10-Q 1 a2019630artandsubsq2.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2019
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to            ,


Commission File Number: 001-34723
AMERICOLD REALTY TRUST
AMERICOLD REALTY OPERATING PARTNERSHIP, L.P.

(Exact name of registrant as specified in its charter)
Maryland (Americold Realty Trust)
 
93-0295215
Delaware (Americold Realty Operating Partnership, L.P.)
 
01-0958815
 (State or other jurisdiction of incorporation or organization)
 
 (IRS Employer Identification Number)
 
 
 
10 Glenlake Parkway, Suite 600, South Tower
 
 
Atlanta, Georgia
 
30328
 (Address of principal executive offices)
 
(Zip Code)

(678) 441-1400
(Registrant’s telephone number, including area code)
_________________________




    
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Americold Realty Trust
Yes x

No ¨
 
Americold Realty Operating Partnership, L.P.
 Yes ¨
No x
 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).
Americold Realty Trust
Yes x

No ¨
 
Americold Realty Operating Partnership, L.P.
Yes x

No ¨
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):
Americold Realty Trust
 
Americold Realty Operating Partnership, L.P.
¨  Large accelerated filer
¨   Accelerated filer
 
¨   Large accelerated filer

¨   Accelerated filer

x   Non-accelerated filer
¨   Smaller reporting company
 
x   Non-accelerated filer
¨   Smaller reporting company

 
¨   Emerging growth company
 
 
¨   Emerging growth company

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Americold Realty Trust
Yes ¨
No ¨
 
Americold Realty Operating Partnership, L.P.
 Yes ¨
No ¨
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)
Americold Realty Trust
Yes ¨
No x
 
Americold Realty Operating Partnership, L.P.
 Yes ¨
No x
 
Securities registered pursuant to Section 12(b) of the Act:
Americold Realty Trust:
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per share
 
COLD
 
New York Stock Exchange (NYSE)
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Americold Realty Trust:
Class
 
Outstanding at August 6, 2019
Common Stock, $0.01 par value per share
 
191,659,250




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2019 of Americold Realty Trust and Americold Realty Operating Partnership, L.P. As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” “our Company” and “the Company” refer to Americold Realty Trust, a Maryland real estate investment trust, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “our operating partnership” or “the operating partnership.”

The operating partnership is voluntarily co-filing its quarterly report with the Company because the operating partnership anticipates that it may register one or more classes of securities in the future and will thus become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

As of June 30, 2019 and for each of the periods ended December 31, 2018 and 2017, and June 30, 2018, the sole general partner, Americold Realty Trust, held 99% of the partnership units of our operating partnership, and the limited partner, Americold Realty Operations, Inc., a wholly-owned subsidiary of Americold Realty Trust, held 1% of the partnership units of our operating partnership.

We believe combining the quarterly reports on Form 10-Q of Americold Realty Trust and Americold Realty Operating Partnership, L.P., into this single report results in the following benefits:

enhancing investors’ understanding of our Company and our operating partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both our Company and our operating partnership; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are a few differences between our Company and our operating partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between our Company and our operating partnership in the context of how we operate as an interrelated consolidated company. Americold Realty Trust is a real estate investment trust, or REIT, whose only material asset is its ownership of partnership interests of Americold Realty Operating Partnership, L.P. As a result, Americold Realty Trust does not conduct business itself, other than acting as the sole general partner and substantial-majority indirect limited partner of Americold Realty Operating Partnership, L.P., issuing public equity from time to time and guaranteeing certain unsecured debt of Americold Realty Operating Partnership, L.P. and certain of its subsidiaries. Americold Realty Trust itself has not issued any indebtedness but guarantees certain of the debt of Americold Realty Operating Partnership, L.P. and certain of its subsidiaries and affiliates, as disclosed in this report. Americold Realty Operating Partnership, L.P. holds substantially all the assets of the Company and holds the ownership interests in the Company’s joint ventures. Americold Realty Operating Partnership, L.P. conducts the operations of the business and is structured as a limited partnership with no publicly traded equity. Except for net proceeds from public equity issuances by Americold Realty Trust, which are generally contributed to Americold Realty Operating Partnership, L.P. in exchange for partnership units, Americold Realty Operating Partnership, L.P. generates the capital required by the Company’s business through Americold Realty Operating Partnership, L.P.’s operations, or by Americold Realty Operating Partnership, L.P.’s direct or indirect incurrence of indebtedness.

To help investors understand the significant differences between our Company and our operating partnership, this report presents the following separate sections for each of our Company and our operating partnership:




condensed consolidated financial statements;
the following notes to the condensed consolidated financial statements:
Debt of the Company and Debt of the Operating Partnership;
Partners' Capital; and
Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations.
This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the operating partnership in order to establish that the Chief Executive Officer and Chief Financial Officer of each entity has made the requisite certification and that the Company and the operating partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Exchange Act and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the operating partnership, the separate sections in this report for the Company and the operating partnership specifically refer to the Company and the operating partnership. In the sections that combine disclosure of the Company and the operating partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the operating partnership is generally the entity that enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Company operates the business through the operating partnership.

As general and limited partner with control of the operating partnership, Americold Realty Trust consolidates the operating partnership for financial reporting purposes, and it does not have significant assets other than its investment in the operating partnership. Therefore, the assets and liabilities of Americold Realty Trust and Americold Realty Operating Partnership, L.P. are the same on their respective consolidated financial statements. The separate discussions of Americold Realty Trust and Americold Realty Operating Partnership, L.P. in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.
    
In addition, unless otherwise stated herein, when we refer to “cubic feet” in one of our temperature-controlled facilities, we refer to refrigerated cubic feet (as opposed to total cubic feet, refrigerated and otherwise) therein.




TABLE OF CONTENTS

 
 
Page
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
 
 
PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
 
 
SIGNATURES
 
 


1



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following:

adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;
general economic conditions;
risks associated with the ownership of real estate and temperature-controlled warehouses in particular;
defaults or non-renewals of contracts with customers;
potential bankruptcy or insolvency of our customers;
uncertainty of revenues, given the nature of our customer contracts;
increased interest rates and operating costs;
our failure to obtain necessary outside financing;
risks related to, or restrictions contained in, our debt financing;
decreased storage rates or increased vacancy rates;
risks related to current and potential international operations and properties;
our failure to realize the intended benefits from our recent acquisitions including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;
our failure to successfully integrate and operate acquired or developed properties or businesses, including but not limited to: Cloverleaf Cold Storage, Lanier Cold Storage and PortFresh Holdings, LLC;
difficulties in identifying properties to be acquired and completing acquisitions;
acquisition risks, including the failure of such acquisitions to perform in accordance with projections;
risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames in respect thereof;
difficulties in expanding our operations into new markets, including international markets;
our failure to maintain our status as a REIT;
our operating partnership’s failure to qualify as a partnership for federal income tax purposes;
uncertainties and risks related to natural disasters and global climate change;
possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;
financial market fluctuations;
actions by our competitors and their increasing ability to compete with us;
labor and power costs;
changes in real estate and zoning laws and increases in real property tax rates;
the competitive environment in which we operate;
our relationship with our employees, including the occurrence of any work stoppages or any disputes under our collective bargaining agreements;
liabilities as a result of our participation in multi-employer pension plans;
losses in excess of our insurance coverage;
the cost and time requirements as a result of our operation as a publicly traded REIT;
risks related to joint venture investments, including as a result of our lack of control of such investments;
changes in foreign currency exchange rates;
the potential dilutive effect of our common share offerings;

2



the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our shareholders to replace our trustees and affect the price of our common shares of beneficial interest, $0.01 par value per share, or our common shares; and
risks related to our forward sale agreement entered into with Bank of America, N.A. in September 2018, or the 2018 forward sale agreement, and our forward sale agreement entered into with Bank of America, N.A. in April 2019, or the 2019 forward sale agreement, including substantial dilution to our earnings per share or substantial cash payment obligations.
    
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Quarterly Report on Form 10-Q. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Quarterly Report on Form 10-Q include, among others, statements about our expected acquisitions and expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.


3



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Americold Realty Trust and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
 
June 30, 2019

December 31, 2018
Assets
 
 
 
Property, plant, and equipment:
 
 
 
Land
$
516,874

 
$
385,232

Buildings and improvements
2,591,532

 
1,849,749

Machinery and equipment
770,336

 
577,175

Assets under construction
118,375

 
85,983


3,997,117

 
2,898,139

Accumulated depreciation and depletion
(1,157,430
)
 
(1,097,624
)
Property, plant, and equipment – net
2,839,687

 
1,800,515


 
 
 
Operating lease right-of-use assets
75,849

 

Accumulated depreciation-operating leases
(10,411
)
 

Operating leases-net
65,438

 

 
 
 
 
Financing leases:

 

Buildings and improvements
11,227

 
11,227

Machinery and equipment
67,188

 
49,276


78,415

 
60,503

Accumulated depreciation- financing leases
(23,967
)
 
(21,317
)
Financing leases – net
54,448

 
39,186

 
 
 
 
Cash and cash equivalents
320,805

 
208,078

Restricted cash
6,441

 
6,019

Accounts receivable – net of allowance of $4,946 and $5,706 at June 30, 2019 and December 31, 2018, respectively
208,978

 
194,279

Identifiable intangible assets – net
275,363

 
25,056

Goodwill
300,007

 
186,095

Investments in partially owned entities
12,788

 
14,541

Other assets
78,502

 
58,659

Total assets
$
4,162,457

 
$
2,532,428

 
 
 
 
Liabilities and shareholders’ equity

 

Liabilities:

 

Accounts payable and accrued expenses
287,691

 
253,080

Mortgage notes, senior unsecured notes, term loan and notes payable - net of unamortized deferred financing costs of $14,499 and $13,943, in the aggregate, at June 30, 2019 and December 31, 2018, respectively
1,710,523

 
1,351,014

Sale-leaseback financing obligations
117,420

 
118,920

Financing lease obligations
55,292

 
40,787

Operating lease obligations
68,428

 

Unearned revenue
18,805

 
18,625

Pension and postretirement benefits
17,135

 
16,317

Deferred tax liability - net
22,669

 
17,992

Multi-Employer pension plan withdrawal liability
8,837

 
8,938

Total liabilities
2,306,800

 
1,825,673

 Shareholders’ equity:

 

Common shares of beneficial interest, $0.01 par value – authorized 250,000,000 shares; 191,634,460 and 148,234,959 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
1,916

 
1,482

Paid-in capital
2,577,888

 
1,356,133

Accumulated deficit and distributions in excess of net earnings
(707,170
)
 
(638,345
)
Accumulated other comprehensive loss
(16,977
)
 
(12,515
)
Total shareholders’ equity
1,855,657

 
706,755

Total liabilities and shareholders’ equity
$
4,162,457

 
$
2,532,428

 
 
 
 
See accompanying notes to condensed consolidated financial statements.

 
 

4



Americold Realty Trust and Subsidiaries
Consolidated Financial Statements


Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019

2018
Revenues:
 
 
 
 



Rent, storage, and warehouse services
$
338,231

 
$
287,712

 
$
627,846

 
$
574,229

Third-party managed services
61,515

 
65,755

 
125,651

 
129,632

Transportation services
36,492

 
38,889

 
73,588

 
77,234

Other
2,222

 
2,311

 
4,454

 
4,714

Total revenues
438,460

 
394,667

 
831,539


785,809

Operating expenses:
 
 
 
 



Rent, storage, and warehouse services cost of operations
224,414

 
196,877

 
423,210

 
393,824

Third-party managed services cost of operations
58,711

 
61,896

 
119,588

 
121,995

Transportation services cost of operations
32,286

 
35,303

 
65,026

 
70,054

Cost of operations related to other revenues
1,930

 
2,391

 
3,918

 
4,448

Depreciation, depletion and amortization
40,437

 
29,051

 
70,533

 
58,459

Selling, general and administrative
32,669

 
27,750

 
63,786

 
55,857

Acquisition, litigation, and other
17,964

 
(268
)
 
26,457

 
3,574

Loss (gain) from sale of real estate
34

 
(8,384
)
 
34

 
(8,384
)
Impairment of long-lived assets
930

 
747

 
13,485

 
747

Total operating expenses
409,375

 
345,363

 
786,037


700,574

 
 
 
 
 



Operating income
29,085

 
49,304

 
45,502


85,235

 
 
 
 
 



Other income (expense):
 
 
 
 



(Loss) income from investments in partially owned entities
(68
)
 
252

 
54

 
112

Interest expense
(24,098
)
 
(22,929
)
 
(45,674
)
 
(47,424
)
Bridge loan commitment fees
(2,665
)
 

 
(2,665
)
 

Interest income
2,405

 
1,109

 
3,408

 
1,733

Loss on debt extinguishment and modifications

 

 

 
(21,385
)
Foreign currency exchange (loss) gain, net
(83
)
 
1,511

 
(23
)
 
2,191

Other (expense) income, net
(591
)
 
33

 
(758
)
 
89

Income (loss) before income tax (expense) benefit
3,985

 
29,280

 
(156
)

20,551

Income tax (expense) benefit:
 
 
 
 



Current
(2,446
)
 
(1,323
)
 
(3,994
)
 
(2,390
)
Deferred
3,352

 
1,449

 
4,412

 
2,605

Total income tax benefit
906

 
126

 
418


215

 
 
 
 
 
 
 
 
Net income
$
4,891

 
$
29,406

 
$
262


$
20,766

Less distributions on preferred shares of beneficial interest - Series A

 

 


(1
)
Less distributions on preferred shares of beneficial interest - Series B

 

 


(1,817
)
Net income attributable to common shares of beneficial interest
$
4,891

 
$
29,406

 
$
262


$
18,948

 
 
 
 
 



Weighted average common shares outstanding – basic
182,325

 
143,499

 
165,869


133,965

Weighted average common shares outstanding – diluted
186,117

 
146,474

 
169,305


136,737

 
 
 
 
 



Net income per common share of beneficial interest - basic
$
0.03

 
$
0.20

 
$
0.00


$
0.13

Net income per common share of beneficial interest - diluted
$
0.03

 
$
0.20

 
$
0.00


$
0.14

See accompanying notes to condensed consolidated financial statements.


5



Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
4,891

 
$
29,406

 
$
262

 
$
20,766

Other comprehensive income (loss) - net of tax:
 
 
 
 
 
 
 
Adjustment to accrued pension liability
527

 
498

 
1,051

 
997

Change in unrealized net loss on foreign currency
(2,257
)
 
(4,723
)
 
(1,036
)
 
(6,196
)
Unrealized (loss) gain on cash flow hedge derivatives
(1,763
)
 
204

 
(4,477
)
 
240

Other comprehensive loss
(3,493
)
 
(4,021
)
 
(4,462
)
 
(4,959
)
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
$
1,398

 
$
25,385

 
$
(4,200
)
 
$
15,807

 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
 
 
 
 
 



6



Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(In thousands, except shares and per share amounts)
 
 
 
 
 
 
 
 
Common Shares of
 
Accumulated Deficit and Distributions in Excess of Net Earnings
Accumulated Other Comprehensive Loss
 
 
Beneficial Interest
 
 
 
Number of Shares
Par Value
Paid-in Capital
 
 
Total
Balance - December 31, 2018
148,234,959

$
1,482

$
1,356,133

$
(638,345
)
$
(12,515
)
$
706,755

Net loss



(4,629
)

(4,629
)
Other comprehensive loss




(2,832
)
(2,832
)
Distributions on common shares of beneficial interest



(30,235
)

(30,235
)
Share-based compensation expense (Stock Options and Restricted Stock Units)


2,625



2,625

Share-based compensation expense (modification and acceleration of equity awards)


3,044



3,044

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes
897,849

9

3,965



3,974

Other



(88
)
1,863

1,775

Balance - March 31, 2019
149,132,808

$
1,491

$
1,365,767

$
(673,297
)
$
(13,484
)
$
680,477

Net income



4,891


4,891

Other comprehensive loss




(4,476
)
(4,476
)
Distributions on common shares of beneficial interest



(38,764
)

(38,764
)
Share-based compensation expense (Stock Options and Restricted Stock Units)


3,171



3,171

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes
439,152

4

2,323



2,327

Issuance of common shares
42,062,500

421

1,206,627



1,207,048

Other




983

983

Balance - June 30, 2019
191,634,460

$
1,916

$
2,577,888

$
(707,170
)
$
(16,977
)
$
1,855,657


7



Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)
(In thousands, except shares)
 
Preferred Shares of
 
 
 
 
 
 
 
Beneficial Interest
Common Shares of
 
Accumulated Deficit and Distributions in Excess of Net Earnings
Accumulated Other Comprehensive Loss
 
 
Series A
Beneficial Interest
 
 
 
Number of Shares
Par Value
Number of Shares
Par Value
Paid-in Capital
 
 
Total
Balance - December 31, 2017
125

$

69,370,609

$
694

$
394,082

$
(581,470
)
$
(230
)
$
(186,924
)
Net loss





(8,640
)

(8,640
)
Other comprehensive loss






(938
)
(938
)
Redemption and distributions on preferred shares of beneficial interest – Series A
(125
)



(133
)
(1
)

(134
)
Distributions on preferred shares of beneficial interest – Series B





(1,817
)

(1,817
)
Distributions on common shares





(21,436
)

(21,436
)
Share-based compensation expense (Stock Options and Restricted Stock Units)




1,839



1,839

Share-based compensation expense (modification of Restricted Stock Units)




2,600



2,600

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes


125,763

1

(260
)


(259
)
Warrants exercise


6,426,818

64

(64
)



Issuance of common shares


33,350,000

334

484,571



484,905

Conversion of mezzanine Series B Preferred shares


33,240,258

332

372,459



372,791

Balance - March 31, 2018

$

142,513,448

$
1,425

$1,255,094
$
(613,364
)
$
(1,168
)
$
641,987

Net loss





29,406


29,406

Other comprehensive loss






(4,021
)
(4,021
)
Distributions on common shares





(27,250
)

(27,250
)
Share-based compensation expense (Stock Options and Restricted Stock Units)




2,256



2,256

Share-based compensation expense (modification of Restricted Stock Units)




(559
)


(559
)
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes


945,604

10

988



998

Balance - June 30, 2018

$

143,459,052

$
1,435

$
1,257,779

$
(611,208
)
$
(5,189
)
$
642,817


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Distributions declared per common share of beneficial interest
$
0.2126

 
$
0.1891

 
$
0.4160

 
$
0.3620

See accompanying notes to condensed consolidated financial statements.

8



Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
Six Months Ended June 30,
 
2019

2018
Operating activities:

 
 
Net income attributable to Americold Realty Trust
$
262


$
20,766

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation, depletion and amortization
70,533


58,459

Amortization of deferred financing costs and pension withdrawal liability
2,978


3,230

Amortization of above/below market leases
76


76

Loss on debt extinguishment and modification, non-cash


21,105

Foreign exchange loss (gain)
23


(2,191
)
Income from investments in partially owned entities
(54
)

(112
)
Share-based compensation expense
5,810


4,142

Share-based compensation expense (modification and acceleration of equity awards)
3,044


2,042

Deferred income tax benefit
(4,412
)

(2,605
)
Loss (gain) from sale of real estate
34

 
(8,384
)
Loss (gain) on other asset disposals
189


(308
)
Impairment of long-lived assets
13,485


747

Provision for doubtful accounts receivable
622


360

Changes in operating assets and liabilities:



Accounts receivable
3,287


15,548

Accounts payable and accrued expenses
(23,883
)

(34,357
)
Other
7,841


(1,631
)
Net cash provided by operating activities
79,835

 
76,887

Investing activities:
 
 
 
Return of investment in joint venture
2,000



Proceeds from the sale of property, plant, and equipment
822


18,104

Business combinations, net of cash acquired
(1,323,265
)
 

Acquisitions of property, plant, and equipment, net of cash acquired
(35,923
)
 

Additions to property, plant, and equipment
(98,428
)

(65,039
)
Net cash used in investing activities 
(1,454,794
)
 
(46,935
)
Financing activities:
 
 
 
Redemption and distributions paid on preferred shares of beneficial interest – Series A


(134
)
Distributions paid on preferred shares of beneficial interest – Series B


(1,817
)
Distributions paid on common shares
(58,206
)

(21,377
)
Proceeds from stock options exercised
9,647


7,524

Share purchases for taxes, net of proceeds from employee share-based transactions
(3,570
)

(7,021
)
Proceeds from revolving line of credit
100,000



Repayment on revolving line of credit
(100,000
)


Payment of underwriters' costs


(5,750
)
Reimbursement of underwriters' costs


5,750

Repayment of sale-leaseback financing obligations
(1,500
)

(1,227
)
Repayment of financing lease obligations
(5,838
)

(4,796
)
Payment of debt issuance costs
(2,025
)

(8,727
)
Repayment of term loan, mortgage notes, notes payable and construction loans
(7,113
)

(889,454
)
Proceeds from term loan


525,000

Proceeds from issuance of senior unsecured notes
350,000

 

Net proceeds from initial public offering


493,557

Net proceeds from follow-on public offering
1,206,627



Proceeds from construction loans


1,097

Net cash provided by financing activities
1,488,022

 
92,625

Net increase in cash, cash equivalents and restricted cash
113,063

 
122,577

Effect of foreign currency translation on cash, cash equivalents and restricted cash
86

 
(1,765
)
Cash, cash equivalents and restricted cash:

 

Beginning of period
214,097

 
69,963

End of period
$
327,246

 
$
190,775


 
 
 
See accompanying notes to condensed consolidated financial statements.
 
 
 

9




Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
(In thousands)

Six Months Ended June 30,
Supplemental disclosures of cash flows information:
2019

2018
Acquisition of fixed assets under financing lease obligations
$
20,215


$
5,564

Acquisition of fixed assets under operating lease obligations
$
8,117

 
$

Interest paid – net of amounts capitalized
$
26,188


$
43,954

Income taxes paid – net of refunds
$
2,975


$
4,545

Acquisition of property, plant, and equipment on accrual
$
20,886


$
15,118





Reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the ending cash, cash equivalents and restricted cash balances above:
As of June 30,
2019

2018
Cash and cash equivalents
$
320,805

 
$
153,200

Restricted cash
6,441

 
37,575

Total cash, cash equivalents and restricted cash
$
327,246


$
190,775







 
As of June 30,
Allocation of purchase price of property, plant and equipment to:
2019
 
2018
Investments in land, building and improvements
$
31,561

 
$

Machinery and equipment
3,410

 

Assembled workforce
351

 

Other assets
601

 

Cash paid for acquisition of property, plant and equipment
$
35,923

 
$

 
 
 
 
 
 
 
 

As of June 30,

2019

2018
Allocation of purchase price to business combinations:





Land
$
63,463


$

Building and improvements
724,756



Machinery and equipment
170,339



Assets under construction
20,968

 

Operating lease right-of-use assets
1,254

 

Cash and cash equivalents
4,977

 

Accounts receivable
22,761

 

Goodwill
113,806

 

Acquired identifiable intangibles:
 
 
 
Customer relationships
250,989

 

Trade names and trademarks
1,623

 

Other assets
18,802

 

Accounts payable and accrued expenses
(32,444
)
 

Notes payable
(17,179
)
 

Operating lease obligations
(1,254
)
 

Unearned revenue
(3,536
)
 

Pension and postretirement benefits
(2,020
)
 

Deferred tax liability
(9,063
)
 

Total consideration
$
1,328,242

 
$




10



Americold Realty Operating Partnership, L.P. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per unit amounts)
 
June 30,
 
December 31,
 
2019
 
2018
Assets
 
 
 
Property, plant, and equipment:
 
 
 
Land
$
516,874

 
$
385,232

Buildings and improvements
2,591,532

 
1,849,749

Machinery and equipment
770,336

 
577,175

Assets under construction
118,375

 
85,983

 
3,997,117

 
2,898,139

Accumulated depreciation and depletion
(1,157,430
)
 
(1,097,624
)
Property, plant, and equipment – net
2,839,687

 
1,800,515

 
 
 
 
Operating lease right-of-use assets
75,849

 

Accumulated depreciation-operating leases
(10,411
)
 

Operating leases-net
65,438

 

 
 
 
 
Financing leases:
 
 
 
Buildings and improvements
11,227

 
11,227

Machinery and equipment
67,188

 
49,276

 
78,415

 
60,503

Accumulated depreciation- financing leases
(23,967
)
 
(21,317
)
Financing leases – net
54,448

 
39,186

 
 
 
 
Cash and cash equivalents
320,805

 
208,078

Restricted cash
6,441

 
6,019

Accounts receivable – net of allowance of $4,946 and $5,706 at June 30, 2019 and December 31, 2018, respectively
208,978

 
194,279

Identifiable intangible assets – net
275,363

 
25,056

Goodwill
300,007

 
186,095

Investments in partially owned entities
12,788

 
14,541

Other assets
78,502

 
58,659

Total assets
$
4,162,457

 
$
2,532,428

 
 
 
 
 Liabilities and partners' capital
 
 
 
 Liabilities:
 
 
 
Accounts payable and accrued expenses
287,691

 
253,080

Mortgage notes, senior unsecured notes, term loan and notes payable - net of unamortized deferred financing costs of $14,499 and $13,943, in the aggregate, at June 30, 2019 and December 31, 2018, respectively
1,710,523

 
1,351,014

Sale-leaseback financing obligations
117,420

 
118,920

Financing lease obligations
55,292

 
40,787

Operating lease obligations
68,428

 

Unearned revenue
18,805

 
18,625

Pension and postretirement benefits
17,135

 
16,317

Deferred tax liability - net
22,669

 
17,992

Multi-Employer pension plan withdrawal liability
8,837

 
8,938

Total liabilities
2,306,800

 
1,825,673

Partners' capital:
 
 
 
General partner - 189,718,115 and 146,752,609 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
1,853,907

 
712,078

Limited partner - 1,916,345 and 1,482,350 units issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
18,727

 
7,192

Accumulated other comprehensive loss
(16,977
)
 
(12,515
)
Total partners' capital
1,855,657

 
706,755

Total liabilities and partners' capital
$
4,162,457

 
$
2,532,428

See accompanying notes to condensed consolidated financial statements.
 
 
 
Americold Realty Operating Partnership, L.P. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per unit amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Rent, storage, and warehouse services
$
338,231

 
$
287,712

 
$
627,846

 
$
574,229

Third-party managed services
61,515

 
65,755

 
125,651

 
129,632

Transportation services
36,492

 
38,889

 
73,588

 
77,234

Other
2,222

 
2,311

 
4,454

 
4,714

Total revenues
438,460

 
394,667

 
831,539

 
785,809

Operating expenses:
 
 
 
 
 
 
 
Rent, storage, and warehouse services cost of operations
224,414

 
196,877

 
423,210

 
393,824

Third-party managed services cost of operations
58,711

 
61,896

 
119,588

 
121,995

Transportation services cost of operations
32,286

 
35,303

 
65,026

 
70,054

Cost of operations related to other revenues
1,930

 
2,391

 
3,918

 
4,448

Depreciation, depletion and amortization
40,437

 
29,051

 
70,533

 
58,459

Selling, general and administrative
32,669

 
27,750

 
63,786

 
55,857

Acquisition, litigation, and other
17,964

 
(268
)
 
26,457

 
3,574

Impairment of long-lived assets
930

 
747

 
13,485

 
747

Loss (gain) from sale of real estate, net
34

 
(8,384
)
 
34

 
(8,384
)
Total operating expenses
409,375

 
345,363

 
786,037

 
700,574

 
 
 
 
 
 
 
 
Operating income
29,085

 
49,304

 
45,502

 
85,235

 
 
 
 
 
 
 
 
Other (expense) income:
 
 
 
 
 
 
 
(Loss) income from partially owned entities
(68
)
 
252

 
54

 
112

Interest expense
(24,098
)
 
(22,929
)
 
(45,674
)
 
(47,424
)
Bridge loan commitment fees
(2,665
)
 

 
(2,665
)
 

Interest income
2,405

 
1,109

 
3,408

 
1,733

Loss on debt extinguishment and modifications

 

 

 
(21,385
)
Foreign currency exchange (loss) gain, net
(83
)
 
1,511

 
(23
)
 
2,191

Other (expense) income, net
(591
)
 
33

 
(758
)
 
89

Income (loss) before income tax (expense) benefit
3,985

 
29,280

 
(156
)
 
20,551

Income tax (expense) benefit:
 
 
 
 
 
 
 
Current
(2,446
)
 
(1,323
)
 
(3,994
)
 
(2,390
)
Deferred
3,352

 
1,449

 
4,412

 
2,605

Total income tax benefit
906

 
126

 
418

 
215

 
 
 
 
 
 
 
 
Net income attributable to the Partnership
$
4,891

 
$
29,406

 
$
262

 
$
20,766

 
 
 
 
 
 
 
 
General partners' interest in net income attributable to unitholders
$
4,842

 
$
29,112

 
$
259

 
$
20,558

Limited partners' interest in net income attributable to unitholders
$
49

 
$
294

 
$
3

 
$
208

 
 
 
 
 
 
 
 
General partner weighted average units outstanding
179,880

 
141,460

 
163,589

 
132,412

Limited partner weighted average units outstanding
1,817

 
1,429

 
1,652

 
1,337

 
 
 
 
 
 
 
 
General partners' net income per unit
$
0.03

 
$
0.21

 
$
0.00

 
$
0.16

Limited partners' net income per unit
$
0.03

 
$
0.21

 
$
0.00

 
$
0.16

See accompanying notes to condensed consolidated financial statements.

11



Americold Realty Operating Partnership, L.P. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2018
 
2018
Net income attributable to Americold Realty Operating Partnership, L.P.
$
4,891

 
$
29,406

 
$
262

 
$
20,766

Other comprehensive income (loss) - net of tax:
 
 
 
 
 
 
 
Adjustment to accrued pension liability
527

 
498

 
1,051

 
997

Change in unrealized net loss on foreign currency
(2,257
)
 
(4,723
)
 
(1,036
)
 
(6,196
)
Unrealized (loss) gain on cash flow hedge
(1,763
)
 
204

 
(4,477
)
 
240

Other comprehensive loss attributable to Americold Realty Operating Partnership, L.P.
(3,493
)
 
(4,021
)
 
(4,462
)
 
(4,959
)
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
$
1,398

 
$
25,385

 
$
(4,200
)
 
$
15,807

 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
 
 
 
 
 
 


12



Americold Realty Operating Partnership, L.P. and Subsidiaries

Condensed Consolidated Statements of Partners' Capital (Unaudited)
(In thousands, except units and per unit amounts)
 
Limited Partners' Units
Limited Partners' Capital
General Partners' Units
General Partners' Capital
Accumulated Other Comprehensive Loss
Total Capital
Balance - December 31, 2018
1,482,350

$
7,192

146,752,609

$
712,078

$
(12,515
)
$
706,755

Net loss

(46
)

(4,583
)

(4,629
)
Other comprehensive loss




(2,832
)
(2,832
)
Distributions to parent

(302
)

(29,933
)

(30,235
)
Share-based compensation expense

57


5,612


5,669

Contributions to partners' capital
8,978

40

888,871

3,934


3,974

Other

(1
)

(87
)
1,863

1,775

Balance - March 31, 2019
1,491,328

$
6,940

147,641,480

$
687,021

$
(13,484
)
$
680,477

Net income

49


4,842


4,891

Other comprehensive loss





(4,476
)
(4,476
)
Distributions to parent

(388
)

(38,376
)

(38,764
)
Share-based compensation expense

32


3,139


3,171

Contributions to partners' capital
425,017

12,094

42,076,635

1,197,281


1,209,375

Other




983

983

Balance - June 30, 2019
1,916,345

$
18,727

189,718,115

$
1,853,907

$
(16,977
)
$
1,855,657

 
Limited Partners' Units
Limited Partners' Capital
General Partners' Units
General Partners' Capital
Accumulated Other Comprehensive Loss
Total Capital
Balance - December 31, 2017
693,706

$
1,860

68,676,903

$
184,240

$
(230
)
$
185,870

Net loss

(86
)

(8,554
)

(8,640
)
Other comprehensive loss




(938
)
(938
)
Distributions to parent

(234
)

(23,155
)

(23,389
)
Share-based compensation expense

42


4,137


4,179

Contributions to partners' capital
731,428

4,849

72,411,411

480,056


484,905

Balance - March 31, 2018
1,425,134

$
6,431

141,088,314

$
636,724

$
(1,168
)
$
641,987

Net income

294


29,112


29,406

Other comprehensive loss




(4,021
)
(4,021
)
Distributions to parent

(272
)

(26,978
)

(27,250
)
Share-based compensation expense

17


1,680


1,697

Contributions to partners' capital
9,456

10

936,148

988


998

Balance - June 30, 2018
1,434,590

$
6,480

142,024,462

$
641,526

$
(5,189
)
$
642,817

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
2018
Distributions declared per unit
$
0.2133

 
$
0.1899

 
$
0.4176

$
0.3226

See accompanying notes to condensed consolidated financial statements.



13



Americold Realty Operating Partnership, L.P. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
Six Months Ended June 30,
 
2019
 
2018
Operating activities:
 
Net income attributable to Americold Realty Operating Partnership, L.P.
$
262

 
$
20,766

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation, depletion and amortization
70,533

 
58,459

Amortization of deferred financing costs and pension withdrawal liability
2,978

 
3,230

Amortization of above/below market leases
76

 
76

Loss on debt extinguishment and modification, non-cash

 
21,105

Foreign exchange loss (gain)
23

 
(2,191
)
Income from investments in partially owned entities
(54
)
 
(112
)
Share-based compensation expense
5,810

 
4,142

Share-based compensation expense (modification and acceleration of equity awards)
3,044

 
2,042

Deferred income tax benefit
(4,412
)
 
(2,605
)
Loss (gain) from sale of real estate
34

 
(8,384
)
Loss (gain) on other asset disposals
189

 
(308
)
Impairment of long-lived assets
13,485

 
747

Provision for doubtful accounts receivable
622

 
360

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
3,287

 
15,548

Accounts payable and accrued expenses
(23,883
)
 
(34,357
)
Other
7,841

 
(1,631
)
Net cash provided by operating activities
79,835

 
76,887

Investing activities:
 
 
 
Return of investment in joint venture
2,000

 

Proceeds from the sale of property, plant, and equipment
822

 
18,104

Business combinations, net of cash acquired
(1,323,265
)
 

Acquisitions of property, plant, and equipment, net of cash acquired
(35,923
)
 

Additions to property, plant, and equipment
(98,428
)
 
(65,039
)
Net cash used in investing activities 
(1,454,794
)
 
(46,935
)
Financing activities:
 
 
 
Distributions to parent
(58,206
)
 
(29,078
)
Repayment of sale-leaseback financing obligations
(1,500
)
 
(1,227
)
Repayment of financing lease obligations
(5,838
)
 
(4,796
)
Payment of debt issuance costs
(2,025
)
 
(8,727
)
Repayment of term loan, mortgage notes, notes payable and construction loans
(7,113
)
 
(889,454
)
Proceeds from term loan

 
525,000

Proceeds from issuance of senior unsecured notes
350,000

 

Proceeds from construction loans

 
1,097

General partner contributions
1,212,704

 
499,810

Net cash provided by financing activities
1,488,022

 
92,625

Net increase in cash, cash equivalents and restricted cash
113,063

 
122,577

Effect of foreign currency translation on cash, cash equivalents and restricted cash
86

 
(1,765
)
Cash, cash equivalents and restricted cash:

 

Beginning of period
214,097

 
69,963

End of period
$
327,246

 
$
190,775


 
 
 
See accompanying notes to condensed consolidated financial statements.
 
 
 


14



Americold Realty Operating Partnership, L.P. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
(In thousands)

Six Months Ended June 30,
Supplemental disclosures of cash flows information:
2019
 
2018
Acquisition of fixed assets under financing lease obligations
$
20,215

 
$
5,564

Acquisition of fixed assets under operating lease obligations
$
8,117

 
$

Interest paid – net of amounts capitalized
$
26,188

 
$
43,954

Income taxes paid – net of refunds
$
2,975

 
$
4,545

Acquisition of property, plant, and equipment on accrual
$
20,886

 
$
15,118

 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the ending cash, cash equivalents and restricted cash balances above:
As of June 30,
2019
 
2018
Cash and cash equivalents
$
320,805

 
$
153,200

Restricted cash
6,441

 
37,575

Total cash, cash equivalents and restricted cash
$
327,246

 
$
190,775

 
 
 
 
 
As of June 30,
Allocation of purchase price of property, plant and equipment to:
2019
 
2018
Investments in land, building and improvements
$
31,561

 
$

Machinery and equipment
3,410

 

Assembled workforce
351

 

Other assets
601

 

Cash paid for acquisition of property, plant and equipment
$
35,923

 
$

 
 
 
 
 
As of June 30,
 
2019
 
2018
Allocation of purchase price to business combinations:
 
 
 
Land
$
63,463

 
$

Building and improvements
724,756

 

Machinery and equipment
170,339

 

Assets under construction
20,968

 

Operating lease right-of-use assets
1,254

 

Cash and cash equivalents
4,977

 

Accounts receivable
22,761

 

Goodwill
113,806

 

Acquired identifiable intangibles:
 
 
 
Customer relationships
250,989

 

Trade names and trademarks
1,623

 

Other assets
18,802

 

Accounts payable and accrued expenses
(32,444
)
 

Notes payable
(17,179
)
 

Operating lease obligations
(1,254
)
 

Unearned revenue
(3,536
)
 

Pension and postretirement benefits
(2,020
)
 

Deferred tax liability
(9,063
)
 

Total consideration
$
1,328,242

 
$


15


Americold Realty Trust and Subsidiaries
Americold Realty Operating Partnership, L.P. and Subs