Lineage, Inc. Q1 FY2025 earnings call

• Announced landmark agreements with Tyson Foods, expecting to deploy ~$1 billion in capital over years, generating over $100 million in annual EBITDA. Acquired 4 Tyson Foods cold storage warehouses for $247 million and will develop 2 next-generation fully automated cold storage warehouses. - First quarter results reflect normal seasonality; total revenue down 3%, adjusted EBITDA down 7%, same-store warehouse NOI down 7.9%, but AFFO per share up 6%. - LinOS pilots at conventional buildings exceed expectations; proprietary warehouse execution system with productivity benefits. - Executed on development and M&A opportunities, including acquiring 3 warehouse campuses from Bellingham Cold Storage and expanding facilities in Denmark and the Netherlands.

Global warehousing: Total revenue was $1.29 billion, down 3%; adjusted EBITDA decreased 7% to $304 million, with adjusted EBITDA margin down 110 basis points to 23.5%; same-store warehouse NOI down 7.9%; AFFO for the quarter was up 48% to $219 million, and AFFO per share was $0.86, a 6% increase. Global integrated solutions segment: Segment revenue was down 3% to $348 million; NOI was down 3% to $57 million, with NOI margin flat at 16.4%.

Maintaining 2025 guidance with adjusted EBITDA range of $1,350 to $1,400 million and AFFO per share of $3.40 to $3.60. Acknowledges near-term uncertainty due to macroeconomic factors like tariff policies but expects growth in the second half of the year. Contributions from recent acquisitions are factored in, with the Tyson Foods agreements positioning the company well for future growth.

• Macro uncertainties including U.S. tariff announcements causing customer hesitancy in supply chain investments. - Potential impact of trade disruptions on import/export business, affecting throughput volume and occupancy. - Uncertainty around the timing and extent of inventory normalization and customer decision-making regarding supply chain changes.

Q: Caitlin Burrows asked about the impact of import/export business on Lineage.

A: Greg Lehmkuhl stated customers are delaying major supply chain decisions due to tariff uncertainty, but occupancy hasn't been substantially impacted yet.

Q: Brendan Lynch inquired about the assets acquired from Tyson Foods and their long-term commitment.

A: Greg Lehmkuhl said it's a long-term multiyear agreement, with assets slanted towards the distribution side.

Q: Samir Khanal asked about occupancy recovery.

A: Greg Lehmkuhl explained normal seasonality resumed in the third quarter of last year, with expected recovery in the second half despite short-term tariff uncertainty.

Q: Michael Carroll asked about storage and service rental rates.

A: Greg Lehmkuhl said there's a mix of new business wins with volume guarantees and existing customers resetting volume guarantees, leading to price pressure, but expecting normalization as the year progresses.

Q: Michael Mueller asked about customer pauses and acquisition returns.

A: Greg Lehmkuhl said pauses are more with producers, and acquisitions are in line with historical expectations and accretive.

Q: Craig Mailman asked about changing assumptions and volume resets.

A: Greg Lehmkuhl said volume guarantees reset in the first quarter, with new business having strong volume guarantees but existing customers lowering them.

Q: Alexander Goldfarb asked about non-same-store pool occupancy drop.

A: Rob Crisci said it's related to incidents like the Kennewick fire.

Q: Blaine Heck asked about funding for Tyson deal and development.

A: Rob Crisci said it's in line with normal operating cadence using revolver and maintaining flexibility.

Q: Nick Thillman asked about labor costs and staffing.

A: Rob Crisci said labor productivity is a strength, with wage increases in line with history.

Q: Omotayo Okusanya asked about guidance moving parts.

A: Rob Crisci said there are many moving parts but confident in guidance ranges.

Q: Ronald Kamdem asked about tenant inventory and sectors.

A: Greg Lehmkuhl said seafood inventory has stabilized, and there's wait and see on other sectors.

Q: Steve Sakwa asked about Chinese pork order cancellation impact.

A: Greg Lehmkuhl said it could impact occupancy with potential upside.

Q: Ki Bin Kim asked about Tyson's value proposition.

A: Greg Lehmkuhl said it includes lower cost, best technology, and future-proofing supply chain with LinOS.

Q: Michael Goldsmith asked about supply and competitive advantages.

A: Greg Lehmkuhl said new capacity added at high cost, and Lineage has scale, technology, and global presence as competitive advantages.

Q: Todd Thomas asked about volume guarantees and fixed commits.

A: Greg Lehmkuhl said majority reset in first quarter, with new business having strong volume guarantees.

Q: Vikram Malhotra asked about guide offsets and buyback.

A: Rob Crisci said there are levers to pull to maintain guidance, and Board evaluates shareholder value initiatives.