Americold (COLD) Q1 2026 Earnings Transcript

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DATE

Thursday, May 7, 2026 at 8 a.m. ET

Call participants

• Chief Executive Officer — Robert Chambers
• Chief Financial Officer — Christopher Papa
• Chief Accounting Officer — Scott Henderson
• Vice President, Investor Relations — Rich Leland

Takeaways

• AFFO per share -- $0.29, exceeding analyst consensus and tracking in line or slightly above original guidance according to management.
• Physical occupancy -- Flat year over year, reflecting stabilizing inventory levels; economic occupancy contracted less than anticipated.
• Fixed committed contracts renewed -- 34% of expiring or month-to-month contracts representing approximately $100 million in revenue were renewed, extending average duration.
• Tenant churn -- 2.5% customer churn rate, with management highlighting customer service as the primary retention driver.
• Fixed commitment revenue concentration -- 59% of total rent and storage revenue derived from fixed committed contracts during a critical renewal period.
• Joint venture formation -- 12 properties valued over $1.3 billion contributed to a new JV with EQT Partners, with EQT holding 70% and Americold (NYSE:COLD) expecting approximately $1.1 billion in Q3 proceeds.
• JV cap rate and valuation -- Properties contributed at a 7% blended cap rate, or approximately $3,300 per pallet position; a premium to current public market valuation per management.
• Proceeds use and deleveraging -- Approximately $1.1 billion in proceeds expected to repay 2026, 2027, and part of 2028 U.S. debt maturities; net debt to pro forma core EBITDA estimated to decrease by approximately 0.75x to below 7.1x, moving toward 6x target.
• JV economics and fee structure -- Americold keeps 30% of JV NOI and operates assets, with anticipated $15 million-$20 million in annual management fees.
• JV asset revenue and NOI -- JV contributed assets generated approximately $231 million in revenue and $103 million in NOI for fiscal 2025, as stated by CFO.
• Portfolio optimization actions -- Two of nine targeted facility exits completed in Q1, removing 62,000 pallet positions from Atlanta, with additional sites idled and marketed for sale.
• Triple net lease activity -- Acquisition of a leased facility and subsequent 15-year triple net lease yielded a 10% return on investment; new lease deals increased annualized leasing revenue by over $4 million (7%).
• Operating expense reductions -- $30 million in annual SG&A and indirect labor savings fully realized in Q1; over 400 positions cut.
• International performance -- European physical occupancy increased more than 800 basis points sequentially; throughput gains cited for both Europe and Asia Pacific.
• Warehouse NOI -- Warehouse NOI declined 4.5%, attributed to ongoing pricing pressure, lower throughput, and a $2 million energy cost headwind.
• Power expense overview -- Power costs represent about 6% of same-store warehouse expenses; most contracts enable cost pass-throughs or hedging via locked-in rates for 25% of the portfolio.
• Customer wins and retention -- Renewed a 10-year KFC Australia contract and expanded a multi-temperature deal with On the Run to cover 600 locations.
• E-commerce growth -- Double-digit rate e-commerce growth, onboarding three new accounts, plus over 1 million packages shipped last year; now operational in five sites with 99.5% U.S. population coverage in two days.
• Development pipeline -- Sydney and Christchurch expansions delivered on time and on budget, both serving grocery retailers in near-full markets.
• Major dedicated project -- Announced a 20-year, customer-dedicated cold storage project for McCain Foods, adding 56,000 pallet positions, potentially to be funded via the JV.

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Risks

• CFO Christopher Papa said, "While we don't know the exact timing of when the transaction will close, we estimate that the JV could be a full year headwind to AFFO of approximately $0.10 per share or roughly $0.06 per share for the second half of 2026. The ultimate impact will depend on when the deal closes."
• Warehouse NOI -- NOI fell 4.5%, pressured by lower storage pricing, reduced throughput, and a $2 million energy cost headwind, as cited by Papa.
• Market softness: Papa stated, "many of them have, in some way, felt the effects of the soft market conditions that are impacting our industry."

Summary

Management unveiled a new joint venture with EQT Partners, transferring 12 properties to unlock approximately $1.1 billion, with proceeds pledged toward deleveraging through near-term debt repayment. Americold maintained its original AFFO outlook, anticipating the JV's AFFO dilution can be largely offset by business outperformance and cost savings. Portfolio optimization advanced with targeted exits and new leasing activity, while international and e-commerce operations delivered notable growth achievements. Strategic focus for 2026 remains on balance sheet strength, disciplined capital deployment, and leveraging operational expertise to drive multi-segment growth as industry demand stabilizes.

• The JV structure preserves Americold's long-term operational control, ongoing management fee income, and participation in future development opportunities, with both partners expecting first-look rights on new projects.
• Executives confirmed cost optimization and asset management initiatives will continue, supplementing capital recycling efforts to approach the company's 6x leverage target.
• Contract renewal efforts and elevated fixed commitment revenue concentration signaled successful navigation of competitive pricing dynamics, with management repeatedly emphasizing the role of service quality in customer retention.
• Upcoming reporting periods will include more granular guidance as JV closing conditions are finalized and further cost actions progress.

Industry glossary

• AFFO (Adjusted Funds from Operations): A REIT cash flow metric that adjusts FFO for recurring capital expenditures and straight-line rents, representing cash available to shareholders.
• Cap rate (Capitalization Rate): The expected annual return on a real estate investment, calculated as NOI divided by the property's value or purchase price.
• NOI (Net Operating Income): Income from property operations after operating expenses, but before interest, depreciation, and taxes.
• Triple net lease: A lease structure where the tenant pays property taxes, insurance, and maintenance, in addition to rent.
• Churn rate: The percentage of customers lost over a period, used as a measure of client retention.
• JV (Joint Venture): A business agreement where two or more parties pool resources for a specific project or business activity, sharing profits and management.

Full Conference Call Transcript

Operator: Hello, and welcome, everyone joining today's Americold Realty Trust First Quarter 2026 Earnings Call. [Operator Instructions] Please note this call is being recorded. It is now my pleasure to turn the meeting over to Rich Leland. Please go ahead.

Rich Leland: Hello, and thank you for joining us today for Americold Realty Trust's First Quarter 2026 Earnings Conference Call. In addition to the press release distributed this morning, we have filed a supplemental financial package with additional detail on our results. These materials are available on the Investor Relations section of our website at www.americold.com. This morning's conference call is hosted by Americold's Chief Executive Officer, Rob Chambers, along with Chris Papa, our Chief Financial Officer. Management will make some prepared comments, after which we'll open up the call to your questions. Before we begin, let me remind you that management's remarks today may contain forward-looking statements.

Forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those anticipated. These forward-looking statements are based on current expectations, assumptions and beliefs as well as information available to us at this time and speak only as of the date they are made. Management undertakes no obligation to update publicly any of these statements in light of new information or future events. During this call, we will also discuss certain non-GAAP financial measures, including NOI, core EBITDA and net debt to pro forma core EBITDA and AFFO, among others.

The full definition of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the supplemental financial package available on the company's website. Please note that all warehouse financial results are in constant currency and reflects the Q1 2026 same-store pool unless otherwise noted. Now I'll turn the call over to Rob for his prepared remarks.

Robert Chambers: Thank you, Rich, and thank you all for joining our first quarter 2026 earnings conference call. Before we begin, I would like to formally welcome Chris Papa to the team as our Chief Financial Officer. Chris started with us in February and brings more than two decades of experience, leading investment-grade rated and publicly traded REITs. Since joining the team, Chris has been fully engaged, meeting with leaders across the business, spending time with our investors and our customers and touring our facilities. He brings a unique mix of qualifications and experiences and I look forward to his many future contributions to drive our business forward. Turning to our first quarter financial results.

We delivered AFFO of $0.29 per share above analyst consensus. Chris will review the full detail in just a few minutes, but I was pleased that all key metrics materialized in line or slightly better than our original guidance. I'm particularly encouraged that our physical occupancy was flat year-over-year, further supporting relief that inventories levels have largely stabilized. These trends have continued in April, and we believe that we should see a return to more normalized seasonal trends as we progress throughout the year. Our pricing metrics in the quarter also marginally overperformed expectations.

Our commercial teams continue to lead with our value proposition, which we call the Americold Advantage, consisting of best-in-class service, technology solutions and a suite of services rather than simply competing on price as you see from others in our industry. Our customer churn rate remains low at 2.5%, further validating our view that service remains a top priority to our customers when considering their cold chain partner. During the quarter, we also successfully renewed 34% and of the year's fixed committed contracts that were either month-to-month are set to expire in 2026. This represents approximately $100 million of revenue and extends the weighted average duration of our future expirations.

Importantly, we held our total rent and storage revenue from fixed committed contracts at 59%, very solid performance during a critical renewal period as customers continue to see the benefits of a fixed commitment structure. All of these metrics demonstrate our company-wide focus on commercial excellence as we navigate through the current market environment. Since stepping into the CEO role, I've been laser-focused on setting a strong foundation for future growth while ensuring that we deliver on our financial commitments. Despite a continued challenging macro environment, we've now delivered 3 straight quarters that either met or exceeded AFFO per share consensus. Beyond our financial performance, we also made significant progress this quarter on each of our 5 key strategic priorities.

As a reminder, we launched these objectives late last year to strengthen the foundation of our organization and set us up for long-term success. They include delevering our balance sheet to maintain our investment-grade profile, actively managing our portfolio of real estate assets for maximum value, streamlining our operations and rightsizing our cost structure, identifying unique opportunities to drive occupancy growth across our network and selectively supporting our key customers and strategic partnerships. Perhaps the most foundational of these priorities are the strategic actions that we are taking to strengthen our balance sheet. Earlier this morning, we announced the formation of a new joint venture with EQT Partners, one of the largest purpose-driven real estate investors in the world.

EQT is a sophisticated investor in the space as they own one of the largest cold storage providers in Europe. They will hold a 70% interest in the JV as part of their infrastructure portfolio with Americold contributing a seed pool of 12 properties across the U.S. worth over $1.3 billion. This represents a blended cap rate to the JV of approximately 7% for nearly $3,300 per pallet position. This is a significant premium to our public market valuation, which reflects the mission-critical nature of our assets. As part of the agreement, we will continue to operate the assets, providing continuity of service to our customers as well as providing ongoing asset management and development expertise to the JV.

We anticipate closing the transaction in the third quarter at which point Americold will receive approximately $1.1 billion in proceeds, which we intend to use to pay down a portion of our outstanding debt. As many of you are aware, joint ventures are a common structure across the REIT industry, and I'm thrilled that EQT is a partner to help support our strategy. We expect to expand the platform in the future with additional development opportunities and we already have one exciting new project for consideration, which I will discuss in just a moment.

As we look forward, our capital allocation priorities remain consistent, maintaining an investment-grade balance sheet, evaluating the portfolio for asset recycling opportunities and continuing our disciplined approach to new capital deployment. Our second priority is to actively manage our portfolio to address underperforming properties while pursuing the highest and best use of our geographically diverse network of real estate assets. During fourth quarter call, we indicated that we had identified 9 additional facilities to exit or idle in 2026. Two of these exits were completed in Q1. Both of these facilities were leased and we returned the keys to the owner at the end of the term after successfully shifting much of the customer inventory into our nearby facilities.

These buildings will be torn down, removing over 62,000 pallet positions from the Atlanta market. Of the remaining facilities, the majority have been idled and are actively being marketed for sale. We'll continue to do our part to remove excess capacity from the industry, we continue to see smaller, less sophisticated operators remain under pressure. In the quarter, we've heard of several smaller operators and new market entrants either shutting their doors or struggling to meet their financial commitments. In many of those instances, we've been the beneficiary of volumes coming back to Americold, given our status as an industry leader. Beyond just exiting facilities, we are also pursuing attractive triple net leasing opportunities across the portfolio.

During Q1, we identified one of these opportunities and purchased an existing leased facility at well below market value and subsequently entered into a 15-year triple net lease with a new tenant to fully occupy the space. By eliminating the rent expense and acquiring the property at a discount, we are able to achieve an approximate 10% return on investment. We also signed several other new deals in the quarter, and have increased our annualized leasing revenue by over $4 million or about 7%, which you can see reflected on Page 24 of the financial supplement.

These are all great examples of the disciplined process we are taking to creatively ensure we are receiving the best value possible from our real estate assets. Our third priority is to rightsize our cost structure and drive efficiencies across our operation. Late last year, we identified $30 million in potential savings within indirect labor and SG&A, and I'm pleased to report that all initiatives were completed in Q1 as expected. We are exploring additional cost actions, and Chris will discuss the details in a moment. While we are taking cost out of the business, we are being extremely cautious to ensure that we retain the high level of customer service that Americold is known for in the industry.

This quarter, I'm pleased to announce that our Fort Worth railhead site received the Warehouse of the Year award from Kraft Heinz. This award was measured by performance KPIs, like turn times, inventory accuracy, fill rates and others. It is a great example of our relentless pursuit of efficiency and high-quality service resulting in meaningful value to our customers. Congratulations to our team in Fort Worth. Our fourth priority is driving organic growth by leveraging our operational expertise, scale and mission-critical infrastructure in adjacent and underpenetrated sectors. Late last year, we announced our initial win with On the Run in South Australia, one of the nation's most well-known convenience and petrol providers.

And in February, we announced the expansion of our relationship to support their national network in Australia. As a reminder, we are providing tri-temperature warehousing services to replenish every product in the store and have expanded our coverage to 600 of their locations. Additionally, I am very pleased that we recently renewed our contract with KFC in Australia for an additional 10 years. Americold has been working with KFC stores for the last 30 years, and we will continue to support their restaurant network of approximately 500 stores on the East Coast of Australia for the next decade, providing tri-temperature warehousing and distributing all of their food and nonfood materials.

Additionally, as part of this extension, we are implementing a technology solution that will generate restaurant-level sales forecast recommend replenishment orders and proactively optimize inventory positioning across the network. This technology will serve as the backbone of our store support solutions and is a great example of a Americold's differentiated offering and the value we can provide to our QSR multiunit customers. In North America, we successfully closed on a handful of new pet food and floral deals this quarter, expanding our presence in nonfood categories. Additionally, our initial outreach into pharmaceutical space resulted in a new storage commitment for probiotic products.

While these floral pet food and pharma deals will not be material to our results this year, they remain a great example of our ability to capture business in multiple new markets, while the food industry remains under pressure. One area that we're particularly excited about is our e-commerce business. which has been growing at a double-digit rate. We're currently onboarding 3 new accounts and shipped over 1 million package last year. We've expanded our capabilities to 5 sites across the country and have the ability to cover 99.5% of the U.S. population in 2 days or less.

Similar to our retail and QSR customers, e-commerce is operationally intensive which gives us an advantage in pursuing new business given our experience in the area and the strength of the Americold operating system. On to our fifth priority. From a development perspective, our expansions in Sydney, Australia and Christchurch, New Zealand were both delivered on time and on budget during the quarter. Both expansions are dedicated to large grocery retailers and add critical capacity to both markets where our existing facilities are nearly full. These facilities are great examples of the opportunity to strategically invest in markets that have not seen the level of speculative activity that has occurred in the U.S.

Finally, as I mentioned earlier, one of the important benefits of our new partnership with EQT is the ability to pursue new development opportunities through the joint venture. While we have significantly narrowed our development pipeline and refined our internal requirements for capital allocation, there are certain customer-driven projects where it makes sense to support our key relationships. A great example of this is a new customer dedicated project that we're kicking off with the McCain Foods and [indiscernible]. McCain is a top 5 customer for Americold with a nearly 35-year relationship.

We have an existing plant advantage facility that is located adjacent to their manufacturing plant [indiscernible] they want to consolidate portions of their cold storage network with an additional 56,000 pallet positions at the site. The project is backed by a 20-year fixed commitment agreement from McCain and given the attractive profile of the project, we believe that this is a type of project that could fit well in the joint venture. This is truly a win-win transaction for all the parties involved and we're honored that McCain chose us for this opportunity, and we look forward to servicing them for many more years to come.

This win also highlights the importance of having a diverse network at every node in the supply chain. Customers evaluate their future networks, we continue to see large food manufacturers looking to consolidate significant piles of inventory back closer to production. This is an area where Americold is a clear industry leader, and we're positioned to take advantage of this trend, given our long-standing relationships and solutioning expertise. I am proud of our progress in each of our 5 key strategic priorities this quarter with the joint venture representing a meaningful step towards our long-term leverage goal.

As we continue to relentlessly pursue cost savings, portfolio management and see our developments continue to come online, we're confident that our current playbook will build a strong foundation for future success. With that, I'll turn the call over to Chris to provide some additional details on our performance in the quarter. as well as some of the anticipated impacts to our financial statements for the new joint venture. Chris?

Christopher Papa: Thanks, Rob, and good morning, everyone. I'm excited to participate this morning on my first call as Americold's Chief Financial Officer. As Rob mentioned, since joining, I have met with our leaders, investors, customers and towards several of our facilities. I have been impressed by the capability and discipline and service our teams bring every day. I believe the scale, diversity and mission critical nature of our assets, when coupled with our operational expertise, creates a compelling value proposition that is difficult to replicate. I look forward to helping unlock this value for our shareholders.

One of my first priorities when I arrived was to fully engage in the strategic capital raise initiative that our management team and Board have been diligently pursuing for the past several months. I am very familiar with real estate joint ventures and the partnership with EQT not only strengthens Americold's balance sheet by funding debt repayment, improving liquidity and reducing future development risk, but also allows us to preserve operational control and cash flow from the assets. As Rob mentioned, we expect the transaction to close in the third quarter, at which point we will receive approximately $1.1 billion in cash proceeds.

We plan to use these proceeds to repay all of our 2026, 2027 and a portion of our 2028 U.S. dollar-denominated debt maturities. We will continue to operate these warehouses and receive a management fee of approximately $15 million to $20 million each year. We will also receive 30% of the NOI generated by venture, which will be recorded on our P&L under the line item titled Income Loss from investments in partially owned entities. These 12 properties represent approximately $231 million in revenue and [ $103 million ] in NOI for fiscal 2025.

At the end of Q1, our net debt to pro forma core EBITDA was 7.1x, and this transaction on a pro forma basis would reduce this by about 3/4 of a turn. This reflects significant progress toward our goal of 6x or less. We believe this joint venture, along with our portfolio optimization, ongoing cost actions and stabilizing industry fundamentals is a strong confidence in our ability to achieve this goal and we remain committed to maintaining our investment-grade profile.

While we don't know the exact timing of when the transaction will close, we estimate that the JV could be a full year headwind to AFFO of approximately $0.10 per share or roughly $0.06 per share for the second half of 2026. The ultimate impact will depend on when the deal closes. Since the business is currently performing in line to slightly ahead of our expectations, we believe that we will be able to offset most, if not all, of this impact. We are proud of our ability to preserve our AFFO guide for the year and simultaneously executed a strategic transaction to reduce leverage and significantly improve our balance sheet position.

We will provide more granular updates to our individual guidance components as the deal nears completion. Beyond the joint venture, I want to discuss our first quarter results, where we delivered AFFO per share of $0.29, exceeding analyst consensus. We were encouraged to see same-store physical occupancy stabilize with economic occupancy contracting slightly less than anticipated. While we are not updating our full year occupancy and pricing assumptions, this is certainly encouraging performance. Outside of the U.S., we were pleased to see throughput in both Europe and Asia Pacific increased from the prior year and Europe's physical occupancy increased by over 800 basis points in the quarter.

This is very strong performance and reflects the positive impact of the new business that was won by the international team over the past couple of quarters. Our Q1 warehouse NOI decreased 4.5% as expected, driven by the ongoing pricing pressure in the storage market and lower throughput and as well as a modest $2 million headwind from energy costs this quarter. As a reminder, almost all of our customer contracts have the ability to pass through abnormal cost increases. In addition to the power surcharge mechanism, we also lock in power rates in deregulated states, which represents about 25% of our portfolio.

We have pursued energy-saving best practices for many years and we are also leveraging AI to strategically pull power from the grid during nonpeak outers. As a reminder, power expense is only about 6% of our same-store warehouse costs and we plan to leverage all available mitigation strategies to continue managing these costs closely and minimize future P&L impacts. As Rob mentioned, one of our key priorities for the year is to optimize our cost structure. We were pleased to see core SG&A for the quarter came in relatively flat year-over-year, absent the impact of certain accruals that can fluctuate in Q1 and served to offset the typical wage rate inflation across the business.

Late last year, we identified $30 million in savings between both indirect labor and SG&A. We are pleased to report that these were fully executed and we reduced indirectly by over 400 positions in Q1. Additionally, we recently commenced the second phase of this project to identify further cost savings opportunities in other parts of our business as well as to explore ways to enhance efficiency within our organizational structure. Our goal is not only to reduce expenses but also to optimize how our teams operate and collaborate across the company. I look forward to sharing the outcome of this broader analysis with you on next quarter's call.

Additionally, as Rob mentioned earlier, we have made great progress with our portfolio management initiative, which is another one of our 5 key priorities for the year. As a reminder, when a site has no customers and minimal operating costs or otherwise meets the held-for-sale accounting criteria. We moved their expenses to transactions, strategic initiatives and other costs on our P&L. You can see on Page 22 of the supplement that we have included additional detail regarding these costs, which have decreased substantially versus the prior year. we exit sites, we are often able to terminate the lease or find an interested buyer in a fairly short period of time.

Proceeds from the sale of our own properties will assist with delevering our balance sheet. Additionally, since I joined the company, we have asked the team to do a review of our expansion and development projects to reassess our assumptions around the timing of stabilization dates, cash flows and expected yields given the duration of the current macro environment. While certain of these projects have been impacted more than others, many of them have, in some way, felt the effects of the soft market conditions that are impacting our industry. We will update you on the results of this review in the coming quarters.

In the short time I have been with Americold, I have been impressed by the team's focus on delivering the strategic priorities for the year. I believe these priorities are the best blueprint to building a strong foundation for the future and that this team can bring that vision to life. I'd rather be part of such a talented group of people and look forward to leveraging my expertise to further unlock this company's potential. Now I would like to turn the call back over to Rob for some closing comments. Rob?

Robert Chambers: Thanks, Chris. I'm very pleased with our results this quarter and remain confident in the long-term direction of our business. In my discussions with customers over the past several months, they remain cautious with their outlook for the year. However, they are increasingly mentioning investments in innovation as well as increased marketing and promotional spend, all with a focus on consumer value. These actions are intended to help drive organic volume growth. And in fact, we've seen this reflected in their earnings releases over the past several months with several customers regarding sales growth in the first quarter of the year. I hope to see this continue to gain traction as we navigate through the balance of the year.

As I've mentioned in the past, this is not a team that is standing still and waiting for a rebound in demand. I'm very proud of the significant progress that we are making across all 5 of our key priorities while also delivering on our financial commitments. The formation of the joint venture is a significant accomplishment, strengthening the balance sheet, illuminating the disconnect between public and private markets and supporting future development. It is also a testament to this team and this organization's ability to execute as well as the Board's focus on unlocking shareholder value.

With disciplined capital allocation, a sharpened focus on operational excellence and unwavering dedication to customer service, I believe we are well equipped to create meaningful growth over time. I want to thank our associates around the world for their continued hard work and our shareholders for their ongoing trust and support. Operator, we're now ready to open the call for questions.

Operator: [Operator Instructions] We will take our first question from Michael Griffin with Evercore ISI.

Michael Griffin: I wondered if you could give a little bit more color on the facilities being contributed to the JV? Where they are along the cold chain, the age, customer mix, kind of anything that might have stood out for these assets? And then would you say it's indicative of the portfolio quality overall of that, call it, [ 7 ] transaction cap rate? And then lastly, I know you mentioned the cap rate in the prepared remarks, how should we think about this deal on sort of the EV to EBITDA multiple basis?

Robert Chambers: Thanks, Michael. So let me start with the portfolio that we're contributing to the joint venture. I think what you said is right. I mean the facilities are a good representation of the broader North American portfolio. So what we see would be facilities that are geographically diverse, facilities that are across each of the node in the supply chain along with some conventional and automation as well. So, we think it's a very good mix of facilities. It's one that EQT was certainly excited about being part of a joint venture.

And from our perspective, we're also very excited that we'll continue to have a meaningful ownership stake in those facilities and be able to operate them and provide the level of continuity to our customers that they would expect. So, it's a significant accomplishment out of the gate here, and we're very excited about it.

Operator: We'll go to our next question, Brendan Lynch with Barclays.

Brendan Lynch: Maybe just on the physical occupancy growth that you saw in the quarter, can you disaggregate that between consolidation to fewer facilities versus just the industry improving?

Robert Chambers: Yes. There's really essentially nominal to no impact on the consolidation of the facilities because we adjusted that same-store pool at the end of last year. So the impact of physical occupancy in Q1 was a result of industry stabilization, along with a combination of new business wins coming in, some market share gains that we've seen as we've seen some of the volumes that have previously been with some of the small providers come back in. So I think when you look at the overall impact of the physical occupancy being flat to slightly up, it was driven by industry fundamentals, new business wins and some market share gains.

Operator: We will come next to Viktor Fediv with Scotiabank.

Viktor Fediv: I have a follow-up on this JV financials. So it looks like EQT will be retaining 70% and you will be getting $1.1 billion in cash proceeds, which kind of implies $1.6 billion of total value? Just trying to understand puts and takes here and what is involved.

Christopher Papa: Well, I mean, the total transaction size is $1.3 billion. given the debt we're putting on the project and our equity contributed to the venture, we think we'll be able to pull out about $1.1 billion of proceeds from the venture.

Operator: And we'll take our next question from Craig Mailman with Citi.

Craig Mailman: I think Bert had asked earlier about the EBITDA multiple, I don't think I heard an answer on that. Does the 7 cap equate the [indiscernible] a 9% to 10% EBITDA multiple? Maybe give us some guide rails there. Then, Chris, to your commentary that you guys are putting debt in the JVs, is that [ 0.75 ] term reduction on debt to EBITDA? Is that on a look-through basis, like if you assume the JV debt, do you still get that 3 quarters of return reduction pro forma that?

Christopher Papa: Sure. So I'll answer that -- the second question first. Yes, the 3 quarters in turn we talked about includes picking up our share of the debt from the JV. So we'd be picking up our [indiscernible] portion of that debt as well as the EBITDA. I'll let Scott address the EV to EBITDA question.

Scott Henderson: Craig, if you think about the math around this point, $1.3 billion enterprise value for the JV, an NOI strip before fee of roughly $110 million. And then with a fee of around $17 million to get to a net NOI strip of below 90s and that gets you to the 7% cap rate that we quoted. So hopefully, those parts help back to answer the question on a yield basis, which you convert to a multiple. And when you think about the fee strip in this business, given the operational intensive nature and the amount of work that goes into, it looks a little bit different than I'd say your traditional industrial business.

Christopher Papa: And Craig, I'd add that if you look at it on an EV to EBITDA basis, is this valuation implies a couple of hundred basis point increase over where the stock is currently tripping.

Operator: And we'll go next to Michael Goldsmith with UBS.

Michael Goldsmith: It seems like you were active on the renewals of fixed committed contracts during the quarter. So maybe can you talk a little bit about the negotiations with your tenants, what was the feedback from them? What was their ability to absorb pricing or they're asking for concessions? Just trying to get a sense of what you're hearing from your content base and how that ties to your overall pricing power?

Robert Chambers: Yes. Thanks, Michael. I mean, I think the work that we did in the quarter on fixed commitments is one of the -- that's certainly one of the highlights of the quarter. As we mentioned in our prepared remarks, we were able to work through 34% of all VIX commitment contracts that were month-to-month or had expirations in 2026. We said now for several quarters, just as a reminder that these contracts tend to be relatively ratable throughout the year, meaning there's not a whole lot of outsized renewals in one quarter or another. So that 34% represents great progress in a single quarter.

We continue to be very pleased by the conversations that we're having that we think are extremely constructive given the fact that our customers recognize the value of having that fixed commitment structure. So despite the fact that we recognize and acknowledge that there's more capacity in the industry than there has been historically. We've been able to maintain that 59% of our total rent and storage revenue being derived from these fixed commitment contracts. So I think the metrics speak for themselves. It's playing out probably slightly better than what we had planned in our guide. You saw that our economic occupancy was down slightly while our physical occupancy was flat.

That's exactly what we assumed would have in a slight contraction, but it is less of a decrease in terms of economic occupancy than what we had planned. So very, very encouraged to see that. On the pricing side of the equation, our pricing metrics are marginally better than what we had guided to. Storage on a constant currency basis was down slightly year-over-year. that does tend to be -- the storage side of the business does tend to be the side of the business that gets discounted a little bit more than the handling just given the margin profile. So we're making sure we're being thoughtful.

We're making sure we're market competitive on the pricing and that we're responding to the current environment. But at the same time, we continue to lead with our value proposition. And I think as this environment has played out longer. Really what customers are seeing is that customer service is the most important decision-making factor and who they partner with and price is important. But if your product isn't showing up on time and in full and if you can't invest in your customer base and you can't grow with them and you don't have the technology solutions and your only value proposition is price, you eventually return back to the industry leaders.

And so that's exactly what we're seeing constructive conversation and I think great progress this quarter.

Operator: We'll take our next question from Michael Carroll with RBC Capital Markets.

Michael Carroll: Rob, is there a specific mandate for the new joint venture as and does Cold need to contribute future investments or development opportunities in the JV? Or does this need to be agreed upon by both parties to be able to do it similar to like the McCain development that you talked about in your prepared remarks?

Robert Chambers: Yes. Yes. Look, I mean, we want to scale this venture. And so we're -- we'll be working to provide first looks of development opportunities to the joint venture. There's no mandate that if the venture passes on those that we can't do those on our own accord. So we'll be providing some first looks related to development projects to the venture. We think that's the best path forward given the opportunity to do some off-balance sheet development to ensure that it doesn't -- there's less volatility to earnings there. Outside of that, no mandate to contribute other stabilized assets. So, this is going to be a great partnership.

We think we're confident we found the right partner in EQT given the level of sophistication in the space and the alignment of our mission and our values. So a big step for both parties.

Operator: We'll take the next question from Nick Thillman, with Baird.

Nicholas Thillman: Maybe you wanted to touch a little bit more on just the joint venture assets being contributed and the profile of them. As we think of it relative to your fixed commitment contracts, is it similar to that [ 60% ] of that revenue associated with those assets is similar in mix and then what the average duration of those contracts are on those assets being contributed? And then maybe secondly, just a point of clarification on the $110 million of NOI, does that include the handling and services NOI contribution as well?

Robert Chambers: Yes. On the NOI, it does. It's both the storage and handling NOI. I'd say the portfolio is very representative of the broader Americold pool. So again, these sites are geographically diverse. There's some conventional, there's some automation, they are customer dedicated. They're a multi-tenant. They're fixed commitments, they are transactional agreements. So be thinking about it as very similar to the broader portfolio, the Americold wholly owned portfolio will look very similar pre and post and that's exactly what EQT was looking for, and that's exactly what we felt like was the right path to see the JV.

Operator: And we'll take question from Mike Mueller with JPMorgan.

Michael Mueller: I think this is a kind of a dumb clarification question. But the release says that EQT isn't baked into guidance. But Chris, we were talking about the transaction in your comments, you mentioned that you're kind of proud to maintain guidance, while this is kind of going on simultaneously. So I guess, is it in guidance? Or is it not guidance?

Robert Chambers: Yes. Let me start and then Chris can jump in. I mean -- so look, I mean, we're sitting here on May 7. And as we look at the trajectory of the business and we look at the fact that the metrics were coming in line to above our expectations, absent the joint venture, we would be thinking about the business trending towards the higher end of our original guide. And now that we have this joint venture that is still subject to traditional closing conditions, and we don't have the final date of when the JV will be -- will close.

When we look at it on a pro forma basis, what we can sit here today and tell you is when we factor in the closing of a joint venture assumed during the third quarter that we'll be able to absorb the impact of that JV and maintain our original guide. So as we get a little bit closer to the closing of the JV, we'll be able to provide more specific details around each one of the guidance parameters. But the punchline here is we're maintaining our guide inclusive of the impacts of the joint venture in 2026.

Christopher Papa: And then just to be more specific about the guidance, the original guidance that we had given obviously did not include the JV, but it also did not include any incremental cost optimization initiatives. So those two things going, obviously in different directions, coupled with, as Rob said, our business performing slightly ahead of expectations, gave us confidence to keep it in that [ $120 million to $130 million ] range from an AFFO perspective. But we'll come back with more details in the second quarter as we get as the JV and the cost optimization materialize.

Operator: And we'll go next to Alexander Goldfarb with Piper.

Unknown Analyst: So question, as you guys were doing the strategic review, and I'm guessing that it's not done, how does exiting regions, there's discussion in the press that perhaps maybe certain regions overseas to exit or larger outright sales? Just trying to see, is the JV -- is this -- you're done? I mean you have 2 activists as part of the company. So is this JV done or there are other potential strategic initiatives and work that could include exiting, whether it's regions or larger parts, larger portfolios?

Robert Chambers: Yes. Let me maybe just take a step back, so I can answer the question holistically. I mean, since I took the role in September, one of my first priorities was to sit down with the Board and really develop what our key strategic initiatives we're going to be for 2026. And top of the list was strengthening the foundation and delevering the balance sheet. And so knowing that, that was a priority, we started a process, right, then there to evaluate multiple different options to get there. And we've looked at different geographies, portfolio management, this joint venture opportunity.

And during that review process, it was very clear that there was tremendous interest from institutional investors, not just in this asset class, but also to have a continuing partnership with Americold. And so as we started down the path of evaluating this option specifically, we felt like it met all of our objectives. This option obviously strengthens our balance sheet, it gives us the opportunity to pay down debt materially and then lower leverage. This transaction highlights the lower gap between public and private valuations in the space. Again, these facilities are being contributed $3,300 per pallet position. We trade at $1,500 per pallet position right now. So a significant premium.

This supports our ability to do development with our key strategic comers in a customer-dedicated manner and it allows us to continue to have a meaningful ownership percentage in these facilities and provide the level of continuity to our customers that we expect and do it all with a partner that we really feel has the right level of sophistication, experience and is aligned from a values perspective. So this is to the right deal. We're confident in that. We certainly are always open to options that create shareholder value. I think we're doing within our priority list.

Several other key initiatives, the portfolio optimization and management with the 19 sites over the last 2 years that we're idling and/or exiting as having a meaningful impact on our results. The great things that we're doing to grow this business organically, you can see in our occupancy and our pricing. So I think this puts us on a trajectory to get to our long-term leverage goal, but we're always open to continue to evaluate opportunities on a go-forward basis.

Christopher Papa: And Alex, if you think about it from a balance sheet perspective, we talked about in our prepared remarks that this transaction, we expect to have an impact of reducing our debt to EBITDA of about 3/4 of return. It's a meaningful contribution toward our deleveraging but it also allows us to start thinking about things on a go-forward basis on a more targeted basis, continuing to do more targeted capital recycling plus the cost optimization initiatives that are underway. We'll continue to also move the needle on deleveraging down toward that 6x or less target. So I think we could be more surgical on a go-forward basis, but certainly, we're considering options as we continue to manage the business.

Operator: And we'll take a follow-up question from Mike Mueller with JPMorgan.

Michael Mueller: Real quick on a prior question about JVs, the JV and development. I think you said we're going to provide some first looks to the JV. So is it -- you have the choice to provide a first look on development to the JV? Or you kind of have to do all U.S. development first looks to the JV?

Scott Henderson: Mike, it's Scott. Yes, we've given EQT, our exclusive partner to look at those joint ventures and then there's optionality. After that, if that does not go into the joint venture, but hopefully, that answers the question. And it's targeted to North America, Mike, and we'll be focusing on some potential expansion opportunities in the pool as well as things like build-to-suits like the project, Rob highlighted on the call.

Robert Chambers: And I think as we wrap up here, I just want to highlight again, as we move forward and sitting here today in May, we've got very clear priorities. This team is now a track record of demonstrating our ability on executing against those priorities and delivering on our guide and our financial commitments. And so I thank all of our associates for helping us support that and delivering every day and look forward to continuing that track record.

Operator: And that does bring us to the end of our question-and-answer session. We'd like to thank everybody for joining today's call. We appreciate your time and participation. You may now disconnect.

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