Americold Realty Trust, Inc.

Greetings and welcome to the AmeriCold Realty Trust fourth quarter and full year 2021 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal 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, Investor Relations. Thank you, Scott. You may begin.

Good afternoon. Thank you for joining us today for AmeriCold Realty Trust's fourth quarter 2021 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 relations section on our website at www.americold.com. This afternoon's conference call is hosted by AmeriCold's Chief Executive Officer, George Chappell, Chief Commercial Officer Rob Chambers, and Chief Financial Officer Mark Smirnoff. Management will make some prepared remarks, after which we will open up the call to your questions. On today's call, management's prepared remarks 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, including core EBITDA and AFFO. Full definitions of 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. Now, I will turn the call over to George Chappell.

Thank you, Scott, and welcome to our fourth quarter 2021 earnings conference call. This afternoon, I will summarize our 2021 results and then discuss current market conditions that are impacting our full year 2022 guidance. Rob will then provide an update on our recent pricing initiatives and Mark will review results in more detail providing commentary on full year guidance. But before I begin, I would like to take a moment to comment on my appointment as permanent CEO that was announced this afternoon. Having spent decades in operational roles in the food industry, I've been responsible for many cold storage operations, including providers like AmeriCold and many of its competitors. I've always considered AmeriCold the industry leader in quality and customer service. As I've worked with the team over the past few months, I've been impressed by their commitment to delivering operational excellence and disciplined growth. I am very excited to be here and look forward to getting to know more of you in the future. On to our results. While in-consumer demand for temperature-controlled food remains strong, COVID-related supply chain and labor disruptions continue to impact the global food supply chain. At the time of our last earnings call in early November, Delta was the dominant COVID variant and it seemed to be peaking in various regions of the world. Businesses, including us and our customers, were making progress in adapting to Delta. However, by late November, the Omicron variant began to rapidly spread worldwide. This highly contagious variant introduced more uncertainty and disruption into an already strained supply chain. The impact of Omicron can be seen in our results. For the full year, our global warehouse same-store pool generated total revenue growth of 0.3%, while we experienced an NOI decline of 5.8% on a constant currency basis. KFFO per share was $1.15 in line with our guidance. The main factors that led to these results were the following. First, a meaningful decrease in the year-over-year economic and physical occupancy across the same store pool of 327 basis points and 500 basis points respectively. These same pressures were also felt in the non-same store pool, which is made up of recent acquisitions and completed development. Second, as discussed on last quarter's call, There was a significant increase in our labor, power, and other expenses beginning in the latter part of the third quarter. As you know, we are not able to offset all of this cost pressure immediately through price increases in our warehouse segment business. There is a lag period. Rob will provide an update on our progress in this area. However, we remain on track to exit the first quarter with a run rate to cover all known inflation in our cost structure. Third, a reduction in throughput volumes also created a drag on contribution dollars in our warehouse business. For the full year, our same store pool throughput volume decreased 2.8%. The non-same store pool was also impacted by throughput volume decline. While we've made significant progress on the price increases in our warehouse business, we also need the throughput volume to recover for our contribution dollars to fully normalize. Let me now discuss current market conditions that are underpinning our 2022 AFFO per share guidance of $1 to $1.10. Many of these challenging conditions carry over from 2021. Beginning with the revenue side, as in many of other labor-intensive industries, labor availability continues to be a challenge for our food production customers, which negatively impacts their production levels. This, in turn, negatively impacts our economic and physical occupancy, as well as throughput volumes. We are confident our manufacturing customers have the desire to increase production and satisfy rising demand. However, the labor challenges continue to be a barrier. Once labor normalizes, we are confident inventory will return to historic norms. Economic and physical occupancy in our portfolio and the overall cold storage industry continues to be significantly below pre-COVID levels. Our economic and physical occupancy for the 2021 same-store pool averaged approximately 77% and 68.4% respectively. Our 2019 same-store pool, the most recent pre-COVID year, averaged 79.4% and 75.4%. A similar pattern exists in the USDA data. Overall total holdings in cold storage are down 8 to 10% throughout 2021 versus 2019 levels. Our commercialization efforts, particularly our fixed commit structures, helped us to mitigate part of the decline in overall holdings. True put volumes have been equally impacted over the year, driven by the same challenges. These are expected to be lower than pre-COVID levels in the near term. The fast rise of the Omicron variant further strained an already challenging labor environment. Many of our customers saw an increase in absenteeism late in 2021 and into 2022, as did we. Omicron has delayed labor recovery by three to six months and proven how fragile the operating environment is. On to the cost side of the equation. Inflation in the global food supply chain remains a significant concern. In many of our markets, we raised wages beginning in the third quarter last year to remain competitive. While we believe we are paying competitive wages today, inflation remains a concern and there is still a possibility wages will rise again. We have taken action through price increases to address the cost pressures we faced last year. We will seek to offset additional inflation through operating efficiencies, but we may take further pricing actions outside of our normal course general rate increases if needed. As a reminder, there is a lag period between when cost increases occur and when the price increase is going to affect. Rob will discuss this in more detail. Omicron has proven that our ability to predict when economic and physical occupancy levels will fully recover is impossible. So, we'll refrain from doing so going forward. The global food supply chain continues to be strained and is not operating anywhere near normalized levels. Our 2022 guidance has these assumptions embedded in our range, which Mark will discuss. I have outlined some significant near-term challenges in our business due to the large amount of uncertainty created by COVID, inflation, and the challenged labor environment. The good news is that structurally our business model remains intact and end consumer demand for temperature-controlled food remains strong. Prior to COVID, industry standard fill rate objectives were 98.5%. Now it is not uncommon to see fill rates in the 70% range. During my many years in the food industry, I've never seen general fill rates at such a low level. Additionally, our retail customers have struggled to keep store shelves fully stocked. All of our customers are keenly focused on producing more food, returning to normalized inventory levels in support of higher fill rates, and satisfying unmet consumer demand. At the end of the day, the state of the current food supply chain is a challenge for all participants, food producers, retailers, food service companies, restaurants, the cold storage industry, including Ameri-co, and ultimately the end consumer. We are absolutely confident that our food manufacturing customers want to satisfy unmet demand. When they are able to produce more, we are fully prepared to accept their inventory and support their business with our strategic network of facilities and best-in-class customer service. At this point, I wanted to quickly highlight the recognition we received from Newsweek for our ESG efforts. For 2022, AmeriCode is included in Newsweek's list of America's most responsible companies. We are very proud of this achievement. Additionally, in 2021, the Global Cold Chain Alliance awarded 41 of our facilities gold silver, or bronze certifications as part of its Energy Excellence Recognition Program, bringing our total at year-end to 203. As of today, 84% of our warehouse segment portfolio is now certified in this program. Lastly, for the past two years, the AmeriCold team has continued to work in an unprecedented, extremely challenging operating environment in order to protect the integrity of the global food supply chain. We firmly believe that our success continues to rely on having a best-in-class team, and we continue to take action to ensure this remains the case. Over the past year, we've adjusted wages and offered enhanced incentive programs for our frontline associates and will continue to do so to remain competitive in the marketplace and ensure AmeriCorps remains a rewarding place to work. With that, I will turn it over to Rob.