Lineage, Inc.

My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the lineage third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Evan Barbosa, Vice President of Investor Relations. You may begin.

Thank you. Welcome to Lineage's discussion of the third quarter 2024 financial results. Joining me today are Greg Lemko, Lineage's President and Chief Executive Officer, and Rob Cresci, Lineage's Chief Financial Officer. Our earnings presentation, which includes supplemental financial information, can be found on our investor relations website at IR.OneLineage.com. Following management's prepared remarks, we'll be happy to take your questions. Turning to slide two, before we start, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties, as described in our filings with the SEC. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, reference will be made to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of non-GAAP to GAAP measures can be found in the press release that was issued this morning. unless otherwise noted, reported figures are rounded, and comparisons of the third quarter of 2024 are to the third quarter of 2023. Now, I would like to turn the call over to our President and CEO, Greg Lehmkuhl.

Thanks, Evan. Good morning, and thanks, everyone, for joining us today. Turning to slide three. Given this is our first earnings call, I'll kick off the call with a quick lineage overview. I'll then cover our third quarter highlights and share some updates around capital deployment before turning it over to Rob, who will provide insights into our business segment results and an update on our capital structure. He will also share our outlook for the remainder of the year. Moving to slide four, for those of you getting to know us for the first time, lineage is the world's largest tech-enabled, temperature-controlled warehouse REIT. growing from a single warehouse to over 480 with more than 3 billion cubic feet of warehouse capacity and LTM adjusted EBITDA of $1.3 billion. We're the global leader in our space with high-quality assets in locations most critical to our diversified customer base. Lineage is also differentiated by our industry-leading positions in technology, data science, and automation, as well as our ability to grow rapidly over the last 16 years, completing over 115 acquisitions. The cold storage industry is fragmented, and we are well positioned to continue to grow organically and through strategic capital deployment. Next, on slide five, like the great composers of our era, we generate strong, durable cash flows, driving future growth and attractive long-term returns. The lineage of the engine of our flywheel is our NOI and our same warehouse growth. which creates additional investment capacity. These strong cash flows, paired with a tax-efficient REIT structure, help to create an efficient cost of capital, which we can deploy in accretive development projects and strategic M&A, supporting future NOI growth. Our IPO in July only accelerated this flywheel by reducing our leverage and lowering our cost of capital, positioning us even better for long-term compounding. Moving to our third quarter highlights on slide six. I think it's fair to say that successfully executing the largest IPO of the year and the largest re-IPO of all time certainly tops our highlight list. This was an important milestone for our company, and I want to sincerely thank the lineage team, our board of directors, and our bankers and advisors who worked so hard for so long to make the IPO a tremendous success. I'd also like to thank our existing and new investors who recognized what a well-positioned, special unicorn that Lineage is, as well as our embedded long-term growth potential. Our IPO proceeds were used to pay down debt, bringing our leverage under five times, earning us investment-grade ratings at both Fitch and Moody's. The IPO also positions us for future capital deployment, as we'll speak about more in a moment. Financially, in Q3, we delivered strong 20% AFFO per share growth, aided by our successful IPO and strong operational execution by the team. Notably, we continue to successfully navigate market headwinds driven by customer inventory rationalization, high interest rates, and pressures from inflation limiting consumer demand as food prices remain elevated. We have seen limited seasonal lift as occupancy levels remain steady but below last year. In select markets, we are seeing some competitive pressures as speculative development and new supplies come online. Despite these industry headwinds, we are well positioned to win given our number one market position, technology investments, long-term relationships with over 13,000 customers, leadership and automation, network effects, our global farm-to-fork service offerings, and our strong balance sheet. To that end, we believe we remain the acquirer of choice in the industry, ideally poised to take advantage of market opportunities. As demonstrated in the quarter, we controlled the controllables and were able to deliver strong financial performance. further demonstrating our ability to perform well in various economic environments. In the third quarter, we also achieved outstanding safety performance, which is our number one priority and first corporate value. We saw all-time best turn times, the metric that matters most to our customers. I can't say enough about how Jeff Rivera, our COO, and our entire global operations team are performing for customers. We saw all-time high customer service scores as reflected in our daily customer pulse surveys. We also saw strong productivity and warehouse margin expansion despite lower volumes. Additionally, we continue to win new business, helping to offset the industry headwinds. Thank you and great job to our global sales and commercial finance teams. We awarded equity or cash IPO bonuses to our team members around the globe, making the majority of our team members owners of the company. We were proud to be awarded our 100th patent, underscoring our commitment to remaining the industry's innovation leader as we are a tech and data science-driven company. We also declared our first quarterly dividend, representing an annualized rate of $2.11 a share. Lastly, we continued to fuel our long-term growth flywheel by deploying over $350 million in growth capital, including our acquisition of Coldpoint Logistics closed November 1st. We remain well positioned to continue to execute on our attractive pipeline opportunities moving forward. On slide seven, we continue to execute on our significant pipeline of greenfields and expansion projects. In September, we successfully opened what we consider to be the most state-of-the-art and innovative cold store in the world in Hazleton, Pennsylvania. The facility has fully automated full pallet layer pick and case pick capabilities and is driven by our patented LinOS technology and algorithms. I would like to thank our network optimization, project management, operations, engineering, technology, and our data science team for delivering another complex project on time and on budget. On the M&A front, we fired up our acquisition engine after pausing for the IPO. Our first post-IPO acquisition was Lube Naughty for $66 million, which fits perfectly into our strategy of mission-critical, hard-to-replace assets strategically positioned in port locations. The business is in the port of Antwerp, which is the second largest port in Europe and supports our sustainability efforts by producing 80% of the energy it consumes with onsite renewables. Moving to slide 8, we're excited to announce the largest deal since our IPO, Coldpoint Logistics, which we closed on November 1st for $223 million. The acquisition expands Lineage's existing presence in the strategic Kansas City area and enhances our ability to provide an efficient solution for customers along the protein corridor with direct access to major U.S. ports via on-site rail. Coldpoint is expected to earn $16 million of EBITDA in 2024 and is well aligned with our investment criteria with an excellent management team, attractive locations, high-quality young and owned assets, and of course, it's financially accretive. On behalf of our over 26,000 team members around the world, I'd like to formally welcome the Luke Naughty and the Coldpoint teams into the lineage family. Now, I'll turn the call over to our CFO, Rob Cresci, before answering your questions.