facilities, we refer to refrigerated cubic feet (as opposed to total cubic feet, refrigerated and otherwise) therein.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
	September 30, 2022		December 31, 2021
Assets
Property, buildings and equipment:
Land	$	770,775	$	807,495
Buildings and improvements	4,159,993		4,152,763
Machinery and equipment	1,368,207		1,352,399
Assets under construction	520,702		450,153
	6,819,677		6,762,810
Accumulated depreciation	(1,825,107)		(1,634,909)
Property, buildings and equipment – net	4,994,570		5,127,901

Operating lease right-of-use assets	356,260		377,536
Accumulated depreciation – operating leases	(72,632)		(57,483)
Operating leases – net	283,628		320,053

Financing leases:
Buildings and improvements	13,556		13,552
Machinery and equipment	130,530		146,341
	144,086		159,893
Accumulated depreciation – financing leases	(56,409)		(58,165)
Financing leases – net	87,677		101,728

Cash, cash equivalents and restricted cash	45,693		82,958

Accounts receivable – net of allowance of $12,423 and $18,755 at September 30, 2022 and December 31, 2021, respectively	441,739		380,014
Identifiable intangible assets – net	919,052		980,966
Goodwill	1,009,330		1,072,980
Investments in partially owned entities	70,130		37,458
Other assets	150,085		112,139
Total assets	$	8,001,904	$	8,216,197

Liabilities and equity
Liabilities:
Borrowings under revolving line of credit	$	468,286	$	399,314
Accounts payable and accrued expenses	516,728		559,412
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $12,025 and $11,050, in the aggregate, at September 30, 2022 and December 31, 2021, respectively	2,493,004		2,443,806
Sale-leaseback financing obligations	173,344		178,817
Financing lease obligations	83,353		97,633
Operating lease obligations	271,433		301,765
Unearned revenue	34,205		26,143
Pension and postretirement benefits	2,624		2,843
Deferred tax liability – net	128,404		169,209
Multi-employer pension plan withdrawal liability	7,932		8,179
Total liabilities	4,179,313		4,187,121
Commitments and contingencies (Note 9)
Equity
Stockholders’ equity:
Common stock, $0.01 par value per share – 500,000,000 authorized shares; 269,395,574 and 268,282,592 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	2,694		2,683
Paid-in capital	5,189,215		5,171,690
Accumulated deficit and distributions in excess of net earnings	(1,359,106)		(1,157,888)
Accumulated other comprehensive (loss) income	(23,194)		4,522
Total stockholders’ equity	3,809,609		4,021,007
Noncontrolling interests:
Noncontrolling interests in operating partnership	12,982		8,069
Total equity	3,822,591		4,029,076

Total liabilities and equity	$	8,001,904	$	8,216,197
See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Rent, storage and warehouse services	$	598,977	$	542,047	$	1,704,281	$	1,531,232
Third-party managed services	82,436		87,782		251,782		233,027
Transportation services	76,367		78,979		237,168		234,051

Total revenues	757,780		708,808		2,193,231		1,998,310
Operating expenses:
Rent, storage and warehouse services cost of operations	432,315		397,055		1,240,376		1,095,680
Third-party managed services cost of operations	78,776		83,231		240,900		222,401
Transportation services cost of operations	65,531		72,728		204,218		211,847

Depreciation and amortization	83,669		70,569		248,979		232,239
Selling, general and administrative	57,119		45,545		170,994		133,072
Acquisition, litigation and other, net	4,874		6,338		20,612		31,011
Impairment of indefinite and long-lived assets	6,616		1,784		6,616		3,312
Loss from sale of real estate	5,710		—		5,710		—
Total operating expenses	734,610		677,250		2,138,405		1,929,562

Operating income	23,170		31,558		54,826		68,748

Other expense, net:
Interest expense	(30,402)		(25,303)		(82,720)		(77,838)
Loss on debt extinguishment, modifications and termination of derivative instruments	(1,040)		(627)		(2,284)		(5,051)
Other, net	(2,593)		(57)		(1,197)		1,021





Loss from investments in partially owned entities	(1,440)		(489)		(7,199)		(1,250)
(Loss) income before income taxes	(12,305)		5,082		(38,574)		(14,370)
Income tax (expense) benefit
Current	(1,006)		(3,336)		(3,004)		(6,953)
Deferred	4,374		3,562		19,149		(1,004)
Total income tax benefit (expense)	3,368		226		16,145		(7,957)

Net (loss) income	$	(8,937)	$	5,308	$	(22,429)	$	(22,327)
Net (loss) income attributable to noncontrolling interests	(25)		14		(45)		163
Net (loss) income attributable to Americold Realty Trust, Inc.	$	(8,912)	$	5,294	$	(22,384)	$	(22,490)

Weighted average common stock outstanding – basic	269,586		261,865		269,467		256,129
Weighted average common stock outstanding – diluted	269,586		262,550		269,467		256,129

Net (loss) income per common share - basic	$	(0.03)	$	0.02	$	(0.08)	$	(0.09)
Net (loss) income per common share - diluted	$	(0.03)	$	0.02	$	(0.08)	$	(0.09)

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(8,937)	$	5,308	$	(22,429)	$	(22,327)
Other comprehensive (loss) income - net of tax:
Adjustment to accrued pension liability	66		389		20		1,166
Change in unrealized net loss on foreign currency	(25,038)		(9,485)		(37,720)		(13,141)
Unrealized gain on cash flow hedges	8,274		247		9,984		2,877
Other comprehensive loss - net of tax attributable to Americold Realty Trust, Inc.	(16,698)		(8,849)		(27,716)		(9,098)
Other comprehensive loss attributable to noncontrolling interests	(53)		(19)		(103)		(11)
Total comprehensive loss	$	(25,688)	$	(3,560)	$	(50,248)	$	(31,436)

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity (Unaudited)
(In thousands, except shares and per share amounts)

	Common Stock					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests in Operating Partnership

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2021	268,282,592	$	2,683	$	5,171,690	$	(1,157,888)	$	4,522	$	8,069	$	4,029,076
Net loss	—	—		—		(17,407)		—		(38)		(17,445)
Other comprehensive income	—	—		—		—		11,404		23		11,427
Distributions on common stock, restricted stock and OP units	—	—		—		(59,580)		—		(180)		(59,760)
Stock-based compensation expense	—	—		6,108		—		—		1,985		8,093

Common stock issuance related to stock-based payment plans, net of shares withheld for employee taxes	318,729	3		(2,140)		—		—		—		(2,137)
Common stock issuance related to employee stock purchase plan	71,144	1		1,984		—		—		—		1,985
Balance - March 31, 2022	268,672,465	$	2,687	$	5,177,642	$	(1,234,875)	$	15,926	$	9,859	$	3,971,239
Net income	—	—		—		3,935		—		18		3,953
Other comprehensive loss	—	—		—		—		(27,392)		(73)		(27,465)
Distributions on common stock, restricted stock and OP units	—	—		—		(59,571)		—		(188)		(59,759)
Stock-based compensation expense	—	—		5,115		—		—		2,173		7,288
Common stock issuance related to stock-based payment plans, net of shares withheld for employee taxes	618,176	6		(448)		—		—		—		(442)

Deconsolidation of previously consolidated entities	—	—		—		—		4,970		(204)		4,766
Balance - June 30, 2022	269,290,641	$	2,693	$	5,182,309	$	(1,290,511)	$	(6,496)	$	11,585	$	3,899,580
Net loss	—	—		—		(8,912)		—		(25)		(8,937)
Other comprehensive loss	—	—		—		—		(16,698)		(53)		(16,751)
Distributions on common stock, restricted stock and OP units	—	—		—		(59,583)		—		(180)		(59,763)
Stock-based compensation expense	—	—		5,065		—		—		1,655		6,720
Common stock issuance related to stock-based payment plans, net of shares withheld for employee taxes	30,791	—		(53)		—		—		—		(53)
Common stock issuance related to employee stock purchase plan	74,142	1		1,894		—		—		—		1,895
Other	—	—		—		(100)		—		—		(100)
Balance - September 30, 2022	269,395,574	$	2,694	$	5,189,215	$	(1,359,106)	$	(23,194)	$	12,982	$	3,822,591

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity, Continued (Unaudited)
(In thousands, except shares and per share amounts)

	Common Stock					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests in Operating Partnership and Consolidated Joint Venture

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2020	251,702,603	$	2,517	$	4,687,823	$	(895,521)	$	(4,379)	$	2,381	$	3,792,821
Net (loss) income	—	—		—		(14,414)		—		178		(14,236)
Other comprehensive loss	—	—		—		—		(9,280)		(12)		(9,292)
Distributions on common shares, restricted stock and OP units	—	—		—		(55,909)		—		(120)		(56,029)
Stock-based compensation expense	—	—		4,075		—		—		949		5,024
Common share issuance related to stock-based payment plans, net of shares withheld for employee taxes	816,915	8		(10,089)		—		—		—		(10,081)

Balance - March 31, 2021	252,519,518	$	2,525	$	4,681,809	$	(965,844)	$	(13,659)	$	3,376	$	3,708,207
Net loss	—	—		—		(13,370)		—		(29)		(13,399)
Other comprehensive income	—	—		—		—		9,031		20		9,051
Distributions on common shares, restricted stock and OP units	—	—		—		(57,773)		—		(124)		(57,897)
Stock-based compensation expense	—	—		3,922		—		—		1,539		5,461
Common share issuance related to stock-based payment plans, net of shares withheld for employee taxes	66,431	1		(108)		—		—		—		(107)
Issuance of common stock	8,429,104	84		214,775		—		—		—		214,859
Balance - June 30, 2021	261,015,053	$	2,610	$	4,900,398	$	(1,036,987)	$	(4,628)	$	4,782	$	3,866,175
Net income	—	—		—		5,294		—		14		5,308
Other comprehensive loss	—	—		—		—		(8,849)		(19)		(8,868)
Distributions on common shares, restricted stock and OP units	—	—		—		(58,902)		—		(124)		(59,026)
Stock-based compensation expense	—	—		2,782		—		—		1,502		4,284
Common share issuance related to stock-based payment plans, net of shares withheld for employee taxes	9,326	—		(57)		—		—		—		(57)
Common shares issuance related to employee stock purchase plan	63,260	1		1,919		—		—		—		1,920
Issuance of common stock	5,681,369	57		205,390		—		—		—		205,447
Balance - September 30, 2021	266,769,008	$	2,668	$	5,110,432	$	(1,090,595)	$	(13,477)	$	6,155	$	4,015,183

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands, See accompanying notes to condensed consolidated financial statements)
	Nine Months Ended September 30,
	2022		2021
Operating activities:
Net loss	$	(22,429)	$	(22,327)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	248,979		232,239
Amortization of deferred financing costs and pension withdrawal liability	3,528		3,321
Amortization of above/below market leases	1,597		1,418
Loss on debt extinguishment, modifications and termination of derivative instruments	2,284		4,927
Foreign exchange loss	3,453		317
Loss from investments in partially owned entities	7,199		1,250


Gain on extinguishment of New Market Tax Credit structure	(3,410)		—
Loss on deconsolidation of subsidiary contributed to LATAM joint venture	4,148		—
Stock-based compensation expense	22,101		14,788
Deferred income taxes (benefit) expense	(19,149)		1,004
Loss from sale of real estate	5,710		—
Loss (gain) on other asset disposals	1,107		(647)
Impairment of indefinite and long-lived assets	6,616		3,312
Provision for doubtful accounts receivable	3,866		4,730
Changes in operating assets and liabilities:
Accounts receivable	(84,761)		(46,372)
Accounts payable and accrued expenses	(19,382)		(16,281)
Other	21,426		(17,360)
Net cash provided by operating activities	182,883		164,319
Investing activities:

Additions to property, buildings and equipment	(254,112)		(313,229)
Business combinations, net of cash acquired	(15,228)		(616,316)
Acquisitions of property, buildings and equipment, net of cash acquired	(14,581)		—
Investment in partially owned entities	(4,427)		(6,260)
Purchase of noncontrolling interest holders share in consolidated joint venture	—		(11,600)

Proceeds from sale of property, buildings and equipment	340		1,318

Proceeds from sale of investments in partially owned entities	—		596



Net cash used in investing activities	(288,008)		(945,491)
Financing activities:


Distributions paid on common shares, restricted stock units and noncontrolling interests in Operating Partnership	(179,623)		(168,538)
Proceeds from stock options exercised	887		5,191
Proceeds from employee stock purchase plan	3,880		1,920
Remittance of withholding taxes related to employee share-based transactions	(4,031)		(15,777)
Proceeds from revolving line of credit	404,604		590,841
Repayment on revolving line of credit	(303,860)		(280,000)



Repayment of sale-leaseback financing obligations	(5,580)		(2,663)
Repayment of financing lease obligations	(24,758)		(27,500)
Payment of debt issuance and extinguishment costs	(11,593)		(3,110)
Repayment of term loan and mortgage notes	(5,453)		(205,246)
Proceeds from term loan	200,000		—

Net proceeds from issuance of common shares	—		420,151


Net cash provided by financing activities	74,473		315,269
Net decrease in cash, cash equivalents and restricted cash	(30,652)		(465,903)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(