Lineage, Inc.

Thank you for standing by and welcome to the Lineage fourth 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, again, press the star one. Thank you. I'd now like to turn the call over to Evan Barbosa, vice president of investor relations. You may begin.

Thank you. Welcome to Lineage's discussion of its fourth quarter and full year 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 issue 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. Comparisons of the fourth quarter of 2024 are to the fourth quarter of 2023, and comparisons of the full year 2024 are to the full year 2023. Now, I would like to turn the call over to Greg.

Thanks, Evan, and thanks, everyone, for joining us today. Turning to the 2024 highlights on slide three, I'd like to start with a brief recap of our 2024 accomplishments. We executed the largest IPO of the year and the largest REIT IPO of all time. This enabled us to reduce our leverage to under five times, which earned us investment grade ratings at both Moody's and Fitch and positions as well to continue to deploy capital across our attractive pipeline of development and M&A opportunities. Financially, we delivered 4% adjusted EBITDA growth and 6% AFFO per share growth and initiated our dividend at an annualized rate of $2.11 a share. Operationally, we delivered same warehouse physical occupancy of 78% despite a challenging external environment, driven by our high-quality assets in the locations most critical to our diversified customer base. As we reflect on 2024, we achieved the second year in a row of our all-time best safety performance. reinforcing our first corporate value of safety. Record new business wins, helping to offset the industry headwinds. Best ever truck turn times for our customers, the service metrics they care about the most. Best warehouse labor productivity in our history, and this continued into the first quarter. The issuance of our 100th patent, demonstrating our unwavering commitment to innovation, automation, and data science. We received market recognition and awards like the CNBC Disruptor 50 list for the fourth consecutive year The Fortune's 2024 Change the World List for the second time, the Inc's 2024 Best in Business Awards for the Innovation and Technology category, and the 2024 SmartWay Leader by the US EPA in recognition for our dedication to sustainability through innovative freight solutions. Finally, we executed on our robust pipeline of development and M&A opportunities deploying $760 million of growth capital, including the opening of what we believe to be the most state-of-the-art and innovative fully automated cold store in the world in Hazleton, Pennsylvania, which opened on time and is operating as expected. The acquisition of Coldpoint Logistics in Kansas City and several other accretive acquisitions around the globe, I would like to sincerely thank all of our team members across the world for contributing to our success in 2024. Next slide. As we move into 2025, fresh and frozen food remains a growing segment driven by strong long-term demand. The vast majority of food consumed in developed markets requires temperature-controlled warehousing at some point in its journey from fork to fork. At Lineage, our strategically built network and cutting-edge technology gives us a significant competitive advantage and positions us as the global leader in the cold chain. Operationally, we're seeing continued benefits from our focus on labor productivity, lean process excellence, and energy management, driving efficiency across our business. And speaking of efficiencies, our LinOS initiative is on track and our early pilots are exceeding expectations. As a reminder, LinOS is our proprietary warehouse execution system that we've developed and already implemented in multiple automated facilities and have begun piloting in our conventional buildings. The software uses patented and proprietary algorithms that are a result of many years of development and collaboration between our data science, technology, and operations team. Our belief is that LinOS will transform warehouse operations, resulting in significantly higher performance for customers while accelerating efficiency improvements. Our early pilots are both exceeding our efficiency expectations and being positively received by our hourly team members and warehouse leadership. Our teams are genuinely excited about how this technology can transform our operations. In fact, I've been getting requests from general managers asking to be next on the list as the enthusiasm around this initiative spreads. In short, it's still early, but we're more excited than ever about WinOS, and we will provide more color moving forward as our pilots continue and we learn more. Before introducing our 2025 guidance, allow me to provide some color on the path traveled over the last few years. As part of our long-term planning cycle, we recently had our data scientists refresh our analysis on the core holdings of our North American warehousing business to shed light on recent trends. Now, no study is perfect, but our data suggests that, first of all, food consumption has not changed. In fact, our study showed that since 2021, our outbound pallet volume remains stable, fluctuating less than 1% annually. The volume just shifted between channels, for example, from food service to retail, and importantly, due to our diversification, has minimal impact on us because we store pretty much everything. However, inventory holdings have fluctuated over the past several years. Here is a brief timeline of what happened. Back in 2020-2021, we saw supply chain chaos, production shortages, port shutdowns, and the inventory was bled down. 2022 was the year where customers began to rebuild inventories quickly, leading to overbuilding. That overbuilding continued into the third quarter of 2023 when the excess inventory began to unwind. That unwinding continued through the second quarter of 2024. Said another way, inventory levels remained elevated for the first half of 2024. Since then, we've experienced a more normal seasonal pattern, which is what we expect to continue moving forward. For 2025, we expect full-year adjusted EBITDA of $1.35 billion to $1.4 billion and AFFO per share of $3.40 to $3.60. To reiterate, our 2025 guidance assumes normal seasonality from today's historically low inventory levels with no market improvement. As always, our guidance excludes the impact of unannounced future acquisitions or developments. Our solid financial position, bolstered by a strong balance sheet, available cash, and significant debt capacity, provides the opportunity to deploy over $1.5 billion in capital in 2025. Now, I'd like to turn the call over to our CFO, Rob Cresci.