Americold Realty Trust, Inc.

Ladies and gentlemen, greetings and welcome to the AmeriCold Realty Trust Second Quarter 2023 Earnings Conference 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 and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Henderson, Chief Investment Officer. Please go ahead, sir.

Good afternoon. Thank you for joining us today for AmeriCold Realty Trust's second quarter 2023 earnings conference call. In addition to the press release distributed this afternoon, we have filed a supplemental package with additional details 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 comments, 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 risks and uncertainties that may cause actual results 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 AFFL. Full definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the supplemental package available on the company's website. Now, I will turn the call over to George.

Thank you, Scott, and thank you all for joining our second quarter 2023 earnings conference call. This afternoon, I will discuss some key operational metrics and financial results for the second quarter and then comment on our outlook for the remainder of the year. Rob will provide an update on our recent customer initiatives and an update on our growth activity. Mark will also provide some additional commentary on our second quarter results and a detailed walkthrough of our guidance for the remainder of the year. Before I begin, let me quickly comment on last quarter's cybersecurity event. I am pleased to report that this event is behind us from an operational standpoint. We are confident that the impact of the cybersecurity event on our AFFO per share is largely contained to the second quarter and that our guidance going forward takes any additional impacts into account. Mark will provide a detailed bridge on how it impacted us during the second quarter and how we are taking this into account in our guidance for the remainder of the year. As a note, we have characterized direct cybersecurity costs below AFFO to provide a clean view of our operating performance turning to our core business priorities which we have made progress on since our last call first customer service continues to be a key priority for americals for the second quarter our same store economic occupancy increased to 84.8 percent a very strong record-setting second quarter level We also derived 48.5% of rent and storage revenue from fixed commitment storage contracts in the second quarter, which is 240 basis points higher than the first quarter's level and sets another record for this metric at AmeriCold. Lastly, our churn rate continued to remain low at approximately 3.2% of total warehouse revenues consistent with historical churn rates. These key operational metrics illustrate that despite the cybersecurity event, we were able to perform at high levels for our customers. Let me provide one example of recognition from a customer for strong customer service. Last month, we received an award from Yum! Brands for the successful launch of a new contract with Kentucky Fried Chicken and a handful of our Australian sites. The KFC Link Award is given to KFC partners who provide strong links to the company's supply chain. Acknowledgements like this demonstrate our strong commitment to customer service. Second, turning to our priorities around labor management. During the second quarter, we achieved a perm to temp hours ratio of 76-24. This is six points higher than our second quarter 2022 levels, And on a sequential basis, we improved by one point over the first quarter 2023 levels. Additionally, we ended June of 2023 at an annualized turnover trend approximately nine percentage points lower compared to prior year. Compared to the end of 2019, a pre-COVID year, we ended June at approximately 11 percentage points higher. On a sequential basis, we improved our turnover rate from the end of March, which was approximately 18 percentage points higher than pre-COVID levels. As these data points show, we are making continued improvements on our perm to temp ratios and turnover rates. Third, we continue to make progress in our development projects. We recently completed our customer-dedicated automated project in Russellville, Arkansas. This facility went live, and we are now in the process of inbounding product as we begin ramping up to stabilization. We also recently completed phase two of our automated facility in Atlanta, Georgia, and a few strategic food manufacturing customers have already committed to taking the space. Additionally, today, we are announcing plans to launch an expansion project with RSA, our JV partner in Dubai. Also during the quarter, we announced an agreement with Canadian Pacific, Kansas City, or CPKC, one of North America's largest railroad companies. CPKC owns the first and only single-line transnational railroad linking Canada, the United States, and Mexico. Our agreement with CPKC is a strategic collaboration in which AmeriCold will build own and operate cold storage facilities on the land located on CPKC's railroad network. Similar to our recent DP World announcement, our agreement with CPKC illustrates AmeriCold's unique ability to create value by collaborating with global leaders in the supply chain. Given our strong operating metrics and the significant customer demand for cold storage coupled with a best-in-class operating platform, We are turning to growth, and we expect to be in a position to announce additional high-quality expansions throughout the remainder of the year. Lastly, we continue to effectively reprice our warehouse business to offset inflationary pressures in our cost structure, to protect margin dollars, and to continue to move back towards historical warehouse margin percentages. For the second quarter, rent and storage revenue per economic occupied pallet in our same store on a constant currency basis increased by 4.8% versus the prior year. Service revenue per throughput pallet increased by 7%. During the second quarter, we broadly saw inflationary pressures in our business begin to moderate sequentially, and we reduced power surcharges in certain markets. Moving through the third quarter, we will continue to take a surgical approach to our pricing initiatives to continue to drive margin dollars and increase margin percent. Please note, as the high inflation cycle is showing signs of moderating, we also expect our pricing growth will begin to moderate as we lap last year's decades-high inflationary period and power surcharges continue to be reduced in certain markets. Turning to our second quarter results, we delivered AFFO per share of 28 cents. This performance was primarily driven by our global warehouse same-store pool which generated revenue growth of 3.9% and NOI growth of 13.8% versus prior year, both on a constant currency basis. Our strong same-store pool results were driven by meaningful economic occupancy growth and pricing initiatives, partially offset by reduced throughput volumes driven by the cybersecurity event and reduced pantry stocking by the end consumer. which recently has been mentioned by several large food manufacturers and retailers. For the second quarter, our same store economic occupancy increased 687 basis points over second quarter 2022 to 84.8%. As we have discussed, we expected second quarter economic occupancy to decline roughly 100 to 200 basis points sequentially versus first quarter. and instead economic occupancy slightly increased. However, we now expect the bulk of this decrease to occur during the third quarter. The key drivers for this strong economic occupancy increase year over year are as follows. First, our fixed commitment contract structures smooth out the seasonality in our business and increase overall economic occupancy while also providing certainty for our customers. Second, our food manufacturing customers continue to support inventory levels, ensuring better service levels for their customers. And third, our continued focus on customer service in combination with our strategically located mission-critical infrastructure is enabling us to continue to win new business. As a result of the progress we have made around economic occupancy and pricing in our same store pool, we are increasing our full year 2023 AFFO per share guidance to the range of $1.20 to $1.30. This guidance incorporates the progress we have made year to date and that we expect this progress to continue coupled with some near-term headwinds that Mark will discuss later in the call. Next, let me comment on some strategic decisions that we have made after very careful consideration. First, during the second quarter, we exited our ownership position in our LATAM JV, which was formed to develop and acquire assets in Latin American countries other than Brazil. Our recently announced agreements with DP World and CPKC provide better opportunities and lower risk approaches to invest in the region. Second, regarding our Comfrio JV in Brazil, we received regulatory approval and were required to close on the transaction with our JV partner, who had previously exercised their put option, requiring us to purchase all of their ownership interest in the Comfrio JV. This JV came to America through the acquisition of AgroMerchants in 2020. Since year end, we have been in the process of exploring strategic alternatives for Comfrio, which is not aligned with our core business model as the business lacks significant real estate ownership. Finally, let me comment on an ESG initiative. Recently, AmeriCold, in partnership with Feed the Children and the Atlanta's Mayor's Office of International and Immigrant Affairs, completed a four-month initiative where we worked together to provide nearly 80,000 pounds of food and essentials to families across Atlanta as well as Atlanta public schools. The goal of these efforts was to help reduce the stress of food insecurity that families face daily. We are very proud of the work that AmeriCold and our associates do in the communities in which we live and operate. With that, I will turn it over to Rob.