Americold Earnings: Management Increases Full-Year 2023 Guidance on Back of Strong Performance

No-moat-rated Americold Realty COLD reported solid second-quarter results on the back of pricing initiatives, rate escalations, and higher economic occupancy. The firm reported adjusted funds from operations of $0.28 per share, 3.7% higher than the $0.27 in adjusted FFO during the second quarter of 2022. Core EBITDA, which removes the impact of higher interest expenses and is less prone to quarterly fluctuations, was reported at $134.6 million in the second quarter, up approximately 12% compared with the $120.2 million in core EBITDA during the second quarter of the previous year. Management has increased its 2023 AFFO guidance to $1.20-$1.30 per share, which is approximately 3.3% higher than previous guidance at the midpoint on account of strong fundamental performance. We do not plan to change our $33 fair value estimate for the company as we incorporate the second-quarter results.

The highlight of the quarter was the continued strong performance in the warehouse segment of the company. The economic occupancy rate in the company’s same-store portfolio was recorded at 84.8%, up 20 basis points sequentially and 680 basis points on a year-over-year basis as food manufacturers continued to ramp up production, and labor-related issues have eased in recent months. The increasing demand for cold storage facilities and rent escalations by the company led to a 4.8% growth in same-store rent and storage revenue per economically occupied pallet in the second quarter on a constant-currency basis. The robust growth in occupancy and rent per pallet led to a 13.1% growth in same-store rent and storage revenue on a constant-currency basis. Same-store expenses increased by around 5.2%, resulting in a same-store rent and storage contribution net operating income growth of 17.0% on a year-over-year basis. The company was able to improve its same-store rent and storage margin to 65.4% compared with 63.2% in the second quarter of 2022.