Lineage, Inc. Q4 FY2025 earnings call

W. Gregory Lehmkuhl thanked customers and team members. Recapped quarterly performance with flat total revenue, adjusted EBITDA down 2%, AFFO flat but ahead of expectations. Discussed 2026 outlook, cold storage supply and demand. Robert C. Crisci detailed segment performance, expense management initiatives, capital structure, and 2026 outlook. Mentioned idling assets, dispositions like the Santa Maria site, and efforts to drive efficiencies including $50,000,000 annualized admin and indirect cost savings by end of 2026. Also discussed AI impact on the business, with use of AI in cold storage automation, energy management, and computer vision technology.

During the fourth quarter, total revenue was flat year over year and adjusted EBITDA decreased 2% to $327,000,000. Total AFFO of $214,000,000 and AFFO per share of $0.83 were flat year over year but both ahead of expectations. Full year 2025 adjusted EBITDA declined 2.3% year over year to $1,300,000,000.00 and full year AFFO per share increased 2.4% year over year. Global Integrated Solutions segment's EBITDA grew 15% to $61,000,000 in the fourth quarter and was up 9% to $251,000,000 for the full year 2025. Warehouse NOI: fourth quarter total warehouse NOI declined 2.4% year over year to $373,000,000 while same store NOI declined 5% year over year to $340,000,000; full year total warehouse NOI declined 3.3% to $1,480,000,000.00 while same store NOI growth was minus 5.8%.

2026 outlook: same store NOI growth of negative 4% to negative 1%, adjusted EBITDA of $1,250,000,000.00 to $1,300,000,000.0 and AFFO per share of $2.75 to $3 per share. Expect 1% to 2% net pricing increase in warehousing segment. Admin of $465,000,000 to $480,000,000, stock-based comp of $125,000,000, interest expense $340,000,000 to $360,000,000, current tax expense for AFFO calculations of $20,000,000 to $30,000,000 and recurring CapEx of $170,180,000,000. Same store NOI cadence starts at lower end of range and improves into second half.

Risks include the industry's challenging macro environment affecting throughput volumes, import/export volumes, and profitability. Also, potential for continued competitive pressure in late cycle supply markets. Uncertainties related to tariff resolution, interest rate changes, and consumer behavior shifts could impact the business. Risks associated with the execution of efficiency initiatives and the success of asset dispositions and redeployment strategies.

Q: Talk through the impact of idling assets?

A: Last year idled 10 sites, 2026 not expecting as many opportunities, impact on NOI and occupancy negligible.

Q: What made the SoCal property noncore?

A: Medium quality asset, single user, didn't support surrounding public customers.

Q: On customers switching, is there tangible evidence?

A: Seeing customers come back to Lineage in markets where new supply hit earliest.

Q: How does AI impact the business?

A: AI can help optimize supply chains over time, Lineage already using AI in cold storage automation, energy management, computer vision technology.

Q: Update on Lean Journey?

A: About a third of revenue base supported by lean manager, deploying technology and process, seeing good results.