Lineage, Inc. Q1 FY2026 earnings call

Key highlights from Q1: Total revenue flat y-o-y, adjusted EBITDA increased 3.3% to $314 million. Core operations results solid, same-store physical occupancy declined, economic occupancy tracked nicely. Customer rate per pallet increased 2.2% for fourth consecutive quarter. Same-store warehouse services for throughput pallet was modestly more positive. Maintaining 2026 guidance. Capital investments: $130 million invested in growth capital, 22 facilities under construction/ramping. LinOS technology implementation at 11 conventional facilities, expected to roll out to at least 20 facilities this year. U.S. supply and demand trends: New supply growth analyzed, 85% of U.S. asset NOI in stable markets. GIS segment: NOI flat, revenue impact due to divestiture, transportation and food service business strong but offset by lower drayage activity.

In the global warehousing segment, first quarter total warehouse NOI increased 1.1% year-over-year to $364 million, and same-store NOI declined 0.9% year-over-year to $347 million. Same-store NOI benefited by approximately 250 basis points from favorable FX year-over-year. Same-store physical occupancy sequentially declined by 290 basis points to 76.4, rate per physical pallet increased 2.2%, throughput volumes were modestly softer, down 3.3%, although services revenue per throughput pallet increased 50 basis points. In the global integrated solutions segment, NOI was flat versus prior year at $57 million. GIS NOI margin improved by 190 base points year-over-year to 18.3%.

Maintaining 2026 guidance: Same-store NOI contraction of negative 4 to negative 1%, AFFO of $2.75 to $3 per share. Administrative expense expected to normalize to approximately $120 to $125 million per quarter for balance of year. FX expected to be relatively minor year-over-year factor for balance of 2026. Outlook for Q2: FX less of a benefit to same-store NOI, administrative expenses to trend back, occupancy historically shows modest seasonal decline from Q1 to Q2.

Industry headwinds including elevated new supply and trade-related challenges. Geopolitical uncertainty impacting trade volumes. Potential impact of Middle East situation on business, though limited exposure. Energy cost risks, but largely insulated through in-place hedges, surcharge mechanisms, etc.

Q: Dive a bit deeper into factors driving earnings upside in Q1 and reconcile with full year guidance.

A: Mix was tailwind led by international business, admin expenses timing and international customer factors contributed.

Q: Portion of share count free float and future selling.

A: Floated about 30% of company, 70% managed by Baygrove with long-term holders, no immediate sell pressure.

Q: Context on reshaping portfolio.

A: Advancing strategic portfolio review, opportunities include sale of assets, joint ventures, enhancing financial flexibility.

Q: When industry will achieve peak supply growth abatement.

A: Past biggest impact, new supply crisis past, pricing more rational, number of concerned markets decreasing.

Q: Color on GIS segment.

A: Revenue impact due to divestiture, organic growth when excluding divestiture, transportation and food service business strong but offset by lower drayage.

Q: Pricing and occupancy trajectory.

A: Customers gravitating to established operators, pricing net positive, occupancy stabilizing.

Q: Impact of strategic review on guidance.

A: Early in review, no decisions made, portfolio review to build balance sheet capacity.

Q: FX impact dimensionalization.

A: 250 basis points benefit in Q1, 100 basis points in Q2, then flatter, based on spot and forward curves.

Q: Insights on inventory bottoming and rebound.

A: Inventory destocking largely in rear view mirror, new supply deliveries stabilizing, trade volatility transitory.

Q: Update on Tyson facility developments.

A: Tyson developments going as planned, in CapEx plan, returns secure, not affected by incremental inflation