Americold Realty Trust, Inc.

Greetings and welcome to AmeriCold Realty Trust third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone 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, Kevin Reid, Vice President, Investor Relations. Thank you. You may begin.

Good morning. Thank you for joining us today for AmeriCold Realty Trust's third quarter 2024 earnings conference call. In addition to the press release distributed this morning, 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.ir.americold.com. Today's conference call is hosted by AmeriCold's Chief Executive Officer, George Chappell, President of the Americas, Rob Chambers, and Chief Financial Officer, Jay Wells. 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 to differ from those discussed today. A number of factors could cause actual results to differ material 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 but not limited to core EBITDA and AFFO. The full definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in a supplemental information package available on the company's website. Now I will turn the call over to George.

Thank you, Kevin, and thank you all for joining our third quarter 2024 earnings conference call. I would like to begin this call by extending our sympathies to everyone affected by the recent severe weather events in the U.S. and Europe. Our associates' planning and proactive outreach to our customers has been exceptional in maximizing safety and limiting disruption. The AmeriCold Foundation, which is designed to help our associates in times of need, is actively providing support to those affected in the AmeriCold family, and we hope for the quickest possible recovery to all. This morning, I am pleased to announce our financial results and key operational metrics for the quarter. I will then discuss our updated outlook for the remainder of the year. Rob will provide an update of our recent customer initiatives and growth activity. And Jay will discuss our capital position, liquidity, and provide an update to full year 2024 guidance. I'll begin with an overview of some key financial achievements for the quarter. We generated AFFO of approximately $100 million, or 35 cents per share, an increase of over 11% from Q3 of last year. Same store NOI was approximately $201 million in the quarter, up 11% from prior year, and remains on track to deliver double digit growth for the full year. This performance was driven once again by continued strength of our same store warehouse services, where we delivered a third consecutive quarter of double digit margins, coming in this quarter at 14%, up almost 11 percentage points from prior year. Our productivity continues to increase as we remain focused on workforce performance and extracting increasingly more benefits out of our new technology program, Project Orion. Approximately 18 months ago, we said we believed our warehouse services business could add $100 million in NOI to our bottom line through workforce hiring, retention, and productivity. Through the first three quarters of the year, we have already achieved an incremental $100 million of warehouse services NOI versus prior year. Furthermore, last quarter, we highlighted our expectation that we could deliver services margins of 11% for the full year 2024, an increase from our original expectations. Services margins were higher in Q3, partly due to an over-delivery on throughput volumes versus our forecast. That said, we believe the new base for our annual warehouse services margins is 12%. Project Orion systems deployment continues to enable efficiencies in North America and Asia-Pac as our workforce gains more experience with its use. Further, it provides a platform for us to exploit the very latest technology available in the industry. For example, we recently completed a review of the artificial intelligence capabilities embedded in our new systems with one of our strategic technology partners. They were able to use a proprietary AI discovery tool to identify over 400 embedded and native AI opportunities specific to our systems and business, including further improvements in customer service, productivity, forecasting, and activity-based pricing that without the power of AI would be very difficult to identify. Our technology partner commented that the artificial intelligence capability implemented via Project Orion provides us the ability to leapfrog previously achieved technology innovation and reshape industry performance standards. We are confident our technology strategy will both support and enable profitable growth for the foreseeable future. The improvements in productivity through both workforce management and Project Orion have enabled us to grow our business through a challenging time of weak consumer demand. The continuing theme we hear during food manufacturers' and distributors' quarterly earnings calls is that volumes remain pressured as the end consumer continues to be strapped from the cumulative effects of inflation. While a full recovery of consumer demand and a return to growth is expected, it does appear it will take longer than originally anticipated. For example, Kraft Heinz commented on its third quarter earnings call that it expects that demand will be softer for longer. Given this backdrop, we continue to control the controllable within our business and grow our earnings through productivity and growing our organic sales pipeline, which sets us up for outsized organic growth as consumer demand recovers. Turning to our four core priorities, Customer service remains very strong across the company. One of our most recent fully automated developments, which went live just a year ago in Russellville, Arkansas, was awarded site of the year by one of our largest customers for a flawless startup and ramp to full capacity, highlighting the design, build, and operating capability of our automation group. While economic occupancy dipped in the third quarter to approximately 77%, Rent and storage revenue derived from fixed commitment storage contracts came in at approximately 58%. The quality of our infrastructure, breadth of our warehouse services we provide, and commitment to best-in-class customer service all drive the highest fixed commit contract percentage of revenue in the industry. A safe, well-trained, and productive workforce is critical to offering a broad suite of warehouse services and high customer service levels across our global network. As we've said many times in the past, it's the services part of our business that customers value the most, as it provides incrementally more supply chain benefit than just simply storing a pallet and keeping it cold. Over time, we expect to expand the services we offer to organically grow and provide even more supply chain capabilities to our customers. The continued refinement of our hiring and retention processes have resulted in a perm to temp hours ratio of 75-25, which is flat year over year. Associate turnover finished the quarter at 32%, a 600 basis point improvement upon the second quarter and well below pre-COVID levels of 40%. Our third key metric, the percentage of associates with less than 12 months of service, now stands at 21% and has improved at 100 basis points since the second quarter. Our workforce continues to mature and grow in experience, and our warehouse services margin continues to improve in tandem. In the third quarter, same-store rent and storage revenue per economic occupied pallet on a constant currency basis increased by almost 4% versus the prior year, and same-store services revenue per throughput pallet on a constant currency basis increased by 11%. Both were driven by pricing put in place in the back half of 2023 coupled with general rate increases or GRIs at the beginning of 2024. As we discussed last quarter, we expect our warehouse service pricing comps to compress in the fourth quarter as we lap those increases from prior year. As we stated last quarter, we are tracking to exceed our $200 to $300 million guide Our announced development starts in 2024, and I am pleased to announce that we now exceeded our guidance with our plan to build a $148 million automated expansion in the Dallas-Fort Worth market. This build will further our automation strategy in a very desirable market with the scale to consolidate large customers where inventory fragmentation can be a problem for customers requiring large amounts of space. We also completed the expansion of a building we own with our JV partner RSA in Dubai. The building is rapidly filling up and gives us confidence that when our previously announced 40,000 pallet building in the port of Jabal Ali goes live next year, it will also fill up quickly. Through our partnerships, we have many opportunities currently in underwriting and expect next year to be very active as our new development pipeline continues to exceed a billion dollars over the next few years. Turning to guidance, we are maintaining our current AFFO per share guidance range of $1.44 to $1.50, which represents an approximately 16% increase from 2023. Before I turn the call over to Rob, I would like to provide a brief update on our ESG progress. Last week, Gresby released its annual benchmark scores. and I am happy to report our score increased to 81 out of 100. We finished first in standing investments in Gresby's predefined peer group, which further highlights our commitment to delivering our sustainability goals and objectives. With that, I will turn it over to Rob.