Americold: Low protein stocks weigh on cold storage throughput

Americold's 2021 guidance ahead of estimates

Management from cold storage facility operator Americold Realty Trust (NYSE: COLD) said declines in protein inventories as well as other inventory-related supply chain disruptions are providing headwinds.

The Atlanta-based company reported adjusted funds from operations Thursday of 37 cents per share, 3 cents higher than the consensus estimate.

On a conference call with analysts, management said occupancy and flow-through have been pressured by reduced protein volumes and food services activity. The issue with proteins has been supply related as food manufacturers and producers, which normally operate with a 30-day supply, have seen stocks decline to a week in some instances.

Management said poultry supply is down more than 10%, with supply of other proteins off by as much as 30%.

While supply still hasn’t recovered from pandemic-induced drawdowns and downtime at production plants during spikes in COVID cases, management believes the changes are not structural.

For all of 2021, the company anticipates total food consumption will be flat with past years. Americold’s full-year guidance calls for adjusted FFO of $1.36 to $1.46 per share, ahead of the current consensus estimate of $1.32. The company reported $1.29 in adjusted FFO in 2020.

Management’s guidance assumes no fast correction in protein stocks or food service demand.

Acquisitions allowed Americold to realize year-over-year growth in 2020. The company closed $2.6 billion of acquisitions during the year, which added 62 facilities and 342 million cubic feet of space to the network. It also broke ground on five development projects with a total cost of $461 million.

In the fourth quarter, Americold closed on the $1.74 billion acquisition of Agro Merchants Group, the world’s fourth-largest cold storage operator. That deal added 46 facilities and 236 million cubic feet of space. The company also acquired eight facilities in the $480 million purchase of Hall’s Warehouse Corp.

Those companies provide more managed and transportation services than the rest of Americold’s network. The new guidance calls for the managed and transportation contribution to increase to a range of $46 million to $54 million in 2021, up from roughly $31 million in 2021.

Fourth-quarter results

Total revenue increased 8% year-over-year to $524 million due to the acquisitions and development projects. Throughput pallets and rent and storage revenue per pallet increased slightly. Net operating income contribution was up 11% to $152 million with the contribution margin improving 80 basis points to 29.1%.

The period produced a net loss of $44 million, which was related to currency hedges and fees from recent debt placements. Management also noted $2 million in lost revenue and $8 million in costs associated with a cyberattack during the quarter.

The company ended the year with $1.7 billion in total liquidity and total debt of $3 billion, $2.7 billion of which is tied to real estate. Including the earnings before interest, taxes, depreciation and amortization expectations from recent acquisitions, net debt-to-pro forma EBITDA ended the year at 4.4x, down from 4.5x at the end of the third quarter.

Americold owns and operates 238 cold storage facilities with more than 1.4 billion cubic feet of space in North America, Europe, Asia-Pacific and South America.

Table: Americold’s key performance indicators

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