Americold Realty Trust, Inc.

Greetings and welcome to the AmeriCold Realty Trust second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Henderson, Senior Vice President of Capital Market. Thank you. You may begin.

Good afternoon. We would like to thank you for joining us today for AmeriCold Realty Trust's second quarter 2020 earnings conference call. In addition to the press release distributed this afternoon, we have filed a supplemental package with additional detail on our results, which is available in the investor section on our website at www.americold.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Forward-looking statements address matters that are subject to risk and uncertainties that may cause actual results to differ from those discussed today. A number of factors could cause actual results to differ materially from those anticipated. Forward-looking statements are based on current expectations, assumptions, and beliefs, as well as information available to us at this time and speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures is contained in the supplemental information package available on the company's website. We also would like to note that numbers presented in today's prepared remarks have been rounded to the nearest million, with the exception of per share amounts. This afternoon's conference call is hosted by AmeriCold's Chief Executive Officer, Fred Bowler, and Executive Vice President and Chief Financial Officer Mark Smirnoff. Management will make some prepared comments, after which we will open up the call to your questions. Now, I will turn the call over to Fred.

Thank you, and welcome to our second quarter 2020 earnings conference call. We hope everyone on this call and their families are well. This afternoon, I will discuss our second quarter 2020 results and activity. I will also comment on the continuing effects of COVID-19 on our business. Mark will then review our quarterly results in more detail and discuss our balance sheet in updates to our guidance for 2020. After our prepared remarks, we will open the call for your questions. Let me begin by stating that our business remains consistent and resilient, despite volatility in the economy and the world around us. Our global network of temperature control infrastructure and the services we provide are a mission-critical part of the food supply chain. We are committed to supporting our frontline associates who protect the integrity of this supply chain. They are our greatest asset and have worked tirelessly since the outbreak of COVID-19 to help ensure grocery stores are stocked. Since the start of this pandemic, we have invested in extra sanitation and PPE, social distancing protocols, and other measures designed to promote health and safety. In addition, this quarter, to thank our frontline associates for their hard work and dedication, we paid an appreciation bonus of $4.3 million. As anticipated, our second quarter results show some level of normalization after the first quarter's unprecedented surge in retail activity due to the COVID-19 pandemic. In the second quarter, our global warehouse same-store pool generated total revenue growth in the NAOI growth of 3% and 0.7%, respectively, on a constant currency basis. Please note that our second quarter results reflect the full impact of the frontline appreciation bonus I just mentioned. Excluding this appreciation bonus, of which $3.1 million impacted our same-store pool, our global warehouse same-store NOI growth would have been 4% on a constant currency basis. Consistent with our comments last quarter, We saw grocery retail activity sequentially decline after the consumer stockpiling surge late in the first quarter. It then stabilized late in the second quarter, but remains above pre-COVID levels. Additionally, now we have begun to see individual states reopen. We have seen some modest pickup in food service, particularly in quick service restaurants. That said, overall food service activity still remains well below historic norms. As we have previously stated, there remains uncertainty around the progress of individual states reopening and impact in near-term and long-term consumer behavior. With respect to protein manufacturers, we saw some production plants temporarily close during the second quarter, but all have since reopened. In certain cases, they are not running at full capacity. As such, while our economic occupancy increased this quarter, our physical occupancy was impacted. This is partially attributed to protein inventory being pulled through the supply chain and headed toward grocery store shelves at a faster pace. We also continued to grow externally during the second quarter, as we worked to help our customers execute their business plans. In May, we announced a new $325 million fully automated build-to-suit development project for Ajo Del Haze, the second largest grocer in the world and the fourth largest grocer in the United States. We are building and will operate two state-of-the-art temperature control retail distribution centers, one in Connecticut and one in Pennsylvania, that will support the local brands of Ajo Del Haze USA in the Northeast and Mid-Atlantic regions. We broke ground in both locations in the second quarter, and we plan to deliver these facilities in 2022. As we have discussed previously, grocery retail is a key growth sector for AmeriCold. As evidenced by this project with AHOLD, we are well positioned to partner with leading retailers. Also during the second quarter, at our Chicago facility, we have sold nearly all available pallet positions, and we continue to onboard customers. we remain on track to stabilize this facility in the first quarter of 2021. At the three expansion projects that we purchased from Cloverleaf, we are fully operational and nearly all pallet positions are sold. We have received our final certificate of occupancy at our newly delivered facility in Savannah, Georgia, and we continue to onboard customers commensurate with our underwriting. In Atlanta, at our major market expansion, We have sold nearly all pallet positions in advance of completion. We remain on track with construction to be completed in mid-2021. Finally, we have restarted construction at our New Zealand project after a pause due to local COVID-19 restrictions. As disclosed previously, this expansion will be anchored by our top retail customer. In addition to this customer, we have sold significant amount of pallet positions to other customers, and at this point we have sold a majority of the pallet positions in advance of completion. We also continue to optimize our portfolio through acquisitions and dispositions. During the quarter, we closed on an opportunistic sale of our Boston, Massachusetts facility for a sale price of $27 million to a local developer who will be repurposing the property. We recorded a gain on the sale of $19.4 million and expect to redeploy the proceeds into a 1031 exchange. We intend to move the customers from that facility to other facilities that we have in the region. Additionally, post quarter end, we acquired two facilities which we previously leased in Auckland, New Zealand for $12.3 million New Zealand dollars. We also sold a non-core quarry asset in Carthage, Missouri for $9 million. Mark will discuss both of these transactions in more detail momentarily. Finally, in August, we signed a definitive purchase agreement to acquire AMC Warehouses located in the Dallas-Fort Worth market for $85 million. AMC owned one distribution center, which was recently expanded in Mansfield, Texas, and leased an additional facility in Grand Prairie, Texas. We will purchase the Mansfield facility and assume the Grand Prairie lease. The Mansfield facility was constructed in 2018, has 8.6 million cubic feet, and an additional 18 acres that can accommodate further expansion. This acquisition grows our DFW major market capacity by approximately 30%. and expands our protein capabilities, including our wallet share with one of the leading global protein producers. We expect to complete this acquisition subject to customary closing conditions in early September. The COVID-19 pandemic has certainly put a spotlight on the integrity and flexibility of the food supply chain through periods of dislocation. As a leader in the temperature-controlled storage, We have no shortage of growth opportunities with current and potential customers and their efforts to improve their supply chain initiatives. Now, let me discuss our view of the road ahead as we begin the back half of what has been an unprecedented year. While the greater economy may be in for a bumpy recovery, our business is naturally stable on an annual basis and designed for resiliency. First, demand remains consistent. What people eat and where they eat may change, but people are still going to continue to eat. Our portfolio is diversified by geography, customer, commodity type, facility type, and note in the supply chain. This helps us to reduce volatility from the shifts in consumption behavior and specific commodity disruptions. Second, we may continue to see shifts in the endpoint of consumption as individual states are in various stages of reopening. Recall that typical consumption has historically been served through an even balance of food service and retail. AmeriCold's infrastructure serves both parts of the food supply chain. While the mix continues to be tilted toward grocery, we are well positioned as we move forward to support any mix. Finally, we would remind you that growth in e-commerce, which many of us are seeing in our own households in real time, does not meaningfully impact AmeriCold. Whether purchased online or in person, groceries still move through the traditional supply chain infrastructure. Grocery stores, due to their location with targeted populations, remain by far the best place for grocers to service last-mile logistics. As food travels from food manufacturer all the way to the grocery store, AmeriCold is a key player at each stage of the supply chain along the way. At the same time, barriers to entry in our business remain high. Over decades, we have built a fully integrated global network of temperature control infrastructure with deep customer relationships as well as proprietary technology and processes. We have also spent many years professionalizing and commercializing our business, including our fixed commitment model, which helps to stabilize our revenue streams and ensure customers have space when they need it. The pandemic has proven just how mission critical our infrastructure and services are to the food supply chain. We have also proven that our large diversified portfolio, combined with our business model, is extremely resilient. We will continue to partner with our customers and ensure the food supply chain is protected and efficient. Before I turn the call over to Mark, I want to reiterate our commitment to all of our valued stakeholders. This includes our customers, our shareholders, and importantly, our associates. Now I'll turn the call over to Mark.