Americold Earnings: Extremely Strong Services Business Hides Pain Within the Core Rental Business

No-moat-rated Americold Realty reported third-quarter results that looked decent on the whole because of the extremely strong recovery in the services segment, but the core rent and storage business is under substantial pressure. The firm reported adjusted funds from operations of $0.35 per share, 9.4% higher than the $0.32 reported for the third quarter of 2023. Core EBITDA, which removes the impact of higher interest expenses and is less prone to quarterly fluctuations, was $157.2 million in the third quarter of 2024, up 9.1% compared with $144.0 million in the third quarter of the previous year. The year-over-year growth in the headline numbers can be completely attributed to the strong recovery in the services business, where margins have expanded significantly. We do not plan to change our $31.50 per share fair value estimate for the company as we incorporate these results.