Lineage, Inc.

Hello, everyone. Thank you for joining us and welcome to the Lineage Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Keebin Kim, Head of Investor Relations. Please go ahead.

Thank you. Welcome to Lineage's discussion of the second quarter 2026 financial results. Joining me today are Greg Lehmkuhl, Lineage's president and chief executive officer, and Robb LeMasters, 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. Before we start, I would like to remind everybody that our comments today will include forward-looking statements under federal securities law. 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 the reconciliation of non-GAAP to GAAP measures can be found in our press release and supplemental package that was issued this morning. Unless otherwise noted, reported figures are rounded, and comparisons of the second quarter of 2026 are to the second quarter of 2025. Now, I would like to turn the call over to Greg.

Thanks, Stephen, and good morning, everyone. Let me walk through our agenda for this morning. Then I'll share our latest views on cold storage industry dynamics. Following my remarks, I'll turn it over to Robb LeMasters who will walk through the details of our segment performance, capital structure, and outlook. I'll then return to share closing comments before we open up the line for your questions. Turning to our quarterly performance on slide 4, we are pleased to report another quarter of better than expected results. Operational trends continue to show signs of stabilization. and this quarter marks another step forward in demonstrating our ability to execute on our plan and navigate the industry challenges highlighted in past calls. During the second quarter, adjusted EBITDA was approximately $320 million, ahead of both our internal expectations and consensus estimates. Total AFFO was approximately $198 million, or 76 cents per share, also ahead of expectations. As a reminder, the year-over-year decline in AFFO continues to be driven primarily by the expiration and the prior year interest rate hedges, consistent with our 2026 guidance. On a comparable basis, excluding this impact, underlying AFFO trends are showing meaningful improvement. Turning to core operations, let's start with the solid results in our warehousing segment. We're pleased to see growth in same store physical occupancy this quarter, increasing 90 basis points year over year. This is a welcome inflection point following last quarter's slight decline This reflects our ability to grow share despite competition, a function of our industry-leading offerings we'll discuss in a moment. The sequential occupancy trends were slightly better than normal seasonality, and economic occupancy continued to track at a consistent spread to physical occupancy. Same-store rent, storage, and blast revenue per physical pallet declined 0.7% year-over-year, while services revenue per three-year pallet increased 2.1%. As we've explained in the past, customer commodity and geographic mix, along with FX, creates some quarter-to-quarter noise in these metrics. So we tend to view them in a combined and trended basis versus a short-term proxy for pricing trends. Robb will go into more detail, but we've completed the significant majority of our 2026 customer pricing discussions and remain We remain encouraged by the strong execution of our sales team, particularly given the current environment. I'll reiterate that our full year outlook for revenue per pallet is unchanged. We still expect to be slightly down, consistent with prior guidance. That reflects the trade related and mixed headwinds we called out on previous calls, which have broadly played out as expected. Turning to volume, same store throughput pallets declined 1.8% year over year. We continue to experience pressure in Q2 on higher turning trade-related port volumes, with container volumes down 14% in the quarter. While this quarter's pace of decline represents an improvement relative to the declines we experienced in Q1, I'd remind you that customer product mix can always play a role quarter to quarter, so this doesn't represent a change to how we see the full year playing out. I'd also remind you that we adjust labor according to mix and service activity, allowing us to react quickly to optimize cost as mix changes. Overall, same-story NOI declined 2.9% year-over-year, continued improvement from the steeper declines we saw throughout 2025. Compared to the prior quarter, that's a wider decline than Q1's negative 0.9%, which is mostly explained by the step-down in FX benefit from roughly 250 basis points in Q1 to about 90 basis points this quarter, as well as Q1's elevated international services activity that we called out last quarter. Before turning to our outlook, I want to briefly discuss the fire we had at our Big Bear facility in Los Angeles during the quarter. I want to sincerely thank our team members on the ground for their extraordinary response, along with the first responders who acted quickly to protect the surrounding community. Safety remains our top priority, and I'm incredibly proud of our team and how they're handling this very challenging situation. As part of our response, we committed over $3.3 million to local nonprofits for their cleanup and remediation efforts. Robb will provide more details in his remarks. Turning to our outlook, we have maintained our adjusted EBITDA midpoint while narrowing the range, despite the impact of a big bear fire. We're also raising our full year same store NOI guidance to a range of negative three to zero and increasing our ASFO guidance to $2.80 to $3.05 per share. The underlying trajectory of our business through the first half has been encouraging. Operations are performing better than expected, and the signs of stabilization we've highlighted over the past couple of quarters have continued. That said, the operating environment still includes some challenges, competitive dynamics in certain domestic markets, and trade-related volume headwinds, but we're encouraged by our results in the face of these obstacles. The overall direction is positive. and we have the building blocks in place through pricing discipline, productivity initiatives and the contribution of our past investments in people, process and technology. I also want to spend a moment on something that I think is overlooked, the strength of our geographic diversification. This year and last year, our APAC, European and Canadian businesses have been a real source of stability. We haven't experienced the same headwinds we've dealt with here in the U.S. and we continue to extend our leadership position in each of these respective markets. built on the same customer service and value that has become our global hallmark. I'm excited about the trajectories in these portfolios and proud of the teams driving such solid results. As a reminder, we have 20 facilities under construction or in the process of ramping and stabilizing. We've invested $1.1 billion of capital into these projects and expect them to deliver over $134 million in incremental NOI once stabilized. Non-sames to our contribution in the second quarter came in better than expected. given the strong continued customer demand for our high quality modern assets. You'll also notice that our updated development pipeline disclosure that our pre-lease levels stand at 71%. Moving to slide five, U.S. supply and demand trends. This slide revisits the three primary headwinds we faced in the recent past, supply and demand, inventory destocking, and trade impacts. I'll move quickly as we've covered each of these in detail on prior We are better equipped to send off competitors as customers increasingly recognize our superior value proposition and operational excellence. Looking ahead, slowing supply growth, asset repurposing, potential competitor exits or bankruptcies, and asset obsolescence should help offset the excess capacity overhang. We're also managing supply proactively through selected facility idling. The second headwind, customer inventory destocking, affected all of our North American business. Levels that built up during COVID have since reset closer to historical norms. Finally, our third headwind is import-export volumes pulling back amid terror of uncertainty. International container volumes, which are about 15% of our warehouse throughput, stay pressured in Q2, and we remain cautious given ongoing political concerns. Notably, incremental international volume is highly margin-accreting, We expect to begin lapping 2025's steep volume declines in late Q3 into Q4, easing the headwind as the year closes. Longer term, we expect U.S. agricultural trade to again become a tailwind. Beyond tariff resolution, there are several upside factors not embedded in our guidance. Normalizing food inflation, easing political uncertainty, new product categories, and lower interest rates. Any of which could meaningfully move the needle over time. So taken together, supply is stabilizing, destocking is behind us, and trade is ahead when we expect a lap by year end. None of these are structural, they're cyclical, and each is now moving in our direction. It's the same story of the past few decades of cold storage. Food demand doesn't go away, and we are the critical infrastructure that enables it. We like our position as we continue to turn the corner. Moving to slide six. In navigating some of these macro challenges, we've doubled down on driving costs out of our operating cost base, allowing us to outperform industry inflation by 750 basis points. The lineage operating platform and our lean continuous improvement approach are a big part of why we've been able to hold adjusted EBITDA stable year-over-year through the first half of 2026, following a challenging 2025. The team continues to impress me by finding new ways to land new business while aggressively managing our costs to drive profitability. And with that, let me turn it over to Robb LeMasters, who will give you more detail on the quarter and some comments on our revised outlook.