Americold Earnings: Lower Throughput Pallets and Warehouse Services Weigh on Overall Results

No-moat-rated Americold Realty COLD reported mixed third-quarter results with strong performance in the warehouse rent and storage segment but disappointing results in the warehouse services segment. The firm reported adjusted funds from operations, or AFFO, of $0.32 per share, 10.3% higher than the $0.29 in adjusted FFO during the third quarter of 2022. Core EBITDA, which removes the impact of higher interest expenses and is less prone to quarterly fluctuations, was reported at $144.1 million in the third quarter up 9.2% compared with the $131.9 million in core EBITDA during the third quarter of the previous year. Management has tightened its 2023 AFFO guidance to $1.24-$1.30 per share, which is approximately 14.4% higher than the full-year 2022 AFFO at the midpoint. We do not plan to change our $33 fair value estimate for the company as we incorporate the third-quarter results.

The warehouse rent and storage segment of the company continues to perform decently in the current environment. The economic occupancy rate in the company’s same-store portfolio was recorded at 84.0%, down 80 basis points sequentially and up 350 basis points on a year-over-year basis. We note that the economic occupancy rate has improved materially on a year-over-year basis, but the physical occupancy rate has moved up only by around 100 basis points. This shows that the utilization rate of the space leased by the company has gone down, and therefore we can probably expect muted occupancy rates in the upcoming quarters.