Cost Inflation Leads to Decline in Operations for Americold in Q1

Americold Realty reported first-quarter earnings that were in line with our expectations, leading us to reaffirm our $36 fair value estimate for the no-moat company. Physical occupancy for the same-store portfolio flattened out at 70.7% in the first quarter, in line with the same period in 2021 and only 10 basis points below the fourth quarter of 2021. Same-store revenue was up 4.5% year over year and 6.0% in constant-currency terms as rent per occupied pallet improved to $59.10. However, same-store expenses were up 8.7% as electricity costs were up 15.9% and costs related to other services were up 17.1%. As a result, Americold saw same-store net operating income fall 4.7% and 3.6% on a constant-currency basis. The higher operating expenses also caused a slight decline in adjusted funds from operations as Americold reported a $0.26 per share figure that was below the $0.30 reported in the first quarter of 2021 but in line with our expectations.