Americold Realty Trust Faces Mixed Sentiments in Earnings Call

Americold Realty Trust ((COLD)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call of Americold Realty Trust revealed a mixed sentiment, highlighting both achievements and challenges. While the company celebrated notable successes in sales growth and regional performance, it continues to grapple with macroeconomic challenges, excess capacity, and pricing pressures. The positive developments in sales and cost management were overshadowed by demand challenges and anticipated pricing and economic occupancy headwinds.

Strong Sales Pipeline and Record Sales Year

Americold Realty Trust reported a strong sales pipeline, marking a record year in new business wins. However, the realization of these wins has been slower than initially planned, indicating potential delays in revenue recognition.

Growth in Asia Pacific Region

The Asia Pacific region emerged as a significant growth area, with warehouse net operating income (NOI) increasing by approximately 16% year-to-date. Economic occupancy in this region is robust, exceeding 90%, underscoring the region’s strategic importance to Americold’s overall portfolio.

Cost Management and Productivity

The company has successfully managed costs, achieving handling margins that exceeded 12%. This was accomplished through strong cost control measures and productivity targets set for the operations team, highlighting Americold’s commitment to operational efficiency.

Development Projects Delivered On Time and Under Budget

Americold has demonstrated improvements in its development platform by delivering multiple projects on time and under budget. This achievement reflects the company’s ability to manage large-scale projects efficiently, contributing positively to its bottom line.

Pressure on Fixed Commitments and Pricing

Pricing pressure remains a concern, with expectations of a 100 to 200 basis point headwind in 2026. This is particularly significant in the four distribution centers, which account for about 40% of the business, indicating potential impacts on future profitability.

Challenges in Demand and Economic Occupancy

The company faces challenges in demand and economic occupancy, with same-store economic occupancy recorded at 75.5%. Predictions indicate a potential decrease by 200 to 300 basis points in 2026, reflecting ongoing industry challenges.

Excess Capacity and Speculative Development

Americold has added over 15% of incremental capacity in North America, which has led to increased pricing competition and pressure on fixed commitment renewal levels. This excess capacity could pose challenges in maintaining pricing power.

Macro Environment Challenges

The macroeconomic environment continues to exert pressure on demand, influenced by factors such as lower consumer demand, increased supply, food inflation, and reductions in governmental benefits. These factors are likely to continue impacting Americold’s performance.

Forward-Looking Guidance

During the earnings call, Americold provided forward-looking guidance amidst industry headwinds. The company reported an AFFO per share of $0.35 and maintained a record level of fixed commitment contracts at 60% of rent and storage revenue. Looking ahead, pricing pressures could pose a 100 to 200 basis point headwind in 2026, with economic occupancy potentially decreasing by 200 to 300 basis points. Despite these challenges, Americold remains optimistic about the long-term trajectory of the cold storage industry, supported by a robust development pipeline and strategic customer partnerships.

In summary, Americold Realty Trust’s earnings call presented a mixed outlook, with significant achievements in sales and regional growth tempered by ongoing challenges in demand, pricing, and macroeconomic factors. The company’s strategic initiatives in cost management and project delivery are commendable, but the anticipated headwinds in pricing and occupancy highlight the need for continued vigilance and adaptability in a challenging market environment.