AMERICOLD REALTY TRUST - Quarter Report: 2023 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to ,

Commission File Number: 001-34723

AMERICOLD REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland		93-0295215
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

10 Glenlake Parkway,	Suite 600, South Tower
Atlanta	Georgia	30328
(Address of principal executive offices)		(Zip Code)

(678) 441-1400

(Registrant’s telephone number, including area code)

_________________________

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)

Yes

☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

COLD

New York Stock Exchange

(NYSE)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at May 2, 2023
Common Stock, $0.01 par value per share						270,164,244

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			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			57
Item 4. Controls and Procedures			57

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			59
Item 1A. Risk Factors			59
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60
Item 3. Defaults Upon Senior Securities			60
Item 4. Mine Safety Disclosures			60
Item 5. Other Information			60
Item 6. Exhibits			61

SIGNATURES			62

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following:

•rising inflationary pressures, increased interest rates and operating costs;

•labor and power costs;

•labor shortages;

•our relationship with our associates, the occurrence of any work stoppages or any disputes under our collective bargaining agreements and employment related litigation;

•the impact of supply chain disruptions, including, among others, the impact on labor availability, raw material availability, manufacturing and food production and transportation;

•risks related to rising construction costs;

•risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames, or at all, in respect thereof;

•uncertainty of revenues, given the nature of our customer contracts;

•acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements;

•our failure to realize the intended benefits from our recent acquisitions including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;

•difficulties in expanding our operations into new markets, including international markets;

•uncertainties and risks related to public health crises, such as the COVID-19 pandemic;

•a failure of our information technology systems, systems conversions and integrations, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions, loss of confidential information, remediation costs or damages;

•disruption caused by implementation of the new ERP system, potential cost overruns, timing and control risks and failure to recognize anticipated cost savings and increased productivity from the implementation of the new ERP system;

•defaults or non-renewals of significant customer contracts;

•risks related to privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations;

•changes in applicable governmental regulations and tax legislation, including in the international markets;

•risks related to current and potential international operations and properties;

•actions by our competitors and their increasing ability to compete with us;

•changes in foreign currency exchange rates;

•the potential liabilities, costs and regulatory impacts associated with our in-house trucking services and the potential disruptions associated with our use of third-party trucking service providers to provide transportation services to our customers;

•liabilities as a result of our participation in multi-employer pension plans;

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•risks related to the partial ownership of properties, including as a result of our lack of control over such investments, financial condition of JV partners, disputes with JV partners, regulatory risks, brand recognition risks and the failure of such entities to perform in accordance with projections;

•risks related to natural disasters such as fires, floods, tornadoes, hurricanes and earthquakes;

•adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;

•changes in real estate and zoning laws and increases in real property tax rates;

•general economic conditions;

•risks associated with the ownership of real estate generally and temperature-controlled warehouses in particular;

•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;

•uninsured losses or losses in excess of our insurance coverage;

•financial market fluctuations;

•our failure to obtain necessary outside financing;

•risks related to, or restrictions contained in, our debt financings;

•decreased storage rates or increased vacancy rates;

•the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our stockholders to replace our directors and affect the price of our common stock, $0.01 par value per share;

•the potential dilutive effect of our common stock offerings;

•the cost and time requirements as a result of our operation as a publicly traded REIT; and

•our failure to maintain our status as a REIT.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Quarterly Report on Form 10-Q. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Quarterly Report on Form 10-Q include, among others, statements about our expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our” and “the Company” refer to Americold Realty Trust, Inc., a Maryland corporation, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “our Operating Partnership” or “the Operating Partnership,” and references to “common stock” refer to our common stock, $0.01 par value per share.

In addition, unless otherwise stated herein, when we refer to “cubic feet” in one of our temperature-controlled facilities, we refer to refrigerated cubic feet (as opposed to total cubic feet, refrigerated and otherwise) therein.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
	March 31, 2023		December 31, 2022
Assets
Property, buildings and equipment:
Land	$	789,118	$	786,975
Buildings and improvements	4,350,529		4,245,607
Machinery and equipment	1,426,398		1,407,874
Assets under construction	463,953		526,811
	7,029,998		6,967,267
Accumulated depreciation	(1,971,897)		(1,901,450)
Property, buildings and equipment – net	5,058,101		5,065,817

Operating lease right-of-use assets	352,442		352,553
Accumulated depreciation – operating leases	(84,172)		(76,334)
Operating leases – net	268,270		276,219

Financing leases:
Buildings and improvements	13,516		13,546
Machinery and equipment	132,274		127,009
	145,790		140,555
Accumulated depreciation – financing leases	(61,180)		(57,626)
Financing leases – net	84,610		82,929

Cash, cash equivalents and restricted cash	47,222		53,063

Accounts receivable – net of allowance of $17,411 and $15,951 at March 31, 2023 and December 31, 2022, respectively	409,530		430,042
Identifiable intangible assets – net	918,945		925,223
Goodwill	1,030,562		1,033,637
Investments in partially owned entities and other	96,717		78,926
Other assets	157,761		158,705
Total assets	$	8,071,718	$	8,104,561

Liabilities and equity
Liabilities:
Borrowings under revolving line of credit	$	610,500	$	500,052
Accounts payable and accrued expenses	479,738		557,540
Senior unsecured notes and term loans – net of deferred financing costs of $12,434 and $13,044, in the aggregate, at March 31, 2023 and December 31, 2022, respectively	2,580,441		2,569,281
Sale-leaseback financing obligations	168,919		171,089
Financing lease obligations	78,421		77,561
Operating lease obligations	257,791		264,634
Unearned revenue	32,921		32,046
Pension and postretirement benefits	1,564		1,531
Deferred tax liability – net	132,415		135,098
Multi-employer pension plan withdrawal liability	7,731		7,851
Total liabilities	4,350,441		4,316,683
Commitments and contingencies (Note 8)
Equity
Stockholders’ equity:
Common stock, $0.01 par value per share – 500,000,000 authorized shares; 270,096,433 and 269,814,956 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	2,701		2,698
Paid-in capital	5,197,893		5,191,969
Accumulated deficit and distributions in excess of net earnings	(1,477,452)		(1,415,198)
Accumulated other comprehensive loss	(17,737)		(6,050)
Total stockholders’ equity	3,705,405		3,773,419
Noncontrolling interests:
Noncontrolling interests in Operating Partnership	15,872		14,459
Total equity	3,721,277		3,787,878

Total liabilities and equity	$	8,071,718	$	8,104,561
See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
	Three Months Ended March 31,
	2023		2022
Revenues:
Rent, storage and warehouse services	$	595,052	$	540,925
Transportation services	68,078		78,910
Third-party managed services	13,359		85,860

Total revenues	676,489		705,695
Operating expenses:
Rent, storage and warehouse services cost of operations	420,225		394,667
Transportation services cost of operations	56,418		70,381
Third-party managed services cost of operations	12,280		82,359

Depreciation and amortization	85,024		82,620
Selling, general and administrative	62,855		57,602
Acquisition, litigation and other, net	7,147		10,075

Loss from sale of real estate	191		—
Total operating expenses	644,140		697,704

Operating income	32,349		7,991

Other expense, net:
Interest expense	(34,423)		(25,773)
Loss on debt extinguishment, modifications and termination of derivative instruments	(545)		(616)
Other, net	1,433		2,357





Loss from investments in partially owned entities	(3,029)		(2,112)
Loss before income taxes	(4,215)		(18,153)
Income tax (expense) benefit:
Current	(1,977)		(1,181)
Deferred	3,621		1,889
Total income tax benefit	1,644		708

Net loss	$	(2,571)	$	(17,445)
Net loss attributable to noncontrolling interests	(9)		(38)
Net loss attributable to Americold Realty Trust, Inc.	$	(2,562)	$	(17,407)

Weighted average common stock outstanding – basic	270,230		269,164
Weighted average common stock outstanding – diluted	270,230		269,164

Net loss per common share - basic	$	(0.01)	$	(0.06)
Net loss per common share - diluted	$	(0.01)	$	(0.06)

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands)
	Three Months Ended March 31,
	2023		2022
Net loss	$	(2,571)	$	(17,445)
Other comprehensive (loss) income - net of tax:
Adjustment to accrued pension liability	698		67
Change in unrealized net loss on foreign currency	179		11,186
Unrealized (loss) gain on cash flow hedges	(12,564)		151
Other comprehensive (loss) income - net of tax attributable to Americold Realty Trust, Inc.	(11,687)		11,404
Other comprehensive (loss) income attributable to noncontrolling interests	(35)		23
Total comprehensive loss	$	(14,293)	$	(6,018)

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Equity (Unaudited)
(In thousands, except shares and per share amounts)

	Common Stock					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests in Operating Partnership

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2022	269,814,956	$	2,698	$	5,191,969	$	(1,415,198)	$	(6,050)	$	14,459	$	3,787,878
Net loss	—	—		—		(2,562)		—		(9)		(2,571)
Other comprehensive loss	—	—		—		—		(11,687)		(35)		(11,722)
Distributions on common stock, restricted stock and OP units	—	—		—		(59,692)		—		(240)		(59,932)
Stock-based compensation expense	—	—		5,273		—		—		1,697		6,970

Common stock issuance related to stock-based payment plans, net of shares withheld for employee taxes	221,084	2		(801)		—		—		—		(799)
Common stock issuance related to employee stock purchase plan	60,393	1		1,452		—		—		—		1,453
Balance - March 31, 2023	270,096,433	$	2,701	$	5,197,893	$	(1,477,452)	$	(17,737)	$	15,872	$	3,721,277






	Common Stock					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests in Operating Partnership

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2021	268,282,592	$	2,683	$	5,171,690	$	(1,157,888)	$	4,522	$	8,069	$	4,029,076
Net loss	—	—		—		(17,407)		—		(38)		(17,445)
Other comprehensive income	—	—		—		—		11,404		23		11,427
Distributions on common stock, restricted stock and OP units	—	—		—		(59,580)		—		(180)		(59,760)
Stock-based compensation expense	—	—		6,108		—		—		1,985		8,093
Common stock issuance related to stock-based payment plans, net of shares withheld for employee taxes	318,729	3		(2,140)		—		—		—		(2,137)
Common stock issuance related to employee stock purchase plan	71,144	1		1,984		—		—		—		1,985

Balance - March 31, 2022	268,672,465	$	2,687	$	5,177,642	$	(1,234,875)	$	15,926	$	9,859	$	3,971,239

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands, See accompanying notes to condensed consolidated financial statements)
	Three Months Ended March 31,
	2023		2022
Operating activities:
Net loss	$	(2,571)	$	(17,445)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	85,024		82,620
Amortization of deferred financing costs and pension withdrawal liability	1,240		1,146
Amortization of above/below market leases	402		508
Loss on debt extinguishment, modifications and termination of derivative instruments	545		616
Foreign exchange gain	(458)		(325)
Loss from investments in partially owned entities	3,029		2,112




Stock-based compensation expense	6,970		8,093
Deferred income taxes benefit	(3,621)		(1,889)
Loss from sale of real estate	191		—
Gain on other asset disposals	(156)		(165)

Provision for doubtful accounts receivable	1,458		1,970
Changes in operating assets and liabilities:
Accounts receivable	20,012		(41,994)
Accounts payable and accrued expenses	(69,996)		(35,572)
Other	(588)		15,911
Net cash provided by operating activities	41,481		15,586
Investing activities:

Additions to property, buildings and equipment	(69,262)		(93,020)
Business combinations, net of cash acquired	—		603

Investment in partially owned entities and other	(18,400)		(1,925)


Proceeds from sale of property, buildings and equipment	70		98





Net cash used in investing activities	(87,592)		(94,244)
Financing activities:


Distributions paid on common stock, restricted stock units and noncontrolling interests in Operating Partnership	(60,064)		(59,940)
Proceeds from stock options exercised	1,464		575
Proceeds from employee stock purchase plan	1,452		1,985
Remittance of withholding taxes related to employee stock-based transactions	(2,265)		(3,226)
Proceeds from revolving line of credit	186,700		115,000
Repayment on revolving line of credit	(76,604)		—



Repayment of sale-leaseback financing obligations	(2,170)		(1,619)
Repayment of financing lease obligations	(9,646)		(4,695)

Repayment of term loan and mortgage notes	—		(1,824)





Net cash provided by financing activities	38,867		46,256
Net decrease in cash, cash equivalents and restricted cash	(7,244)		(32,402)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	1,403		409
Cash, cash equivalents and restricted cash:
Beginning of period	53,063		82,958
End of period	$	47,222	$	50,965

Supplemental disclosures of non-cash investing and financing activities:

Addition of property, buildings and equipment on accrual	$	40,467	$	52,931
Addition of property, buildings and equipment under financing lease obligations	$	10,486	$	5,717
Addition of property, buildings and equipment under operating lease obligations	$	474	$	1,828

Supplemental cash flow information:
Interest paid – net of amounts capitalized	$	47,387	$	38,751
Income taxes paid – net of refunds	$	556	$	2,252

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. General

The Company

Americold Realty Trust, Inc. together with its subsidiaries (ART, Americold, the Company, us or we) is a Maryland corporation that operates as a real estate investment trust (REIT) for U.S. federal income tax purposes. The Company is a global leader in temperature-controlled logistics real estate and value added services, focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. The Company is organized as a self-administered and self-managed REIT with proven operating, acquisition and development experience.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP) for interim financial information, and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its 2022 Annual Report on Form 10-K as filed with the SEC, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries where the Company exerts control. Intercompany balances and transactions have been eliminated. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Investments in which the Company does not have control, and is not the primary beneficiary of a Variable Interest Entity (VIE), but where the Company exercises significant influence over the operating and financial policies of the investee, are accounted for using the equity method of accounting.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation within the Notes to the Condensed Consolidated Financial Statements.

Summary of Significant Accounting Policies

The following disclosure regarding certain of our significant accounting policies should be read in conjunction with Note 2 to the consolidated financial statements included in our 2022 Annual Report on Form 10-K as filed with the SEC, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Termination of Certain Employee Benefit Plans

On February 28, 2023, the Company’s Board of Directors approved a plan to effect the termination of the Americold Retirement Income Plan (“ARIP”). Additionally, on February 28, 2023, the Company amended the ARIP plan agreements in order to provide for a limited lump-sum window for eligible participants. The Company plans to file the Application for Determination Upon Termination with the Internal Revenue Service during the second quarter of 2023. The Company has chosen to proceed with the distributions without waiting for the final letter of favorable determination. The Company plans to file the appropriate documents related to the termination of the ARIP with the Pension Benefit Guaranty Corporation and any other appropriate parties during the third quarter of 2023.

The Company will recognize a gain or loss upon settlement when an irrevocable action to terminate the ARIP has occurred, the Company is relieved of the primary responsibility of the ARIP, and the significant risks related to the obligations of the plan and the assets used to effect the settlement is eliminated for the Company.

The Company expects to make cash contributions in 2023 in order to fully fund the ARIP on a liquidation basis, and the ARIP will be dissolved upon completion of lump sum distributions and purchase of annuity contracts. The actual amount of this cash contribution requirement will depend upon the nature and timing of participant settlements, interest rates, as well as prevailing market conditions. In addition, the Company expects to recognize pre-tax non-cash pension settlement charges related to actuarial losses currently in Accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets, upon settlement of the obligations of the ARIP. These charges are currently expected to occur in 2023, with the specific timing and final amounts dependent upon completion of the activities enumerated above.

The termination of the plan will be accounted for under the liquidation basis of accounting. Refer to Note 9 for additional details regarding the fair value of the Company’s pension assets as of the three months ended March 31, 2023 and December 31, 2022, respectively. The gain or loss resulting from the liquidation is not expected to be material and will be recorded to “other, net” in the condensed consolidated financial statements.

Recent Capital Markets Activity

At the Market (ATM) Equity Program

On March 17, 2023, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $900.0 million of our common stock through an ATM Equity Program (the “2023 ATM Equity Program”). Sales of the Company’s common stock made pursuant to the 2023 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent named therein and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. There was no activity during the three months ended March 31, 2023 under the 2023 ATM Equity Program.

Universal Shelf Registration Statement

In connection with establishing the 2023 ATM Equity Program on March 17, 2023, the Company and the Operating Partnership filed with the SEC an automatic shelf registration statement on Form S-3 (Registration No.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

333-270664 and 333-270664-01) (the “Registration Statement”), registering an indeterminate amount of (i) the Company’s common stock, $0.01 par value per share, (ii) the Company’s preferred stock, $0.01 par value per share, (iii) depositary shares representing entitlement to all rights and preferences of fractions of the Company’s preferred shares of a specified series and represented by depositary receipts, (iv) warrants to purchase the Company’s common stock or preferred stock or depositary shares and (v) debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company.

Recently Adopted Accounting Standards

Accounting for Revenue Contracts Acquired in a Business Combination

In 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). The changes require entities to apply Accounting Standards Codification (ASC) 606) to recognize and measure contract assets and contract liabilities from contracts with customers in a business combination. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Adoption of ASU 2021-08 did not have a material impact on the Company’s condensed consolidated financial statements.

Significant Risks and Uncertainties

The three months ended March 31, 2022 was negatively impacted by the contributory effects of the COVID-19 pandemic and the resulting disruptions in (i) the food supply chain; (ii) our customers’ production of goods; (iii) the labor market, which impacts associate turnover, availability and cost; and (iv) the impact of inflation on the cost to provide our services. Over the last twelve months, there have been gradual improvements in food production and the food supply chain has begun to recover storage levels, reaching pre-COVID-19 pandemic levels. While our business continues to be impacted by rising inflationary pressures, we are well-situated due to our strong financial position and our ability to pass along price increases to our customers.

2. Acquisition, Litigation and Other, net

The components of the charges and credits included in “Acquisition, litigation and other, net” in our Condensed Consolidated Statements of Operations are as follows (in thousands):


	Three Months Ended March 31,
Acquisition, litigation and other, net	2023		2022
Acquisition and integration related costs	$	1,786	$	6,285
Project Orion expenses	1,946		—
Litigation	—		1,200
Severance costs	3,415		2,564

Cyber incident related costs, net of insurance recoveries	—		26

Total acquisition, litigation and other, net	$	7,147	$	10,075

Refer to Note 8 of the consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC for further information regarding the nature of costs within each of these captions. The Project Orion expenses were not presented separately during 2022 due to immateriality. These expenses represent the non-capitalizable portion of our Project Orion costs, which is an investment in and transformation of our technology systems, business processes and customer solutions. The project includes the implementation of a new, state-of-the-art, cloud-based enterprise resource planning (“ERP”) software system.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

3. Debt

The following table reflects a summary of our outstanding indebtedness as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023			December 31, 2022
	Weighted Average Effective Interest Rate	Carrying Amount		Weighted Average Effective Interest Rate	Carrying Amount
Senior Unsecured Notes	3.26%	$	1,762,925	3.27%	$	1,752,875
Senior Unsecured Term Loans	4.66%	829,950		4.67%	829,450
Senior Unsecured Revolving Credit Facility	5.66%	610,500		5.12%	500,052
Total principal amount of indebtedness		$	3,203,375		$	3,082,377
Less: unamortized deferred financing costs		(12,434)			(13,044)
Total indebtedness, net of deferred financing costs		$	3,190,941		$	3,069,333

The weighted-average interest rates shown represent interest rates at the end of the periods for the debt outstanding and include the impact of designated interest rate swaps, which effectively lock-in the interest rates on certain variable rate debt under our Senior Unsecured Term Loans.

The following table provides the details of our Senior Unsecured Notes (balances in thousands):


			March 31, 2023				December 31, 2022
	Stated Maturity Date	Contractual Interest Rate	Borrowing Currency		Carrying Amount (USD)		Borrowing Currency		Carrying Amount (USD)
Series A Notes	01/2026	4.68%	$	200,000	$	200,000	$	200,000	$	200,000
Series B Notes	01/2029	4.86%	$	400,000	400,000		$	400,000	400,000
Series C Notes	01/2030	4.10%	$	350,000	350,000		$	350,000	350,000
Series D Notes	01/2031	1.62%	€	400,000	433,560		€	400,000	428,200
Series E Notes	01/2033	1.65%	€	350,000	379,365		€	350,000	374,675
Total Senior Unsecured Notes					$	1,762,925			$	1,752,875

The following table provides the details of our Senior Unsecured Term Loans (balances in thousands):


	March 31, 2023					December 31, 2022
	Contractual Interest Rate(1)	Borrowing Currency		Carrying Amount (USD)			Contractual Interest Rate(1)	Borrowing Currency		Carrying Amount (USD)
Tranche A-1	SOFR+ 0.94%	$	375,000	$	375,000		SOFR + 0.95%	$	375,000	$	375,000
Tranche A-2	CDOR+ 0.94%	C$	250,000	184,950			CDOR+0.95%	C$	250,000	184,450
Delayed Draw Tranche A-3	SOFR+0.94%	$	270,000	270,000			SOFR + 0.95%	$	270,000	270,000



Total Senior Unsecured Term Loan Facility		$	829,950					$	829,450

(1) S = one-month Adjusted Term SOFR; C = one-month CDOR. Tranche A-1 and Tranche A-3 SOFR includes an adjustment of 0.10%, in addition to the margin. While the above reflects the contractual rate, refer to the description below of the Senior Unsecured Credit Facility for details of the portion of these Term Loans that are hedged, therefore, at a fixed interest rate for the duration of the respective swap agreement. Refer to Note 4 for details of the related interest rate swaps.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table provides the details of our Senior Unsecured Revolving Credit Facility (balances in thousands):


	March 31, 2023					December 31, 2022
Denomination of Draw	Contractual Interest Rate (1)	Borrowing Currency		Carrying Amount (USD)			Contractual Interest Rate(1)	Borrowing Currency		Carrying Amount (USD)
U.S. dollar	SOFR + 0.84%	$	323,000	$	323,000		SOFR + 0.85%	$	225,000	$	225,000
Australian dollar	BBSW + 0.84%	A$	152,000	101,612			BBSW+0.85%	A$	146,000	99,470
British pound sterling	SONIA + 0.84%	£	78,000	96,229			SONIA+0.85%	£	76,500	92,435
Canadian dollar	CDOR + 0.84%	C$	45,000	33,291			CDOR+0.85%	C$	50,000	36,890
Euro	EURIBOR +0.84%	€	44,500	48,234			EURIBOR+0.85%	€	35,500	38,003
New Zealand dollar	BKBM + 0.84%	NZD	13,000	8,134			BKBM+0.85%	NZD	12,998	8,254
Total Senior Unsecured Revolving Credit Facility		$	610,500					$	500,052

(1) S = one-month Adjusted SOFR; C = one-month CDOR; E = Euro Interbank Offered Rate (EURIBOR); SONIA = Adjusted Sterling Overnight Interbank Average Rate; BBSW = Bank Bill Swap Rate; BKBM = Bank Bill Reference Rate. We have elected Daily SOFR for the entirety of our U.S. dollar denominated borrowings shown above, which includes an adjustment of 0.10%, in addition to the margin. Our British pound sterling borrowings bear interest tied to adjusted SONIA, which includes an adjustment of 0.03% in addition to our margin.

Refer to Note 9 of the consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC for further details of its outstanding indebtedness. As of March 31, 2023, we were in compliance with all debt covenants.

4. Derivative Financial Instruments

Designated Non-derivative Financial Instruments

As of March 31, 2023, the Company designated £78.0 million, A$152.0 million and €794.5 million debt and accrued interest as a hedge of our net investment in the respective international subsidiaries. As of December 31, 2022, the Company designated £76.5 million, A$146.0 million and €785.5 million debt and accrued interest as a hedge of our net investment in the respective international subsidiaries. The remeasurement of these instruments is recorded in “Change in unrealized net loss on foreign currency” on the accompanying Condensed Consolidated Statements of Comprehensive Loss.

Derivative Financial Instruments

The Company is subject to volatility in interest rates due to variable-rate debt. To manage this risk, the Company periodically enters into interest rate swap agreements. These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective swap agreement without an exchange of the underlying notional amount. The Company’s objective for utilizing these derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in interest rates. The following table includes the key provisions of the interest rate swaps outstanding as of March 31, 2023 and December 31, 2022 (fair value in thousands):

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)


Notional	Fixed Base Interest Rate Swap	Effective Date	Expiration Date	Debt Instrument	Fair Value as of March 31, 2023		Fair Value as of December 31, 2022
$200 million USD	3.65%	9/23/2022	12/29/2023	Tranche A-1	$	1,609	$	2,240
$200 million USD	3.05%	12/29/2023	7/30/2027	Tranche A-1	206		2,328
$175 million USD	3.47%	11/30/2022	7/30/2027	Tranche A-1	(530)		2,020
$270 million USD	3.05%	11/01/2022	12/31/2027	Delayed Draw Tranche A-3	3,513		8,034
$250 million CAD	3.59%	9/23/2022	12/31/2027	Tranche A-2	(1,905)		950
			Total		$	2,893	$	15,572

In addition, the Company is subject to volatility in foreign exchange rates due to foreign-currency denominated intercompany loans. The Company implemented cross-currency swaps to manage the foreign currency exchange rate risk on certain intercompany loans. These agreements effectively mitigate the Company’s exposure to fluctuations in cash flows due to foreign exchange rate risk. These agreements involve the receipt of fixed USD amounts in exchange for payment of fixed Australian and New Zealand Dollar amounts over the life of the respective intercompany loan. The entirety of the Company’s outstanding intercompany loans receivable balances, $153.5 million AUD and $37.5 million NZD, were hedged under the cross-currency swap agreements at March 31, 2023 and December 31, 2022.

There have been no significant changes to our policy or strategy from what was disclosed in our 2022 Annual Report on Form 10-K. During the next twelve months, the Company estimates that an additional $2.3 million will be reclassified as an increase to “Loss on debt extinguishment, modifications, and termination of derivative instruments”. Additionally, during the next twelve months, the Company estimates that an additional $0.3 million will be reclassified as a increase to gain/loss on foreign exchange (a component of “Other income (expense), net”) and an additional $10.1 million will be reclassified as a decrease to “Interest expense”.

The Company determines the fair value of its derivative instruments using a present value calculation with significant observable inputs classified as Level 2 of the fair value hierarchy. Derivative asset balances are recorded on the accompanying Condensed Consolidated Balance Sheets within “Other assets” and derivative liability balances are recorded on the accompanying Condensed Consolidated Balance Sheets within “Accounts payable and accrued expenses”. The following table presents the fair value of the derivative financial instruments within “Other assets” and “Accounts payable and accrued expenses” as of March 31, 2023 and December 31, 2022 (in thousands):


			Derivative Assets						Derivative Liabilities
			March 31, 2023				December 31, 2022				March 31, 2023				December 31, 2022


Designated derivatives
Foreign exchange contracts			$	9,539			$	7,948			$	—			$	—
Interest rate contracts			5,328				15,572				2,435				—



Total fair value of derivatives	$	14,867			$	23,520			$	2,435			$	—

The following tables present the effect of the Company’s derivative financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, including the impacts to Accumulated Other Comprehensive (Loss) Income (AOCI) (in thousands):

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative				Location of Gain or (Loss) Reclassified from AOCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income

	Three Months Ended March 31,					Three Months Ended March 31,
	2023		2022			2023		2022

Interest rate contracts	$	(10,247)	$	—	Interest expense	$	2,432	$	—
Interest rate contracts	—		—		Loss on debt extinguishment, modifications and termination of derivative instruments(1)	(620)		(627)
Foreign exchange contracts	1,683		(4,325)		Foreign currency exchange loss, net	2,096		(3,851)
Foreign exchange contracts	—		—		Interest expense	92		2

Total designated cash flow hedges	$	(8,564)	$	(4,325)		$	4,000	$	(4,476)

(1) In conjunction with the termination of interest rate swaps in 2020, the Company recorded amounts in other comprehensive income that will be reclassified as an adjustment to earnings over the term of the original hedges and respective borrowings. As of March 31, 2023, the Company recorded an increase to “Loss on debt extinguishment, modifications and termination of derivative instruments” related to this transaction.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2023. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying Condensed Consolidated Balance Sheets (in thousands):


March 31, 2023
Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	14,867	$	—	$	14,867	$	(1,343)	$	—	$	13,524

Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	(2,435)	$	—	$	(2,435)	$	1,343	$	—	$	(1,092)

As of December 31, 2022, there was no impact from netting arrangements and the Company did not have any outstanding derivatives in a net liability position. Refer to Note 9 for additional details regarding the impact of the Company’s derivatives on AOCI for the three months ended March 31, 2023 and 2022, respectively.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

5. Fair Value Measurements

There have been no significant changes in the Company’s policy for fair value measurements from what was disclosed in Note 13 of its 2022 Annual Report on Form 10-K as filed with the SEC. As of March 31, 2023 and December 31, 2022, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and revolving line of credit approximate their fair values due to the short-term maturities of the instruments.

The Company’s assets and liabilities measured or disclosed at fair value are as follows (in thousands):


		Fair Value
	Fair Value Hierarchy	March 31, 2023		December 31, 2022

Measured at fair value during the current reporting period:




Interest rate swap assets	Level 2	$	5,328	$	15,572
Cross currency swap assets	Level 2	$	9,539	$	7,948
Interest rate swap liabilities	Level 2	$	2,435	$	—


Assets held by ARIP pension plan:
	Level 1	$	10,403	$	23,489
	Level 2	$	24,828	$	11,503





Disclosed at fair value:
Senior unsecured notes and term loans	Level 3	$	2,966,215	$	2,829,574

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

6. Stock-Based Compensation

Aggregate stock-based compensation charges were $7.0 million and $8.3 million during the three months ended March 31, 2023 and 2022, respectively. Routine stock-based compensation expense is included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2023, there was $41.6 million of unrecognized stock-based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.3 years.

Restricted Stock Units Activity

The following table provides a summary of restricted stock unit (RSU) activity for the three months ended March 31, 2023:


Three Months Ended March 31, 2023
	Number of Time-Based RSUs	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based RSUs(2)	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2022	687,667	$	19.5	249,447	$	7.1
Granted	406,062			107,177
Market-performance adjustment(3)	—			(10,834)
Vested	(181,204)			(52,962)
Forfeited	(18,261)			(6,477)
Non-vested as of March 31, 2023	894,264	$	25.4	286,351	$	8.1
Shares vested, but not released(1)	46,890	$	1.3	—	$	—
Total outstanding restricted stock units	941,154	$	26.7	286,351	$	8.1

(1)For certain vested RSUs, common stock issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. These 46,890 RSUs belong to an active member of the Board of Directors and the date of issuance is therefore unknown at this time. The weighted average grant date fair value of these units is $8.42 per unit.

(2)The number of market performance-based RSUs are reflected within this table based upon the number of shares of common stock issuable upon achievement of the performance metric at target.

(3)Represents the decrease in the number of original market-performance units awarded based on the final performance criteria achievement at the end of the defined performance period. In January 2023, following the completion of the applicable market-performance period, the Compensation Committee determined that the 47th percentile had been achieved for the 2020 awards and, accordingly, 52,962 units vested immediately, representing a vesting percentage of 83.0%.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


Three Months Ended March 31, 2022
Restricted Stock	Number of Time-Based Restricted Stock Units	Aggregate Intrinsic Value (in millions)		Number of Performance-Based Restricted Stock Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based Restricted Stock Units(2)	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2021	1,071,959	$	35.1	—	$	—	374,048	$	12.3
Granted	350,641			—			130,458
Market-performance adjustment(3)	—			—			(18,253)
Vested	(171,176)			—			(194,111)
Forfeited	(45,597)			—			(8,044)
Non-vested as of March 31, 2022	1,205,827	$	33.6	—	$	—	284,098	$	7.9
Shares vested, but not released(1)	615,643	17.2		42,856	1.2		—	—
Total outstanding restricted stock units	1,821,470	$	50.8	42,856	$	1.2	284,098	$	7.9

(1)For certain vested restricted stock units, common share issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. This is comprised of 568,753 vested time-based restricted stock units which belong to a member of the Board of Trustees who has resigned and common shares shall not be issued until the first to occur: (1) change in control; or (2) April 13, 2022. The weighted average grant date fair value of these units is $9.38 per unit. This is also comprised of 46,890 vested time-based restricted stock units which belong to an active member of the Board of Trustees and the date of issuance is therefore unknown at this time. The weighted average grant date fair value of these units is $8.42 per unit. Finally, this is comprised of 42,856 vested performance-based restricted stock units which belong to the former CEO and common shares shall not be issued until May 2, 2022 in accordance with the terms of the award. The weighted average grant date fair value of these units is $13.43 per unit. The holders of these vested restricted stock units are entitled to receive distributions, but are not entitled to vote the shares until common shares are issued.in exchange for these vested restricted stock units.

(2)The number of market performance-based restricted stock units are reflected within this table based upon the number of shares issuable upon achievement of the performance metric at target.

(3)Represents the decrease in the number of original market-performance units awarded based on the final performance criteria achievement at the end of the defined performance period.

The weighted average grant date fair value of restricted stock units granted during the three months ended March 31, 2023 was $31.03 per unit. During the three months ended March 31, 2023, the weighted average grant date fair value of vested and converted restricted stock units was $29.58 and forfeited restricted stock units was $28.16. The weighted average grant date fair value of non-vested restricted stock units was $29.07 and $28.15 per unit as of March 31, 2023 and December 31, 2022, respectively.

OP Units Activity

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table provides a summary of the OP unit activity for the three months ended March 31, 2023:


Three Months Ended March 31, 2023
	Number of Time-Based OP Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based OP Units	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2022	160,182	$	4.5	462,815	$	13.1
Granted	127,637			193,560
Market-performance adjustment(1)	—			(23,959)
Vested	(53,498)			(116,983)

Non-vested as of March 31, 2023	234,321	$	6.7	515,433	$	14.7
Shares vested, but not released	228,456	$	6.5	—	$	—
Total outstanding OP units	462,777	$	13.2	515,433	$	14.7

(1) Represents the decrease in the number of original market-performance units awarded based on the final performance criteria achievement at the end of the defined performance period. In January 2023, following the completion of the applicable market-performance period, the Compensation Committee determined that the 47th percentile had been achieved for the 2020 awards and, accordingly, 116,983 units vested immediately, representing a vesting percentage of 83.0%.


Three Months Ended March 31, 2022
OP Units	Number of Time-Based OP Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based OP Units	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2021	140,222	$	4.6	288,165	$	9.4
Granted	98,994			243,986
Vested	(28,179)			—
Forfeited	(7,635)			(20,366)
Non-vested as of March 31, 2022	203,402	$	5.7	511,785	$	14.3
Shares vested, but not released	104,874	2.9		—	—
Total outstanding OP units	308,276	$	8.6	511,785	$	14.3

The weighted average grant date fair value of OP units granted during the three months ended March 31, 2023 was $33.52 per unit. During the three months ended March 31, 2023, the weighted average grant date fair value of vested OP units was $29.60. The weighted average grant date fair value of non-vested OP units was $30.61 and $29.39 per unit as of March 31, 2023 and December 31, 2022, respectively.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Stock Options Activity

The following table provides a summary of stock option activity for the three months ended March 31, 2023:


Options	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2022	105,498	$	9.81	3.6
Granted	—	$	—
Exercised	—	$	9.81
Forfeited or expired	—	$	—
Outstanding as of March 31, 2023	105,498	$	9.81	3.4

Exercisable as of March 31, 2023	105,498	$	9.81	3.4


Options	Shares (In thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2021	206,298	$	9.81	2.9
Granted	—	—
Exercised	(40,900)	9.81
Forfeited or expired	—	—
Outstanding as of March 31, 2022	165,398	9.81		3.1

Exercisable as of March 31, 2022	165,398	$	9.81	3.1

All outstanding stock options were vested as of December 31, 2022.

7. Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2023 and March 31, 2022 varies from the statutory U.S. federal income tax rate primarily due to the Company being designated as a REIT that is generally treated as a non-tax paying entity. During the three months ended March 31, 2023 and March 31, 2022, the effective tax rate was impacted by the loss generated by our foreign operations.

8. Commitments and Contingencies

Legal Proceedings

In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company and its legal counsel evaluate the merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency suggests that a loss is probable, and the amount can be reasonably estimated, then a loss is recorded.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

In addition to the matters discussed below, the Company may be subject to litigation and claims arising from the ordinary course of business. In the opinion of management, after consultation with legal counsel, the outcome of such matters is not expected to have a material impact on the Company’s financial condition, results of operations, or cash flows.

Preferred Freezer Services, LLC Litigation

On February 11, 2019, Preferred Freezer Services, LLC (“PFS”) moved by Order to Show Cause in the Supreme Court of the State of New York, New York County, asserting breach of contract and other claims against the Company and seeking to preliminarily enjoin the Company from acting to acquire certain properties leased by PFS. In its complaint and request for preliminary injunctive relief, PFS alleged that the Company breached a confidentiality agreement entered into in connection with the Company’s participation in a bidding process for the sale of PFS by contacting PFS’s landlords and by using confidential PFS information in bidding for the properties leased by PFS (the “PFS Action”).

PFS’s request for a preliminary injunction was denied after oral argument on February 26, 2019. On March 1, 2019, PFS filed an application for interim injunctive relief from the Appellate Division of the Supreme Court, First Judicial Department (“the First Department”).

On April 2, 2019, while its application to the First Department was pending, PFS voluntarily dismissed its state court action, and First Department application, and re-filed substantially the same claims against the Company in the U.S. District Court for the Southern District of New York. In addition to an order enjoining Americold from making offers to purchase the properties leased by PFS, PFS sought compensatory, consequential and/or punitive damages. The Company filed a motion to require PFS to reimburse the Company for its legal fees it incurred for the state court action before PFS is allowed to proceed in the federal court action. On February 18, 2020, the Court granted Americold’s request for an award of legal fees from PFS but declined to stay the case pending payment of that award. As to the amount of the award, the Company and PFS have entered into a stipulation that PFS will pay Americold $0.6 million to reimburse the Company for its legal fees upon conclusion of the case. PFS has since amended its complaint, and Americold has filed a motion to dismiss that amended complaint.

The Company denies the allegations and believes PFS’s claims are without merit and intends to vigorously defend itself against the allegations. Given the status of the proceedings to date, a liability cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its consolidated financial statements.

Environmental Matters

The Company is subject to a wide range of environmental laws and regulations in each of the locations in which the Company operates. Compliance with these requirements can involve significant capital and operating costs. Failure to comply with these requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental permits, or restrictions on the Company’s operations.

The Company records accruals for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. The Company adjusts these accruals periodically as assessment and remediation efforts progress or as additional technical or legal information become available. The Company had nominal environmental liabilities in accounts payable and accrued expenses as of March 31, 2023 and December 31, 2022. The Company believes it is in compliance with applicable environmental regulations in all material respects. Under various U.S. federal, state,

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

and local environmental laws, a current or previous owner or operator of real estate may be liable for the entire cost of investigating, removing, and/or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the contamination. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for the entire clean-up cost. There are no material unrecorded contingent liabilities as of March 31, 2023. Most of the Company’s warehouses utilize ammonia as a refrigerant. Ammonia is classified as a hazardous chemical regulated by the Environmental Protection Agency, and an accident or significant release of ammonia from a warehouse could result in injuries, loss of life, and property damage.

Occupational Safety and Health Act (OSHA)

The Company’s warehouses located in the U.S. are subject to regulation under OSHA, which requires employers to provide employees with an environment free from hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, and unsanitary conditions. The cost of complying with OSHA and similar laws enacted by states and other jurisdictions in which we operate can be substantial, and any failure to comply with these regulations could expose us to substantial penalties and potentially to liabilities to employees who may be injured at our warehouses. The Company records accruals for OSHA matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company believes that it is in substantial compliance with all OSHA regulations and that no material unrecorded contingent liabilities exist as of March 31, 2023 and December 31, 2022. Future changes in applicable environmental laws or regulations, or in the interpretations of such laws and regulations, could negatively impact the Company.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

9. Accumulated Other Comprehensive (Loss) Income

The Company reports activity in AOCI for foreign currency translation adjustments, including the translation adjustment for investments in partially owned entities, unrealized gains and losses on designated derivatives, and minimum pension liability adjustments (net of tax). The activity in AOCI for the three months ended March 31, 2023 and 2022 is as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Pension and other postretirement benefits:
Gain arising during the period	$	698	$	62
Amortization of prior service cost (1)	—		5
Total pension and other postretirement benefits, net of tax	$	698	$	67

Foreign currency translation adjustments:
Cumulative translation adjustment	$	10,801	$	(12,506)
Derivative net investment hedges	(10,622)		23,692
Total foreign currency translation adjustments	$	179	$	11,186

Designated derivatives:
Cash flow hedge derivatives	$	(8,564)	(4,325)
Net amount reclassified from AOCI to net loss	(4,000)		4,476
Total unrealized (loss) gain on derivative contracts	$	(12,564)	$	151
Total change in other comprehensive loss	$	(11,687)	$	11,404

(1)Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations.

10. Segment Information

Our principal operations are organized into three reportable segments: Warehouse, Transportation and Third-party managed. The details of these segments remain materially unchanged from those disclosed in the Company’s 2022 Annual Report on Form 10-K as filed with the SEC. Our reportable segments are strategic business units separated by service offerings. Each reportable segment is managed separately and requires different operational and marketing strategies. The accounting polices used in the preparation of our reportable segments financial information are the same as those used in the preparation of our condensed consolidated financial statements.

Our chief operating decision maker uses revenues and segment contribution to evaluate segment performance. We calculate segment contribution as earnings before interest expense, taxes, depreciation and amortization, and excluding corporate selling, general and administrative expense, acquisition, litigation and other expense, impairment of long-lived assets, gain or loss on sale of real estate and all components of non-operating other income and expense. Selling, general and administrative functions support all the business segments. Therefore, the related expense is not allocated to segments as the chief operating decision maker does not use it to evaluate segment performance.

Segment contribution is not a measurement of financial performance under U.S. GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our segment contribution as an alternative to operating income determined in accordance with U.S. GAAP.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table presents segment revenues and contributions with a reconciliation to loss before income taxes for the three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	2023		2022
Segment revenues:
Warehouse	$	595,052	$	540,925
Transportation	68,078		78,910
Third-party managed	13,359		85,860

Total revenues	676,489		705,695

Segment contribution:
Warehouse	174,827		146,258
Transportation	11,660		8,529
Third-party managed	1,079		3,501

Total segment contribution	187,566		158,288

Reconciling items:
Depreciation and amortization	(85,024)		(82,620)
Selling, general and administrative	(62,855)		(57,602)
Acquisition, litigation and other, net	(7,147)		(10,075)

Loss from sale of real estate	(191)		—
Interest expense	(34,423)		(25,773)
Loss on debt extinguishment, modifications and termination of derivative instruments	(545)		(616)
Other income, net	1,433		2,357




Loss from partially owned entities	(3,029)		(2,112)

Loss before income taxes	$	(4,215)	$	(18,153)

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table details our assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets (in thousands).


	March 31, 2023		December 31, 2022
Assets:
Warehouse	$	7,717,279	$	7,736,704
Transportation	198,014		205,653
Third-party managed	23,057		25,997
Total segments assets	7,938,350		7,968,354

Reconciling items:
Investments in partially owned entities	96,717		78,926
Corporate assets	36,651		57,281
Total reconciling items	133,368		136,207
Total assets	$	8,071,718	$	8,104,561

11. Loss per Common Share

Basic and diluted earnings per common share are calculated by dividing the net income or loss attributable to common stockholders by the basic and diluted weighted-average number of common shares outstanding in the period, respectively, using the allocation method prescribed by the two-class method. The Company applies this method to compute earnings per share because it distributes non-forfeitable dividend equivalents on restricted stock units and OP units granted to certain employees and non-employee directors who have the right to participate in the distribution of common dividends while the restricted stock units and OP units are unvested.

A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2023 and 2022 is as follows (in thousands):


	Three Months Ended March 31,
	2023	2022
Weighted average common shares outstanding – basic	270,230	269,164
Dilutive effect of stock-based awards	—	—

Weighted average common shares outstanding – diluted	270,230	269,164

For the three months ended March 31, 2023 and the three months ended March 31, 2022, potential common shares under the treasury stock method and the if-converted method were antidilutive because the Company reported a net loss for both periods. Consequently, the Company did not have any adjustments between basic and diluted loss per share related to stock-based awards.

The table below presents the number of antidilutive potential common shares that are not considered in the calculation of diluted loss per share (in thousands):

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Three Months Ended March 31,
	2023	2022
Employee stock options	—	202
Restricted stock units	57	1,295
OP units	51	494

	108	1,991

12. Revenue from Contracts with Customers

Disaggregated Revenue

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2023 and 2022 by segment and geographic region (in thousands):


	Three Months Ended March 31, 2023
	North America		Europe		Asia-Pacific		South America		Total
Warehouse rent and storage	$	219,081	$	20,545	$	17,665	$	1,702	$	258,993
Warehouse services(1)	261,632		26,356		34,372		1,285		323,645
Transportation	35,381		23,406		8,672		619		68,078
Third-party managed	7,563		—		5,796		—		13,359

Total revenues (2)	523,657		70,307		66,505		3,606		664,075
Lease revenue (3)	11,050		1,364		—		—		12,414
Total revenues from contracts with all customers	$	534,707	$	71,671	$	66,505	$	3,606	$	676,489


	Three Months Ended March 31, 2022
	North America		Europe		Asia-Pacific		South America		Total
Warehouse rent and storage	$	181,939	$	17,355	$	16,721	$	2,950	$	218,965
Warehouse services(1)	238,169		32,197		39,202		1,600		311,168
Transportation	37,493		34,106		6,860		451		78,910
Third-party managed	80,820		—		5,040		—		85,860

Total revenues (2)	538,421		83,658		67,823		5,001		694,903
Lease revenue (3)	9,313		1,479		—		—		10,792
Total revenues from contracts with all customers	$	547,734	$	85,137	$	67,823	$	5,001	$	705,695

(1)Warehouse services revenue includes sales of product that Americold purchases on the spot market, repackages, and sells to customers. Such revenues totaled less than $0.1 million and $3.2 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

(2)Revenues are within the scope of ASC 606, Revenue From Contracts with Customers. Elements of contracts or arrangements that are in the scope of other standards (e.g., leases) are separated and accounted for under those standards.

(3)Revenues are within the scope of Topic 842, Leases.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Performance Obligations

Substantially all our revenue for warehouse storage and handling services, and management and incentive fees earned under third-party managed and other contracts is recognized over time as the customer benefits equally throughout the period until the contractual term expires. Typically, revenue is recognized over time using an output measure (e.g. passage of time). Revenue is recognized at a point in time upon delivery when the customer typically obtains control, for most accessorial services, transportation services and reimbursed costs.

For arrangements containing non-cancellable contract terms, any variable consideration related to storage renewals or incremental handling charges above stated minimums are 100% constrained and not included in the aggregate amount of the transaction price allocated to the unsatisfied performance obligations disclosed below, given the degree in difficulty in estimation. Payment terms are generally 0 - 30 days upon billing, which is typically monthly, either in advance or subsequent to the performance of services. The same payment terms typically apply for arrangements containing variable consideration.

The Company has no material warranties or obligations for allowances, refunds or other similar obligations.

As of March 31, 2023, the Company had $649.7 million of remaining unsatisfied performance obligations from contracts with customers subject to a non-cancellable term and within contracts that have an original expected duration exceeding one year. These obligations also do not include variable consideration beyond the non-cancellable term, which due to the inability to quantify by estimate, is fully constrained. The Company expects to recognize approximately 24% of these remaining performance obligations as revenue in 2023, and the remaining 76% to be recognized over a weighted average period of 11.3 years through 2038.

Contract Balances

The timing of revenue recognition, billings and cash collections results in accounts receivable (contract assets), and unearned revenue (contract liabilities) on the accompanying Condensed Consolidated Balance Sheets. Generally, billing occurs monthly, subsequent to revenue recognition, resulting in contract assets. However, the Company may bill and receive advances or deposits from customers, particularly on storage and handling services, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the accompanying Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three months ended March 31, 2023, were not materially impacted by any other factors.

Receivable balances related to contracts with customers accounted for under ASC 606 were $402.1 million and $421.1 million as of March 31, 2023 and December 31, 2022, respectively. All other trade receivable balances relate to contracts accounted for under ASC 842.

Balances in unearned revenue related to contracts with customers were $32.9 million and $32.0 million as of March 31, 2023 and December 31, 2022, respectively. Substantially all revenue that was included in the contract liability balances at the beginning of 2022 has been recognized as of March 31, 2023, and represents revenue from the satisfaction of monthly storage and handling services with average inventory turns of approximately 30 days.

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Americold Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

13. Subsequent Events

On April 26, 2023, Americold Realty Trust, Inc. (the “Company”) began to receive evidence that its computer network was affected by a cybersecurity incident. The Company immediately implemented containment measures and took operations offline to secure its systems and reduce disruption to its business and customers. The Company has launched a review of the nature and scope of the incident, is working closely with cybersecurity experts and legal counsel, and has reported the matter to law enforcement. The Company is taking action to resume normal operations at impacted facilities so that it can continue to support customers.

The security and the privacy of data remain a priority at the Company. The Company will continue to take appropriate measures to further safeguard the integrity of its information technology infrastructure, data and customer information. The Company is currently assessing the impact to its condensed consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. In addition, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Management’s Overview

We are a global leader in temperature-controlled logistics, real estate and value added services, and are focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of March 31, 2023, we operated a global network of 243 temperature-controlled warehouses encompassing approximately 1.5 billion cubic feet, with 196 warehouses in North America, 27 in Europe, 18 warehouses in Asia-Pacific, and two warehouses in South America. We view and manage our business through three primary business segments: warehouse, third-party managed and transportation. In addition, we hold four minority interests in joint ventures, one with SuperFrio which owns or operates 37 temperature-controlled warehouses in Brazil, one with Comfrio which owns or operates 28 temperature-controlled warehouses in Brazil, one with LATAM which owns two temperature-controlled warehouses in Chile, and one with the RSA JV, which owns one temperature-controlled warehouse in Dubai.

Components of Our Results of Operations

Warehouse. Our primary source of revenues consists of rent, storage, and warehouse services fees. Our rent, storage, and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen, perishable or other products in our warehouses by our customers. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, (10) government-approved temperature-controlled storage and inspection services, (11) fumigation, (12) pre-cooling and cold treatment services, (13) produce grading and bagging, (14) protein boxing, (15) e-commerce fulfillment, and (16) ripening. We refer to these handling and other warehouse services as our value-added services.

Cost of operations for our warehouse segment consist of power, other facilities costs, labor, and other service costs. Labor, the largest component of the cost of operations from our warehouse segment, consists primarily of employee wages, benefits, and workers’ compensation. Trends in our labor expense are influenced by changes in headcount, changes in compensation levels and associated performance incentives, the use of third-party labor to support our operations, changes in terms of collective bargaining agreements, changes in customer requirements and associated work content, workforce productivity, labor availability, governmental policies and regulations,

variability in costs associated with medical insurance and the impact of workplace safety programs, inclusive of the number and severity of workers’ compensation claims. Labor expense can also be impacted as a result of discretionary bonuses. In response to the COVID-19 pandemic, we incorporated certain activities such as staggered break schedules, social distancing, and other changes to process that can create inefficiencies. Our second largest cost of operations from our warehouse segment is power utilized in the operation of our temperature-controlled warehouses. As a result, fluctuations in the price for power in the regions where we operate may have a significant effect on our financial results. We may from time to time hedge our exposure to changes in power prices through fixed rate agreements or, to the extent possible and appropriate, through rate escalations or power surcharge provisions within our customer contracts. Additionally, business mix impacts power expense depending on the temperature zone or type of freezing required. Other facilities costs include utilities other than power, property insurance, property taxes, sanitation, repairs and maintenance on real estate, rent under real property operating leases, where applicable, security, and other related facilities costs. Other services costs include equipment costs, warehouse consumables (e.g., shrink-wrap and uniforms), personal protective equipment to maintain the health and safety of our associates, warehouse administration and other related services costs.

Transportation. We charge transportation fees, which may also include fuel and capacity surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consists primarily of third-party carrier charges, which are impacted by factors affecting those carriers, including driver and equipment availability in certain markets. Additionally, in certain markets we employ drivers and assets to serve our customers. Costs to operate these assets include wages, fuel, tolls, insurance and maintenance.

Third-Party Managed. We receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners, with all reimbursements recognized as revenues under the relevant accounting guidance. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs. Cost of operations for our third-party managed segment is reimbursed on a pass-through basis. During the fourth quarter of 2022, we strategically transitioned the management of our largest third-party managed customer’s warehouses to a new third-party provider, and those operations ceased. As part of this transition, we agreed to continue to process certain costs for the related employee benefits for this customer, and will receive reimbursement for all such costs.

Other Consolidated Operating Expenses. We also incur depreciation and amortization expenses, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other, net expenses.

Our depreciation and amortization charges result primarily from the capital-intensive nature of our business. The principal components of depreciation relate to our warehouses, including buildings and improvements, refrigeration equipment, racking, leasehold improvements, material handling equipment, furniture and fixtures, and our computer hardware and software. Amortization relates primarily to intangible assets for customer relationships.

Our corporate-level selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, business development, account management, project management, marketing, engineering, supply-chain solutions, human resources and information technology personnel, as well as expenses related to equity incentive plans, communications and data processing, travel, professional fees, bad debt, training, office equipment and supplies. Trends in corporate-level selling, general and administrative expenses are influenced by changes in headcount and compensation levels and achievement of incentive compensation targets. To position ourselves to meet the challenges of the current business environment, we have implemented a shared services support structure to better manage costs and enhance the efficiency of our operations.

Our corporate-level acquisition, litigation and other, net consists of costs that we view outside of selling, general and administrative expenses with a high level of variability from period-to-period, and include the following: acquisition and integration related costs, Project Orion costs, litigation costs incurred in order to defend ourselves from litigation charges outside of the normal course of business and related settlement costs, certain severance costs, terminated site operations costs, cyber incident related costs and other costs relate to insurance claims, including deductibles, and related recoveries.

Key Factors Affecting Our Business and Financial Results

Formation of Middle Eastern Joint Venture

On February 28, 2023, the Company purchased a 49% equity interest in a newly formed entity, RSA Cold Holdings Limited (the “RSA JV”), in a transaction that is accounted for as a joint venture. In exchange for our equity interest, the Company paid $4.0 million in total. RSA Cold Holdings Limited contributed their Dubai cold storage business, which consists of a single cold storage warehouse, in exchange for the remaining 51% equity interest in the joint venture. As a result of this transaction, we recognized our subsidiary’s 49% equity investment in the RSA JV at its estimated fair value of $4.0 million within “Investments in partially owned entities” on the Condensed Consolidated Balance Sheets. Under the terms of the JV agreement, the Company has a call right that enables it to purchase all remaining issued and outstanding shares of the RSA JV starting August 28, 2025, with the exercise price to be set as the fair market value of the shares on the exercise date.

Market Conditions and COVID-19

The three months ended March 31, 2022 were negatively impacted by the contributory effects of the COVID-19 pandemic and the resulting disruptions in (i) the food supply chain; (ii) our customers’ production of goods; (iii) the labor market, which impacts associate turnover, availability and cost; and (iv) the level of inflation on the cost to provide our services. Over the last twelve months, there have been gradual improvements in food production and the food supply chain has begun to recover storage levels, reaching pre-COVID-19 pandemic levels. While our business continues to be impacted by rising inflationary pressures, we believe we are well-situated due to our strong financial position, our contractual rate escalations paired with our ability to pass along the impacts of inflationary pressures and costs outside of our control to our customers.

Refer to “Item 1A - Risk Factors” of our 2022 Annual Report on Form 10-K as filed with the SEC.

Seasonality

We are involved in providing services to food producers, distributors, retailers and e-tailers whose businesses, in some cases, are seasonal or cyclical. In order to mitigate the volatility in our revenue and earnings caused by seasonal business, we have implemented fixed commitment contracts with certain of our customers. Our customers with fixed commitment contracts pay for guaranteed warehouse space in order to maintain their required inventory levels, which is especially helpful to them during periods of peak physical occupancy. The timing of Easter fluctuates between the first and second quarter of the year, however, on average the first and second quarter revenue and NOI are relatively consistent. On a portfolio-wide basis, physical occupancy rates are generally the lowest during May and June. Physical occupancy rates typically exhibit a gradual increase after May and June as a result of annual harvests and our customers building inventories in connection with end-of-year holidays and generally peak between mid-September and early December as a result thereof. The external temperature reaches annual peaks for a majority of our portfolio during the third quarter of the year resulting in increased power expense that negatively impacts NOI, and moderates during the fourth quarter. Typically, we

have higher than average physical occupancy levels in October or November, which also tends to result in higher revenues.

Additionally, the involvement of our customers in a cross-section of the food industry mitigates, in part, the impact of seasonality as peak demand for various products occurs at different times of the year (for example, demand for ice cream is typically highest in the summer while demand for frozen turkeys usually peaks in the late fall). Our southern hemisphere operations in Australia, New Zealand and South America also help balance the impact of seasonality in our global operations, as their growing and harvesting cycles are complementary to North America and Europe. Each of our warehouses sets its own operating hours based on demand, which is heavily driven by growing seasons and seasonal consumer demand for certain products.

Foreign Currency Translation Impact on Our Operations

Our consolidated revenues and expenses are subject to variations caused by the net effect of foreign currency translation on revenues and expenses incurred by our operations outside the United States. Future fluctuations of foreign currency exchange rates and their impact on our Condensed Consolidated Statements of Operations are inherently uncertain. As a result of the relative size of our international operations, these fluctuations may be material on our results of operations. Our revenues and expenses from our international operations are typically denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of foreign currency fluctuations on our results of operations and margins is partially mitigated.

The following table shows a comparison of underlying average exchange rates of the foreign currencies that impacted our U.S. dollar-reported revenues and expenses during the periods discussed herein, together with a comparison against the exchange rates of such currencies at the end of the applicable periods presented herein. The rates below represent the U.S. dollar equivalent of one unit of the respective foreign currency. Amounts presented in constant currency within our results of operations are calculated by applying the average foreign exchange rate from the comparable prior year period to actual local currency results in the current period, rather than the actual exchange rates in effect during the respective period. While constant currency metrics are a non-GAAP calculation and do not represent actual results, the comparison allows the reader to understand the impact of the underlying operations in addition to the impact of changing foreign exchange rates.


	Foreign exchange rates as of March 31, 2023	Average foreign exchange rates used to translate actual operating results for the three months ended March 31, 2023	Foreign exchange rates as of March 31, 2022	Prior period average foreign exchange rates used to adjust actual operating results for the three months ended March 31, 2023(1)
Argentinian peso	0.005	0.005	0.009	0.009
Australian dollar	0.669	0.684	0.748	0.724
Brazilian real	0.198	0.193	0.211	0.192
British Pound	1.234	1.215	1.314	1.342
Canadian dollar	0.740	0.740	0.800	0.789
Chilean Peso	0.001	0.001	0.001	0.001
Euro	1.084	1.073	1.107	1.122
New Zealand dollar	0.626	0.630	0.695	0.676
Poland Zloty	0.232	0.228	0.238	0.243

(1)Represents the relevant average foreign exchange rates in effect in the comparable prior period applied to the activity for the current period. The average foreign currency exchange rates we apply to our operating results are derived from third party reporting sources for the periods indicated.

Focus on Our Operational Effectiveness and Cost Structure

During 2022, we initiated Project Orion in order to further enhance our operational effectiveness, and to integrate the acquisitions completed over the last several years. For further information regarding Project Orion, refer to our consolidated financial statements included in our 2022 Annual Report on Form 10-K as filed with the SEC. We continuously seek to execute on various initiatives aimed at streamlining our business processes and reducing our cost structure, including: realigning and centralizing key business processes and fully integrating acquired assets and businesses; implementing standardized operational processes; integrating and launching new information technology tools and platforms; instituting key health, safety, leadership and training programs; and capitalizing on the purchasing power of our network. Through the realignment of our business processes, we have acquired new talent and strengthened our service offerings. In order to reduce costs in our facilities, we have invested in energy efficiency projects, including LED lighting, thermal energy storage, motion-sensor technology, variable frequency drives for our fans and compressors, third party efficiency reviews and real-time monitoring of energy consumption, rapid open and close doors, and alternative-power generation technologies to improve the energy efficiency of our warehouses. We have also performed fine-tuning of our refrigeration systems, deployed efficient energy management practices, such as time-of-use and awareness, and have increased our participation in Power Demand Response programs with some of our power suppliers. These initiatives have allowed us to reduce our consumption of kilowatt hours and energy spend.

Additionally, temperature-controlled warehouses utilize refrigeration condensers to maintain their environments, which rely on a steady supply of water. We have implemented rainwater harvesting in certain locations as a sustainable method for reducing municipal water demand. Rainwater harvesting also reduces wastewater treatment costs as well as storm water runoff.

As part of our initiatives to streamline our business processes and to reduce our cost structure, we have evaluated and exited less strategic and profitable markets or business lines, including the sale of certain warehouse assets, the exit of certain leased facilities, the exit of certain managed warehouse agreements. Through our process of active portfolio management, we continue to evaluate our markets and offerings.

Strategic Shift within Our Transportation Segment

Several years ago, we initiated a strategic shift in our transportation segment services and solutions. The intention of this strategic shift was to better focus our business on the operation of our temperature-controlled warehouses. Specifically, we have gradually exited certain commoditized, non-scalable, or low margin services we historically offered to our customers, in favor of more profitable and value-added programs, such as regional, national, truckload and retailer-specific multi-vendor consolidation services. We designed each value-added program to improve efficiency and reduce transportation and logistics costs to our warehouse customers, whose transportation spend typically represents the majority of their supply-chain costs. We believe this efficiency and cost reduction helps to drive increased client retention, as well as maintain high occupancy levels in our temperature-controlled warehouses. Over the last several years, we have made significant progress in implementing our strategic initiative of growing our transportation service offering in a way that complements our temperature-controlled warehouse business, such as adding a dedicated fleet service offering through acquisitions. We intend to continue executing this strategy in the future.

Historically Significant Customer

For the three months ended March 31, 2022, one customer accounted for more than 10% of our total revenues. The substantial majority of this customer’s business related to our third-party managed segment. The Company and this customer transitioned the management of this customer’s warehouses to a new third-party provider during the fourth quarter of 2022, and we are no longer serving this customer in the third-party managed segment. For the three months ended March 31, 2022, revenues attributable to this customer were $78.1 million. Of the revenues received from this customer, $75.2 million represented reimbursements for certain expenses we incurred during the three months ended March 31, 2022, and were offset by matching expenses included in our third-party managed cost of operations.

Economic Occupancy of our Warehouses

We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account the actual pallet commitment specified in each customers’ contract, and subtracting the physical pallet positions. We regard economic occupancy as an important driver of our financial results. Historically, providers of temperature-controlled warehouse space have offered storage services to customers on an as-utilized, on-demand basis. We actively seek to enter into contracts that implement our commercial business rules which contemplate, among other things, fixed storage commitments in connection with establishing new customer relationships. Additionally, we actively seek opportunities to transition our current customers to contracts that feature a fixed storage commitment when renewing existing agreements or upon the change in the anticipated profile of our customer. This strategy mitigates the impact of changes in physical occupancy throughout the course of the year due to seasonality, as well as other factors that can impact physical occupancy while ensuring our customers have the necessary space they need to support their business.

Throughput at our Warehouses

The level and nature of throughput at our warehouses is an important factor impacting our warehouse services revenues in our warehouse segment. Throughput refers to the volume of pallets that enter and exit our warehouses. Higher levels of throughput drive warehouse services revenues in our warehouse segment as customers are typically billed on a basis that takes into account the level of throughput of the goods they store in our warehouses. The nature of throughput may be driven by the expected turn of the underlying product or commodity. Throughput pallets can be influenced both by the food manufacturers as well as shifts in demand preferences. Food manufacturers’ production levels, which respond to market conditions, labor availability, supply chain dynamics and consumer preferences, may impact inbound pallets. Similarly, a change in inventory turnover due to shift in consumer demand may impact outbound pallets.

How We Assess the Performance of Our Business

Segment Contribution (Net Operating Income or “NOI”)

We evaluate the performance of our primary business segments based on their contribution (NOI) to our overall results of operations. We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other, net). We use segment contribution (NOI) to evaluate our segments for purposes of making operating decisions and assessing performance in accordance with FASB ASC, Topic 280, Segment Reporting.

We also analyze the “segment contribution (NOI) margin” for each of our business segments, which we calculate as segment contribution (NOI) divided by segment revenues.

In addition to our segment contribution (NOI) and segment contribution (NOI) margin, we analyze the contribution (NOI) of our warehouse rent and storage operations and our warehouse services operations within our warehouse segment. We calculate the contribution (NOI) of our warehouse rent and storage operations as rent and storage revenues less power and other facilities cost. We calculate the contribution (NOI) of our warehouse services operations as warehouse services revenues less labor and other service costs. We calculate the contribution (NOI) margin for each of these operations as the applicable contribution (NOI) measure divided by the applicable revenue measure. We believe the presentation of these contribution (NOI) and contribution (NOI) margin measures helps investors understand the relative revenues, costs and earnings resulting from each of these separate types of services we provide to our customers in the same manner reviewed by our management in connection with the operation of our business. These contribution (NOI) measures within our warehouse segment are not measurements of financial performance under U.S. GAAP, and these measures should be considered as supplements, but not as alternatives, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Same Store Analysis

We define our “same store” population once a year at the beginning of the current calendar year. Our same store population includes properties that were owned or leased for the entirety of two comparable periods and that have reported at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year. We define “normalized operations” as properties that have been open for operation or lease after development or significant modification, including the expansion of a warehouse footprint or a warehouse rehabilitation subsequent to an event, such as a natural disaster or similar event causing disruption to operations. In addition, our definition of “normalized operations” takes into account changes in the ownership structure (e.g., purchase of a previously leased warehouse would result in a change in the nature of expenditures in the compared periods), which would impact comparability in our warehouse segment contribution (NOI).

Acquired properties will be included in the “same store” population if owned by us as of the first business day of each year of the prior calendar year (e.g. January 1, 2022) and still owned by us as of the end of the current reporting period, unless the property is under development. The “same store” pool is also adjusted to remove properties that were sold or entering development subsequent to the beginning of the current calendar year. As such, the “same store” population for the period ended March 31, 2023 includes all properties that we owned or leased at January 2, 2023 which had both been owned or leased and had reached “normalized operations” by January 2, 2023.

We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other, net and gain or loss on sale of real estate). In order to derive an appropriate measure of period-to-period operating performance, we also calculate our same store contribution (NOI) on a constant currency basis to remove the effects of foreign currency exchange rate movements by using the comparable prior period exchange rate to translate from local currency into U.S. dollars for both periods. We evaluate the performance of the warehouses we own or lease using a “same store” analysis, and we believe that same store contribution (NOI) is helpful to investors as a supplemental performance measure because it includes the operating performance from the population of properties that is consistent from period to period and also on a constant currency basis, thereby eliminating the effects of changes in the composition of our warehouse portfolio and currency fluctuations on performance measures.

The following table shows the number of same-store warehouses in our portfolio as of March 31, 2023. The number of warehouses owned or operated in as of March 31, 2023 and excluded as same-store warehouses for the period ended March 31, 2023 is listed below. While not included in the non-same store warehouse count in the

table below, the results of operations for the non-same store warehouses includes the partial period impact of sites that were exited during the periods presented.


Total Warehouses			243
Same Store Warehouses			221
Non-Same Store Warehouses (1)			17
Third-Party Managed Warehouses			5

(1) The non-same store facility count of 17 includes a facility acquired through the De Bruyn Cold Storage acquisition on July 1, 2022, a facility previously leased that we bought during the third quarter of 2022, one recently leased warehouse in Australia, one facility previously leased that we bought during the second quarter of 2022, one warehouse which we ceased operations within as it is being prepared for lease to a third-party, a leased facility in which we ceased operations during the fourth quarter of 2022 in anticipation of the upcoming lease maturity, a facility pending sale negotiations, and 10 warehouses in expansion or redevelopment.

As of March 31, 2023, our portfolio consisted of 243 total warehouses, including 238 within the warehouse segment and five in the third-party managed segment. In addition, we hold minority interests in four joint ventures, one with Superfrio, which owns or operates 37 temperature-controlled warehouses in Brazil, one with Comfrio, which owns or operates 28 temperature-controlled warehouses in Brazil, one with LATAM, which owns two temperature-controlled warehouses in Chile, and one with the RSA JV, which owns one temperature-controlled warehouse in Dubai. These joint ventures are not included in the table above.

Same store contribution (NOI) is not a measurement of financial performance under U.S. GAAP. In addition, other companies providing temperature-controlled warehouse storage and handling and other warehouse services may not define same store or calculate same store contribution (NOI) in a manner consistent with our definition or calculation. Same store contribution (NOI) should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Constant Currency Metrics

As discussed above under “Key Factors Affecting Our Business and Financial Results—Foreign Currency Translation Impact on Our Operations,” our consolidated revenues and expenses are subject to variations outside our control that are caused by the net effect of foreign currency translation on revenues generated and expenses incurred by our operations outside the United States. As a result, in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we analyze our business performance based on certain constant currency reporting that represents current period results translated into U.S. dollars at the relevant average foreign exchange rates applicable in the comparable prior period. We believe that the presentation of constant currency results provides a measurement of our ongoing operations that is meaningful to investors because it excludes the impact of these foreign currency movements that we cannot control. Constant currency results are not measurements of financial performance under U.S. GAAP, and our constant currency results should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below. Our discussion of the drivers of our performance below are based upon U.S. GAAP.

RESULTS OF OPERATIONS

Comparison of Results for the Three Months Ended March 31, 2023 and 2022

Warehouse Segment

The following table presents the operating results of our warehouse segment for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,									Change
	2023 Actual			2023 Constant Currency(1)			2022 Actual			Actual		Constant Currency
	(Dollars in thousands)
Rent and storage	$	271,407		$	275,912		$	229,757		18.1	%	20.1	%
Warehouse services	323,645			328,600			311,168			4.0	%	5.6	%
Total warehouse segment revenues	595,052			604,512			540,925			10.0	%	11.8	%

Power	36,048			37,099			33,035			9.1	%	12.3	%
Other facilities costs (2)	60,800			61,773			56,572			7.5	%	9.2	%
Labor	258,541			262,523			244,160			5.9	%	7.5	%
Other services costs (3)	64,836			65,754			60,900			6.5	%	8.0	%
Total warehouse segment cost of operations	$	420,225		$	427,149		$	394,667		6.5	%	8.2	%

Warehouse segment contribution (NOI)	174,827			177,363			146,258			19.5	%	21.3	%
Warehouse rent and storage contribution (NOI) (4)	174,559			177,040			140,150			24.6	%	26.3	%
Warehouse services contribution (NOI) (5)	268			323			6,108			(95.6)	%	(94.7)	%

Total warehouse segment margin	29.4		%	29.3		%	27.0		%	234 bps		230 bps
Rent and storage margin(6)	64.3		%	64.2		%	61.0		%	332 bps		317 bps
Warehouse services margin(7)	0.1		%	0.1		%	2.0		%	-188 bps		-186 bps

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.

(2)Includes real estate rent expense of $9.4 million and $10.6 million, on an actual basis, for the first quarter of 2023 and 2022, respectively.

(3)Includes non-real estate rent expense (equipment lease and rentals) of $3.6 million and $3.1 million, on an actual basis, for the first quarter of 2023 and 2022, respectively.

(4)Calculated as rent and storage revenues less power and other facilities costs.

(5)Calculated as warehouse services revenues less labor and other services costs.

(6)Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenues.

(7)Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

Warehouse segment revenues were $595.1 million for the three months ended March 31, 2023, an increase of $54.1 million, or 10.0%, compared to $540.9 million for the three months ended March 31, 2022. On a constant currency basis, our warehouse segment revenues were $604.5 million for the three months ended March 31, 2023, an increase of $63.6 million, or 11.8%, from the three months ended March 31, 2022. This growth was driven by $63.9 million of growth in our same store pool on a constant currency basis primarily due to our pricing initiatives, rate escalations, and improvements in economic occupancy, partially offset by a slight decline in throughput. Non-same store revenue was flat on a constant currency basis, due to exits of leased facilities during 2022, offset by an increase in occupancy, recently completed expansion and developments, and the De Bruyn acquisition. The foreign currency translation of revenues earned by our foreign operations had a $9.5 million

unfavorable impact during the three months ended March 31, 2023, which was mainly driven by the strengthening of the U.S. dollar against our foreign subsidiaries’ currencies.

Warehouse segment cost of operations was $420.2 million for the three months ended March 31, 2023, an increase of $25.6 million, or 6.5%, compared to the three months ended March 31, 2022. On a constant currency basis, our warehouse segment cost of operations was $427.1 million for the three months ended March 31, 2023, an increase of $32.5 million, or 8.2%, from the three months ended March 31, 2022. The cost of operations for our same store pool increased $25.8 million on a constant currency basis, primarily driven by higher labor, power and other facilities costs, reflective of inflationary pressure. Approximately $6.7 million of the increase, on a constant currency basis, was related to growth in our recently completed expansions and developments and the De Bruyn acquisition in our non-same store pool. These increases are offset by the foreign currency translation of expenses incurred by our foreign operations which had an $6.9 million favorable impact during the three months ended March 31, 2023.

For the three months ended March 31, 2023, warehouse segment contribution (NOI), increased $28.6 million, or 19.5%, to $174.8 million for the first quarter of 2023 compared to $146.3 million for the first quarter of 2022. On a constant currency basis, warehouse segment NOI increased 21.3% from the three months ended March 31, 2022. The NOI for our same store pool increased $38.1 million on a constant currency basis, attributable to revenue and cost of operations factors previously described. Warehouse segment NOI was negatively impacted by the start-up costs incurred in connection with our expansion and development projects in the non-same store pool as they incur pre-launch costs or costs as they ramp to stabilization, partially offset by the NOI from the De Bruyn acquisition and lease buyouts. The foreign currency translation of our results of operations had a $2.5 million unfavorable impact to warehouse segment NOI period-over-period due to the strengthening of the U.S. dollar.

Same Store and Non-Same Store Results

We had 221 same stores for the three months ended March 31, 2023. Please see “How We Assess the Performance of Our Business—Same Store Analysis” above for a reconciliation of the change in the same store portfolio from period to period. Amounts related to our recently completed expansion and development projects not yet stabilized, the acquisition of De Bruyn Cold Storage, one temporarily leased warehouse, previously leased facilities purchased during 2022 and idled facilities are reflected within non-same store results.

The following table presents revenues, cost of operations, contribution (NOI) and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,									Change
	2023 Actual			2023 Constant Currency(1)			2022 Actual			Actual		Constant Currency
Number of same store sites	221						221			n/a		n/a
Same store revenues:	(Dollars in thousands)
Rent and storage	$	258,694		$	262,734		$	219,329		17.9	%	19.8	%
Warehouse services	315,033			319,579			299,118			5.3	%	6.8	%
Total same store revenues	573,727			582,313			518,447			10.7	%	12.3	%
Same store cost of operations:
Power	33,253			34,185			30,244			9.9	%	13.0	%
Other facilities costs	56,477			57,336			51,844			8.9	%	10.6	%
Labor	245,260			248,899			232,970			5.3	%	6.8	%
Other services costs	57,175			58,011			57,618			(0.8)	%	0.7	%
Total same store cost of operations	$	392,165		$	398,431		$	372,676		5.2	%	6.9	%

Same store contribution (NOI)	$	181,562		$	183,882		$	145,771		24.6	%	26.1	%
Same store rent and storage contribution (NOI)(2)	$	168,964		$	171,213		$	137,241		23.1	%	24.8	%
Same store services contribution (NOI)(3)	$	12,598		$	12,669		$	8,530		47.7	%	48.5	%

Total same store margin	31.6		%	31.6		%	28.1		%	353 bps		346 bps
Same store rent and storage margin(4)	65.3		%	65.2		%	62.6		%	274 bps		259 bps
Same store services margin(5)	4.0		%	4.0		%	2.9		%	115 bps		111 bps


	Three Months Ended March 31,									Change
	2023 Actual			2023 Constant Currency(1)			2022 Actual			Actual	Constant Currency
Number of non-same store sites(6)	17						19			n/a	n/a
Non-same store revenues:	(Dollars in thousands)
Rent and storage	$	12,713		$	13,178		$	10,428		n/r	n/r
Warehouse services	8,612			9,021			12,050			n/r	n/r
Total non-same store revenues	21,325			22,199			22,478			n/r	n/r
Non-same store cost of operations:
Power	2,795			2,914			2,791			n/r	n/r
Other facilities costs	4,323			4,437			4,728			n/r	n/r
Labor	13,281			13,624			11,190			n/r	n/r
Other services costs	7,661			7,743			3,282			n/r	n/r
Total non-same store cost of operations	$	28,060		$	28,718		$	21,991		n/r	n/r

Non-same store contribution (NOI)	$	(6,735)		$	(6,519)		$	487		n/r	n/r
Non-same store rent and storage contribution (NOI)(2)	$	5,595		$	5,827		$	2,909		n/r	n/r
Non-same store services contribution (NOI)(3)	$	(12,330)		$	(12,346)		$	(2,422)		n/r	n/r

Total non-same store margin	(31.6)		%	(29.4)		%	2.2		%	n/r	n/r
Non-same store rent and storage margin(4)	44.0		%	44.2		%	27.9		%	n/r	n/r
Non-same store services margin(5)	(143.2)		%	(136.9)		%	(20.1)		%	n/r	n/r


	Three Months Ended March 31,						Change
	2023 Actual		2023 Constant Currency(1)		2022 Actual		Actual		Constant Currency
Total warehouse segment revenues	$	595,052	$	604,512	$	540,925	10.0	%	11.8	%
Total warehouse cost of operations	$	420,225	$	427,149	$	394,667	6.5	%	8.2	%
Total warehouse segment contribution	$	174,827	$	177,363	$	146,258	19.5	%	21.3	%

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period.

(2)Calculated as rent and storage revenues less power and other facilities costs.

(3)Calculated as warehouse services revenues less labor and other services costs.

(4)Calculated as rent and storage contribution (NOI) divided by rent and storage revenues.

(5)Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

(6)Refer to our Same Store Analysis previously disclosed that includes the composition of our Non-same store warehouse pool.

n/a - not applicable, the change in actual and constant currency metrics does not apply to site count.

n/r - not relevant

The following table provides certain operating metrics to explain the drivers of our same store performance.


	Three Months Ended March 31,						Change
Units in thousands except per pallet and site number data - unaudited	2023			2022
Number of same store sites	221			221			n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets	4,359			4,012			8.6	%
Economic occupancy percentage	84.6		%	77.1		%	748 bps
Same store rent and storage revenues per economic occupied pallet	$	59.35		$	54.66		8.6	%
Constant currency same store rent and storage revenues per economic occupied pallet	$	60.28		$	54.66		10.3	%

Physical occupancy(2)
Average physical occupied pallets	4,018			3,649			10.1	%
Average physical pallet positions	5,154			5,205			(1.0)	%
Physical occupancy percentage	78.0		%	70.1		%	786 bps
Same store rent and storage revenues per physical occupied pallet	$	64.38		$	60.10		7.1	%
Constant currency same store rent and storage revenues per physical occupied pallet	$	65.39		$	60.10		8.8	%

Same store warehouse services:
Throughput pallets (in thousands)	9,234			9,382			(1.6)	%
Same store warehouse services revenues per throughput pallet	$	34.12		$	31.88		7.0	%
Constant currency same store warehouse services revenues per throughput pallet	$	34.61		$	31.88		8.6	%

Number of non-same store sites(3)	17			19			n/a
Non-same store rent and storage:

Economic occupancy(1)
Average economic occupied pallets	194			162			n/r
Economic occupancy percentage	73.6		%	69.8		%	n/r
Non-same store rent and storage revenues per economic occupied pallet	$	65.57		$	64.29		n/r
Constant currency non-same store rent and storage revenues per economic occupied pallet	$	67.97		$	64.29		n/r

Physical occupancy(2)
Average physical occupied pallets	172			155			n/r
Average physical pallet positions	263			232			n/r
Physical occupancy percentage	65.2		%	66.9		%	n/r
Non-same store rent and storage revenues per physical occupied pallet	$	74.04		$	67.15		n/r
Constant currency non-same store rent and storage revenues per physical occupied pallet	$	76.75		$	67.15		n/r

Non-same store warehouse services:
Throughput pallets (in thousands)	419			478			n/r
Non-same store warehouse services revenues per throughput pallet	$	20.56		$	25.23		n/r
Constant currency non-same store warehouse services revenues per throughput pallet	$	21.54		$	25.23		n/r

(1)We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account actual pallet commitments specified in each customer’s contract, and subtracting the physical pallet positions.

(2)We define average physical occupancy as the average number of occupied pallets divided by the estimated number of average physical pallet positions in our warehouses for the applicable period. We estimate the number of physical pallet positions by taking into account actual racked space and by estimating unracked space on an as-if racked basis. We base this estimate on a formula utilizing the total cubic feet of each room within the warehouse that is unracked divided by the volume of an assumed rack space that is consistent with the characteristics of the relevant warehouse. On a warehouse by warehouse basis, rack space generally ranges from three to four feet depending upon the type of facility and the nature of the customer goods stored therein. The number of our pallet positions is reviewed and updated quarterly, taking into account changes in racking configurations and room utilization.

(3)Refer to our Same Store Analysis previously disclosed that includes the composition of our Non-same store warehouse pool.

Economic occupancy for our same store pool was 84.6% for the three months ended March 31, 2023, an increase of 748 basis points compared to 77.1% for the quarter ended March 31, 2022. Economic occupancy growth as compared to the prior year was due to improvements in customer service initiatives, as well as our customers increase in food production levels, which is benefiting from the improved labor market. Same store rent and storage revenues per economic occupied pallet increased 8.6% period-over-period, primarily driven by our pricing initiative, contractual rate escalations and business mix. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 10.3% period-over-period. Our economic occupancy for our same store pool for the three months ended March 31, 2023 was 661 basis points higher than our corresponding average physical occupancy of 78.0%.

Throughput pallets for our same store pool was 9.2 million pallets for the three months ended March 31, 2023, a decrease of 1.6% from 9.4 million pallets for the three months ended March 31, 2022. This decrease was the result of a slight decline in end-consumer demand as basket sizes decreased due to the broader economic slowdown and a slight change in business mix. Same store warehouse services revenue per throughput pallet increased 7.0% compared to the prior year primarily as a result of our pricing initiative and contractual rate escalations, offset by unfavorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenue per throughput pallet increased 8.6% compared to the prior year.

Transportation Segment

The following table presents the operating results of our transportation segment for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,									Change
	2023 Actual			2023 Constant Currency(1)			2022 Actual			Actual		Constant Currency
	(Dollars in thousands)
Transportation revenues	$	68,078		$	71,255		$	78,910		(13.7)	%	(9.7)	%
Transportation cost of operations	56,418			59,305			70,381			(19.8)	%	(15.7)	%
Transportation segment contribution (NOI)	$	11,660		$	11,950		$	8,529		36.7	%	40.1	%

Transportation margin	17.1		%	16.8		%	10.8		%	632 bps		596 bps

Transportation revenues were $68.1 million for the three months ended March 31, 2023, a decrease of $10.8 million, or 13.7%, compared to $78.9 million for the three months ended March 31, 2022. The decrease was primarily due to the softening of transportation demand in the general macro-environment and the unfavorable impact of foreign currency translation, partially offset by higher rates in our consolidation business, acquisitions

and expansions in Australia, and the higher revenue associated with brokered transportation costs, and inflation in wage and fuel rates.

Transportation cost of operations was $56.4 million for the three months ended March 31, 2023, a decrease of $14.0 million, or 19.8%, compared to $70.4 million for the three months ended March 31, 2022. The decrease was due to the softening of transportation demand in the general macro-environment which has also resulted in lower carrier costs, lower volume in certain foreign market operations and the favorable impact of foreign currency translation, partially offset by the acquisitions mentioned above.

Transportation segment contribution (NOI) was $11.7 million for the three months ended March 31, 2023, an increase of 36.7% compared to the three months ended March 31, 2022. Transportation segment margin increased 632 basis points from the three months ended March 31, 2022, to 17.1%. The increase in margin was primarily due to rate increases.

Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,									Change
	2023 Actual			2023 Constant Currency(1)			2022 Actual			Actual		Constant Currency
Number of managed sites	5						9			n/a		n/a
	(Dollars in thousands)
Third-party managed revenues	$	13,359		$	13,769		$	85,860		(84.4)	%	(84.0)	%
Third-party managed cost of operations	12,280			12,620			82,359			(85.1)	%	(84.7)	%
Third-party managed segment contribution	$	1,079		$	1,149		$	3,501		(69.2)	%	(67.2)	%

Third-party managed margin	8.1		%	8.3		%	4.1		%	400 bps		427 bps

Third-party managed revenues were $13.4 million for the three months ended March 31, 2023, a decrease of $72.5 million, or 84.4%, compared to $85.9 million for the three months ended March 31, 2022. On a constant currency basis, third-party managed revenues were $13.8 million for the three months ended March 31, 2023, a decrease of $72.1 million, or 84.0%, from the three months ended March 31, 2022.

Third-party managed cost of operations was $12.3 million for the three months ended March 31, 2023, a decrease of $70.1 million, or 85.1%, compared to $82.4 million for the three months ended March 31, 2022.

Third-party managed segment contribution (NOI) was $1.1 million for the three months ended March 31, 2023, a decrease of $2.4 million, or 69.2%, compared to $3.5 million for the three months ended March 31, 2022. The decreases in revenue, cost, and NOI were primarily due to the strategic exit of operations of our historically largest domestic customer in this segment.

Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was $85.0 million for the three months ended March 31, 2023, an increase of $2.4 million, or 2.9%, compared to $82.6 million for the three months ended March 31, 2022. This increase was primarily due to the impact of our recently completed expansion and developments and partially offset by the favorable impact of foreign currency translation.

Selling, general and administrative. Corporate-level selling, general and administrative expenses were $62.9 million for the three months ended March 31, 2023, an increase of $5.3 million, or 9.1%, compared to $57.6 million for the three months ended March 31, 2022. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer on-boarding, and engineering and consulting services to support our customers in the cold chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was driven by higher travel and conference expenses that resumed in 2023 and timing of professional fees, which is partially offset by a decrease in stock-based compensation in connection with the November 2021 retention grant, a significant portion of which vested in November 2022.

Acquisition, litigation and other, net. Corporate-level acquisition, litigation and other, net expenses were $7.1 million for the three months ended March 31, 2023, a decrease of $2.9 million compared to the three months ended March 31, 2022. During the three months ended March 31, 2023, we incurred $3.4 million of severance primarily due to the realignment of certain international operations, $1.9 million of implementation costs related to Project Orion, and $1.8 million of acquisition and integration related costs. Refer to Note 3 of the Condensed Consolidated Financial Statements for details. During the three months ended March 31, 2022, we incurred $6.3 million of acquisition and integration related expenses, an aggregate $2.6 million of severance related expenses due to the realignment of certain international operations and leadership changes and $1.2 million of litigation fees.

Other Expense and Income

The following table presents other items of expense and income for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,				Change
	2023		2022		%
Other (expense) income:	(Dollars in thousands)
Interest expense	$	(34,423)	$	(25,773)	33.6	%
Loss on debt extinguishment, modifications and termination of derivative instruments	$	(545)	$	(616)	(11.5)	%
Other, net	$	1,433	$	2,357	(39.2)	%




Loss from investments in partially owned entities	$	(3,029)	$	(2,112)	43.4	%

n/r=not relevant

Interest expense. Interest expense was $34.4 million for the three months ended March 31, 2023, an increase of $8.7 million, or 33.6%, compared to $25.8 million for the three months ended March 31, 2022. Our effective interest rate of our outstanding debt increased from 3.06% in the first quarter of 2022 to 4.08% in the first quarter of 2023, primarily due to the rising interest rates associated with our floating rate borrowings under our Senior Unsecured Credit Facility, as well as higher outstanding borrowings, partially offset by the impact of our interest rate swaps.

Loss on debt extinguishment, modifications and termination of derivative instruments. Loss on debt extinguishment, modifications, and termination of derivative instruments was $0.5 million and $0.6 million for the three months ended March 31, 2023 and 2022, respectively. The three months ended March 31, 2023 and 2022 is related to the amortization of fees paid for the termination of interest rate swaps in each of the periods. These interest rate swaps were terminated in 2020 and will amortize through 2024.

Other, net. Other, net income was $1.4 million for the three months ended March 31, 2023, a decrease of $0.9 million, compared to $2.4 million for the three months ended March 31, 2022. This is primarily due to an increase in non-service pension costs due to a reduction in the assumed long-term rate of return on the pension asset, and an increase in loss on asset disposals compared to 2022. This is partially offset by an increase in interest income earned from the loan to our Comfrio joint venture.

Loss from investments in partially owned entities. Loss from investments in partially owned entities was $3.0 million and $2.1 million for the three months ended March 31, 2023 and 2022, respectively. The increase is primarily driven by higher interest expense incurred by our joint ventures driven by rising interest rates.

Income Tax Benefit (Expense)

Income tax benefit for the three months ended March 31, 2023 was $1.6 million, an increase of $0.9 million from an income tax benefit of $0.7 million for the three months ended March 31, 2022. The change in income tax benefit was primarily attributable to the losses generated by our foreign operations for the three months ended March 31, 2023.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures as supplemental performance measures of our business: FFO, Core FFO, Adjusted FFO, EBITDAre, Core EBITDA and net debt to pro-forma Core EBITDA.


We calculate funds from operations, or FFO, in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss determined in accordance with U.S. GAAP, excluding extraordinary items as defined under U.S. GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization and our share of reconciling items for partially owned entities. We believe that FFO is helpful to investors as a supplemental performance measure because it excludes the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, FFO can facilitate comparisons of operating performance between periods and among other equity REITs.
We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of gain or loss on the sale of non-real estate assets, acquisition, litigation and other, net, goodwill and other non-core impairment (when applicable), loss on debt extinguishment, modifications and termination of derivative instruments and foreign currency exchange loss. We also adjust for the impact of Core FFO attributable to partially owned entities. We believe that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core business operations. We believe Core FFO can facilitate comparisons of operating performance between periods, while also providing a more meaningful predictor of future earnings potential.
However, because FFO and Core FFO add back real estate depreciation and amortization and do not capture the level of maintenance capital expenditures necessary to maintain the operating performance of our properties, both of which have material economic impacts on our results from operations, we believe the utility of FFO and Core FFO as a measure of our performance may be limited.
We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the effects of amortization of deferred financing costs and pension withdrawal liability, amortization of above or below market leases, non-real estate asset impairment, straight-line net rent, benefit or expense from deferred income taxes, stock-based compensation expense, non-real estate depreciation and amortization and maintenance capital expenditures. We also adjust for AFFO attributable to our share of reconciling items of partially owned entities and operating results from business segments which are not core to our long term business strategy and we intend to divest. We believe that Adjusted FFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in our business and to assess our ability to fund distribution requirements from our operating activities.
FFO, Core FFO and Adjusted FFO are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO, Core FFO and Adjusted FFO should be evaluated along with U.S. GAAP net income and net income per diluted share (the most directly comparable U.S. GAAP measures) in evaluating our operating performance. FFO, Core FFO and Adjusted FFO do not represent net income or cash flows from operating activities in accordance with U.S. GAAP and are not indicative of our results of operations or cash flows from operating activities as disclosed in our consolidated statements of operations included elsewhere in this Quarterly Report on Form 10-Q. FFO, Core FFO and Adjusted FFO should be considered as supplements, but not alternatives, to our net income or cash flows from operating activities as indicators of our operating performance. Moreover, other REITs may not calculate FFO in accordance with the NAREIT definition or may interpret the NAREIT definition differently than we do. Accordingly, our FFO may not be comparable to FFO as calculated by other REITs. In addition, there is no industry definition of Core FFO or Adjusted FFO and, as a result, other REITs may also calculate Core FFO or Adjusted FFO, or other similarly-captioned metrics, in a manner different than we do. The table below reconciles FFO, Core FFO and Adjusted FFO to net (loss) income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.


Reconciliation of Net Loss to NAREIT FFO, Core FFO, and Adjusted FFO
(in thousands)
	Three Months Ended March 31,
	2023		2022
Net loss	$	(2,571)	$	(17,445)
Adjustments:
Real estate related depreciation	54,541		52,200
Loss on sale of real estate	191		—
Net loss on asset disposals	—		63


Our share of reconciling items related to partially owned entities	903		1,033


NAREIT Funds from operations applicable to common stockholders	$	53,064	$	35,851
Adjustments:
Net loss (gain) on sale of non-real estate assets	420		(235)


Acquisition, litigation and other, net	7,147		10,075








Loss on debt extinguishment, modifications and termination of derivative instruments	545		616

Foreign currency exchange gain	(458)		(325)



Our share of reconciling items related to partially owned entities	128		347
Core FFO applicable to common stockholders	60,846		46,329
Adjustments:
Amortization of deferred financing costs and pension withdrawal liability	1,240		1,146
Amortization of below/above market leases	402		508

Straight-line net rent	(491)		204
Deferred income taxes benefit	(3,621)		(1,889)
Stock-based compensation expense	6,970		8,349
Non-real estate depreciation and amortization	30,483		30,420
Maintenance capital expenditures (a)	(16,244)		(16,106)
Our share of reconciling items related to partially owned entities	304		(107)
Adjusted FFO applicable to common stockholders	$	79,889	$	68,854

(a)Maintenance capital expenditures include capital expenditures made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology.


We calculate EBITDA for Real Estate, or EBITDAre, in accordance with the standards established by the Board of Governors of NAREIT, defined as, earnings before interest expense, taxes, depreciation and amortization, and adjustment to reflect share of EBITDAre of partially owned entities. EBITDAre is a measure commonly used in our industry, and we present EBITDAre to enhance investor understanding of our operating performance. We believe that EBITDAre provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and useful life of related assets among otherwise comparable companies.
We also calculate our Core EBITDA as EBITDAre further adjusted for acquisition, litigation and other, net, loss from investments in partially owned entities, impairment of indefinite and long-lived assets (when applicable), foreign currency exchange loss or gain, stock-based compensation expense, loss on debt extinguishment, modifications and termination of derivative instruments, net gain on other asset disposals, reduction in EBITDAre from partially owned entities, and operating results from business segments which are not core to our long term business strategy and we intend to divest. We believe that the presentation of Core EBITDA provides a measurement of our operations that is meaningful to investors because it excludes the effects of certain items that are otherwise included in EBITDAre but which we do not believe are indicative of our core business operations. EBITDAre and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDAre and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDAre and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDAre and Core EBITDA have limitations as analytical tools, including:

•these measures do not reflect our historical or future cash requirements for maintenance capital expenditures or growth and expansion capital expenditures;

•these measures do not reflect changes in, or cash requirements for, our working capital needs;

•these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

•these measures do not reflect our tax expense or the cash requirements to pay our taxes; and

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.


We use EBITDAre and Core EBITDA as measures of our operating performance and not as measures of liquidity. The table below reconciles EBITDAre and Core EBITDA to net (loss) income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.
Net debt to proforma Core EBITDA is calculated using total debt, plus capital lease obligations, less cash and cash equivalents, divided by pro-forma Core EBITDA. We calculate pro-forma Core EBITDA as Core EBITDA further adjusted for acquisitions, dispositions and for rent expense associated with lease buy-outs and lease exits. The pro-forma adjustment for acquisitions reflects the Core EBITDA for the period of time prior to acquisition. The pro-forma adjustment for leased facilities exited or purchased reflects the add-back for the related lease expense from the last year. The pro-forma adjustment for dispositions reduces Core EBITDA for the earnings of facilities disposed of or exited during the year, including the strategic exit of certain third-party managed business.


Reconciliation of Net Loss to NAREIT EBITDAre and Core EBITDA
(In thousands)
	Three Months Ended March 31,
	2023		2022
Net loss	$	(2,571)	$	(17,445)
Adjustments:
Depreciation and amortization	85,024		82,620
Interest expense	34,423		25,773
Income tax benefit	(1,644)		(708)
Loss on sale of real estate	191		—
Adjustment to reflect share of EBITDAre of partially owned entities	2,883		3,198
NAREIT EBITDAre	$	118,306	$	93,438
Adjustments:
Acquisition, litigation, and other, net	7,147		10,075
Loss on partially owned entities	3,029		2,112

Foreign currency exchange gain	(458)		(325)
Stock-based compensation expense	6,970		8,349
Loss on debt extinguishment, modifications, and termination of derivative instruments	545		616

Loss (gain) on other asset disposals	420		(172)


Reduction in EBITDAre from partially owned entities	(2,883)		(3,198)
Core EBITDA	$	133,076	$	110,895

LIQUIDITY AND CAPITAL RESOURCES

The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. Separate consolidated financial statements of the Operating Partnership have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

We currently expect that our principal sources of funding for working capital, facility acquisitions, business combinations, expansions, maintenance and renovation of our properties, developments projects, debt service and distributions to our stockholders will include:

•current cash balances;

•cash flows from operations;

•our Senior Unsecured Revolving Credit Facility;

•our ATM Equity Programs; and

•other forms of debt financings and equity offerings, including capital raises through joint ventures.

We expect that our funding sources as noted above are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include:

•operating activities and overall working capital;

•capital expenditures;

•capital contributions and investments in joint ventures;

•debt service obligations; and

•quarterly stockholder distributions.

We expect to utilize the same sources of capital we will rely on to meet our short-term liquidity requirements to also meet our long-term liquidity requirements, which include funding our operating activities, our debt service obligations and stockholder distributions, and our future development and acquisition activities.

We are a well-known seasoned issuer with an effective shelf registration statement filed on March 17, 2023, which registered an indeterminate amount of common shares, preferred shares, depositary shares and warrants, as well as debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by us. As circumstances warrant, we may issue equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We may use the proceeds for general corporate purposes, which may include the repayment of outstanding indebtedness, the funding of development, expansion and acquisition opportunities and to increase working capital.

On March 17, 2023, we entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $900.0 million of our common shares through an ATM equity program. Sales of our common stock made pursuant to the 2023 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than

on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use the net proceeds from sales of our common stock pursuant to the 2023 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects. There was no activity under the 2023 ATM Equity Program during the three months ended March 31, 2023.

By operation of law and in accordance with our customer contracts (other than leases), we typically receive warehouseman’s liens on products held in our warehouses to secure customer payments. Such liens permit us to take control of the products and sell them to third parties in order to recover any monies receivable on a delinquent account, but such products may be perishable or otherwise not readily salable by us. Historically, in instances where we have warehouseman’s liens and our customer sought bankruptcy protection, we have been successful in receiving “critical vendor” status, which has allowed us to fully collect on our accounts receivable during the pendency of the bankruptcy proceeding.

Our bad debt expense was $0.7 million and $1.3 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we maintained bad debt allowances of approximately $17.4 million, which we believed to be adequate.

Dividends and Distributions

We are required to distribute 90% of our taxable income (excluding capital gains) on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to stockholders from cash flows from our operating activities. While historically we have satisfied this distribution requirement by making cash distributions to our stockholders, we may choose to satisfy this requirement by making distributions of cash or other property. All such distributions are at the discretion of our Board of Directors. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. We have distributed at least 100% of our taxable income annually since inception to minimize corporate-level federal income taxes. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts which are consistent with our intention to maintain our status as a REIT.

As a result of this distribution requirement, we cannot rely on retained earnings to fund our ongoing operations to the same extent that other companies which are not REITs can. We may need to continue to raise capital in the debt and equity markets to fund our working capital needs, as well as potential developments in new or existing properties, acquisitions or investments in existing or newly created joint ventures. In addition, we may be required to use borrowings under our revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status.

For further information regarding dividends and distributions, refer to our consolidated financial statements included in our 2022 Annual Report on Form 10-K as filed with the SEC.

Outstanding Indebtedness

The following table summarizes our outstanding indebtedness as of March 31, 2023 (in thousands):


Debt Summary:
Fixed rate(1)	$	2,592,875
Variable rate - unhedged	610,500
Total mortgage notes, senior unsecured notes, term loans and borrowings under revolving line of credit	3,203,375

Sale-leaseback financing obligations	168,919
Financing lease obligations	78,421
Total debt and debt-like obligations	$	3,450,715

Percent of total debt and debt-like obligations:
Fixed rate	82		%
Variable rate	18		%

Effective interest rate as of March 31, 2023	4.08		%

(1)The total includes borrowings with a variable interest rate that have been effectively hedged through interest rate swaps.

The variable rate debt shown above bears interest at interest rates based on various one-month SOFR, CDOR, SONIA, BBSW, EURIBOR, and BKBM rates, depending on the respective agreement governing the debt, including our global revolving credit facilities. As of March 31, 2023, our debt had a weighted average term to maturity of approximately 5.9 years, assuming exercise of extension options.

For further information regarding outstanding indebtedness, please see Note 3 and Note 4 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and Note 9 to our consolidated financial statements included in our 2022 Annual Report on Form 10-K as filed with the SEC.

Aggregate future repayments of indebtedness

The aggregate maturities of indebtedness as of March 31, 2023 for each of the next five years and thereafter, are as follows (in thousands):


Twelve Months Ending March 31:
2024	$	—
2025	—
2026	200,000
2027	985,500
2028	454,950
Thereafter	1,562,925
Aggregate principal amount of indebtedness	3,203,375
Less: unamortized deferred financing costs	(12,434)
Total indebtedness, net of deferred financing costs	$	3,190,941

Credit Ratings

Our capital structure and financial practices have earned us investment grade credit ratings from three nationally recognized credit rating agencies. We have investment grade ratings of BBB with a negative outlook from Fitch, BBB with a Stable Trends outlook from DBRS Morningstar, and an investment grade rating of Baa3 with a stable outlook from Moody’s. These credit ratings are important to our ability to issue debt at favorable rates of interest, among other terms. Refer to our risk factor “Adverse changes in our credit ratings could negatively impact our financing activity” in our Annual Report on Form 10-K.

Maintenance Capital Expenditures and Repair and Maintenance Expenses

We utilize a strategic and preventative approach to maintenance capital expenditures and repair and maintenance expenses to maintain the high quality and operational efficiency of our warehouses and ensure that our warehouses meet the “mission-critical” role they serve in the cold chain.

Maintenance Capital Expenditures

Maintenance capital expenditures are capitalized investments made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology systems. Examples of maintenance capital expenditures related to our existing temperature-controlled warehouse network include replacing roofs and refrigeration equipment, and upgrading our racking systems. Examples of maintenance capital expenditures related to personal property include expenditures on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. Examples of maintenance capital expenditures related to information technology include expenditures on existing servers, networking equipment and current software. Maintenance capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building or costs which are incurred to bring a building up to Americold’s operating standards. The following table sets forth our maintenance capital expenditures for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,
	2023		2022
	(In thousands, except per cubic foot amounts)
Real estate	$	14,899	$	13,864
Personal property	325		974
Information technology	1,020		1,268
Maintenance capital expenditures(1)	$	16,244	$	16,106

Maintenance capital expenditures per cubic foot	$	0.011	$	0.011

(1) Excludes $2.2 million and $1.8 million of deferred acquisition maintenance capital expenditures incurred for the three months ended March 31, 2023 and 2022, respectively.

Repair and Maintenance Expenses

We incur repair and maintenance expenses that include costs of normal maintenance and repairs and minor replacements that do not materially extend the life of the property or provide future economic benefits. Repair and maintenance expenses consist of expenses related to our existing temperature-controlled warehouse network and its existing supporting personal property and are reflected as operating expenses on our income statement. Examples of repair and maintenance expenses related to our warehouse portfolio include ordinary repair and maintenance on roofs, racking, walls, doors, parking lots and refrigeration equipment. Examples of repair and maintenance expenses related to personal property include ordinary repair and maintenance expenses on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. The increase in costs is due to rising inflationary pressures. The following table sets forth our repair and maintenance expenses for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,
	2023		2022
	(In thousands, except per cubic foot amounts)
Real estate	$	8,802	$	8,843
Personal property	19,966		14,446
Repair and maintenance expenses	$	28,768	$	23,289

Repair and maintenance expenses per cubic foot	$	0.020	$	0.016

External Growth, Expansion and Development Capital Expenditures

External growth expenditures represent asset acquisitions or business combinations. Expansion and development capital expenditures are capitalized investments made to support both our customers and our warehouse expansion and development initiatives. It also includes investments in enhancing our information technology platform. Examples of capital expenditures associated with expansion and development initiatives include funding of construction costs, increases to warehouse capacity and pallet positions, acquisitions of reusable incremental material handling equipment, and implementing energy efficiency projects, such as thermal energy storage, LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, rapid-close doors and alternative-power generation technologies. Examples of capital expenditures to enhance our information technology platform include the delivery of new systems and software and customer interface functionality.

Acquisitions

For information regarding acquisitions completed during 2022, refer to our 2022 Annual Report on Form 10-K which includes details of the purchase price allocation for each acquisition.

Expansion and development

The expansion and development expenditures for the three months ended March 31, 2023 are primarily driven by $2.7 million related to our two fully-automated, build-to-suit, development sites in Connecticut and Pennsylvania, $5.1 million for the Spearwood, Australia expansion, $4.8 million related to our Russellville expansion and $3.7 million related to Atlanta Major Market Strategy Phase 2. During the three months ended March 31, 2023, we also incurred capitalized interest of $3.4 million and capitalized insurance, property taxes, and compensation and travel expense aggregating to $1.9 million related to our ongoing expansion and development projects.

Expansion and development initiatives also include $2.2 million of corporate initiatives and smaller customer driven growth projects, which are designed to reduce future spending over the course of time. This category reflects return on investment projects, conversion of leases to owned assets, and other cost-saving initiatives. Finally, we incurred approximately $4.9 million during the three months ended March 31, 2023 for contemplated future expansion or development projects.

The decrease in costs from the three months ended March 31, 2022 to the three months ended March 31, 2023 is due to fewer outstanding expansion and development projects as compared to the prior year.

The following table sets forth our acquisition, expansion and development capital expenditures for the three months ended March 31, 2023 and 2022.


	Three Months Ended March 31,
	2023		2022
	(In thousands)


Expansion and development initiatives	28,723		57,918
Information technology	1,613		741
Growth and expansion capital expenditures	$	30,336	$	58,659

Historical Cash Flows


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Net cash provided by operating activities	$	41,481	$	15,586
Net cash used in investing activities	$	(87,592)	$	(94,244)
Net cash provided by financing activities	$	38,867	$	46,256

Operating Activities

For the three months ended March 31, 2023, our net cash provided by operating activities was $41.5 million, an increase of $25.9 million, compared to $15.6 million for the three months ended March 31, 2022. The increase is primarily due to an increase in segment contribution, partially offset by higher selling, general and administrative expenses.

Investing Activities

Our net cash used in investing activities was $87.6 million for the three months ended March 31, 2023 compared to $94.2 million for the three months ended March 31, 2022. Additions to property, buildings and equipment were $69.3 million, reflecting maintenance capital expenditures and investments in our various expansion and development projects. Additionally, we invested $18.4 million in a loan to the Comfrio joint venture as well as minority equity interest in the RSA joint venture.

Net cash used in investing activities was $94.2 million for the three months ended March 31, 2022 related to cash used for additions to property, buildings and equipment of $93.0 million reflecting maintenance capital expenditures and investments in the Ahold, Atlanta, Dunkirk, Dublin, Barcelona, Spearwood and Russellville expansion and development projects. Additionally, we invested $1.9 million of cash in the SuperFrio joint venture.

Financing Activities

Net cash provided by financing activities was $38.9 million for the three months ended March 31, 2023 compared to $46.3 million for the three months ended March 31, 2022. Cash provided by financing activities for the current period primarily consisted of $110.1 million in proceeds from our Senior Unsecured Revolving Credit Facility, net of repayments, offset by $60.1 million of quarterly dividend distributions paid and $11.8 million aggregate lease repayments.

Net cash provided by financing activities was $46.3 million for the three months ended March 31, 2022. Cash provided by financing activities primarily consisted of $115.0 million in proceeds from our Senior Unsecured Revolving Credit Facility, offset by $59.9 million of quarterly dividend distributions paid.

SIGNIFICANT ACCOUNTING POLICIES UPDATE

Critical accounting policies are those that are both important to the accurate portrayal of a company’s financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. To prepare financial statements that conform to generally accepted accounting principles, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.

Refer to Note 1 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for a discussion of our critical accounting estimates and assumptions.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our future income and cash flows relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

As of March 31, 2023, we had $645.0 million of outstanding USD-denominated variable-rate debt and $250 million of outstanding CAD-denominated variable-rate debt under the Senior Unsecured Term Loan Facility. This consisted of our Senior Unsecured Term Loan A Facility bearing interest at one-month SOFR for the USD tranche and one-month CDOR for the CAD tranche, plus a margin of up to 0.94%. We have entered into interest rate swaps to effectively lock in the floating rates on all of our USD-denominated term loan at a weighted average rate of 4.39% and $250 million of our outstanding CAD-denominated term loan at a weighted average rate of 4.53%. After incorporating the effects of the interest rate swaps, we have no outstanding variable-rate term loan debt.

Additionally, we had C$45.0 million, £78.0 million, A$152.0 million, $323.0 million USD, €44.5 million, and $13.0 million NZD outstanding of Senior Unsecured Revolving Credit Facility draws. At March 31, 2023, one-month term and daily SOFR was approximately 4.80%, one-month CDOR was approximately 4.94%, one-month SONIA was at 4.18%, one-month AUD BBSW was approximately 3.68%, one-month EURIBOR was approximately 2.91%, and one-month BKBM was approximately 4.37%. The interest rate paid on borrowings can never drop below 0%, although the associated benchmark rate does. Therefore, a 100 basis point increase in market interest rates would result in an increase in annual interest expense to service our variable-rate debt of approximately $6.1 million, and a 100 basis point decrease in market interest rates would result in a $6.1 million decrease in annual interest expense.

Foreign Currency Risk

As it relates to the currency of countries where we own and operate warehouse facilities and provide logistics services, our foreign currency risk exposure at March 31, 2023 was not materially different than what we disclosed in our 2022 Annual Report on Form 10-K as filed with the SEC. The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our 2022 Annual Report on Form 10-K, is hereby incorporated by reference in this Quarterly Report on Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2023.

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including the Chief Executive Officer and Chief Financial Officer do not expect that our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the

fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be party to a variety of legal proceedings arising in the ordinary course of our business. We are not a party to, nor is any of our property a subject of, any material litigation or legal proceedings or, to the best of our knowledge, any threatened litigation or legal proceedings which, in the opinion of management, individually or in the aggregate, would have a material impact on our business, financial condition, liquidity, results of operations and prospects.

See Note 8 - Commitments and Contingencies to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding material legal proceedings in which we are involved.

Item 1A. Risk Factors

The following risk factor provides a supplement and update to the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 in response to Item 1A of Part I of such Form 10-K, in order to provide information regarding a recent cybersecurity incident.

A failure of our information technology systems, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions and the loss of confidential information and may materially adversely affect our business.

We rely extensively on our computer systems to process transactions, operate and manage our business. Despite efforts to avoid or mitigate such risks, external and internal risks, such as malware, ransomware, insecure coding, data leakage and human error pose direct threats to the stability and effectiveness of our information technology systems. The failure of our information technology systems to perform as anticipated, and the failure to integrate disparate systems effectively or to collect data accurately and consolidate it a useable manner efficiently could adversely affect our business through transaction errors, billing and invoicing errors, processing inefficiencies or errors and loss of sales, receivables, collections and customers, in each case, which could result in reputational damage and have an ongoing adverse effect on our business, results of operation and financial condition.

We may also be subject to cybersecurity attacks and other intentional hacking. These attacks could include attempts to gain unauthorized access to our data and computer systems. In particular, as discussed further below, our operations have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly disrupt our operations. Generally, such attacks involve restricting access to computer systems or vital data. We employ a number of measures to prevent, detect and mitigate these threats, which include password protection, frequent password changes, firewall detection systems, frequent backups, a redundant data system for core applications and annual penetration testing; however, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. A cybersecurity attack or breach could compromise the confidential information of our associates, customers and vendors. A successful attack could result in service interruptions, operational difficulties, loss of revenue or market share, liability to our customers or others, diversion of corporate resources and injury to our reputation and increased costs. In such cases, we may have to operate manually, which may result in considerable delays in our handling of and damage to perishable products or interruption to other key business processes. Addressing such issues could prove difficult or impossible and be very costly. Responding to claims or liability could similarly involve substantial costs. In addition, our customers rely extensively on computer systems to process transactions and manage their business and thus their businesses are also at risk from, and may be impacted by, cybersecurity attacks. An interruption in the business operations of our

customers or a deterioration in their reputation resulting from a cybersecurity attack could indirectly impact our business operations.

Our computer network has been subjected to cyber attacks from time to time. We previously suffered a cyber attack in November 2020 and more recently identified a separate cyber incident in April 2023. In late April 2023, we determined that our information technology system had experienced a cybersecurity incident. We immediately implemented containment measures and took operations offline to secure our systems and reduce disruption to our business and customers. We have launched a review of the nature and scope of the incident, are working closely with cybersecurity experts and legal counsel, and have reported the matter to law enforcement.

As a result of the April 2023 cyber incident, our operations have been impacted. In particular, the incident resulted in a significant number of our facilities being unable to receive or deliver products for a period of time. Such operational impacts have resulted in, and may continue to result in, considerable delays in the delivery of our products to our customers or interruption to other key business processes.

While our full investigation into the April 2023 cyber incident is still ongoing, our initial examination revealed unauthorized access to personal information. We are currently working to identify populations of impacted individuals in order to make notifications to impacted individuals and to regulators, in accordance with applicable law. As a result of this unauthorized access, we may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations related to impacted data. In addition, the misuse, or perceived misuse, of sensitive or confidential information regarding our business could cause harm to our reputation and result in the loss of business with existing or potential customers, which could adversely impact our business, results of operations and financial condition.

Based on the information currently known, we cannot yet determine whether the April 2023 cybersecurity attack will have a material impact on our business, results of operations or financial condition, and no assurances can be given as we continue to assess the full impact from the incident. We may also be subject to future incidents that could have a material adverse effect on our business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to our reputation.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Index to Exhibits


Exhibit No.						Description
10.1						ATM Equity Offering Sales Agreement, dated March 17, 2023, among the Company, the Operating Partnership, the Agents and the Forward Purchasers (incorporated by reference to Exhibit 1.1 to Americold Realty Trust’s Current Report on Form 8-K filed on March 17, 2023 (File No. 001-34723))
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust

101						The following financial statements of Americold Realty Trust’s Form 10-Q for the quarter ended March 31, 2023, formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022; (ii) Condensed Consolidated Income Statements for the three months ended March 31, 2023 and 2022; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022; (iv) Condensed Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022; (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022; and (vi) Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICOLD REALTY TRUST, INC.

(Registrant)

Date:

May 4, 2023

By:

/s/ Marc J. Smernoff

Name:

Marc J. Smernoff

Title:

Chief Financial Officer and Executive Vice President

(On behalf of the registrant and as principal financial officer)