AMERICOLD REALTY TRUST [COLD] Filings

10-Q 1 art-20220630.htm 10-Q art-20220630

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	June 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)

_________________________

Table of Contents

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 August 3, 2022
Common Stock, $0.01 par value per share						269,365,689

Table of Contents


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			33
Item 3. Quantitative and Qualitative Disclosures About Market Risk			74
Item 4. Controls and Procedures			74

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			76
Item 1A. Risk Factors			76
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			76
Item 3. Defaults Upon Senior Securities			76
Item 4. Mine Safety Disclosures			76
Item 5. Other Information			76
Item 6. Exhibits			77

SIGNATURES			78

Table of Contents

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;

Table of Contents

•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.

Table of Contents


Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
	June 30, 2022		December 31, 2021
Assets
Property, buildings and equipment:
Land	$	780,381	$	807,495
Buildings and improvements	4,150,724		4,152,763
Machinery and equipment	1,360,551		1,352,399
Assets under construction	533,028		450,153
	6,824,684		6,762,810
Accumulated depreciation	(1,765,611)		(1,634,909)
Property, buildings and equipment – net	5,059,073		5,127,901

Operating lease right-of-use assets	367,774		377,536
Accumulated depreciation – operating leases	(68,987)		(57,483)
Operating leases – net	298,787		320,053

Financing leases:
Buildings and improvements	13,549		13,552
Machinery and equipment	137,421		146,341
	150,970		159,893
Accumulated depreciation – financing leases	(55,355)		(58,165)
Financing leases – net	95,615		101,728

Cash, cash equivalents and restricted cash	74,616		82,958

Accounts receivable – net of allowance of $10,523 and $18,755 at June 30, 2022 and December 31, 2021, respectively	408,090		380,014
Identifiable intangible assets – net	944,058		980,966
Goodwill	1,040,746		1,072,980
Investments in partially owned entities	72,505		37,458
Other assets	141,836		112,139
Total assets	$	8,135,326	$	8,216,197

Liabilities and equity
Liabilities:
Borrowings under revolving line of credit	$	584,330	$	399,314
Accounts payable and accrued expenses	554,601		559,412
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $9,934 and $11,050, in the aggregate, at June 30, 2022 and December 31, 2021, respectively	2,361,487		2,443,806
Sale-leaseback financing obligations	175,340		178,817
Financing lease obligations	91,926		97,633
Operating lease obligations	282,990		301,765
Unearned revenue	30,670		26,143
Pension and postretirement benefits	3,051		2,843
Deferred tax liability – net	143,340		169,209
Multi-employer pension plan withdrawal liability	8,011		8,179
Total liabilities	4,235,746		4,187,121
Commitments and contingencies (Note 7)
Equity
Stockholders’ equity:
Common stock, $0.01 par value per share – 500,000,000 authorized shares; 269,290,641 and 268,282,592 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	2,693		2,683
Paid-in capital	5,182,309		5,171,690
Accumulated deficit and distributions in excess of net earnings	(1,290,511)		(1,157,888)
Accumulated other comprehensive (loss) income	(6,496)		4,522
Total stockholders’ equity	3,887,995		4,021,007
Noncontrolling interests:
Noncontrolling interests in operating partnership	11,585		8,069
Total equity	3,899,580		4,029,076

Total liabilities and equity	$	8,135,326	$	8,216,197
See accompanying notes to condensed consolidated financial statements.

Table of Contents


Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Rent, storage and warehouse services	$	564,379	$	503,734	$	1,105,304	$	989,185
Third-party managed services	83,486		72,173		169,346		145,245
Transportation services	81,891		78,800		160,801		155,072

Total revenues	729,756		654,707		1,435,451		1,289,502
Operating expenses:
Rent, storage and warehouse services cost of operations	413,394		359,355		808,061		698,625
Third-party managed services cost of operations	79,765		70,480		162,124		139,170
Transportation services cost of operations	68,306		69,550		138,687		139,119

Depreciation and amortization	82,690		84,459		165,310		161,670
Selling, general and administrative	56,273		42,475		113,875		87,527
Acquisition, litigation and other, net	5,663		3,922		15,738		24,673
Impairment of long-lived assets	—		1,528		—		1,528

Total operating expenses	706,091		631,769		1,403,795		1,252,312

Operating income	23,665		22,938		31,656		37,190

Other income (expense):
Interest expense	(26,545)		(26,579)		(52,318)		(52,535)
Loss on debt extinguishment, modifications and termination of derivative instruments	(627)		(925)		(1,244)		(4,424)
Other, net	(4,609)		141		(4,363)		317






Loss before income taxes	(8,116)		(4,425)		(26,269)		(19,452)
Income tax (expense) benefit
Current	(817)		(2,406)		(1,998)		(3,617)
Deferred	12,886		(6,568)		14,775		(4,566)
Total income tax benefit (expense)	12,069		(8,974)		12,777		(8,183)

Net income (loss)	$	3,953	$	(13,399)	$	(13,492)	$	(27,635)
Net income (loss) attributable to noncontrolling interests	18		(29)		(20)		149
Net income loss attributable to Americold Realty Trust, Inc.	$	3,935	$	(13,370)	$	(13,472)	$	(27,784)

Weighted average common stock outstanding – basic	269,497		253,213		269,464		253,076
Weighted average common stock outstanding – diluted	270,384		253,213		269,464		253,076

Net income (loss) per common share - basic	$	0.01	$	(0.05)	$	(0.05)	$	(0.11)
Net income (loss) per common share - diluted	$	0.01	$	(0.05)	$	(0.05)	$	(0.11)

See accompanying notes to condensed consolidated financial statements.

Table of Contents


Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	3,953	$	(13,399)	$	(13,492)	$	(27,635)
Other comprehensive (loss) income - net of tax:
Adjustment to accrued pension liability	(113)		396		(46)		777
Change in unrealized net (loss) gain on foreign currency	(23,867)		7,026		(12,681)		(3,656)
Unrealized gain on cash flow hedge	1,558		1,609		1,709		2,630
Other comprehensive (loss) income - net of tax attributable to Americold Realty Trust, Inc.	(22,422)		9,031		(11,018)		(249)
Other comprehensive (loss) income attributable to noncontrolling interests	(73)		20		(50)		8
Total comprehensive loss	$	(18,542)	$	(4,348)	$	(24,560)	$	(27,876)

See accompanying notes to condensed consolidated financial statements.

Table of Contents


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 (Loss) Income		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

Table of Contents



	Common Stock					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive Loss		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

See accompanying notes to condensed consolidated financial statements.

Table of Contents


Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
	Six Months Ended June 30,
	2022		2021
Operating activities:
Net loss	$	(13,492)	$	(27,635)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	165,310		161,670
Amortization of deferred financing costs and pension withdrawal liability	2,306		2,233
Amortization of above/below market leases	1,057		401
Loss on debt extinguishment, modifications and termination of derivative instruments	1,244		4,301
Foreign exchange loss (gain)	965		(33)
Loss from investments in partially owned entities	5,759		761


Gain on extinguishment of New Market Tax Credit structure	(3,410)		—
Loss on deconsolidation of subsidiary contributed to joint venture	4,148		—
Stock-based compensation expense	15,381		10,498
Deferred income taxes (benefit) expense	(14,775)		4,566

Gain on other asset disposals	(96)		(475)
Impairment of long-lived assets	—		1,528
Provision for doubtful accounts receivable	1,966		2,910
Changes in operating assets and liabilities:
Accounts receivable	(40,414)		(1,775)
Accounts payable and accrued expenses	6,809		(14,332)
Other	484		(16,865)
Net cash provided by operating activities	133,242		127,753
Investing activities:

Proceeds from sale of investments in partially owned entities	—		596
Investment in partially owned entities	(4,427)		(6,260)
Proceeds from sale of property, buildings and equipment	240		1,063

Business combinations, net of cash acquired	812		(215,329)
Acquisitions of property, buildings and equipment, net of cash acquired	(6,876)		—
Additions to property, buildings and equipment	(181,709)		(207,292)
Purchase of noncontrolling interest holders share in consolidated joint venture	—		(11,600)
Net cash used in investing activities	(191,960)		(438,822)
Financing activities:


Distributions paid on common shares, restricted stock units and noncontrolling interests in Operating Partnership	(119,525)		(110,813)
Proceeds from stock options exercised	651		5,191
Proceeds from employee stock purchase plan	1,985		—
Remittance of withholding taxes related to employee share-based transactions	(3,746)		(15,791)
Proceeds from revolving line of credit	253,340		210,841
Repayment on revolving line of credit	(55,000)		(70,000)



Repayment of sale-leaseback financing obligations	(3,584)		(1,184)
Repayment of financing lease obligations	(17,189)		(19,337)
Payment of debt issuance and extinguishment costs	(1,084)		(3,110)
Repayment of term loan and mortgage notes	(3,629)		(203,493)


Net proceeds from issuance of common shares	—		214,775


Net cash provided by financing activities	52,219		7,079
Net decrease in cash, cash equivalents and restricted cash	(6,499)		(303,990)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(1,843)		(984)
Cash, cash equivalents and restricted cash:
Beginning of period	82,958		621,051
End of period	$	74,616	$	316,077

Table of Contents


Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows, Continued (Unaudited)
(In thousands)
	Six Months Ended June 30,
	2022		2021
Supplemental disclosures of non-cash investing and financing activities:
Addition of property, buildings and equipment on accrual	$	44,559	$	63,587
Addition of property, buildings and equipment under financing lease obligations	$	15,760	$	11,553
Addition of property, buildings and equipment under operating lease obligations	$	6,025	$	3,368

Supplemental cash flow information:
Interest paid – net of amounts capitalized	$	50,987	$	43,328
Income taxes paid – net of refunds	$	4,026	$	6,147

	As of June 30,
	2022		2021
Allocation of purchase price of property, buildings and equipment to:
Land	$	1,322	—
Buildings and improvements	4,082		—
Machinery and equipment	1,472		—
Cash paid for acquisition of property, buildings and equipment	$	6,876	$	—

	As of June 30,
	2022		2021
Deconsolidation of Chile joint venture
Land	$	(19,574)	$	—
Buildings and improvements	(10,118)		—
Machinery and equipment	(8,395)		—
Assets under construction	(20)		—
Accumulated depreciation	1,959		—
Cash, cash equivalents and restricted cash	(2,483)		—
Accounts receivable	(1,422)		—
Goodwill	(6,653)		—
Other Assets	(309)		—
Accounts payable and accrued expenses	1,105		—
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs	9,633		—
Deferred tax liability – net	6,474		—
Accumulated other comprehensive loss	(4,766)		—
Net carrying value of Chile assets and liabilities deconsolidated	$	(34,569)	$	—

Recognition of investment in unconsolidated LATAM joint venture	$	36,896	$	—

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. General

The Company

Americold Realty Trust, Inc. together with all of its consolidated subsidiaries (ART, Americold, the Company, us or we), is a real estate investment trust (REIT) organized under Maryland law. The Company is the world’s largest publicly traded REIT focused on the ownership, operation and development of temperature-controlled warehouses. The Company is organized as a self-administered and self-managed REIT with proven operating, acquisition and development experience.

On May 25, 2022, the Company completed its conversion from a Maryland real estate investment trust to a Maryland corporation, pursuant to the Articles of Conversion, as approved by the stockholders at its annual shareholder meeting on May 17, 2022. Each issued and outstanding share of beneficial interest in Americold Realty Trust was converted into one share of Common Stock in Americold Realty Trust, Inc. As a result of this conversion, several references in this Form 10-Q have been updated accordingly. Despite this conversion, the Company continues to operate as a REIT for U.S. federal income tax purposes.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its 2021 Annual Report on Form 10-K as filed with the SEC, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries where the Company exerts control. Investments in which the Company does not have control, and is not considered to be the primary beneficiary of a Variable Interest Entity (VIE), but where the Company exercises significant influence over the operating and financial policies of the investee, are accounted for using the equity method of accounting. Intercompany balances and transactions have been eliminated. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.

Summary of Significant Accounting Policies

The following disclosure regarding certain of our significant accounting policies should be read in conjunction with Note 2 to the consolidated financial statements included in our 2021 Annual Report on Form 10-K as filed with the SEC, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies.

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Formation of Latin America Joint Venture

On May 31, 2022, we formed a joint venture, Americold LATAM Holdings Ltd (the “LATAM JV”), with Cold LATAM Limited (our “JV partner”), in an effort to help us grow our business and market presence in the Latin America region, excluding Brazil. Our JV partner committed to invest approximately $209.0 million in exchange for 85% of the total equity interests, and we contributed our Chilean business upon formation of the joint venture and retained the remaining 15% equity interests in the joint venture. Our JV partner’s contribution commitment includes an initial contribution of $8 million at closing and the remainder as a contribution receivable to the LATAM JV. The JV partner must complete its remaining contribution payments over the next four-year period through December 31, 2025 and in doing so, it retains its 85% equity ownership during this period. As a result of this transaction, we recognized a loss of approximately $4.1 million within “Other, net” on the Condensed Consolidated Statement of Operations (net of accumulated foreign currency translation loss related to the Chilean business) upon the deconsolidation of this entity and subsequent recognition of our subsidiary’s 15% equity investment in the LATAM JV at its estimated fair value of $37.0 million within “Investments in partially owned entities” on the Condensed Consolidated Balance Sheet. The fair value of the Company’s retained equity investment is based on Level 2 measurements within the fair value hierarchy based on the cash paid and contribution receivable committed to by our JV partner for their 85% interest, as well as fair value measurement performed in December 2020 when the Chilean business was acquired. Under the terms of the JV agreement, the Company has a call right that enables it to purchase all remaining issued and outstanding shares of the LATAM JV starting in 2026 through 2028, as calculated in accordance with the JV agreement. Upon expiration of the Company’s call option, if unexercised, the JV partner has a call right that requires the Company to sell all of its interest in the LATAM JV by December 31, 2028, with the exercise price based upon the same calculation as the Company’s call option in accordance with the JV agreement.

Extinguishment of New Market Tax Credit (“NMTC”) Arrangement

During the second quarter of 2022, we recognized a gain of $3.4 million within “Other, net” on the Condensed Consolidated Statement of operations upon extinguishment of New Markets Tax Credit (“NMTC”) agreements which were dissolved immediately following the conclusion of the seven-year compliance period during which the tax credits were recognized. The NMTC deferred contribution liability was previously recorded within “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets. For a more detailed description of the NMTC arrangement, refer to Note 17 of the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC.

Impairment of Long-Lived Assets

There were no impairment charges recorded during the three or six months ended June 30, 2022. During the three and six months ended June 30, 2021, the Company recorded impairment charges totaling $1.5 million related to costs associated with development projects which management determined it would no longer pursue.

Future Adoption of Accounting Standards

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Significant Risks and Uncertainties

The COVID-19 pandemic has caused, and is likely to continue to cause severe economic, market and other disruptions worldwide, which could lead to future material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises.

The Company is closely monitoring the impact of the ongoing COVID-19 pandemic and any variants on all aspects of its business in all geographies, including how it will impact its customers and business partners. The three and six months ended June 30, 2022 and the year ended December 31, 2021 were negatively impacted by COVID-19 related disruptions and other macro-economic conditions in (i) the food supply chain; (ii) our customers’ production of goods; (iii) the labor market impacting availability and cost; and (iv) the impact of inflation on the cost to provide our services. Despite the current headwinds, we expect that end-consumer demand for food will remain consistent over the long-term with historic levels. However, current end-consumer demand coupled with food production and transportation challenges since the outset of the pandemic has driven down holdings in our facilities. As a result, occupancy and throughput volume continue at lower than historical levels experienced prior to COVID-19. We expect this to continue until our customers are able to ramp production back up to pre-pandemic levels for an extended period of time and rebuild inventory in the supply chain.

The unprecedented labor environment continues to be challenging for many companies, including our food manufacturing customers. Labor availability continues to be the primary constraint on food production, along with the continuing spread of COVID-19 and related variants, which also impacts the labor market.

Our business has also been impacted due to inflation during the back half of 2021 and during the three and six months ended June 30, 2022. We believe we are positioned to address continued inflationary pressure as it arises; however, many of our contracts require that we experience sustained cost increases for an extended period of time ranging up to 60 days before we are able to initiate rate increases or seek remedies under our contracts. As a result of the significant impact of inflation on the cost of providing our storage, services and transportation to customers, during the second half of 2021 we initiated out-of-cycle rate increases in our customer contracts (many of which contain provisions for inflationary price escalators), and expect to continue to monitor and implement further inflation and pricing increases required into 2022. We can give no assurance that we will be able to offset the entire impact of inflation or future inflationary cost increases through increased storage or service charges or by operational efficiencies.

Additionally, global supply chains have been volatile following the invasion of Ukraine by Russia which has resulted in sanctions against Russia from the U.S. and a number of European countries. While we do not expect our global operations and specifically our European operations to be directly impacted by this event currently, changes could occur that could impact our operations.

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

2. Business Combinations

Acquisitions Completed During 2021

There were no businesses acquired during the three and six months ended June 30, 2022. Total consideration paid for Bowman Stores, and KMT Brrr! and Liberty Freezers, which were acquired during the three and six months ended June 30, 2021 was $106.4 million, $71.4 million, and C$56.8 million, or $44.9 million, respectively, and the acquisition accounting was finalized within twelve months from the date of the respective acquisition. No material adjustments were made to the acquisition accounting during the three and six months ended June 30, 2022. Total consideration paid for ColdCo, Newark Facility Management and Lago Cold Stores, which were businesses acquired during the second half of 2021, for $20.5 million, $390.8 million, and A$102.2 million or $75.1 million, respectively, remained preliminary as of June 30, 2022. No material adjustments were made to the preliminary acquisition accounting for these businesses during the three and six months ended June 30, 2022. We will continue to evaluate the preliminary fair values of the assets acquired and liabilities assumed until they are satisfactorily resolved and adjust our acquisition accounting accordingly and within the allowable measurement period (not to exceed one year from the date of acquisition as defined by ASC 805). For more detailed descriptions of these acquisitions refer to Note 3 of the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC.

3. Acquisition, Litigation and Other, net

The components of the charges and credits included in “Acquisition, litigation and other, net” in our Condensed Consolidated Statements of Operations are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Acquisition, litigation and other, net	2022		2021		2022		2021
Acquisition and integration related costs	$	3,786	$	3,075	$	10,071	$	16,550
Litigation	1,179		117		2,379		117
Severance costs	910		255		3,474		2,701
Terminated site operations costs	767		13		767		72
Cyber incident related costs, net of insurance recoveries	(819)		(289)		(793)		4,482
Other	(160)		751		(160)		751
Total acquisition, litigation and other, net	$	5,663	$	3,922	$	15,738	$	24,673

Acquisition related costs include costs associated with business transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as work associated with information systems and other projects including spending to support future acquisitions, and primarily consist of professional services. We consider acquisition related costs to be corporate costs regardless of the segment or segments involved in the transaction. Refer to Note 3 of the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC for further information regarding acquisitions completed during 2021.

Severance costs represent certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies and reduction in workforce costs associated with exiting or selling non-strategic warehouses or businesses.

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Terminated site operations costs relates to repair expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our Condensed Consolidated Statement of Operations.

Cyber incident related costs include third-party fees incurred in connection with the cyber incident that occurred in November 2020, as well as any incremental costs, internal and external, incurred to restore operations at our facilities and damage claims. Any subsequent reimbursements from insurance coverage for expenses incurred in connection with the event are also reflected within this category.

Other costs are those expenses incurred which are subject to an insurance claim, including deductibles, which are recorded at the time the claim is submitted to the insurer. Subsequent reimbursement of expenses in excess of the deductible are also reflected within this category upon receipt from the insurer. Occasionally, we may subsequently decide to withdraw an insurance claim if costs are less than initially estimated and below the deductible, among other reasons, resulting in the reversal of the unused portion of a deductible previously recorded to this category.

Table of Contents

Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

4. Debt

The Company’s outstanding indebtedness as of June 30, 2022 and December 31, 2021 was as follows (in thousands):

June 30, 2022

December 31, 2021

Indebtedness

Stated Maturity Date

Contractual Interest Rate

Effective Interest Rate as of June 30, 2022