AMERICOLD REALTY TRUST Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) | MarketScreener

2022-08-08 09:14:20 By :

Components of Our Results of Operations

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.

•Litigation costs incurred in order to defend ourselves from litigation charges outside of the normal course of business and related settlement costs.

•Equity acceleration costs representing the unrecognized expense for share-based awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification.

•Non-offering related equity issuance expenses whether incurred through our initial public offering, follow-on offerings or secondary offerings.

•Other costs relate to insurance claims, including deductibles, and related recoveries.

Key Factors Affecting Our Business and Financial Results

The unprecedented labor environment continues to be challenging for many companies, including our food manufacturing customers. Labor availability continues to be the primary constraint on food production, along with the continuing spread of COVID-19 and related variants, which also impacts the labor market.

America, excluding Brazil. Our JV partner committed to invest approximately $209.0 million in exchange for 85% of the total equity interests, and we contributed our Chilean business upon formation of the joint venture and retained the remaining 15% equity interests in the joint venture.

Foreign Currency Translation Impact on Our Operations

(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

Strategic Shift within Our Transportation Segment

Economic Occupancy of our Warehouses

How We Assess the Performance of Our Business

Segment Contribution (Net Operating Income or "NOI")

results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Comparison of Results for the Three Months Ended June 30, 2022 and 2021

The following table presents the operating results of our warehouse segment for the three months ended June 30, 2022 and 2021.

Same Store and Non-Same Store Analysis

Total same store cost of operations $ 354,068 $ 362,147

Total non-same store cost of operations $ 59,326 $ 60,697

Total warehouse cost of operations $ 413,394 $ 422,844

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

Ended June 30, Units in thousands except per pallet and site number data - unaudited

Same store warehouse services revenues per throughput pallet

Non-same store rent and storage:

Non-same store rent and storage revenues per economic occupied pallet

Non-same store rent and storage revenues per physical occupied pallet

Constant currency non-same store warehouse services revenues per throughput pallet

The following table presents the operating results of our third-party managed segment for the three months ended June 30, 2022 and 2021.

(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.

Transportation Segment The following table presents the operating results of our transportation segment for the three months ended June 30, 2022 and 2021.

(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.

offset by the net decrease in revenue from the rationalization of certain domestic market operations and the unfavorable impact of foreign currency translation.

The following table presents other items of expense and income for the three months ended June 30, 2022 and 2021.

Comparison of Results for the Six Months Ended June 30, 2022 and 2021

The following table presents the operating results of our warehouse segment for the six months ended June 30, 2022 and 2021.

Same Store and Non-Same Store Analysis

Total same store cost of operations $ 696,558 $ 710,031

Total warehouse cost of operations $ 808,061 $ 823,607

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

June 30, Units in thousands except per pallet and site number data - unaudited

Same store warehouse services revenues per throughput pallet

Non-same store rent and storage:

Non-same store rent and storage revenues per economic occupied pallet

Non-same store rent and storage revenues per physical occupied pallet

Constant currency non-same store warehouse services revenues per throughput pallet

(4)n/r - not relevant

The following table presents the operating results of our third-party managed segment for the six months ended June 30, 2022 and 2021.

(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.

The following table presents the operating results of our transportation segment for the six months ended June 30, 2022 and 2021.

(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.

Depreciation and amortization. Depreciation and amortization expense was $165.3 million for the six months ended June 30, 2022, an increase of $3.6 million, or 2.3%, compared to $161.7 million for the six months ended June 30, 2021. This increase was primarily due to the acquisitions and recently completed developments in 2021.

Selling, general and administrative. Corporate-level selling, general and administrative expenses were $113.9 million for the six months ended June 30, 2022, an increase of $26.3 million, or 30.1%, compared to

The following table presents other items of income and expense for the six months ended June 30, 2022 and 2021.

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

FFO, Core FFO, and Adjusted FFO

$ (13,399) $ (13,492) $ (27,635) Adjustments: Real estate related depreciation

Our share of reconciling items related to partially owned entities

Loss on deconsolidation of subsidiary contributed to joint venture

Our share of reconciling items related to partially owned entities

Amortization of deferred financing costs and pension withdrawal liability

Our share of reconciling items related to partially owned entities

Adjusted FFO applicable to common shareholders $ 73,875

Loss on deconsolidation of subsidiary contributed to joint venture

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:

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:

Security Interests in Customers' Products

Total mortgage notes, senior unsecured notes, term loans and borrowings under revolving line of credit

Maintenance Capital Expenditures and Repair and Maintenance Expenses

External Growth, Expansion and Development Capital Expenditures

Finally, we incurred approximately $21.3 million during the six months ended June 30, 2022 for contemplated future expansion or development projects.

Net cash used in investing activities $ (191,960) $ (438,822) Net cash provided by financing activities $ 52,219

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

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

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