QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to , |
(Americold Realty Trust) | |||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | ||
(Address of principal executive offices) | (Zip 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. | |||||||||||||||
x | No | ¨ | |||||||||||||
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). | |||||||||||||||
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): | |||||||||||||||
x | ☐ | Accelerated filer | |||||||||||||
☐ | Non-accelerated filer | Smaller reporting 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. | |||||||||||||||
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) | |||||||||||||||
Yes | No | x |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | |||
(NYSE) |
Class | Outstanding at May 6, 2020 | |
Common Stock, $0.01 par value per share |
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 | |
• | adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry; |
• | general economic conditions; |
• | uncertainties and risks related to natural disasters, global climate change and public health crises, including the recent and ongoing COVID-19 pandemic; |
• | 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, or the inability of our customers to otherwise perform under their contracts, including as a result of the recent and ongoing COVID-19 pandemic; |
• | uncertainty of revenues, given the nature of our customer contracts; |
• | increased interest rates and operating costs, including as a result of the recent and ongoing COVID-19 pandemic; |
• | our failure to obtain necessary outside financing; |
• | risks related to, or restrictions contained in, our debt financings; |
• | 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 properties or businesses, including but not limited to: Cloverleaf Cold Storage, Lanier Cold Storage, MHW Group Inc., Nova Cold Logistics, Newport Cold Storage and PortFresh Holdings, LLC; |
• | 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, or at all, in respect thereof; |
• | difficulties in expanding our operations into new markets, including international markets; |
• | risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections; |
• | our failure to maintain our status as a REIT; |
• | our Operating Partnership’s failure to qualify as a partnership for federal income tax purposes; |
• | 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 and employment related litigation; |
• | 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; |
• | changes in foreign currency exchange rates; |
• | 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; |
• | the potential dilutive effect of our common share offerings; and |
• | risks related to any forward sale agreement, including the forward sale agreement we entered into with an affiliate of BofA Securities, Inc. in September 2018, as amended, or the 2018 forward sale agreement, including substantial dilution to our earnings per share or substantial cash payment obligations. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(In thousands, except shares and per share amounts) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Property, buildings and equipment: | |||||||
Land | $ | $ | |||||
Buildings and improvements | |||||||
Machinery and equipment | |||||||
Assets under construction | |||||||
Accumulated depreciation and depletion | ( | ) | ( | ) | |||
Property, buildings and equipment – net | |||||||
Operating lease right-of-use assets | |||||||
Accumulated depreciation – operating leases | ( | ) | ( | ) | |||
Operating leases – net | |||||||
Financing leases: | |||||||
Buildings and improvements | |||||||
Machinery and equipment | |||||||
Accumulated depreciation – financing leases | ( | ) | ( | ) | |||
Financing leases – net | |||||||
Cash and cash equivalents | |||||||
Restricted cash | |||||||
Accounts receivable – net of allowance of $7,426 and $6,927 at March 31, 2020 and December 31, 2019, respectively | |||||||
Identifiable intangible assets – net | |||||||
Goodwill | |||||||
Investments in partially owned entities | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
Liabilities and shareholders’ equity | |||||||
Liabilities: | |||||||
Borrowings under revolving line of credit | $ | $ | |||||
Accounts payable and accrued expenses | |||||||
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $14,976 and $12,996, in the aggregate, at March 31, 2020 and December 31, 2019, respectively | |||||||
Sale-leaseback financing obligations | |||||||
Financing lease obligations | |||||||
Operating lease obligations | |||||||
Unearned revenue | |||||||
Pension and postretirement benefits | |||||||
Deferred tax liability – net | |||||||
Multi-employer pension plan withdrawal liability | |||||||
Total liabilities | |||||||
Shareholders’ equity: | |||||||
Common shares of beneficial interest, $0.01 par value – authorized 325,000,000 and 250,000,000 shares; 200,265,965 and 191,799,909 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | |||||||
Paid-in capital | |||||||
Accumulated deficit and distributions in excess of net earnings | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Total liabilities and shareholders’ equity | $ | $ | |||||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Rent, storage and warehouse services | $ | $ | |||||
Third-party managed services | |||||||
Transportation services | |||||||
Other | |||||||
Total revenues | |||||||
Operating expenses: | |||||||
Rent, storage and warehouse services cost of operations | |||||||
Third-party managed services cost of operations | |||||||
Transportation services cost of operations | |||||||
Cost of operations related to other revenues | |||||||
Depreciation, depletion and amortization | |||||||
Selling, general and administrative | |||||||
Acquisition, litigation and other | |||||||
Impairment of long-lived assets | |||||||
Gain from sale of real estate | ( | ) | |||||
Total operating expenses | |||||||
Operating income | |||||||
Other income (expense): | |||||||
Interest expense | ( | ) | ( | ) | |||
Interest income | |||||||
Loss on debt extinguishment and modifications | ( | ) | |||||
Foreign currency exchange (loss) gain, net | ( | ) | |||||
Other income (expense), net | ( | ) | |||||
(Loss) income from investments in partially owned entities | ( | ) | |||||
Income (loss) before income tax (expense) benefit | ( | ) | |||||
Income tax (expense) benefit: | |||||||
Current | ( | ) | ( | ) | |||
Deferred | |||||||
Total income tax expense | ( | ) | ( | ) | |||
Net income (loss) | $ | $ | ( | ) | |||
Weighted average common shares outstanding – basic | |||||||
Weighted average common shares outstanding – diluted | |||||||
Net income (loss) per common share of beneficial interest - basic | $ | $ | ( | ) | |||
Net income (loss) per common share of beneficial interest - diluted | $ | $ | ( | ) |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income (loss) | $ | $ | ( | ) | |||
Other comprehensive income (loss) - net of tax: | |||||||
Adjustment to accrued pension liability | |||||||
Change in unrealized net (loss) gain on foreign currency | ( | ) | |||||
Unrealized loss on designated derivatives | ( | ) | ( | ) | |||
Other comprehensive loss | ( | ) | ( | ) | |||
Total comprehensive loss | $ | ( | ) | $ | ( | ) | |
See accompanying notes to condensed consolidated financial statements. |
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, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Net income | — | — | — | — | |||||||||||||
Other comprehensive loss | — | — | — | — | ( | ) | ( | ) | |||||||||
Distributions on common shares of beneficial interest | — | — | — | ( | ) | — | ( | ) | |||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | ( | ) | — | — | ( | ) | |||||||||||
Issuance of common shares | — | — | |||||||||||||||
Cumulative effect of accounting change(1) | — | — | — | ( | ) | — | ( | ) | |||||||||
Balance - March 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
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 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||
Other comprehensive loss | — | — | — | — | ( | ) | ( | ) | |||||||||
Distributions on common shares | — | — | — | ( | ) | — | ( | ) | |||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||
Share-based compensation expense (modification of Restricted Stock Units) | — | — | — | — | |||||||||||||
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | — | — | |||||||||||||||
Other | — | — | — | ( | ) | — | ( | ) | |||||||||
Balance - March 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Distributions declared per common share of beneficial interest | $ | $ |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Operating activities: | |||||||
Net income (loss) attributable to Americold Realty Trust | $ | $ | ( | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation, depletion and amortization | |||||||
Amortization of deferred financing costs and pension withdrawal liability | |||||||
Amortization of above/below market leases | |||||||
Loss on debt extinguishment and modification, non-cash | |||||||
Foreign exchange loss (gain) | ( | ) | |||||
Loss (income) from investments in partially owned entities | ( | ) | |||||
Share-based compensation expense (modification of restricted stock units) | |||||||
Share-based compensation expense | |||||||
Deferred income tax benefit | ( | ) | ( | ) | |||
Gain from sale of real estate | ( | ) | |||||
(Gain) loss on other asset disposals | ( | ) | |||||
Impairment of long-lived assets | |||||||
Provision for doubtful accounts receivable | |||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Accounts payable and accrued expenses | |||||||
Other | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities: | |||||||
Return of investment in joint venture | |||||||
Investment in partially owned entities | ( | ) | |||||
Proceeds from sale of land and property, buildings and equipment | |||||||
Proceeds from the settlement of net investment hedge | |||||||
Business combinations, net of cash acquired | ( | ) | |||||
Acquisitions of property, buildings and equipment, net of cash acquired | ( | ) | |||||
Additions to property, buildings and equipment | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing activities: | |||||||
Distributions paid on common shares | ( | ) | ( | ) | |||
Proceeds from stock options exercised | |||||||
Remittance of withholding taxes related to employee share-based transactions | ( | ) | ( | ) | |||
Proceeds from revolving line of credit | |||||||
Repayment on revolving line of credit | ( | ) | |||||
Repayment of sale-leaseback financing obligations | ( | ) | ( | ) | |||
Repayment of financing lease obligations | ( | ) | ( | ) | |||
Payment of debt issuance costs | ( | ) | |||||
Repayment of term loan and mortgage notes | ( | ) | ( | ) | |||
Proceeds from term loan | |||||||
Proceeds from equity forward contract | |||||||
Net cash provided by (used in) financing activities | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Effect of foreign currency translation on cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash: | |||||||
Beginning of period | |||||||
End of period | $ | $ |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
Supplemental disclosures of cash flows information: | 2020 | 2019 | |||||
Acquisition of fixed assets under financing lease obligations | $ | $ | |||||
Acquisition of fixed assets under operating lease obligations | $ | $ | |||||
Interest paid – net of amounts capitalized | $ | $ | |||||
Income taxes paid – net of refunds | $ | $ | |||||
Acquisition of property, buildings and equipment on accrual | $ | $ | |||||
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 March 31, | ||||||
2020 | 2019 | ||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Total cash, cash equivalents and restricted cash | $ | $ | |||||
As of March 31, | |||||||
Allocation of purchase price of property, buildings and equipment to: | 2020 | 2019 | |||||
Investments in land and buildings and improvements | $ | $ | |||||
Machinery and equipment | |||||||
Assembled workforce | |||||||
Other assets | |||||||
Cash paid for acquisition of property, buildings and equipment | $ | $ | |||||
As of March 31, | |||||||
2020 | |||||||
Allocation of purchase price to business combinations: | |||||||
Land | $ | ||||||
Buildings and improvements | |||||||
Machinery and equipment | |||||||
Assets under construction | |||||||
Operating and finance lease right-of-use assets | |||||||
Cash and cash equivalents | |||||||
Accounts receivable | |||||||
Goodwill | |||||||
Acquired identifiable intangibles: | |||||||
Below-market leases | |||||||
Customer relationships | |||||||
Other assets | |||||||
Accounts payable and accrued expenses | ( | ) | |||||
Operating and finance lease obligations | ( | ) | |||||
Unearned revenue | ( | ) | |||||
Deferred tax liability | ( | ) | |||||
Total consideration | $ | ||||||
See accompanying notes to condensed consolidated financial statements. |
Amounts Recognized as of the Acquisition Date | Measurement Period Adjustments (1) | Amounts Recognized as of the Acquisition Date (as Adjusted)(2) | ||||||||||
Assets | ||||||||||||
Land | $ | $ | $ | |||||||||
Building and improvements | ( | ) | ||||||||||
Machinery and equipment | ||||||||||||
Assets under construction | ( | ) | ||||||||||
Operating lease right-of-use assets | ||||||||||||
Cash and cash equivalents | ||||||||||||
Restricted cash | ||||||||||||
Accounts receivable | ||||||||||||
Goodwill | ||||||||||||
Acquired identifiable intangibles: | ||||||||||||
Customer relationships | ||||||||||||
Trade names and trademarks | ||||||||||||
Other assets | ( | ) | ||||||||||
Total assets | ( | ) | ||||||||||
Liabilities | ||||||||||||
Accounts payable and accrued expenses | ||||||||||||
Notes payable | ( | ) | ||||||||||
Operating lease obligations | ||||||||||||
Unearned revenue | ||||||||||||
Pension and postretirement benefits | ( | ) | ||||||||||
Deferred tax liability | ( | ) | ||||||||||
Total liabilities | ( | ) | ||||||||||
Total consideration for Cloverleaf acquisition | $ | $ | ( | ) | $ |
Pro forma (unaudited) | |||
(in thousands, except per share data) | |||
Three Months Ended March 31, 2019 | |||
Total revenue | $ | ||
Net income available to common shareholders(1) | $ | ( | ) |
Net income per share, diluted(2) | $ | ( | ) |
Joint Venture | Location | % Ownership | March 31, 2020 | |||
Superfrio | Brazil | $ |
Three Months Ended March 31, | |||||||
Acquisition, litigation and other | 2020 | 2019 | |||||
Acquisition related costs | $ | $ | |||||
Litigation | |||||||
Other: | |||||||
Severance, equity award modifications and acceleration | |||||||
Non-offering related equity issuance expenses | |||||||
Terminated site operations costs | |||||||
Total other | |||||||
Total acquisition, litigation and other | $ | $ |
March 31, 2020 | December 31, 2019 | ||||||||||||||
Indebtedness | Stated Maturity Date | Contractual Interest Rate | Effective Interest Rate as of March 31, 2020 | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||
2013 Mortgage Loans | |||||||||||||||
Senior note | 5/2023 | $ | $ | $ | $ | ||||||||||
Mezzanine A | 5/2023 | ||||||||||||||
Mezzanine B | 5/2023 | ||||||||||||||
Total 2013 Mortgage Loans | |||||||||||||||
Senior Unsecured Notes | |||||||||||||||
Series A 4.68% notes due 2026 | 1/2026 | ||||||||||||||
Series B 4.86% notes due 2029 | 1/2029 | ||||||||||||||
Series C 4.10% notes due 2030 | 1/2030 | ||||||||||||||
Total Senior Unsecured Notes | |||||||||||||||
2020 Senior Unsecured Term Loan Tranche A-1(1) | 03/2025 | L+0.95% | |||||||||||||
2020 Senior Unsecured Term Loan Tranche A-2(2)(6) | 03/2025 | C+0.95% | |||||||||||||
Total 2020 Senior Unsecured Term Loan A Facility(4) | |||||||||||||||
2018 Senior Unsecured Term Loan A Facility(1)(4) | 01/2023 | L+1.00% | |||||||||||||
Total principal amount of indebtedness | $ | $ | $ | $ | |||||||||||
Less: deferred financing costs | ( | ) | n/a | ( | ) | n/a | |||||||||
Total indebtedness, net of unamortized deferred financing costs(3) | $ | $ | $ | $ | |||||||||||
2020 Senior Unsecured Revolving Credit Facility(3)(5) | 03/2024 | L+0.85% | $ | $ | N/A | N/A | |||||||||
2018 Senior Unsecured Revolving Credit Facility(1) (3) | 01/2021 | L+0.90% | N/A | N/A | $ | $ |
• | a maximum leverage ratio of less than or equal to |
• | a maximum unencumbered leverage ratio of less than or equal to |
• | a maximum secured leverage ratio of less than or equal to |
• | a minimum fixed charge coverage ratio of greater than or equal to |
• | a minimum unsecured interest coverage ratio of greater than or equal to |
• | a maximum leverage ratio of less than or equal to |
• | a maximum unsecured indebtedness to qualified assets ratio of less than |
• | a maximum total secured indebtedness ratio of less than |
• | a minimum fixed charge coverage ratio of greater than or equal to |
• | a minimum unsecured debt service ratio of greater than or equal to |
As of March 31, 2020: | (In thousands) | ||
March 31, 2021 | $ | ||
March 31, 2022 | |||
March 31, 2023 | |||
March 31, 2024 | |||
March 31, 2025 | |||
Thereafter | |||
Aggregate principal amount of debt | |||
Less unamortized deferred financing costs | ( | ) | |
Total debt net of unamortized deferred financing costs | $ |
Derivative Assets | Derivative Liabilities | ||||||||||||||
March 31, 2020 | December 31, 2019 | March 31, 2020 | December 31, 2019 | ||||||||||||
Designated derivatives | |||||||||||||||
Foreign exchange contracts | $ | $ | $ | $ | |||||||||||
Interest rate contracts | |||||||||||||||
Undesignated derivatives | |||||||||||||||
Foreign exchange forwards | |||||||||||||||
Total derivatives formally designated as hedging instruments | $ | $ | $ | $ |
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative | Location of Gain or (Loss) Reclassified from AOCI into Income | Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | |||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Interest rate contracts | $ | ( | ) | $ | ( | ) | Interest expense | $ | $ | ||||||||
Foreign exchange contracts | ( | ) | Foreign currency exchange loss, net | ||||||||||||||
Foreign exchange contracts | Interest expense | ||||||||||||||||
Foreign exchange forwards | |||||||||||||||||
Total designated cash flow hedges | $ | $ | ( | ) | $ | $ |
March 31, 2020 | |||||||||||||||||||||||
Offsetting of Derivative Assets | |||||||||||||||||||||||
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivatives | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Offsetting of Derivative Liabilities | |||||||||||||||||||||||
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivatives | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ( | ) |
December 31, 2019 | |||||||||||||||||||||||
Offsetting of Derivative Assets | |||||||||||||||||||||||
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivatives | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Offsetting of Derivative Liabilities | |||||||||||||||||||||||
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Condensed Consolidated Balance Sheet | Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Derivatives | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ( | ) |
Maturity | Interest Rate as of March 31, 2020 | March 31, 2020 | December 31, 2019 | |||||||
(In thousands) | ||||||||||
1 warehouse – 2010 | 7/2030 | $ | $ | |||||||
11 warehouses – 2007 | 9/2027 | 7.00%-19.59% | ||||||||
Total sale-leaseback financing obligations | $ | $ |
Fair Value Hierarchy | Fair Value | ||||||||
March 31, 2020 | December 31, 2019 | ||||||||
(In thousands) | |||||||||
Measured at fair value on a recurring basis: | |||||||||
Interest rate swap asset | Level 2 | $ | $ | ||||||
Interest rate swap liability | Level 2 | ||||||||
Cross-currency swap asset | Level 2 | ||||||||
Foreign exchange forward contract asset | Level 2 | ||||||||
Foreign exchange forward contract liability | Level 2 | ||||||||
Disclosed at fair value: | |||||||||
Mortgage notes, senior unsecured notes and term loans(1) | Level 3 | $ | $ |
Three Months Ended March 31, 2020 | ||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||
(In thousands, except per share amounts) | ||||||||||||
December (2019)/January | $ | $ | $ | |||||||||
December(a) | — | ( | ) | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | ||||||||
December (2019)/January | — | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | ||||||||||
March/April | ||||||||||||
$ | $ |
(a) | Declared in December 2019 and included in the $ |
Three Months Ended March 31, 2019 | ||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||
(In thousands, except per share amounts) | ||||||||||||
December (2018)/January | $ | $ | $ | |||||||||
December(a) | ( | ) | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | |||||||||
December (2018)/January | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | |||||||||||
March/April | ||||||||||||
$ | $ |
(a) | Declared in December 2018 and included in the $ |
Three Months Ended March 31, | Grantee Type | Number of Restricted Stock Units Granted | Vesting Period | Grant Date Fair Value (in thousands) | ||
2020 | Employees | 1-3 years | $ | |||
2019 | Trustees | $ | ||||
2019 | Employees | 1-3 years | $ |
Three Months Ended March 31, 2020 | |||||||||||||||
Restricted Stock | Number of Time-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Performance-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Market Performance-Based Restricted Stock Units(2) | Aggregate Intrinsic Value (in millions) | |||||||||
Non-vested as of December 31, 2019 | $ | $ | $ | ||||||||||||
Granted | |||||||||||||||
Vested | ( | ) | ( | ) | |||||||||||
Forfeited | ( | ) | ( | ) | |||||||||||
Non-vested as of March 31, 2020 | $ | $ | $ | ||||||||||||
Shares vested, but not released(1) | |||||||||||||||
Total outstanding restricted stock units | $ | $ | $ |
(1) | For certain vested restricted stock units, common share issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. Of these vested restricted stock units, |
(2) | The number of market performance-based restricted stock units are reflected within this table based upon the number of shares issuable upon achievement of the performance metric at target. |
Three Months Ended March 31, | Grantee Type | Number of OP Units Granted | Vesting Period | Grant Date Fair Value (in thousands) | ||
2020 | Employee group | 1 - 3 years | $ |
Three Months Ended March 31, 2020 | |||||||||||
OP Units | Number of Time-Based OP Units | Aggregate Intrinsic Value (in millions) | Number of Market Performance-Based OP Units | Aggregate Intrinsic Value (in millions) | |||||||
Non-vested as of December 31, 2019 | $ | $ | |||||||||
Granted | |||||||||||
Vested | |||||||||||
Forfeited | |||||||||||
Non-vested as of March 31, 2020 | $ | $ |
Options | Shares (In thousands) | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Terms (Years) | |||
Outstanding as of December 31, 2019 | $ | |||||
Granted | ||||||
Exercised | ( | ) | ||||
Forfeited or expired | ||||||
Outstanding as of March 31, 2020 | ||||||
Exercisable as of March 31, 2020 | $ |
Three Months Ended March 31, 2020 | |||||||||||||||
Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total | |||||||||||
Components of net periodic benefit cost: | (In thousands) | ||||||||||||||
Service cost | $ | $ | $ | $ | $ | ||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of net loss | |||||||||||||||
Amortization of prior service cost | |||||||||||||||
Net pension benefit cost | $ | $ | $ | $ | $ |
Three Months Ended March 31, 2019 | |||||||||||||||
Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total | |||||||||||
Components of net periodic benefit cost: | (In thousands) | ||||||||||||||
Service cost | $ | $ | $ | $ | $ | ||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of net loss | ( | ) | |||||||||||||
Amortization of prior service cost | |||||||||||||||
Net pension benefit cost | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Pension and other postretirement benefits: | |||||||
Balance at beginning of period, net of tax | $ | ( | ) | $ | ( | ) | |
Gain arising during the period | |||||||
Less: Tax expense | |||||||
Net gain arising during the period | |||||||
Amortization of prior service cost (1) | |||||||
Less: Tax expense | |||||||
Net amount reclassified from AOCI to net income | |||||||
Other comprehensive income, net of tax | |||||||
Balance at end of period, net of tax | ( | ) | ( | ) | |||
Foreign currency translation adjustments: | |||||||
Balance at beginning of period, net of tax | ( | ) | ( | ) | |||
(Loss) gain on foreign currency translation | ( | ) | |||||
Less: Tax expense | |||||||
Net (loss) gain on foreign currency translation | ( | ) | |||||
Balance at end of period, net of tax | ( | ) | ( | ) | |||
Designated derivatives: | |||||||
Balance at beginning of period, net of tax | ( | ) | ( | ) | |||
Unrealized gain (loss) on cash flow hedge derivatives | ( | ) | |||||
Unrealized gain (loss) on net investment hedge derivative | |||||||
Less: Tax expense | |||||||
Net gain (loss) on designated derivatives | ( | ) | |||||
Net amount reclassified from AOCI to net income (loss) (interest expense) | ( | ) | |||||
Net reclassified from AOCI to net income (loss) (foreign exchange (gain) loss) | ( | ) | |||||
Balance at end of period, net of tax | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | $ | ( | ) | $ | ( | ) |
(1) | Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations. |
• | Warehouse. Our primary source of revenues consists of rent and storage and warehouse services fees. Our rent and storage and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen and perishable food and other products in our warehouses. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, and (10) government-approved temperature-controlled storage and inspection services. We may charge our customers in advance for storage and outbound handling fees. Cost of operations for our warehouse segment consists of power, other facilities costs, labor and other services costs. |
• | Third-party managed. We receive management and incentive fees, as well as reimbursement of substantially all expenses, for warehouses and logistics services that we manage on behalf of third-party owners/customers. Cost of operations for our third-party managed segment are reimbursed on a pass-through basis (typically within two weeks), with all reimbursements, plus an applicable mark-up, recognized as revenues under the relevant accounting guidance. |
• | Transportation. We charge transportation fees, including fuel surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consist primarily of third-party carrier charges, which are impacted by factors affecting those carriers. |
• | Other. In addition to our primary business segments, we own a limestone quarry in Carthage, Missouri. Revenues are generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consist primarily of labor, equipment, fuel and explosives. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Segment revenues: | |||||||
Warehouse | $ | $ | |||||
Third-party managed | |||||||
Transportation | |||||||
Other | |||||||
Total revenues | |||||||
Segment contribution: | |||||||
Warehouse | |||||||
Third-party managed | |||||||
Transportation | |||||||
Other | |||||||
Total segment contribution | |||||||
Reconciling items: | |||||||
Depreciation, depletion and amortization | ( | ) | ( | ) | |||
Selling, general and administrative expense | ( | ) | ( | ) | |||
Acquisition, litigation and other | ( | ) | ( | ) | |||
Impairment of long-lived assets | ( | ) | |||||
Gain from sale of real estate | |||||||
Interest expense | ( | ) | ( | ) | |||
Interest income | |||||||
Loss on debt extinguishment and modifications | ( | ) | |||||
Foreign currency exchange (loss) gain | ( | ) | |||||
Other income (expense), net | ( | ) | |||||
(Loss) gain from investments in partially owned entities | ( | ) | |||||
Income (loss) before income tax (expense) benefit | $ | $ | ( | ) |
March 31, 2020 | December 31, 2019 | ||||||
(In thousands) | |||||||
Assets: | |||||||
Warehouse | $ | $ | |||||
Managed | |||||||
Transportation | |||||||
Other | |||||||
Total segments assets | |||||||
Reconciling items: | |||||||
Corporate assets | |||||||
Investments in partially owned entities | |||||||
Total reconciling items | |||||||
Total assets | $ | $ |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Weighted average common shares outstanding – basic | |||||
Dilutive effect of share-based awards | |||||
Equity forward contract | |||||
Weighted average common shares outstanding – diluted |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
(In thousands) | |||||
Employee stock options | |||||
Restricted stock | |||||
OP units | |||||
Equity forward contract shares | |||||
Three Months Ended March 31, 2020 | ||||||||||||||||||
United States | Australia | New Zealand | Argentina | Canada | Total | |||||||||||||
(In thousands) | ||||||||||||||||||
Warehouse rent and storage | $ | $ | $ | $ | $ | $ | ||||||||||||
Warehouse services | ||||||||||||||||||
Third-party managed | ||||||||||||||||||
Transportation | ||||||||||||||||||
Other | ||||||||||||||||||
Total revenues (1) | ||||||||||||||||||
Lease revenue (2) | ||||||||||||||||||
Total revenues from contracts with all customers | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, 2019 | ||||||||||||||||||
United States | Australia | New Zealand | Argentina | Canada | Total | |||||||||||||
(In thousands) | ||||||||||||||||||
Warehouse rent and storage | $ | $ | $ | $ | $ | $ | ||||||||||||
Warehouse services | ||||||||||||||||||
Third-party managed | ||||||||||||||||||
Transportation | ||||||||||||||||||
Other | ||||||||||||||||||
Total revenues (1) | ||||||||||||||||||
Lease revenue (2) | ||||||||||||||||||
Total revenues from contracts with all customers | $ | $ | $ | $ | $ | $ |
(1) | Revenues are within the scope of ASC 606, Revenue From Contracts with Customers. Elements of contracts or arrangements that are in the scope of other standards (e.g., leases) are separated and accounted for under those standards. |
(2) | Revenues are within the scope of Topic 842, Leases. |
• | Acquisition related costs include costs associated with transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as employee retention expense and work associated with |
• | Litigation costs incurred in order to defend the Company from litigation charges outside of the normal course of business and related settlement costs. |
• | Severance costs representing certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies, and reduction in workforce costs associated with exiting or selling non-strategic warehouses. |
• | Equity acceleration costs representing the unrecognized expense for share-based awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification. |
• | Non-offering related equity issuance expenses whether incurred through our initial public offering, follow-on offerings or secondary offerings. |
• | Terminated site operations costs represent expenses incurred to repair expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our condensed consolidated statement of operations. |
Foreign exchange rates as of March 31, 2020 | Average foreign exchange rates used to translate actual operating results for the three months ended March 31, 2020 | Foreign exchange rates as of March 31, 2019 | Prior period average foreign exchange rate used to adjust actual operating results for the three months ended March 31, 2020(1) | ||||||
Australian dollar | 0.614 | 0.657 | 0.710 | 0.714 | |||||
New Zealand dollar | 0.596 | 0.634 | 0.682 | 0.682 | |||||
Argentinian peso | 0.016 | 0.016 | 0.023 | 0.025 | |||||
Canadian dollar | 0.708 | 0.744 | 0.749 | 0.755 | |||||
Brazilian real | 0.193 | 0.208 | N/A | N/A |
(1) | Represents the relevant average foreign exchange rates in effect in the comparable prior period applied to the activity for the current period. The average foreign currency exchange rates we apply to our operating results are derived from third party reporting sources for the periods indicated. |
Total Warehouses | 183 |
Same Store Warehouses (1) | 136 |
Non-Same Store Warehouses (1) | 36 |
Third-Party Managed Warehouses | 11 |
Three Months Ended March 31, | Change | ||||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Rent and storage | $ | 162,308 | $ | 163,990 | $ | 126,380 | 28.4 | % | 29.8 | % | |||||||
Warehouse services | 218,760 | 222,219 | 163,235 | 34.0 | % | 36.1 | % | ||||||||||
Total warehouse segment revenues | 381,068 | 386,209 | 289,615 | 31.6 | % | 33.4 | % | ||||||||||
Power | 19,704 | 19,977 | 15,071 | 30.7 | % | 32.6 | % | ||||||||||
Other facilities costs (2) | 32,102 | 32,544 | 26,389 | 21.6 | % | 23.3 | % | ||||||||||
Labor | 170,138 | 173,044 | 132,919 | 28.0 | % | 30.2 | % | ||||||||||
Other services costs (3) | 32,351 | 32,686 | 24,417 | 32.5 | % | 33.9 | % | ||||||||||
Total warehouse segment cost of operations | $ | 254,295 | $ | 258,251 | $ | 198,796 | 27.9 | % | 29.9 | % | |||||||
Warehouse segment contribution (NOI) | $ | 126,773 | $ | 127,958 | $ | 90,819 | 39.6 | % | 40.9 | % | |||||||
Warehouse rent and storage contribution (NOI) (4) | $ | 110,502 | $ | 111,469 | $ | 84,920 | 30.1 | % | 31.3 | % | |||||||
Warehouse services contribution (NOI) (5) | $ | 16,271 | $ | 16,489 | $ | 5,899 | 175.8 | % | 179.5 | % | |||||||
Total warehouse segment margin | 33.3 | % | 33.1 | % | 31.4 | % | 191 bps | 177 bps | |||||||||
Rent and storage margin(6) | 68.1 | % | 68.0 | % | 67.2 | % | 89 bps | 78 bps | |||||||||
Warehouse services margin(7) | 7.4 | % | 7.4 | % | 3.6 | % | 382 bps | 381 bps |
(1) | The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period. |
(2) | Includes real estate rent expense of $2.8 million and $3.2 million, on an actual basis, for the first quarter of 2020 and 2019, respectively. |
(3) | Includes non-real estate rent expense (equipment lease and rentals) of $2.8 million and $3.4 million, on an actual basis, for the first quarter of 2020 and 2019, respectively. |
(4) | Calculated as rent and storage revenues less power and other facilities costs. |
(5) | Calculated as warehouse services revenues less labor and other services costs. |
(6) | Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenues. |
(7) | Calculated as warehouse services contribution (NOI) divided by warehouse services revenues. |
Three Months Ended March 31, | Change | ||||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||||
Number of same store sites | 136 | 136 | n/a | n/a | |||||||||||||
Same store revenues: | (Dollars in thousands) | ||||||||||||||||
Rent and storage | $ | 125,875 | $ | 127,446 | $ | 120,550 | 4.4 | % | 5.7 | % | |||||||
Warehouse services | 165,988 | 169,390 | 157,507 | 5.4 | % | 7.5 | % | ||||||||||
Total same store revenues | 291,863 | 296,836 | 278,057 | 5.0 | % | 6.8 | % | ||||||||||
Same store cost of operations: | |||||||||||||||||
Power | 14,112 | 14,370 | 14,483 | (2.6 | )% | (0.8 | )% | ||||||||||
Other facilities costs | 25,128 | 25,525 | 24,508 | 2.5 | % | 4.1 | % | ||||||||||
Labor | 133,072 | 135,931 | 127,352 | 4.5 | % | 6.7 | % | ||||||||||
Other services costs | 22,303 | 22,620 | 23,149 | (3.7 | )% | (2.3 | )% | ||||||||||
Total same store cost of operations | $ | 194,615 | $ | 198,446 | $ | 189,492 | 2.7 | % | 4.7 | % | |||||||
Same store contribution (NOI) | $ | 97,248 | $ | 98,390 | $ | 88,565 | 9.8 | % | 11.1 | % | |||||||
Same store rent and storage contribution (NOI)(2) | $ | 86,635 | $ | 87,551 | $ | 81,559 | 6.2 | % | 7.3 | % | |||||||
Same store services contribution (NOI)(3) | $ | 10,613 | $ | 10,839 | $ | 7,006 | 51.5 | % | 54.7 | % | |||||||
Total same store margin | 33.3 | % | 33.1 | % | 31.9 | % | 147 bps | 129 bps | |||||||||
Same store rent and storage margin(4) | 68.8 | % | 68.7 | % | 67.7 | % | 117 bps | 104 bps | |||||||||
Same store services margin(5) | 6.4 | % | 6.4 | % | 4.4 | % | 195 bps | 195 bps |
Three Months Ended March 31, | Change | ||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||
Number of non-same store sites | 36 | 8 | n/a | n/a | |||||||||||
Non-same store revenues: | (Dollars in thousands) | ||||||||||||||
Rent and storage | $ | 36,433 | $ | 36,544 | $ | 5,830 | n/r | n/r | |||||||
Warehouse services | 52,772 | 52,829 | 5,728 | n/r | n/r | ||||||||||
Total non-same store revenues | 89,205 | 89,373 | 11,558 | n/r | n/r | ||||||||||
Non-same store cost of operations: | |||||||||||||||
Power | 5,592 | 5,607 | 588 | n/r | n/r | ||||||||||
Other facilities costs | 6,974 | 7,019 | 1,881 | n/r | n/r | ||||||||||
Labor | 37,066 | 37,113 | 5,567 | n/r | n/r | ||||||||||
Other services costs | 10,048 | 10,066 | 1,268 | n/r | n/r | ||||||||||
Total non-same store cost of operations | $ | 59,680 | $ | 59,805 | $ | 9,304 | n/r | n/r | |||||||
Non-same store contribution (NOI) | $ | 29,525 | $ | 29,568 | $ | 2,254 | n/r | n/r | |||||||
Non-same store rent and storage contribution (NOI)(2) | $ | 23,867 | $ | 23,918 | $ | 3,361 | n/r | n/r | |||||||
Non-same store services contribution (NOI)(3) | $ | 5,658 | $ | 5,650 | $ | (1,107 | ) | n/r | n/r | ||||||
Total non-same store margin | 33.1 | % | 33.1 | % | 19.5 | % | n/r | n/r | |||||||
Non-same store rent and storage margin(4) | 65.5 | % | 65.4 | % | 57.7 | % | n/r | n/r | |||||||
Non-same store services margin(5) | 10.7 | % | 10.7 | % | (19.3 | )% | n/r | n/r |
Three Months Ended March 31, | Change | ||||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||||
Total warehouse segment revenues | $ | 381,068 | $ | 386,209 | $ | 289,615 | 31.6 | % | 33.4 | % | |||||||
Total warehouse cost of operations | $ | 254,295 | $ | 258,251 | $ | 198,796 | 27.9 | % | 29.9 | % | |||||||
Total warehouse segment contribution | $ | 126,773 | $ | 127,958 | $ | 90,819 | 39.6 | % | 40.9 | % |
(1) | The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period. |
(2) | Calculated as rent and storage revenues less power and other facilities costs. |
(3) | Calculated as warehouse services revenues less labor and other services costs. |
(4) | Calculated as rent and storage contribution (NOI) divided by rent and storage revenues. |
(5) | Calculated as warehouse services contribution (NOI) divided by warehouse services revenues. |
Three Months Ended March 31, | Change | |||||||||
Units in thousands except per pallet and site number data - unaudited | 2020 | 2019 | ||||||||
Number of same store sites | 136 | 136 | n/a | |||||||
Same store rent and storage: | ||||||||||
Economic occupancy(1) | ||||||||||
Average occupied economic pallets | 2,490 | 2,391 | 4.1 | % | ||||||
Economic occupancy percentage | 81.8 | % | 78.4 | % | 337 bps | |||||
Same store rent and storage revenues per economic occupied pallet | $ | 50.55 | $ | 50.42 | 0.3 | % | ||||
Constant currency same store rent and storage revenues per economic occupied pallet | $ | 51.18 | $ | 50.42 | 1.5 | % | ||||
Physical occupancy(2) | ||||||||||
Average physical occupied pallets | 2,305 | 2,266 | 1.7 | % | ||||||
Average physical pallet positions | 3,044 | 3,049 | (0.2 | )% | ||||||
Physical occupancy percentage | 75.7 | % | 74.3 | % | 140 bps | |||||
Same store rent and storage revenues per physical occupied pallet | $ | 54.60 | $ | 53.20 | 2.6 | % | ||||
Constant currency same store rent and storage revenues per physical occupied pallet | $ | 55.28 | $ | 53.20 | 3.9 | % | ||||
Same store warehouse services: | ||||||||||
Throughput pallets (in thousands) | 6,467 | 6,296 | 2.7 | % | ||||||
Same store warehouse services revenues per throughput pallet | $ | 25.67 | $ | 25.02 | 2.6 | % | ||||
Constant currency same store warehouse services revenues per throughput pallet | $ | 26.19 | $ | 25.02 | 4.7 | % | ||||
Number of non-same store sites | 36 | 8 | n/a | |||||||
Non-same store rent and storage: | ||||||||||
Economic occupancy(1) | ||||||||||
Average economic occupied pallets | 766 | 116 | n/r | |||||||
Economic occupancy percentage | 79.6 | % | 87.2 | % | ||||||
Physical occupancy(2) | ||||||||||
Average physical occupied pallets | 743 | 108 | n/r | |||||||
Average physical pallet positions | 962 | 133 | n/r | |||||||
Physical occupancy percentage | 77.2 | % | 81.2 | % | ||||||
Non-same store warehouse services: | ||||||||||
Throughput pallets (in thousands) | 1,732 | 225 | n/r |
(1) | We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account actual pallet commitments specified in each customer’s contract, and subtracting the physical pallet positions. |
(2) | We define average physical occupancy as the average number of occupied pallets divided by the estimated number of average physical pallet positions in our warehouses for the applicable period. We estimate the number of physical pallet positions by taking into account actual racked space and by estimating unracked space on an as-if racked basis. We base this estimate on a formula utilizing the total cubic feet of each room within the warehouse that is unracked divided by the volume of an assumed rack space that is consistent with the characteristics of the relevant warehouse. On a warehouse by warehouse basis, rack space generally ranges from three to four feet depending upon the type of facility and the nature of the customer goods stored therein. The number of our pallet positions is reviewed and updated quarterly, taking into account changes in racking configurations and room utilization. |
Three Months Ended March 31, | Change | ||||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||||
Number of managed sites | 11 | 11 | n/a | n/a | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Third-party managed revenues | $ | 64,921 | $ | 65,217 | $ | 64,136 | 1.2 | % | 1.7 | % | |||||||
Third-party managed cost of operations | 61,152 | 61,524 | 60,877 | 0.5 | % | 1.1 | % | ||||||||||
Third-party managed segment contribution | $ | 3,769 | $ | 3,693 | $ | 3,259 | 15.6 | % | 13.3 | % | |||||||
Third-party managed margin | 5.8 | % | 5.7 | % | 5.1 | % | 72 bps | 58 bps |
(1) | The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period. |
Three Months Ended March 31, | Change | ||||||||||||||||
2020 actual | 2020 constant currency(1) | 2019 actual | Actual | Constant currency | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Transportation revenues | $ | 35,917 | $ | 36,864 | $ | 37,096 | (3.2 | )% | (0.6 | )% | |||||||
Brokered transportation | 26,088 | 26,842 | 27,347 | (4.6 | )% | (1.8 | )% | ||||||||||
Other cost of operations | 5,024 | 5,079 | 5,393 | (6.8 | )% | (5.8 | )% | ||||||||||
Total transportation cost of operations | 31,112 | 31,921 | 32,740 | (5.0 | )% | (2.5 | )% | ||||||||||
Transportation segment contribution (NOI) | $ | 4,805 | $ | 4,943 | $ | 4,356 | 10.3 | % | 13.5 | % | |||||||
Transportation margin | 13.4 | % | 13.4 | % | 11.7 | % | 164 bps | 167 bps |
(1) | The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period. |
Three Months Ended March 31, | Change | |||||||||
2020 | 2019 | % | ||||||||
(Dollars in thousands) | ||||||||||
Quarry revenues | $ | 2,163 | $ | 2,232 | (3.1 | )% | ||||
Quarry cost of operations | 2,108 | 1,988 | 6.0 | % | ||||||
Quarry segment contribution (NOI) | $ | 55 | $ | 244 | (77.5 | )% | ||||
Quarry margin | 2.5 | % | 10.9 | % | (76.7 | )% |
Three Months Ended March 31, | Change | |||||||||
2020 | 2019 | % | ||||||||
Other (expense) income: | (Dollars in thousands) | |||||||||
(Loss) income from investments in partially owned entities | $ | (27 | ) | $ | 122 | (122.1 | )% | |||
Interest expense | $ | (23,870 | ) | $ | (21,576 | ) | 10.6 | % | ||
Interest income | $ | 587 | $ | 1,003 | (41.5 | )% | ||||
Loss on debt extinguishment and modification | $ | (781 | ) | $ | — | n/r | ||||
Foreign currency exchange (loss) gain | $ | (492 | ) | $ | 60 | n/r | ||||
Other income (expense) - net | $ | 871 | $ | (167 | ) | n/r |
We calculate funds from operations, or FFO, in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss determined in accordance with U.S. GAAP, excluding extraordinary items as defined under U.S. GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, real estate asset impairment and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a supplemental performance measure because it excludes the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, FFO can facilitate comparisons of operating performance between periods and among other equity REITs. |
We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of gain or loss on the sale of non-real estate assets, share-based compensation expense for the IPO retention grants, acquisition, litigation and other expenses, loss on debt extinguishment and modification, and foreign currency exchange gain or loss. We believe that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core business operations. We believe Core FFO can facilitate comparisons of operating performance between periods, while also providing a more meaningful predictor of future earnings potential. |
However, because FFO and Core FFO add back real estate depreciation and amortization and do not capture the level of recurring maintenance capital expenditures necessary to maintain the operating performance of our properties, both of which have material economic impacts on our results from operations, we believe the utility of FFO and Core FFO as a measure of our performance may be limited. |
We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the effects of amortization of deferred financing costs, pension withdrawal liability and above or below market leases, straight-line net rent, provision or benefit from deferred income taxes, share-based compensation expense from grants of stock options and restricted stock units under our equity incentive plans, excluding IPO grants, non-real estate depreciation and amortization (including in respect of the partially owned entities), and recurring maintenance capital expenditures. We believe that Adjusted FFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in our business and to assess our ability to fund distribution requirements from our operating activities. |
FFO, Core FFO and Adjusted FFO are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO, Core FFO and Adjusted FFO should be evaluated along with U.S. GAAP net income and net income per diluted share (the most directly comparable U.S. GAAP measures) in evaluating our operating performance. FFO, Core FFO and Adjusted FFO do not represent net income or cash flows from operating activities in accordance with U.S. GAAP and are not indicative of our results of operations or cash flows from operating activities as disclosed in our consolidated statements of operations included elsewhere in this Quarterly Report on Form 10-Q. FFO, Core FFO and Adjusted FFO should be considered as supplements, but not alternatives, to our net income or cash flows from operating activities as indicators of our operating performance. Moreover, other REITs may not calculate FFO in accordance with the NAREIT definition or may interpret the NAREIT definition differently than we do. Accordingly, our FFO may not be comparable to FFO as calculated by other REITs. In addition, there is no industry definition of Core FFO or Adjusted FFO and, as a result, other REITs may also calculate Core FFO or Adjusted FFO, or other similarly-captioned metrics, in a manner different than we do. The table below reconciles FFO, Core FFO and Adjusted FFO to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP. |
Reconciliation of Net Income (Loss) to NAREIT FFO, Core FFO, and Adjusted FFO | |||||||
(in thousands) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income (loss) | $ | 23,511 | $ | (4,629 | ) | ||
Adjustments: | |||||||
Real estate related depreciation and depletion | 35,442 | 22,665 | |||||
Net (gain) loss on sale of real estate, net of withholding taxes | (2,096 | ) | 138 | ||||
Impairment charges on certain real estate assets | — | 12,555 | |||||
Real estate depreciation on partially owned entities | 34 | 289 | |||||
NAREIT Funds from operations | 56,891 | 31,018 | |||||
Adjustments: | |||||||
Net gain on sale of non-real estate assets | (165 | ) | (118 | ) | |||
Acquisition, litigation and other expense | 1,688 | 8,493 | |||||
Share-based compensation expense, IPO grants | 373 | 607 | |||||
Loss on debt extinguishment and modifications | 781 | — | |||||
Foreign currency exchange loss (gain) | 492 | (60 | ) | ||||
Core FFO applicable to common shareholders | $ | 60,060 | $ | 39,940 | |||
Adjustments: | |||||||
Amortization of deferred financing costs and pension withdrawal liability | 1,546 | 1,456 | |||||
Amortization of below/above market leases | 76 | 38 | |||||
Straight-line net rent | (109 | ) | (137 | ) | |||
Deferred income taxes benefit | (2,102 | ) | (1,060 | ) | |||
Share-based compensation expense, excluding IPO grants | 3,934 | 2,032 | |||||
Non-real estate depreciation and amortization | 16,162 | 7,431 | |||||
Non-real estate depreciation and amortization on partially owned entities | 22 | 102 | |||||
Recurring maintenance capital expenditures (a) | (12,438 | ) | (5,487 | ) | |||
Adjusted FFO applicable to common shareholders | $ | 67,151 | $ | 44,315 |
(a) | Recurring maintenance capital expenditures include capital expenditures made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology. |
We calculate EBITDA for Real Estate, or EBITDAre, in accordance with the standards established by the Board of Governors of NAREIT, defined as, earnings before interest expense, taxes, depreciation, depletion and amortization, gains or losses on disposition of depreciated property, including gains or losses on change of control, impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustment to reflect share of EBITDAre of unconsolidated affiliates. EBITDAre is a measure commonly used in our industry, and we present EBITDAre to enhance investor understanding of our operating performance. We believe that EBITDAre provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and useful life of related assets among otherwise comparable companies. |
We also calculate our Core EBITDA as EBITDAre further adjusted for acquisition, litigation and other expenses, impairment of long-lived assets, loss on debt extinguishment and modification, share-based compensation expense, foreign currency exchange gain or loss, loss or gain on other asset disposals, loss or income on partially owned entities and reduction in EBITDAre from partially owned entities. We believe that the presentation of Core EBITDA provides a measurement of our operations that is meaningful to investors because it excludes the effects of certain items that are otherwise included in EBITDAre but which we do not believe are indicative of our core business operations. EBITDAre and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDAre and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDAre and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDAre and Core EBITDA have limitations as analytical tools, including: |
• | these measures do not reflect our historical or future cash requirements for recurring maintenance capital expenditures or growth and expansion capital expenditures; |
• | these measures do not reflect changes in, or cash requirements for, our working capital needs; |
• | these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness; |
• | these measures do not reflect our tax expense or the cash requirements to pay our taxes; and |
• | although depreciation, depletion and amortization are non-cash charges, the assets being depreciated, depleted and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements. |
We use EBITDAre and Core EBITDA as measures of our operating performance and not as measures of liquidity. The table below reconciles EBITDAre and Core EBITDA to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP. |
Reconciliation of Net Income (Loss) to NAREIT EBITDAre and Core EBITDA | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income (loss) | $ | 23,511 | $ | (4,629 | ) | ||
Adjustments: | |||||||
Depreciation, depletion and amortization | 51,604 | 30,096 | |||||
Interest expense | 23,870 | 21,576 | |||||
Income tax expense | 91 | 488 | |||||
Net gain on sale of real estate, net of withholding taxes | (2,096 | ) | — | ||||
Adjustment to reflect share of EBITDAre of partially owned entities | 60 | 615 | |||||
NAREIT EBITDAre | $ | 97,040 | $ | 48,146 | |||
Adjustments: | |||||||
Acquisition, litigation, and other expense | 1,688 | 8,493 | |||||
Loss (income) from investments in partially owned entities | 27 | (122 | ) | ||||
Impairment of long-lived assets | — | 12,555 | |||||
Loss (gain) on foreign currency exchange | 492 | (60 | ) | ||||
Share-based compensation expense | 4,307 | 2,639 | |||||
Loss on debt extinguishment and modifications | 781 | — | |||||
Net (gain) loss on sale of non-real estate assets | (165 | ) | 20 | ||||
Reduction in EBITDAre from partially owned entities | (60 | ) | (615 | ) | |||
Core EBITDA | $ | 104,110 | $ | 71,056 |
• | current cash balances; |
• | cash flows from operations; |
• | our 2018 forward sale agreement; |
• | our ATM Equity Program; and |
• | other forms of debt financings and equity offerings. |
• | operating activities and overall working capital; |
• | capital expenditures; |
• | debt service obligations; and |
• | quarterly shareholder distributions. |
Three Months Ended March 31, 2020 | ||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||
December (2019)/January | $ | 0.2000 | $ | — | $ | 38,796 | ||||||
December(a) | — | (169 | ) | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | ||||||||
December (2019)/January | — | 4 | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | |||||||||
March/April | 0.2100 | 42,568 | — | |||||||||
$ | 42,568 | $ | 38,631 |
(a) | Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment. |
Three Months Ended March 31, 2019 | ||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||
December (2018)/January | $ | 0.1875 | $ | — | $ | 28,218 | ||||||
December(a) | (127 | ) | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | |||||||||
December (2018)/January | 7 | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | ||||||||||
March/April | 0.2000 | 30,235 | — | |||||||||
$ | 30,235 | $ | 28,098 |
(a) | Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment. |
Stated Maturity Date | Effective Interest Rate as of March 31, 2020(7) | Outstanding principal amount at | ||||||||
Indebtedness | Contractual Interest Rate | March 31, 2020 | December 31, 2019 | |||||||
2013 Mortgage Loans | ||||||||||
Senior note | 5/2023 | 3.81% | 4.14% | 179,770 | $ | 181,443 | ||||
Mezzanine A | 5/2023 | 7.38% | 7.55% | 70,000 | 70,000 | |||||
Mezzanine B | 5/2023 | 11.50% | 11.75% | 32,000 | 32,000 | |||||
Total 2013 Mortgage Loans | 281,770 | 283,443 | ||||||||
Senior Unsecured Notes | ||||||||||
Series A 4.68% notes due 2026 | 1/2026 | 4.68% | 4.77% | 200,000 | 200,000 | |||||
Series B 4.86% notes due 2029 | 1/2029 | 4.86% | 4.92% | 400,000 | 400,000 | |||||
Series C 4.10% notes due 2030 | 1/2030 | 4.10% | 4.15% | 350,000 | 350,000 | |||||
Total Senior Unsecured Notes | 950,000 | 950,000 | ||||||||
2020 Senior Unsecured Term Loan Tranche A-1(1) | 03/2025 | L+0.95% | 2.83% | 425,000 | — | |||||
2020 Senior Unsecured Term Loan Tranche A-2(2)(6) | 03/2025 | C+0.95% | 2.76% | 177,075 | — | |||||
Total 2020 Senior Unsecured Term Loan A Facility(4) | 602,075 | — | ||||||||
2018 Senior Unsecured Term Loan A Facility(1)(4) | 01/2023 | L+1.00% | 3.14% | — | 475,000 | |||||
Total principal amount of indebtedness | $ | 1,833,845 | $ | 1,708,443 | ||||||
Less: deferred financing costs | (14,976 | ) | (12,996 | ) | ||||||
Total indebtedness, net of unamortized deferred financing costs | $ | 1,818,869 | $ | 1,695,447 | ||||||
2020 Senior Unsecured Revolving Credit Facility(3)(5) | 03/2024 | L+0.85% | 0.20% | $ | — | N/A | ||||
2018 Senior Unsecured Revolving Credit Facility(1)(3) | 1/2021 | L+0.90% | 0.36% | N/A | $ | — |
• | a maximum leverage ratio of less than or equal to 60% of our total asset value. Following a material acquisition, leverage ratio shall not exceed 65%; |
• | a maximum unencumbered leverage ratio of less than or equal to 60% to unencumbered asset value. Following a material acquisition, unencumbered leverage ratio shall not exceed 65%; |
• | a maximum secured leverage ratio of less than or equal to 40% to total asset value. Following a material acquisition, secured leverage ratio shall not exceed 45%; |
• | a minimum fixed charge coverage ratio of greater than or equal to 1.50x; and |
• | a minimum unsecured interest coverage ratio of greater than or equal to 1.75x. |
• | a maximum leverage ratio of less than or equal to 60% of our total asset value; |
• | a maximum unsecured indebtedness to qualified assets ratio of less than 0.60 to 1.00; |
• | a maximum total secured indebtedness ratio of less than 0.40 to 1.00; |
• | a minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; and |
• | a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(In thousands, except per cubic foot amounts) | |||||||
Real estate | $ | 9,390 | $ | 4,485 | |||
Personal property | 2,298 | 171 | |||||
Information technology | 750 | 831 | |||||
Total recurring maintenance capital expenditures | $ | 12,438 | $ | 5,487 | |||
Total recurring maintenance capital expenditures per cubic foot | $ | 0.011 | $ | 0.006 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(In thousands, except per cubic foot amounts) | |||||||
Real estate | $ | 6,797 | $ | 5,309 | |||
Personal property | 8,184 | 7,896 | |||||
Total repair and maintenance expenses | $ | 14,981 | $ | 13,205 | |||
Repair and maintenance expenses per cubic foot | $ | 0.014 | $ | 0.014 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(In thousands) | |||||||
Acquisitions, net of cash acquired and adjustments | $ | 315,583 | $ | 23,623 | |||
Expansion and development initiatives | 29,586 | 26,315 | |||||
Information technology | 951 | 722 | |||||
Total growth and expansion capital expenditures | $ | 346,120 | $ | 50,660 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 81,602 | $ | 53,012 | |||
Net cash used in investing activities | $ | (359,159 | ) | $ | (58,705 | ) | |
Net cash provided by (used in) financing activities | $ | 315,101 | $ | (29,109 | ) |
• | potential work stoppages, including due to spread of the disease among our employees or due to shutdowns that may be requested or mandated by governmental authorities; |
• | labor unrest due to risks of disease from working with other employees and outside vendors; |
• | economic impacts, including increased labor costs, from mitigation and other measures undertaken by us and/or third parties to support and protect our employees or the food supply; |
• | completing developments on time or an inability of our contractors to perform as a result of spread of disease among employees of our contractors and other construction partners or due to shutdowns that may be requested or mandated by governmental authorities; |
• | limiting the ability of our customers to comply with the terms of their contracts with us, including in making timely payments to us; |
• | limiting the ability of our suppliers and partners to comply with the terms of their contracts with us, including in making timely delivery of supplies to us such as ammonia necessary for the operation of our temperature-controlled warehouses; |
• | long-term volatility in or reduced demand for temperature-controlled warehouse storage and related handling and other warehouse services; |
• | adverse impact on the value of our real estate; |
• | reduced ability to execute our growth strategies, including identifying and completing acquisitions and expanding into new markets; and |
• | the exacerbation of other risks discussed in our Annual Report arising from the COVID-19 pandemic. |
Exhibit No. | Description | ||
Articles of Amendment (incorporated by reference to Exhibit 3.1 to Americold Realty Trust’s Current Report on Form 8-K filed on March 10, 2020 (File No. 001-34723)) | |||
Employment Agreement, dated January 7, 2020, by and between AmeriCold Logistics, LLC and Robert Chambers (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on January 10, 2020 (File No. 001-34723)) | |||
Credit Agreement (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on March 30, 2020 (File No. 001-34723)) | |||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust | |||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust | |||
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust | |||
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust | |||
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act | |||
101 | The following financial statements of Americold Realty Trust’s Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019; (ii) Condensed Consolidated Income Statements for the three months ended March 31, 2020 and 2019; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019; (iv) Condensed Consolidated Statements of Equity for the three months ended March 31, 2020 and 2019; (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019; and (vi) Notes to Condensed Consolidated Financial Statements. | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||
AMERICOLD REALTY TRUST | ||||
(Registrant) | ||||
Date: | May 8, 2020 | By: | /s/ Marc Smernoff | |
Name: | Marc Smernoff | |||
Title: | Chief Financial Officer and Executive Vice President | |||
(On behalf of the registrant and as principal financial officer) |
/s/ Fred W. Boehler |
Fred W. Boehler |
Chief Executive Officer, President and Trustee |
/s/ Marc J. Smernoff |
Marc J. Smernoff |
Chief Financial Officer and Executive Vice President |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Fred W. Boehler |
Fred W. Boehler |
President, Chief Executive Officer and Trustee |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Marc J. Smernoff |
Marc J. Smernoff |
Chief Financial Officer and Executive Vice President |
Mine or Operating Name (MSHA Identification Number) | Section 104 S&S Citations | Section 104(b) Orders | Section 104(d) Citations and Orders | Section 110(b)(2) Violations | Section 107(a) Orders | Total Dollar Value of MSHA Assessments Proposed | Total Number of Mining Related Fatalities | Received Notice of Pattern of Violations Under Section 104(e) | Received Notice of Potential to Have Pattern Under Section 104(e) | Legal Actions Pending as of Last Day of Period (1) | Legal Actions Initiated During Period | Legal Actions Resolved During Period | ||||||||||||
Carthage Crushed Limestone (23-00028) | 2 | — | — | — | — | $9,065.00 | — | No | No | 2 | 3 | 1 |
(1) | See table below for additional detail regarding Legal Actions Pending as of March 31, 2020. With respect to Contests of Proposed Penalties, we have included the number of dockets (as opposed to citations) when counting the number of Legal Actions Pending as of March 31, 2020. |
Mine or Operating Name (MSHA Identification Number) | Contests of citations and orders (a) | Contests of proposed penalties (b) | Complaints for compensation (c) | Complaints of discharge, discrimination or interference (d) | Applications for temporary relief (e) | Appeals of judges' decisions or orders (f) | ||||||||
Carthage Crushed Limestone (23-00028) | — | 1 | — | — | — | — |
(a) | Represents (if any) contests of citations and orders, which typically are filed prior to an operator's receipt of a proposed penalty assessment from MSHA or relate to orders for which penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act). This category includes: (i) contests of citations or orders issued under section 104 of the Mine Act, (ii) contests of imminent danger withdrawal orders under section 107 of the Mine Act, and (iii) Emergency response plan dispute proceedings (as required under the Mine Improvement and New Emergency Response Act of 2006, Pub. L. No. 109-236, 120 Stat. 493). |
(b) | Represents (if any) contests of proposed penalties, which are administrative proceedings before the Federal Mine Safety and Health Review Commission (“FMSHRC”) challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order. |
(c) | Represents (if any) complaints for compensation, which are cases under section 111 of the Mine Act that may be filed with the FMSHRC by miners idled by a closure order issued by MSHA who are entitled to compensation. |
(d) | Represents (if any) complaints of discharge, discrimination or interference under section 105 of the Mine Act, which cover: (i) discrimination proceedings involving a miner's allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint, and (ii) temporary reinstatement proceedings involving cases in which a miner has filed a complaint with MSHA stating that he or she has suffered such discrimination and has lost his or her position. Complaints of Discharge, Discrimination, or Interference are also included in Contests of Proposed Penalties, column (b). |
(e) | Represents (if any) applications for temporary relief, which are applications under section 105(b)(2) of the Mine Act for temporary relief from any modification or termination of any order or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act). |
(f) | Represents (if any) appeals of judges' decisions or orders to the FMSHRC, including petitions for discretionary review and review by the FMSHRC on its own motion. |
Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2020 and 2019 by segment and geographic region:
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Share-Based Compensation - OP Units Grants (Details) - OP units $ in Thousands |
3 Months Ended |
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Mar. 31, 2020
USD ($)
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards granted (in shares) | shares | 255,720 |
Grant Date Fair Value (in thousands) | $ | $ 7,719 |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting Period | 1 year |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting Period | 3 years |
Dividends and Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 2 Months Ended | 3 Months Ended | 5 Months Ended | ||||||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Apr. 30, 2020 |
Jan. 31, 2020 |
Jan. 31, 2019 |
Apr. 30, 2018 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Apr. 30, 2020 |
Apr. 30, 2019 |
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Dividends Payable [Line Items] | ||||||||||
Dividend Per Share (in USD per share) | $ 0.2000 | $ 0.1875 | $ 0.2000 | $ 0.21 | $ 0.20 | |||||
Common Shares | ||||||||||
Distributions Declared | $ 0 | $ 0 | $ 30,235 | $ 30,235 | ||||||
Distributions Paid | 38,796 | 28,218 | $ 0 | $ 28,098 | ||||||
Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | ||||||||||
Common Shares | ||||||||||
Distributions Paid | $ 169 | $ 127 | ||||||||
Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | ||||||||||
Common Shares | ||||||||||
Distributions Paid | $ 4 | $ 7 | ||||||||
Subsequent Event | ||||||||||
Dividends Payable [Line Items] | ||||||||||
Dividend Per Share (in USD per share) | $ 0.2100 | |||||||||
Common Shares | ||||||||||
Distributions Declared | $ 42,568 | $ 42,568 | ||||||||
Distributions Paid | $ 0 | $ 38,631 |
Variable Interest Entities (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2015 |
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Variable Interest Entity [Line Items] | |||
Contribution liability | $ 2,482,716 | $ 2,337,665 | |
Cloverleaf | |||
Variable Interest Entity [Line Items] | |||
Original benefit of contribution by tax credit investor's | $ 5,600 | ||
Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Contribution liability | $ 4,800 | $ 4,900 |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to March 31, 2020 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements. COVID-19 The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business in all geographies, including how it will impact its customers and business partners. While the Company did not incur significant disruptions during the three months ended March 31, 2020 from the COVID-19 pandemic, it is unable to predict the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties. Universal Shelf Registration Statement On April 16, 2020, the Company and the Operating Partnership filed with the SEC an automatic shelf registration statement on Form S-3 (Registration Nos. 333-237704 and 333-237704-01) (the “Registration Statement”), registering an indeterminate amount of (i) the Company’s common shares of beneficial interest, $0.01 par value per share, (ii) the Company’s preferred shares of beneficial interest, $0.01 par value per share, (iii) depositary shares representing entitlement to all rights and preferences of fractions of the Company’s preferred shares of a specified series and represented by depositary receipts, (iv) warrants to purchase the Company’s common shares or preferred shares or depositary shares and (v) debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. There has been no activity under the Registration Statement at this time, except for the Company’s ATM program launch discussed below. At the Market (ATM) Equity Program In connection with filing the Registration Statement, on April 16, 2020, the Company and the Operating Partnership entered into a new ATM Equity Offering Sales Agreement (the “Distribution Agreement”) pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of the Company’s common shares through the ATM Equity Program. In connection with entering into the new Distribution Agreement, the Company and the Operating Partnership terminated its previously existing ATM Equity Program, dated August 26, 2019.
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The Company reports activity in AOCI for foreign currency translation adjustments, including the translation adjustment for investments in partially owned entities, unrealized gains and losses on cash flow hedge derivatives, and minimum pension liability adjustments (net of tax). The activity in AOCI for the three months ended March 31, 2020 and 2019 is as follows (in thousands):
(1) Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations.
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Sale-Leasebacks of Real Estate |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale-Leasebacks of Real Estate | Sale-Leasebacks of Real Estate The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of March 31, 2020 and December 31, 2019 are as follows:
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Investment in Partially Owned Entities |
3 Months Ended | ||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||
Investment in Partially Owned Entities | Investment in Partially Owned Entities During the first quarter of 2020, the Company entered into a 14.99% equity interest in a joint venture with Superfrio Armazéns Gerais S.A. (“SuperFrio” or “Brazil JV”) for Brazilian reals of 117.8 million. Including certain transaction costs, this the Company recorded an initial investment of USD $25.7 million. SuperFrio is a Brazilian-based company that provides temperature-controlled storage and logistics services including storage, warehouse services, and transportation. The debt of our unconsolidated joint venture is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations. As of March 31, 2020, our investment in unconsolidated joint venture accounted for under the equity method of accounting presented in our Condensed Consolidated Balance Sheet consists of the following (in thousands):
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Income Taxes |
3 Months Ended |
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Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income taxes are accounted for under the provisions of ASC 740, Income Taxes, which generally requires the Company to record deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities. Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. The Company recorded an income tax expense of approximately $0.5 million for each of the three months ended March 31, 2020 and 2019, respectively. As a REIT, the Company is entitled to a deduction for dividends paid, resulting in a substantial reduction in the amount of federal income tax expense it recognizes. Substantially all of the Company’s income tax expense is incurred based on the earnings generated by its foreign operations and a portion of those earnings is permanently reinvested. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. While we are still assessing the impact of the legislation, we do not expect there to be a material impact to our consolidated financial statements at this time. The Company plans on accelerating the refund of approximately $1.9 million in previously paid alternative minimum taxes in 2020. The Company recorded an opening deferred tax liability of $8.9 million and $0.7 million in 2019 for the purchase of Cloverleaf and Lanier, respectively, further discussed in Note 3. Deferred taxes for the acquisition arose primarily from book to tax differences in the basis of fixed and intangible assets. Purchase accounting for Cloverleaf and Lanier has not yet been completed and the Company recorded additional deferred tax liability of approximately $1.0 million for the quarter ended March 31, 2020 based on additional information obtained during the quarter. Furthermore, a deferred income tax benefit of approximately $1.0 million was also recognized during the quarter as result of a reduction in the Company’s existing valuation allowance due to the aforementioned deferred tax liability for the Cloverleaf and Lanier acquisitions recorded during the quarter that became available to be used as a positive source of income for valuation allowance assessment purposes. The Company recorded an opening deferred tax liability of $42.0 million for the purchase of Novacold in January of 2020, further discussed in Note 3. Deferred taxes for the acquisition arose primarily from book to tax differences in the basis of fixed and intangible assets. Purchase accounting for Novacold has not yet been completed, and additional amounts may be recorded as additional information is obtained. Income Tax Contingencies ASC 740 prescribes a recognition threshold and measurement attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance prescribed in ASC 740 establishes a recognition threshold of more likely than not that a tax position will be sustained upon examination. The measurement attribute requires that a tax position be measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company has $0.4 million of uncertain tax positions outstanding as of March 31, 2020 and December 31, 2019. The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense.
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding borrowings | The Company’s outstanding indebtedness as of March 31, 2020 and December 31, 2019 is as follows (in thousands):
(1) L = one-month LIBOR. (2) C = one-month CDOR. (3) During the first quarter of 2020, the Company refinanced its Senior Unsecured Credit Facility. As such, the 2020 Senior Unsecured Revolving Credit Facility was in effect as of March 31, 2020 and the 2018 Senior Unsecured Revolving Credit Facility was in effect as of December 31, 2019. The above disclosure reflects N/A for the reporting date that the respective instrument was not in effect. (4) During the first quarter of 2020, the Company refinanced its Senior Unsecured Term Loan A. As such, the 2020 Senior Unsecured Term Loan A Facility was in effect as of March 31, 2020 and the 2018 Senior Unsecured Term Loan A Facility was in effect as of December 31, 2019. (5) The Company has the option to extend the 2020 Senior Unsecured Revolving Credit Facility up to two times for a six-month period each. (6) The 2020 Senior Unsecured Term Loan Tranche A-2 is denominated in Canadian dollars and aggregates to CAD $250.0 million. The carrying value in the table above is the US dollar equivalent as of March 31, 2020.
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Schedule of aggregate maturities of total indebtedness | The aggregate maturities of the Company’s total indebtedness as of March 31, 2020, including amortization of principal amounts due under the mortgage notes, for each of the next five years and thereafter, are as follows:
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Dividends and Distributions (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of dividends declared and distributions paid | The following tables summarize dividends declared and distributions paid to the holders of common shares for the three months ended March 31, 2020 and 2019.
(a) Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment.
(a) Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment.
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Revenue from Contracts with Customers - Performance Obligations, Expected Timing of Recognition, Narrative (Details) |
Mar. 31, 2020 |
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, percentage of revenue | 21.00% |
Performance obligation, period for recognition | 9 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, percentage of revenue | 79.00% |
Performance obligation, period for recognition | 15 years 3 months 18 days |
Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation All share-based compensation cost is measured at the grant date, based on the estimated fair value of the award. The Company issues time-based, performance-based and market performance-based equity awards. Time-based awards and cliff vesting market performance-based awards are recognized on a straight-line basis over the employees’ requisite service period, as adjusted for estimate of forfeitures. Performance-based awards are recognized ratably over the vesting period using a graded vesting attribution model upon the achievement of the performance target, as adjusted for estimate of forfeitures. The only performance-based awards issued by the Company were granted in 2016 and 2017. Aggregate share-based compensation charges were $4.3 million and $5.7 million during the three months ended March 31, 2020 and 2019, respectively. Routine share-based compensation expense is included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated Statements of Operations. During the first quarter of 2019, approximately $3.1 million of share-based compensation expense was recorded as a component of “Acquisition, litigation and other” expense on the accompanying Condensed Consolidated Statements of Operations due to accelerated vesting of awards outstanding to former executives and an equity award modification upon trustee resignation. The award modifications and awards with accelerated vesting are discussed further under the section Modification of Restricted Stock Units and Accelerated Vesting of Awards. As of March 31, 2020, there was $31.7 million of unrecognized share‑based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.4 years. Americold Realty Trust 2010 Equity Incentive Plans During December 2010, the Company and the common shareholders approved the Americold Realty Trust 2010 Equity Incentive Plan (2010 Plan), whereby the Company could issue stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and/or dividend equivalents with respect to the Company’s common shares, cash bonus awards, and/or performance compensation awards to certain eligible participants, as defined, based upon a reserved pool of 3,849,976 of the Company’s common shares. No additional awards may be granted under the 2010 Plan. Americold Realty Trust 2017 Equity Incentive Plan On January 4, 2018, the Company’s Board of Trustees adopted the Americold Realty Trust 2017 Equity Incentive Plan (2017 Plan), which permits the grant of various forms of equity- and cash-based awards from a reserved pool of 9,000,000 common shares of the Company. On January 17, 2018, the Company’s shareholders approved the 2017 Plan. Equity-based awards issued under the 2017 Plan have the rights to receive dividend equivalents on an accrual basis. Dividend equivalents for market performance-based awards are forfeitable in the event of termination for cause or when voluntary departure occurs during the vesting period. Otherwise, dividend equivalents are accrued at the time of declaration and are paid upon the vesting of the awards. Time-based awards have the right to receive nonforfeitable dividend equivalent distributions on unvested units throughout the vesting period. As of March 31, 2020 and December 31, 2019, the Company accrued $1.4 million and $1.1 million, respectively, of dividend equivalents on unvested units payable to employees and non-employee trustees. All awards granted under the 2017 Plan dated on March 8, 2020 and thereafter include a retirement provision. The retirement provision allows that if a participant has either attained the age of 65, or has attained the age of 55 and has ten full years of service with the Company, and there are no facts, circumstances or events exist which would give the Company a basis to effect a termination of service for cause, then the award recipient is entitled to continued vesting of any outstanding equity-based awards which include the retirement provision. Should the participant choose to retire from the Company, the awards with the retirement provision would continue to vest. Accordingly, grants of time-based awards to an employee who has met the retirement criteria on or before the date of grant will be expensed at the date of grant. In addition, grants of time-based awards to employees who will meet the retirement criteria during the awards normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the retirement criteria. Time-based awards granted to recipients who meet the retirement criteria will continue vesting on the original vesting schedule. A pro-rated portion of market-performance based awards granted to recipients who meet the retirement criteria will remain outstanding and eligible to vest based on actual performance through the last day of the performance period based on the number of days during the performance period that the recipient was employed. Modification of Restricted Stock Units and Accelerated Vesting of Awards During the first quarter of 2019, the Company’s Compensation Committee approved the modification of an award issued in 2018 to a member of the Board of Trustees upon his resignation. This modification immediately accelerated the next vesting tranche of 100,000 restricted stock units which otherwise would not have vested until 2020 assuming the trustee continued service, under the original award agreement. As a result of this modification, the Company recognized approximately $2.9 million of share-based compensation expense during the first quarter of 2019. Additionally, during the first quarter of 2019, the Company recognized accelerated share-based compensation expense of $0.2 million upon the termination of former executives, in accordance with the terms of their original award agreements. Restricted Stock Units Activity Restricted stock units are nontransferable until vested. Prior to the issuance of a common share, the grantees of restricted stock units are not entitled to vote the shares. Time-based restricted stock unit awards vest in equal annual increments over the vesting period. Performance-based and market performance-based restricted stock unit awards cliff vest upon the achievement of the performance target, as well as completion of the performance period. The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2020 and 2019, respectively:
Of the restricted stock units granted for the three months ended March 31, 2020, (i) 174,661 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (ii) 108,810 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2020 and will end December 31, 2022. Of the restricted stock units granted for the three months ended March 31, 2019, (i) 12,285 were time-based graded vesting restricted stock units with a one-year vesting period issued to non-employee trustees in recognition of their efforts and oversight in the first year as a public company, (ii) 222,937 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (iii) 232,567 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2019 and will end December 31, 2021. The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of March 31, 2020:
The weighted average grant date fair value of restricted stock units granted during three months ended March 31, 2020 was $30.69 per unit, for vested and converted restricted stock units was $20.67, for forfeited restricted stock units was $22.45. The weighted average grant date fair value of non-vested restricted stock units was $24.30 and $22.50 per unit as of March 31, 2020 and December 31, 2019, respectively. OP Units Activity During 2019, upon recommendation by the Compensation Committee, the Board of Trustees approved the grant of OP units in connection with the annual grant to the Board of Trustees. The trustees have the option to elect their annual grant in the form of either time-vested restricted stock units or time-vested OP units. Additionally, the Board of Trustees approved the future award of grants for certain members of management to receive their awards in the form of either OP units or restricted stock units (applicable to time-vested and market-performance based awards). The terms of the OP units mirror the terms of the restricted stock units granted in connection with the annual grant for the first quarter of 2020. The following table summarizes OP unit grants under the 2017 Plan during the three months ended March 31, 2020 (none were issued during the first quarter of 2019):
The following table provides a summary of the OP unit awards activity under the 2017 Plan as of March 31, 2020:
The OP units granted for the three months ended March 31, 2020 had an aggregate grant date fair value of $7.7 million. Stock Options Activity The following tables provide a summary of option activity for the three months ended March 31, 2020, respectively:
The total fair value at grant date of stock option awards that vested during the three months ended March 31, 2020 and 2019 was approximately $0.6 million and $0.1 million, respectively. The total intrinsic value of options exercised for the three months ended March 31, 2020 and 2019, was $0.6 million and $11.0 million, respectively.
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Label | Element | Value |
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Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (500,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (500,000) |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company is subject to volatility in interest rates due to variable-rate debt. To manage this risk, the Company has entered into multiple interest rate swap agreements. The January 2019 agreement hedges $100.0 million of variable interest-rate debt, or 17%, of the Company’s outstanding variable-rate debt as of March 31, 2020. The August 2019 agreement hedges $225.0 million of variable interest-rate debt, or 37%, of the Company’s outstanding variable-rate debt as of March 31, 2020. Each agreement converts the Company’s variable-rate debt to a fixed-rate basis through 2024, thus reducing the impact of interest rate changes on future interest expense. These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company’s objective for utilizing these derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in interest rates. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $4.3 million will be reclassified as an increase to interest expense. The Company classifies cash inflow and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows. The Company is subject to volatility in foreign exchange rates due to foreign-currency denominated intercompany loans. The Company implemented cross-currency swaps to manage the foreign currency exchange rate risk on these intercompany loans. These agreements effectively mitigate the Company’s exposure to fluctuations in cash flows due to foreign exchange rate risk by converting the Company’s floating exchange rate to a fixed-rate basis for the life of the intercompany loans. These agreements involve the receipt of fixed USD amounts in exchange for payment of fixed AUD and NZD amounts over the life of the respective intercompany loan. The entirety of the Company’s outstanding intercompany loans receivable balances, $153.5 million AUD and $37.5 million NZD, were hedged under the cross-currency swap agreements at March 31, 2020. For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next twelve months, the Company estimates that an additional $0.9 million will be reclassified as a decrease to interest expense. The Company classifies cash inflow and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows. The Company is subject to volatility in foreign currencies against its functional currency, the US dollar. Periodically, the Company uses foreign currency derivatives including currency forward contracts to manage its exposure to fluctuations in the CAD-USD exchange rate. While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the strict hedge accounting requirements to be classified as hedging instruments. As a result, the changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. During the first quarter of 2020, the Company’s previous two outstanding foreign exchange forward contracts, which were entered into in conjunction with the funding of the Nova Cold Acquisition that were not designated as hedges in a qualifying hedging relationship, matured.The first contract was entered into in December 2019 with a notional to purchase CAD $217.0 million and sell USD matured on January 2, 2020 and settled for a gain of $2.1 million. The second contract was entered into simultaneously with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020 was subsequently designated as a net investment hedge on January 2, 2020. The net unrealized gain on the change in fair value of the foreign exchange forward contracts included within “Foreign currency exchange gain (loss), net” on the accompanying Consolidated Statement of Operations for the three months ended March 31, 2020 was $0.1 million. The Company is also exposed to fluctuations in foreign exchange rates on property investments it holds in foreign countries. The Company uses forward currency forwards to hedge its exposure to changes in the CAD- USD exchange rates on certain of its foreign investments as well. For derivatives designated as net investment hedges, the changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment. Amounts are reclassified out of accumulated other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated. On January 2, 2020, the Company designated the above noted forward currency contract with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020. This contract was then settled for a gain of $0.2 million and a new contract was entered into with same notional to sell CAD $217.0 million and purchase USD which matured on February 28, 2020. The second contract was settled for a gain of $2.8 million upon the maturity date of February 28, 2020. As of March 31, 2020, the Company did not have any currency forwards that were designated as net investment hedges outstanding. The Company determines the fair value of these derivative instruments using a present value calculation with significant observable inputs classified as Level 2 of the fair value hierarchy. Derivative asset balances are recorded on the Condensed Consolidated Balance Sheets within “Other assets” and derivative liability balances are recorded on the Condensed Consolidated Balance Sheets within “Accounts payable and accrued expenses”. The following table illustrates the disclosure in tabular format of fair value amounts of derivative instruments at March 31, 2020 and December 31, 2019 (in thousands):
The following table presents the effect of the Company’s designated derivative financial instruments on the accompanying Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019, including the impacts to Accumulated Other Comprehensive Income (AOCI) (in thousands):
Interest expense recorded in the accompanying Condensed Consolidated Statements of Operations was $23.9 million and $21.6 million during the three months ended March 31, 2020 and 2019, respectively. The foreign currency exchange loss, net for the three months ended March 31, 2020 was $0.5 million. During the three months ended March 31, 2019, the Company recorded foreign currency exchange gain, net on the accompanying Condensed Consolidated Statements of Operations of $0.1 million. The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2020 and December 31, 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying Condensed Consolidated Balance Sheets (in thousands):
As of March 31, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $16.8 million. As of March 31, 2020, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at March 31, 2020, it could have been required to settle its obligations under the agreements at their termination value of $17.0 million. The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. Refer to Note 16 for additional details regarding the impact of the Company’s derivatives on AOCI for the three months ended March 31, 2020 and 2019, respectively.
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations Acquisitions Completed During the Three Months Ended March 31, 2020 The Company completed the acquisition of privately-held Nova Cold on January 2, 2020 for total cash consideration of approximately CAD $337.3 million, net of cash received, or $259.5 million USD based upon the exchange rate between the CAD and USD on the closing date of the transaction. The preliminary purchase price allocation of consideration primarily included $177.7 million of land and buildings and equipment, $60.0 million of a customer relationship intangible asset, $42.0 million of deferred tax liabilities, and $61.7 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship asset has been preliminarily assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Canada market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Nova Cold acquisition was completed through the acquisition of stock in Canada; as a result, no tax basis in goodwill exists for Canadian tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis, therefore, the Company recorded no deferred tax liability for goodwill for Canadian tax purposes. Deductible goodwill will exist for U.S. federal income tax purposes and will be available to reduce taxable income at the REIT, including any Global Intangible Low-Taxed Income (“GILTI”) inclusion associated with the foreign TRS acquired. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquistion. The Company completed the acquisition of privately-held Newport on January 2, 2020 for total cash consideration of $56.1 million, net of cash received. The preliminary purchase price allocation of consideration primarily included $31.3 million of land and buildings and equipment, $19.5 million of a customer relationship asset and $4.6 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship intangible asset has been preliminarily assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Minneapolis-St. Paul market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Newport acquisition was completed through the acquisition of all of the membership interests of certain limited liability companies; the acquisition of all the membership interests allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis, and the Company has not recorded any deferred taxes as a result. Deductible goodwill will be available to reduce taxable income at both the REIT and its domestic TRS. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquistion. Acquisitions Completed During 2019 The Company completed the acquisition of privately-held Cloverleaf on May 1, 2019. A summary of the preliminary fair value of the assets acquired and liabilities assumed for total cash consideration of $1.24 billion, as well as adjustments made during the measurement period, is as follows (in thousands):
(1) The measurement period adjustments recorded during the measurement period did not have a significant impact on our Consolidated Statements of Operations for the quarter ended March 31, 2020. (2) The measurement period adjustments were primarily due to refinements to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments results in a net increase to goodwill. As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. The Company recorded approximately $0.2 million of additional deferred tax liability related to basis differences in fixed assets and intangibles for the three months ended March 31, 2020. All other adjustments recorded during the three months ended March 31, 2020 were not material to the Condensed Consolidated Balance Sheets, the Condensed Consolidated Statements of Operations or the Condensed Consolidated Statements of Cash Flows. The final purchase price allocation will be presented within our second quarter 2020 Condensed Consolidated Financial Statements. As shown above, in connection with the Cloverleaf Acquisition the Company recorded an intangible asset of approximately $250.3 million for customer relationships which has been assigned a useful life of 25 years, and approximately $1.6 million for trade names and trademarks which has been assigned a useful life of 1.5 years. These intangible assets will be amortized on a straight-line basis over their respective useful lives. Based on the discussion under goodwill above, the Cloverleaf Acquisition resulted in federal income tax deductibility for a portion of the intangible assets. The deductible intangible assets will be available to reduce taxable income for both the REIT and its domestic TRS. The Company recorded a deferred tax liability of $1.9 million for intangible assets in 2019, which remains materially unchanged for the three months ended March 31, 2020. The unaudited pro forma financial information set forth below is based on the historical Condensed Consolidated Statements of Operations for the quarter ended March 31, 2019, adjusted to give effect to the Cloverleaf Acquisition as if it had occurred on January 1, 2018. The pro forma adjustments primarily relate to acquisition expenses, depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the acquisition of Cloverleaf. On March 1, 2019, Cloverleaf acquired Zero Mountain, Inc. and Subsidiaries (Zero Mountain). As a result, we have included the results of operations of Zero Mountain in the below pro forma financial information. The pro forma adjustments made include the acquisition expenses incurred in connection with Cloverleaf’s acquisition of Zero Mountain. The accompanying unaudited pro forma consolidated financial statements exclude the results of all other acquisitions completed during 2019 and 2020, which were deemed immaterial. These statements are provided for illustrative purposes only and do not purport to represent what the actual Consolidated Statements of Operations of the Company or the Operating Partnership would have been had the Cloverleaf Acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.
(1) Pro forma net income available to common shareholders was adjusted to exclude $9.8 million of acquisition related costs incurred by the Company during the quarter ended March 31, 2019. (2)Adjusted to give effect to the issuance of approximately 42.1 million common shares in connection with the Cloverleaf Acquisition. Additionally, the Company completed the acquisition of privately-held Lanier on May 1, 2019 for total cash consideration of $81.9 million, net of cash received. The allocation of consideration primarily included $60.0 million of land and buildings and equipment, $6.4 million of goodwill, and $16.3 million of customer relationship intangible assets. The customer relationship asset has been assigned a useful life of 25 years and will be amortized on a straight- line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the increased presence in the north Georgia poultry market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Lanier acquisition was completed through the acquisition of both stock and partnership units; the acquisition of partnership units allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. The Company originally recorded an opening deferred tax liability of approximately $0.7 million in 2019 and approximately $0.8 million of additional deferred tax liability related to basis differences in fixed assets and intangibles for the three months ended March 31, 2020. All other adjustments recorded subsequent to the acquisition date were not material to the Condensed Consolidated Balance Sheets, the Condensed Consolidated Statements of Operations or the Condensed Consolidated Statements of Cash Flows. The final purchase price allocation will be presented within our second quarter 2020 Condensed Consolidated Financial Statements. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquistion.
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Derivative Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Derivative Results | The following table illustrates the disclosure in tabular format of fair value amounts of derivative instruments at March 31, 2020 and December 31, 2019 (in thousands):
The following table presents the effect of the Company’s designated derivative financial instruments on the accompanying Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019, including the impacts to Accumulated Other Comprehensive Income (AOCI) (in thousands):
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Schedule of Gross Presentation, Effects of Offsetting and a Net Presentation of Derivatives | The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2020 and December 31, 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying Condensed Consolidated Balance Sheets (in thousands):
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of March 31, 2020:
(1) For certain vested restricted stock units, common share issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. Of these vested restricted stock units, 568,753 belong to a member of the Board of Trustees who has resigned and common shares shall not be issued until the first to occur: (1) change in control; or (2) April 13, 2022. Holders of these certain vested restricted stock units are entitled to receive dividends, but are not entitled to vote the shares until common shares are issued. The weighted average grant date fair value of these units is $9.38 per unit. During 2020 an additional 14,286 of these restricted stock units vested. Of the total restricted stock units vested, but not yet released, 615,643 time-based restricted stock units and 14,286 performance-based restricted stock units vested prior to January 1, 2020. The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2020 and 2019, respectively:
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Schedule of OP Units Activity | The following table summarizes OP unit grants under the 2017 Plan during the three months ended March 31, 2020 (none were issued during the first quarter of 2019):
The following table provides a summary of the OP unit awards activity under the 2017 Plan as of March 31, 2020:
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Schedule of Stock Option Activity | The following tables provide a summary of option activity for the three months ended March 31, 2020, respectively:
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Derivative Financial Instruments - Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative [Line Items] | ||
Derivative Assets | $ 24,656 | $ 6,855 |
Derivative Liabilities | 16,831 | 6,094 |
Designated derivatives | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Assets | 24,656 | 1,376 |
Derivative Liabilities | 0 | 0 |
Designated derivatives | Interest rate contracts | ||
Derivative [Line Items] | ||
Derivative Assets | 0 | 2,933 |
Derivative Liabilities | 16,831 | 3,505 |
Undesignated derivatives | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Assets | 0 | 2,546 |
Derivative Liabilities | $ 0 | $ 2,589 |
Employee Benefit Plans - Additional Information (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2020
USD ($)
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Retirement Benefits [Abstract] | |
Expected contribution plan in 2020 | $ 2,500 |
Unfunded liability on multiemployer plan | 13,700 |
Monthly installments on multiemployer plan | $ 38 |
Contribution term of multiemployer plan | 30 years |
Revenue from Contracts with Customers - Contract Balances, Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
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Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
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Revenue from Contract with Customer [Abstract] | ||||
Receivables from contracts with customers | $ 214,800 | $ 213,200 | $ 191,800 | $ 192,100 |
Unearned revenue | $ 17,118 | $ 16,423 | $ 18,000 | $ 18,600 |
Inventory turn period | 30 days |
Revenue from Contracts with Customers - Performance Obligations, Narrative (Details) $ in Millions |
3 Months Ended |
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Mar. 31, 2020
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Variable consideration, percentage constrained | 100.00% |
Unsatisfied performance obligation | $ 635.2 |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Payment terms | 0 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Payment terms | 30 days |
Business Combinations Business Combinations - Pro Forma Information (Details) - Cloverleaf $ / shares in Units, $ in Thousands, shares in Millions |
3 Months Ended |
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Mar. 31, 2019
USD ($)
$ / shares
shares
| |
Business Acquisition [Line Items] | |
Total revenue | $ 449,259 |
Net income available to common shareholders | $ (4,489) |
Net income per share, diluted (in USD per share) | $ / shares | $ (20.00) |
Acquisition related costs | $ 9,800 |
Number of shares issued (in shares) | shares | 42.1 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 11 Months Ended | 12 Months Ended | ||||
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Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2020 |
Dec. 31, 2020 |
Jan. 02, 2020 |
Dec. 31, 2019 |
May 01, 2019 |
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Income Tax Disclosure [Abstract] | |||||||
Income tax expense (benefit) | $ 455 | $ 488 | |||||
Business Acquisition [Line Items] | |||||||
Deferred income tax benefit | 2,102 | $ 1,060 | |||||
Liability for uncertain tax positions | $ 400 | ||||||
Cloverleaf | |||||||
Business Acquisition [Line Items] | |||||||
Deferred tax liability | 9,024 | $ 9,024 | 8,900 | $ 9,063 | |||
Deferred tax liability, change | 200 | $ (39) | |||||
Lanier Cold Storage | |||||||
Business Acquisition [Line Items] | |||||||
Deferred tax liability | $ 700 | $ 700 | |||||
Deferred tax liability, change | 800 | ||||||
Cloverleaf and Lanier Cold Storage | |||||||
Business Acquisition [Line Items] | |||||||
Deferred tax liability, change | 1,000 | ||||||
Deferred income tax benefit | $ 1,000 | ||||||
Nova Cold Logistics | |||||||
Business Acquisition [Line Items] | |||||||
Deferred tax liability | $ 42,000 | ||||||
Forecast | |||||||
Business Acquisition [Line Items] | |||||||
Refunds from CARES Act provision | $ 1,900 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Accounts receivable – net of allowance of $7,426 and $6,927 at March 31, 2020 and December 31, 2019, respectively | $ 7,426 | $ 6,927 |
Common shares, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 325,000,000 | 250,000,000 |
Common shares, shares issued (in shares) | 200,265,965 | 191,799,909 |
Common shares, shares outstanding (in shares) | 200,265,965 | 191,799,909 |
Mortgages, Senior Notes and Term Loans | ||
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $14,976 and $12,996, in the aggregate, at March 31, 2020 and December 31, 2019, respectively | $ 14,976 | $ 12,996 |
Revenue from Contracts with Customers |
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Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregated Revenue The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2020 and 2019 by segment and geographic region:
Performance Obligations Substantially all our revenue for warehouse storage and handling services, and management and incentive fees earned under third-party managed and other contracts is recognized over time as the customer benefits throughout the period until the contractual term expires. Typically, revenue is recognized over time using an output measure (e.g. passage of time) to measure progress. Revenue recognized at a point in time upon delivery when the customer typically obtains control, include most accessorial services, transportation services, reimbursed costs and quarry product shipments. For arrangements containing non-cancellable contract terms, any variable consideration related to storage renewals or incremental handling charges above stated minimums are 100% constrained and not included in aggregate amount of the transaction price allocated to the unsatisfied performance obligations disclosed below, given the degree in difficulty in estimation. Payment terms are generally 0 - 30 days upon billing, which is typically monthly, either in advance or subsequent to the performance of services. The same payment terms typically apply for arrangements containing variable consideration. The Company has no material warranties or obligations for allowances, refunds or other similar obligations. As of March 31, 2020, the Company had $635.2 million of remaining unsatisfied performance obligations from contracts with customers subject to non-cancellable terms and have an original expected duration exceeding one year. These obligations also do not include variable consideration beyond the non-cancellable term, which due to the inability to quantify by estimate, is fully constrained. The Company expects to recognize approximately 21% of these remaining performance obligations as revenue in 2020, an the remaining 79% to be recognized over a weighted average period of 15.3 years through 2038. Contract Balances The timing of revenue recognition, billings and cash collections results in accounts receivable (contract assets), and unearned revenue (contract liabilities) on the accompanying Condensed Consolidated Balance Sheets. Generally, billing occurs monthly, subsequent to revenue recognition, resulting in contract assets. However, the Company may bill and receive advances on storage and handling services, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the accompanying Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three months ended March 31, 2020, were not materially impacted by any other factors. Opening and closing receivables balances related to contracts with customers accounted for under ASC 606 were $214.8 million and $213.2 million as of March 31, 2020 and December 31, 2019, respectively, and $191.8 million and $192.1 million as of March 31, 2019 and December 31, 2018, respectively. All other trade receivable balances relate to contracts accounted for under ASC 842. Opening and closing balances in unearned revenue related to contracts with customers were $17.1 million and $16.4 million as of March 31, 2020 and December 31, 2019, respectively, and $18.0 million and $18.6 million as of March 31, 2019 and December 31, 2018, respectively. Substantially all revenue that was included in the contract liability balances at the beginning of 2020 and 2019 has been recognized as of March 31, 2020 and March 31, 2019, respectively, and represents revenue from the satisfaction of monthly storage and handling services with inventory that turns on average every 30 days.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit As of March 31, 2020 and December 31, 2019, there were $22.8 million and $23.0 million, respectively, of letters of credit issued on the Company’s Senior Unsecured Revolving Credit Facility. Bonds The Company had outstanding surety bonds of $4.3 million as of March 31, 2020 and December 31, 2019. These bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations. Collective Bargaining Agreements As of March 31, 2020, approximately 48% of the Company’s labor force is covered by collective bargaining agreements. Collective bargaining agreements covering less than 12% of the labor force are set to expire during the remaining nine months ended December 31, 2020. Legal Proceedings In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company and its legal counsel evaluate the merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency suggests that a loss is probable, and the amount can be reasonably estimated, then a loss is recorded. In addition to the matters discussed below, the Company may be subject to litigation and claims arising from the ordinary course of business. In the opinion of management, after consultation with legal counsel, the outcome of such matters is not expected to have a material impact on the Company’s financial condition, results of operations, or cash flows. Kansas Breach of Settlement Agreement Litigation This case was served against the Company in Wyandotte County, Kansas, on January 17, 2013, alleging breach of a 1994 Settlement Agreement reached with customers of our predecessor company, Americold Corporation. The plaintiffs originally brought claims in 1992 arising from a fire the previous year in an underground warehouse facility. In 1994, a settlement was reached whereby Americold Corporation agreed to the entry of a $58.7 million judgment against it and assigned its rights to proceed against its insurer to satisfy the judgment. The settlement agreement contained a standard “cooperation provision” in which Americold Corporation agreed to execute any additional documents necessary to fulfill the intent of the settlement agreement. The plaintiffs then sued Americold Corporation’s insurer to recover on the consent judgment. The case was ultimately dismissed in 2012, and the Kansas Supreme Court ruled that the 1994 consent judgment had expired and was not revivable as a matter of law. On September 24, 2012, the plaintiffs filed a separate claim in the district court of Wyandotte County, Kansas, alleging that the Company and one of its subsidiaries, Americold Logistics, LLC, as successors to Americold Corporation, are liable for the full amount of the judgment, based upon the allegation that the Company failed to execute a document or take action to keep the judgment alive and viable. On February 7, 2013, the Company removed the case to the U.S. federal court and ultimately filed a motion for summary judgment, which the plaintiffs vigorously opposed. On October 4, 2013, the court granted the Company’s motion and dismissed the case in full. Only one plaintiff appealed the dismissal to the U.S. Court of Appeals. The Court of Appeals ordered that the case be remanded to the Kansas State Court and the judgment in favor of Americold be vacated, finding U.S. federal diversity jurisdiction did not exist over the Company. The Company petitioned the U.S. Supreme Court for certiorari and oral argument occurred on January 19, 2016. On March 7, 2016, the United States Supreme Court ruled that there was no federal diversity jurisdiction. Following the decision, the United States District Court for the District of Kansas entered an Order vacating the summary judgment and remanding the case to Kansas state court. Regardless of the venue, the Company remains confident that its defenses on the merits of plaintiffs’ claims are strong under Kansas law. Following remand to Kansas state court, Plaintiffs initially petitioned the court to amend their complaint to drop their claim for damages and only seek an Order of Specific Performance requiring Americold to sign a new document reinstating the consent judgment assigned in the 1994 Settlement Agreement. Plaintiffs filed a later motion to add back the damages claim, which was granted in February 2018. Since December 31, 2018, the court granted the Company’s motions to dismiss Kraft and Safeway from the case given they did not appeal the District Court’s Order dismissing their claims and are bound by the judgment entered against them. The Kraft and Safeway plaintiffs have appealed their dismissals. The trial court has stayed the proceedings pending the appeal. In addition, the Company has sued the Chubb Group seeking the court’s declaration that Chubb owes coverage of the amounts sought by Plaintiffs and for bad faith damages for denying coverage. Given the status of the proceedings to date, a liability amount cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its condensed consolidated financial statements. Preferred Freezer Services, LLC Litigation On February 11, 2019, Preferred Freezer Services, LLC (“PFS”) moved by Order to Show Cause in the Supreme Court of the State of New York, New York County, asserting breach of contract and other claims against the Company and seeking to preliminarily enjoin the Company from acting to acquire certain properties leased by PFS. In its complaint and request for preliminary injunctive relief, PFS alleged that the Company breached a confidentiality agreement entered into in connection with the Company’s participation in a bidding process for the sale of PFS by contacting PFS’s landlords and by using confidential PFS information in bidding for the properties leased by PFS. PFS’s request for a preliminary injunction was denied after oral argument on February 26, 2019. On March 1, 2019, PFS filed an application for interim injunctive relief from the Appellate Division of the Supreme Court, First Judicial Department. On April 2, 2019, while its application to the First Department was pending, PFS voluntarily dismissed its state court action, and First Department application, and re-filed substantially the same claims against the Company in the U.S. District Court for the Southern District of New York. In addition to an order enjoining Americold from making offers to purchase the properties leased by PFS, PFS seeks compensatory, consequential and/or punitive damages. The Company has filed a motion to require PFS to reimburse the Company for its legal fees it incurred for the state court action before PFS is allowed to proceed in the federal court action. On February 18, 2020, the Court issued an order granting, in part, Americold’s request for an award of legal fees from Preferred Freezer and lifting the stay of the proceeding. The Company denies the allegations and believes PFS’s claims are without merit and intends to vigorously defend this claim. Given the status of the proceedings to date, a liability cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its condensed consolidated financial statements. Employment Putative Class Action On February 22, 2019, a former employee filed a putative class action against the Company in the San Bernardino County Superior Court asserting that the Company: (1) failed to pay minimum wages; (2) failed to pay overtime wages; (3) failed to pay all vacation wages; (4) failed to provide meal periods; (5) failed to provide accurate wage statements; (6) failed to pay wages timely to terminated employees; and (7) violated California unfair business practices. On April 10, 2019, the Company filed an Answer and Affirmative Defenses in response to the complaint and successfully removed the case to federal court in the U.S. District Court for the Central District of California. On May 2, 2019, plaintiff filed a separate lawsuit for civil penalties under California’s Private Attorneys General Act (“PAGA”) in the San Bernardino Superior Court against the Company, Case No. CIV-DS-1913525 based on similar factual allegations that are asserted in the complaint. The Company successfully obtained a dismissal of the San Bernardino Superior Court Action. On June 18, 2019, the plaintiff amended his complaint in the pending federal court action to add a rest period violation claim and PAGA penalty claims based on similar allegations that are asserted in the complaint. Plaintiff’s counsel later dismissed plaintiff’s vacation wages claim from his first amended complaint. The Company denies the plaintiff’s claims and denies that plaintiff and the putative class members have been damaged in any respect or in any amount as a result of any act or omission by the Company. The Company also denies that this case is appropriate for class treatment and further asserts, among other grounds, that this case is unmanageable as a PAGA representative action. The Company has entered into a preliminary settlement of the case for $2.5 million. The settlement of the case is subject to court approval. Environmental Matters The Company is subject to a wide range of environmental laws and regulations in each of the locations in which the Company operates. Compliance with these requirements can involve significant capital and operating costs. Failure to comply with these requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental permits, or restrictions on the Company’s operations. The Company records accruals for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. The Company adjusts these accruals periodically as assessment and remediation efforts progress or as additional technical or legal information become available. The Company recorded nominal environmental liabilities in accounts payable and accrued expenses as of March 31, 2020 and December 31, 2019. The Company believes it is in compliance with applicable environmental regulations in all material respects. Under various U.S. federal, state, and local environmental laws, a current or previous owner or operator of real estate may be liable for the entire cost of investigating, removing, and/or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the contamination. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for the entire clean-up cost. There are no material unrecorded liabilities as of March 31, 2020. Most of the Company’s warehouses utilize ammonia as a refrigerant. Ammonia is classified as a hazardous chemical regulated by the Environmental Protection Agency, and an accident or significant release of ammonia from a warehouse could result in injuries, loss of life, and property damage. Occupational Safety and Health Act (OSHA) The Company’s warehouses located in the U.S. are subject to regulation under OSHA, which requires employers to provide employees with an environment free from hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, and unsanitary conditions. The cost of complying with OSHA and similar laws enacted by states and other jurisdictions in which we operate can be substantial, and any failure to comply with these regulations could expose us to substantial penalties and potentially to liabilities to employees who may be injured at our warehouses. The Company records accruals for OSHA matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company believes that it is in substantial compliance with all OSHA regulations and that no material unrecorded liabilities exist as of March 31, 2020 and December 31, 2019.
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The activity in AOCI for the three months ended March 31, 2020 and 2019 is as follows (in thousands):
(1) Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations.
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Acquisitions, Litigation, and Other Charges Acquisitions, Litigation, and Other Charges (Tables) |
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Acquisition, Litigation and Other Special Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquisition, Litigation and Other Special Charges | The components of the charges included in “Acquisition, litigation and other” in our Condensed Consolidated Statements of Operations are as follows (in thousands):
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Fair Value Measurements (Tables) |
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Schedule of Assets and Liabilities Measured at Fair Value | The Company’s assets and liabilities measured or disclosed at fair value are as follows:
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The Company categorizes assets and liabilities that are recorded at fair values into one of three tiers based upon fair value hierarchy. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data. The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and revolving line of credit approximate their fair values due to the short-term maturities of the instruments. The Company’s mortgage notes, senior unsecured notes and term loans are reported at their aggregate principal amount less unamortized deferred financing costs on the accompanying Condensed Consolidated Balance Sheets. The fair value of these financial instruments is estimated based on the present value of the expected coupon and principal payments using a discount rate that reflects the projected performance of the collateral asset as of each valuation date. The inputs used to estimate the fair value of the Company’s mortgage notes, senior unsecured notes and term loans are comprised of Level 2 inputs, including senior industrial commercial real estate loan spreads, corporate industrial loan indexes, risk-free interest rates, and Level 3 inputs, such as future coupon and principal payments, and projected future cash flows. The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments. The fair value of interest rate swap and cross currency swap agreements, which are designated as cash flow hedges, and foreign currency forward contracts designated as net investment hedges, is based on inputs other than quoted market prices that are observable (Level 2). The fair value of foreign currency forward contracts is based on adjusting the spot rate utilized at the balance sheet date for translation purposes by an estimate of the forward points observed in active markets (Level 2). Additionally, the fair value of derivatives includes a credit valuation adjustment to appropriately incorporate nonperformance risk for the Company and the respective counterparty. Although the credit valuation adjustments associated with derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, the significance of the impact on the overall valuation of our derivative positions is insignificant. The Company’s cash equivalent money market funds and restricted cash assets are valued at quoted market prices in active markets for identical assets (Level 1), which the Company receives from the financial institutions that hold such investments on its behalf. The fair value hierarchy discussed above is also applicable to the Company’s pension and other post-retirement plans. The Company uses the fair value hierarchy to measure the fair value of assets held by various plans. The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between levels within the hierarchy as of March 31, 2020 and December 31, 2019, respectively. The Company’s assets and liabilities recorded at fair value on a non-recurring basis include long-lived assets when events or changes in circumstances indicate that the carrying amounts may not be recoverable. Additionally, the assets and liabilities recorded through acquisitions are measured at fair value on a non-recurring basis. Refer to Note 2 for asset acquisitions and Note 3 for business combinations, and the respective purchase price allocations of the Company’s acquisitions. The Company estimates the fair values using unobservable inputs classified as Level 3 of the fair value hierarchy. The Company’s assets and liabilities measured or disclosed at fair value are as follows:
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Acquisitions, Litigation, and Other Charges |
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Acquisition, Litigation and Other Special Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions, Litigation, and Other Charges | Acquisition, Litigation and Other Charges The components of the charges included in “Acquisition, litigation and other” in our Condensed Consolidated Statements of Operations are as follows (in thousands):
Acquisition related costs include costs associated with business transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as work associated with information systems and other projects including spending to support future acquisitions, and primarily consist of professional services. We consider acquisition related costs to be corporate costs regardless of the segment or segments involved in the transaction. Refer to Note 3 for further information regarding acquisitions completed in the current year. Litigation costs consist of expenses incurred in order to defend the Company from litigation charges outside of the normal course of business as well as related settlements not in the normal course of business. Litigation costs incurred in connection with matters arising from the ordinary course of business are expensed as a component of “Selling, general and administrative expense” on the Condensed Consolidated Statements of Operations. Severance costs represent certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies and reduction in workforce costs associated with exiting or selling non-strategic warehouses or businesses. Equity acceleration and modification costs represent the unrecognized expense for stock awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification. For the three months ended March 31, 2019, severance, equity modification and acceleration expense consists of $1.2 million of severance related to the departure of two former executives, as well as $3.1 million of accelerated equity award vesting. Refer to Note 11 for further details of all equity modifications and equity acceleration. Non-offering related equity issuance expense consists of non-registration statement related legal fees associated with the selling shareholders’ secondary public offering completed during the first quarter of 2019, which consisted solely of shares sold by YF ART Holdings and Goldman Sachs and affiliates (see Note 1 for more information). The Company received no proceeds from the secondary offering. |
Debt - Schedule of Aggregate Maturities of Total Indebtedness (Details) - Mortgages, Senior Notes and Term Loans - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Debt Instrument [Line Items] | ||
March 31, 2021 | $ 6,833 | |
March 31, 2022 | 7,102 | |
March 31, 2023 | 7,381 | |
March 31, 2024 | 260,454 | |
March 31, 2025 | 602,075 | |
Thereafter | 950,000 | |
Aggregate principal amount of debt | 1,833,845 | $ 1,708,443 |
Less unamortized deferred financing costs | (14,976) | (12,996) |
Total indebtedness, net of unamortized deferred financing costs | $ 1,818,869 | $ 1,695,447 |
Acquisitions, Litigation, and Other Charges - Components of Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Acquisition, Litigation and Other Special Charges [Abstract] | ||
Acquisition related costs | $ 766 | $ 1,441 |
Litigation | 0 | 910 |
Other: | ||
Severance, equity award modifications and acceleration | 922 | 4,293 |
Non-offering related equity issuance expenses | 0 | 1,511 |
Terminated site operations costs | 0 | 338 |
Total other | 922 | 6,142 |
Total acquisition, litigation and other | $ 1,688 | $ 8,493 |
Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The following disclosure regarding certain of our significant accounting policies should be read in conjunction with Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies. Impairment of Long-Lived Assets For the three months ended March 31, 2019, the Company recorded impairment charges totaling $12.6 million. During the first quarter of 2019, management and the Company’s Board of Trustees formally approved the “Atlanta Major Market Strategy” plan which included the partial redevelopment of an existing warehouse facility. The partial redevelopment required the demolition of approximately 75% of the current warehouse, which was unused. We have continued to operate as normal during the redevelopment. As a result of this initiative, the Company wrote off the carrying value of the portion of the warehouse no longer in use resulting in an impairment charge of $9.6 million of Warehouse segment assets. Additionally, during the first quarter of 2019 the Company recorded an impairment charge of $2.9 million of Warehouse segment assets related to a domestic idle warehouse facility in anticipation of a potential future sale of the asset. The estimated fair value of this asset was determined based on ongoing negotiations with prospective buyers. The sale of this property was completed during the second quarter of 2019. The impairment charges are included in the “Impairment of long-lived assets” line item of the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019. There were no impairment charges recorded during the three months ended March 31, 2020. Capitalization of Costs Project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, and costs of personnel working on the project. Costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use commence, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are written off. Capitalized costs are allocated to the specific components of a project that are benefited. We capitalized interest of $0.8 million for each of the three months ended March 31, 2020 and 2019. During each of the three months ended March 31, 2020 and 2019, we capitalized amounts relating to compensation and travel expense of employees direct and incremental to development of properties of approximately $0.1 million and $0.2 million, respectively. Business Combinations For business combinations, the excess of purchase price over the net fair value of assets acquired and liabilities assumed is recorded as goodwill. In an asset acquisition where we have determined that the cost incurred differs from the fair value of the net assets acquired, we assess whether we have appropriately determined the fair value of the assets and liabilities acquired and we also confirm that all identifiable assets have been appropriately identified and recognized. After completing this assessment, we allocate the difference on a relative fair value basis to all assets acquired except for financial assets (as defined in ASC 860, Transfers and Servicing), deferred taxes, and assets defined as “current” (as defined in ASC 210, Balance Sheet). Whether the acquired business is being accounted for as a business combination or an asset acquisition, the determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques. The Company estimates the fair values using observable inputs classified as Level 2 and unobservable inputs classified as Level 3 of the fair value hierarchy. Significant judgment is involved specifically in determining the estimated fair value of the acquired land and buildings and improvements and intangible assets. For intangible assets, we typically use the excess earnings method. Significant estimates used in valuing intangible assets acquired in a business combination include, but are not limited to, revenue growth rates, customer attrition rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount rates. For land and buildings and improvements, we used a combination of methods including the cost approach to value buildings and improvements and the sales comparison approach to value the underlying land. Significant estimates used in valuing land and buildings and improvements acquired in a business combination include, but are not limited to estimates of indirect costs and entrepreneurial profit, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market. Refer to Note 3 for the disclosures related to recent acquisitions accounted for as a business combination. Asset Acquisitions We acquired PortFresh in an asset acquisition on February 1, 2019 for $35.2 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to property, buildings and equipment. Additionally, we acquired MHW in an asset acquisition on November 19, 2019 for $50.8 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to $50.1 million of land, buildings and equipment, $0.6 million of an assembled workforce intangible asset and $0.1 million of other assets and liabilities, net. Additionally, the purchase agreement included a call option to purchase land from the holder of the ground lease for $4.1 million, which was exercised in January 2020. Recently Adopted Accounting Standards Fair Value Measurement - Disclosure Framework In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public business entities, this guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard effective January 1, 2020 on a prospective basis, and it did not have a material impact on its consolidated financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company adopted this standard effective January 1, 2020, and it did not have a material impact on its consolidated financial statements. Credit Losses Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimated expected credit losses, which may result in earlier recognition of losses. Upon adoption of the new standard, the Company recorded a non-cash cumulative effect adjustment to the opening accumulated deficit and distributions in excess of net earnings of $0.5 million as of January 1, 2020. As of March 31, 2020, we had $536.8 million of assets in the scope of the credit loss standard. These assets consist primarily of cash equivalents measured at amortized cost and trade and other receivables. Counterparties associated with these assets are generally highly rated. The substantial majority of the allowance recorded on the aforementioned in-scope assets relates to our trade receivables and totaled $7.4 million as of March 31, 2020. Financial Instruments In March 2020, FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company adopted this standard effective January 1, 2020, and it did not have a material impact on its consolidated financial statements. Future Adoption of Accounting Standards Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company does not expect the provisions of ASU 2018-14 will have a material impact on its consolidated financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; however, early adoption is permitted for all entities. The Company continues to assess the impact of adopting this standard and does not believe the adoption of ASU 2019-12 will have a material effect on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Investments - equity securities; Investments—Equity Method and Joint Ventures; Derivatives and Hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, equity method investments and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2020. The adoption of this ASU is not expected to have any impact on the Company's financial statements.
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Share-Based Compensation - OP Units Activity (Details) - USD ($) $ in Millions |
3 Months Ended | 120 Months Ended |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
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Time-Based OP Units | ||
Number of Units | ||
Beginning balance (in shares) | 20,190 | |
Granted (in shares) | 76,855 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Ending balance (in shares) | 97,045 | 20,190 |
Total outstanding awards, aggregate intrinsic value | $ 3.3 | $ 0.7 |
Market-Based OP Units | ||
Number of Units | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 178,865 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Ending balance (in shares) | 178,865 | 0 |
Total outstanding awards, aggregate intrinsic value | $ 6.1 | $ 0.0 |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
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Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 23,511 | $ (4,629) |
Other comprehensive income (loss) - net of tax: | ||
Adjustment to accrued pension liability | 414 | 524 |
Change in unrealized net (loss) gain on foreign currency | (25,547) | 1,221 |
Unrealized loss on designated derivatives | (4,039) | (2,714) |
Other comprehensive loss | (29,172) | (969) |
Total comprehensive loss | $ (5,661) | $ (5,598) |
Investment in Partially Owned Entities - Schedule of Unconsolidated Joint Venture (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Mar. 06, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||
Investments in partially owned entities | $ 23,041 | $ 0 | |
Superfrio Armazens Gerais S.A. | |||
Schedule of Equity Method Investments [Line Items] | |||
% Ownership | 14.99% | 14.99% | |
Investments in partially owned entities | $ 23,041 | $ 25,700 |
Earnings Per Common Share (Tables) |
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Schedule of weighted average number of common shares outstanding | A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2020 and 2019 is as follows (in thousands):
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Schedule of antidilutive securities excluded from computation of earnings per share | The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted income (loss) per share:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Our principal operations are organized into four reportable segments: Warehouse, Third-party managed, Transportation and Other.
Our reportable segments are strategic business units separated by service offerings. Each reportable segment is managed separately and requires different operational and marketing strategies. The accounting polices used in the preparation of our reportable segments financial information are the same as those used in the preparation of its condensed consolidated financial statements. Our chief operating decision maker uses revenues and segment contribution to evaluate segment performance. We calculate segment contribution as earnings before interest expense, taxes, depreciation and amortization, and exclude selling, general and administrative expense, acquisition, litigation and other expense, impairment of long-lived assets, gain or loss on sale of real estate and all components of non-operating other income and expense. Selling, general and administrative functions support all the business segments. Therefore, the related expense is not allocated to segments as the chief operating decision maker does not use it to evaluate segment performance. Segment contribution is not a measurement of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our segment contribution as an alternative to operating income determined in accordance with GAAP. The following table presents segment revenues and contributions with a reconciliation to income before income tax for the three months ended March 31, 2020 and 2019 (in thousands):
The following table details our long-lived assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets.
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Variable Interest Entities |
3 Months Ended |
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Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities New Market Tax Credit On May 1, 2019, the Company assumed a financing arrangement born out of the New Market Tax Credit (“NMTC” or “NMTC Transactions”) program. These financing arrangements were originated by Cloverleaf in 2015 to monetize state and federal tax credits related to the construction of a cold storage warehouse in Monmouth, Illinois. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (“the Act”) and is intended to induce capital investment in qualified lower income communities. The structure of the financing arrangement is such that Cloverleaf lent money to investment funds into which tax credit investors also made capital contributions. The tax credit investors receive the benefit of the resulting tax credits in exchange for their capital contributions to the investment funds. Tax credits were generated through contribution of the investment fund’s proceeds into special purpose entities having authority from the U.S. Department of Treasury to receive tax credits in exchange for qualifying investments. These entities, known as a Community Development Entities (“CDE”), made qualifying investments in the Monmouth, Illinois cold storage facility in the form of loans payable by Cloverleaf. The loan agreements for monies lent to the investments funds and amounts payable to the CDEs extend through 2045 but contain provisions permitting dissolution in 2022. This coincides with the conclusion of the seven-year compliance period during which the tax credits may be recognized and the NMTCs are subject to 100% recapture. Based on the nature of the arrangements, we expect them to dissolve in 2022. The Company has determined that the financing arrangement with the investment funds and CDEs contains a variable interest entity (“VIE”). The ongoing activities of the investment funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the investment funds. Management considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees to the structure; the tax credit investor’s lack of a material interest in the underling economics of the project; and the fact that the Company is obligated to absorb losses of the investment funds. The Company concluded that it is the primary beneficiary of the VIE and consolidated the investments funds and CDEs, as VIEs, in accordance with the accounting standards for consolidation. Through NMTC Transactions, the Company effectively received net loan proceeds equal to the tax credit investor’s contributions to the investment funds. At inception of the arrangement in 2015, the benefit of contributions by tax credit investor’s totaled approximately $5.6 million. The Company is recognizing the benefit of the contributions ratably over the life of the project which these proceeds were used to fund. As of March 31, 2020 and December 31, 2019, the balance of the deferred contribution liability was $4.8 million and $4.9 million, respectively, which is classified as “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets. The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, could require the Company to indemnify the tax credit investors for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company is in compliance with all applicable requirements and does not anticipate any credit recaptures will result in connection with this arrangement.
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Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the SEC. |
Consolidation | These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Significant Risk and Uncertainties | One of the most significant risks and uncertainties is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19. The COVID-19 pandemic has caused, and is likely to continue to cause severe economic, market and other disruptions worldwide, which could lead to material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises. The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact as requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the illness and containment measures, among others. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.
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Reclassifications | Reclassifications Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation on the Condensed Consolidated Statements of Shareholders’ Equity. The Condensed Consolidated Statements of Shareholders’ Equity reflects the reclassification required in the prior period to condense the amount previously classified within ‘Other’ to be classified within ‘Other comprehensive loss’, both of which are a component of Accumulated Other Comprehensive Income (Loss).
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Impairment of Long-Lived Assets | The estimated fair value of this asset was determined based on ongoing negotiations with prospective buyers. The sale of this property was completed during the second quarter of 2019. The impairment charges are included in the “Impairment of long-lived assets” line item of the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019. There were no impairment charges recorded during the three months ended March 31, 2020. |
Capitalization of Costs | Project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, and costs of personnel working on the project. Costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use commence, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are written off. Capitalized costs are allocated to the specific components of a project that are benefited.
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Purchase Accounting | For business combinations, the excess of purchase price over the net fair value of assets acquired and liabilities assumed is recorded as goodwill. In an asset acquisition where we have determined that the cost incurred differs from the fair value of the net assets acquired, we assess whether we have appropriately determined the fair value of the assets and liabilities acquired and we also confirm that all identifiable assets have been appropriately identified and recognized. After completing this assessment, we allocate the difference on a relative fair value basis to all assets acquired except for financial assets (as defined in ASC 860, Transfers and Servicing), deferred taxes, and assets defined as “current” (as defined in ASC 210, Balance Sheet). Whether the acquired business is being accounted for as a business combination or an asset acquisition, the determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques. The Company estimates the fair values using observable inputs classified as Level 2 and unobservable inputs classified as Level 3 of the fair value hierarchy. Significant judgment is involved specifically in determining the estimated fair value of the acquired land and buildings and improvements and intangible assets. For intangible assets, we typically use the excess earnings method. Significant estimates used in valuing intangible assets acquired in a business combination include, but are not limited to, revenue growth rates, customer attrition rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount rates. For land and buildings and improvements, we used a combination of methods including the cost approach to value buildings and improvements and the sales comparison approach to value the underlying land. Significant estimates used in valuing land and buildings and improvements acquired in a business combination include, but are not limited to estimates of indirect costs and entrepreneurial profit, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market. Refer to Note 3 for the disclosures related to recent acquisitions accounted for as a business combination. Asset Acquisitions We acquired PortFresh in an asset acquisition on February 1, 2019 for $35.2 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to property, buildings and equipment. Additionally, we acquired MHW in an asset acquisition on November 19, 2019 for $50.8 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to $50.1 million of land, buildings and equipment, $0.6 million of an assembled workforce intangible asset and $0.1 million of other assets and liabilities, net. Additionally, the purchase agreement included a call option to purchase land from the holder of the ground lease for $4.1 million, which was exercised in January 2020.
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Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Fair Value Measurement - Disclosure Framework In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public business entities, this guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard effective January 1, 2020 on a prospective basis, and it did not have a material impact on its consolidated financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company adopted this standard effective January 1, 2020, and it did not have a material impact on its consolidated financial statements. Credit Losses Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimated expected credit losses, which may result in earlier recognition of losses. Upon adoption of the new standard, the Company recorded a non-cash cumulative effect adjustment to the opening accumulated deficit and distributions in excess of net earnings of $0.5 million as of January 1, 2020. As of March 31, 2020, we had $536.8 million of assets in the scope of the credit loss standard. These assets consist primarily of cash equivalents measured at amortized cost and trade and other receivables. Counterparties associated with these assets are generally highly rated. The substantial majority of the allowance recorded on the aforementioned in-scope assets relates to our trade receivables and totaled $7.4 million as of March 31, 2020. Financial Instruments In March 2020, FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company adopted this standard effective January 1, 2020, and it did not have a material impact on its consolidated financial statements. Future Adoption of Accounting Standards Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company does not expect the provisions of ASU 2018-14 will have a material impact on its consolidated financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; however, early adoption is permitted for all entities. The Company continues to assess the impact of adopting this standard and does not believe the adoption of ASU 2019-12 will have a material effect on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Investments - equity securities; Investments—Equity Method and Joint Ventures; Derivatives and Hedging In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, equity method investments and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2020. The adoption of this ASU is not expected to have any impact on the Company's financial statements. |
Share-Based Compensation - Summary of Option Activity (Details) - $ / shares |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
|
Shares (In thousands) | ||
Outstanding, beginning balance (in shares) | 794,498 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (27,500) | |
Forfeited or expired (in shares) | 0 | |
Outstanding, ending balance (in shares) | 766,998 | |
Weighted-Average Exercise Price | ||
Outstanding, beginning balance (in USD per share) | $ 9.81 | |
Granted (in USD per share) | 0 | |
Exercised (in USD per share) | 9.81 | |
Forfeited or expired (in USD per share) | 0 | |
Outstanding, ending balance (in USD per share) | $ 9.81 | |
Weighted-Average Remaining Contractual Terms (Years) | ||
Outstanding | 5 years 7 months 6 days | 5 years 9 months 18 days |
Exercisable | ||
Shares (in shares) | 372,000 | |
Weighted-Average Exercise Price (in USD per share) | $ 9.81 | |
Weighted-Average Remaining Contractual Terms (Years) | 5 years 1 month 6 days |
Share-Based Compensation - Restricted Stock Grants (Details) - Restricted Stock Units - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted (in shares) | 283,471 | 455,504 |
Grant Date Fair Value (in thousands) | $ 8,699 | $ 15,169 |
Trustees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted (in shares) | 12,285 | |
Vesting Period | 1 year | |
Grant Date Fair Value (in thousands) | $ 375 | |
Minimum | Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting Period | 1 year | 1 year |
Maximum | Employees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting Period | 3 years | 3 years |
General |
3 Months Ended |
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Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The Company Americold Realty Trust, together with its subsidiaries (ART, the Company, or we), is a real estate investment trust (REIT) organized under Maryland law. During 2010, the Company formed a Delaware limited partnership, Americold Realty Operating Partnership, L.P. (the Operating Partnership), and transferred substantially all of its interests in entities and associated assets and liabilities to the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT or an UPREIT structure. The REIT is the sole general partner of the Operating Partnership, owning approximately 99% of the common general partnership interests as of March 31, 2020. Americold Realty Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of the REIT, is the sole limited partner of the Operating Partnership, owning 1% of the common general partnership interests as of March 31, 2020. As the sole general partner of the Operating Partnership, the REIT has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace Americold Realty Trust as the general partner nor do they have participating rights, although they do have certain protective rights. The terms “Americold,” the “Company,” “we,” “our” and “us” refer to Americold Realty Trust and all of its consolidated subsidiaries, including the Operating Partnership. During the third quarter of 2019 and first quarter of 2020, the Company granted Operating Partnership Profit Units (OP Units) to certain members of the Board of Trustees and certain members of management of the Company, which are described further in Note 11. Upon vesting these units will represent interests in the Operating Partnership that are not owned by Americold Realty Trust. We expect that the expense associated with the vesting of the OP Units in the Operating Partnership will be immaterial to the consolidated financial statements of the Company. On March 9, 2020, the Company filed Articles of Amendment to the Company’s Amended and Restated Declaration of Trust with the State Department of Assessments and Taxation of Maryland to increase the number of authorized common shares of beneficial interest, $0.01 par value per share, from 250,000,000 to 325,000,000. The Articles of Amendment were effective upon filing. The Company also has 25,000,000 authorized preferred shares of beneficial interest, $0.01 par value per share; however, none are issued or outstanding as of March 31, 2020 or December 31, 2019. The Operating Partnership includes numerous qualified REIT subsidiaries (QRSs). Additionally, the Operating Partnership conducts various business activities in the United States (U.S.), Australia, New Zealand, Argentina, and Canada through several wholly-owned taxable REIT subsidiaries (TRSs). Ownership Initial Public Offering On January 23, 2018, we completed an initial public offering of our common shares, or IPO, in which we issued and sold 33,350,000 of our common shares, including 4,350,000 common shares pursuant to the exercise in full of the underwriters’ option to purchase additional common shares. The common shares sold in the offering were registered under the Securities Act of 1933, as amended (the Securities Act) pursuant to our Registration Statement on Form S-11 (File No. 333-221560), as amended, which was declared effective by the U.S. Securities and Exchange Commission (SEC) on January 18, 2018. September 2018 Follow-On Public Offering On September 18, 2018, the Company completed a follow-on public offering of 4,000,000 of its common shares at a public offering price of $24.50 per share, which generated net proceeds of approximately $92.5 million to the Company after deducting the underwriting discount and estimated offering expenses payable by the Company, and an additional 6,000,000 common shares pursuant to the 2018 forward sale agreement, which is currently expected to settle on or before September 2020. The term was extended from its original settlement of September 2019. The Company did not initially receive any proceeds from the sale of the common shares subject to the 2018 forward sale agreement that were sold by the forward purchaser or its affiliate. The Company accounts for the 2018 forward contract as equity and therefore is exempt from derivative and fair value accounting. Before the issuance of the Company’s common shares, if any, upon physical or net share settlement of the 2018 forward sale agreement, the common shares issuable upon settlement of the 2018 forward sale agreement will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the 2018 forward sale agreement less the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted 2018 forward sale price at the end of the reporting period). If and when the Company physically or net share settles the 2018 forward sale agreement, the delivery of the Company’s common shares would result in an increase in the number of common shares outstanding and dilution to our earnings per share. As of March 31, 2020, the Company has not settled any portion of the 2018 forward sale agreement. March 2019 Secondary Public Offering In March 2019, the Company completed a secondary public offering in which certain funds affiliated with YF ART Holdings and The Goldman Sachs Group, Inc. (Goldman) sold their remaining interests in the Company of 38,422,583 and 8,061,228 common shares, respectively, at $27.75 per share, which included 6,063,105 shares purchased by the underwriters upon the exercise in full of their option to purchase additional shares. The selling shareholders received proceeds from the offering, which, net of underwriting fees, totaled $1.1 billion. The Company received no proceeds and incurred fees of $1.5 million related to this offering. April 2019 Follow-On Public Offering On April 22, 2019, the Company completed a follow-on public offering of 42,062,000 of its common shares, including 6,562,000 common shares pursuant to the exercise in full of the underwriters’ option to purchase additional common shares, at a public offering price of $29.75 per share, which generated net proceeds of approximately $1.21 billion to the Company after deducting the underwriting discount and estimated offering expenses payable by the Company, and an additional 8,250,000 common shares pursuant to the 2019 forward sale agreement. The Company did not initially receive any proceeds from the sale of the common shares subject to the 2019 forward sale agreement that were sold by the forward purchaser or its affiliate. The 2019 forward sale agreement was settled during the three months ended March 31, 2020 for proceeds of $233.6 million. The proceeds of the follow-on public offering were used to fund the purchase of Chiller Holdco, LLC ( Cloverleaf Cold Storage or Cloverleaf). The Company used the cash proceeds that we received upon settlement of the 2019 forward sale agreement on January 2, 2020 to fund a portion of the Nova Cold Logistics (Nova Cold) acquisition. At the Market (ATM) Equity Program On August 23, 2019, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through the ATM Equity Program. Sales of our common shares made pursuant to the ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use the net proceeds from sales of our common shares pursuant to the ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects. There were no common shares sold under the ATM Equity Program during the first quarter of 2020. On April 16, 2020 this ATM Equity Program was terminated and replaced with a new ATM Equity Program which is further described in Note 20, Subsequent Events. Acquisitions and Investments in Joint Ventures On February 1, 2019, the Company acquired PortFresh Holdings, LLC (PortFresh). The Company paid aggregate cash consideration of $35.2 million, net of cash acquired. On May 1, 2019, the Company entered into an equity purchase agreement to acquire Cloverleaf Cold Storage (Cloverleaf). The Company refers to the completion of the acquisition of Cloverleaf pursuant to the executed purchase agreement as “the Cloverleaf Acquisition”. The Company paid aggregate cash consideration of approximately $1.24 billion. The consideration paid by the Company was funded using net proceeds from the Company’s equity offering that closed on April 22, 2019, along with funds drawn under the Company’s senior unsecured revolving credit facility. On May 1, 2019, the Company also acquired Lanier Cold Storage (Lanier). The Company paid aggregate cash consideration of approximately $81.9 million, net of cash acquired. On November 19, 2019, the Company acquired MHW Group Inc. (MHW). The Company paid aggregate cash consideration of approximately $50.8 million, net of cash acquired. Additionally, on this date the Company announced the acquisition of Nova Cold which closed in January 2020 for CAD $338.6 million. The Company funded the Nova Cold acquisition using a combination of equity from its April 2019 forward sale agreement, the Company’s revolving credit facility and cash on hand. On January 2, 2020, the Company completed the purchase of all outstanding shares of Nova Cold for Canadian Dollars of $337.3 million, net of cash acquired ($259.5 million USD, net of cash acquired). The acquisition was funded utilizing proceeds from the settlement of our April 2019 forward sale agreement combined with cash drawn on our 2018 Senior Unsecured Revolving Credit Facility. On January 2, 2020, the Company completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $56.1 million, net of cash acquired. On March 6, 2020, the Company acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Real Dollars of 117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Risks and Uncertainties One of the most significant risks and uncertainties is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19. The COVID-19 pandemic has caused, and is likely to continue to cause severe economic, market and other disruptions worldwide, which could lead to material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises. The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact as requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the illness and containment measures, among others. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects. Reclassifications Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation on the Condensed Consolidated Statements of Shareholders’ Equity. The Condensed Consolidated Statements of Shareholders’ Equity reflects the reclassification required in the prior period to condense the amount previously classified within ‘Other’ to be classified within ‘Other comprehensive loss’, both of which are a component of Accumulated Other Comprehensive Income (Loss).
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | The following table presents segment revenues and contributions with a reconciliation to income before income tax for the three months ended March 31, 2020 and 2019 (in thousands):
The following table details our long-lived assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets.
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Investment in Partially Owned Entities - Narrative (Details) $ in Thousands, R$ in Millions |
3 Months Ended | ||||
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Mar. 06, 2020
BRL (R$)
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Mar. 06, 2020
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Mar. 31, 2020
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Mar. 31, 2019
USD ($)
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Dec. 31, 2019
USD ($)
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Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire investment | $ 25,747 | $ 0 | |||
Investments in partially owned entities | $ 23,041 | $ 0 | |||
Superfrio Armazens Gerais S.A. | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire investment | R$ 117.8 | $ 25,700 | |||
Equity interest | 14.99% | 14.99% | |||
Investments in partially owned entities | $ 25,700 | $ 23,041 |
Business Combinations (Tables) |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The Company completed the acquisition of privately-held Cloverleaf on May 1, 2019. A summary of the preliminary fair value of the assets acquired and liabilities assumed for total cash consideration of $1.24 billion, as well as adjustments made during the measurement period, is as follows (in thousands):
(1) The measurement period adjustments recorded during the measurement period did not have a significant impact on our Consolidated Statements of Operations for the quarter ended March 31, 2020. (2) The measurement period adjustments were primarily due to refinements to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments results in a net increase to goodwill.
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Business Acquisition, Pro Forma Information | The unaudited pro forma financial information set forth below is based on the historical Condensed Consolidated Statements of Operations for the quarter ended March 31, 2019, adjusted to give effect to the Cloverleaf Acquisition as if it had occurred on January 1, 2018. The pro forma adjustments primarily relate to acquisition expenses, depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the acquisition of Cloverleaf. On March 1, 2019, Cloverleaf acquired Zero Mountain, Inc. and Subsidiaries (Zero Mountain). As a result, we have included the results of operations of Zero Mountain in the below pro forma financial information. The pro forma adjustments made include the acquisition expenses incurred in connection with Cloverleaf’s acquisition of Zero Mountain. The accompanying unaudited pro forma consolidated financial statements exclude the results of all other acquisitions completed during 2019 and 2020, which were deemed immaterial. These statements are provided for illustrative purposes only and do not purport to represent what the actual Consolidated Statements of Operations of the Company or the Operating Partnership would have been had the Cloverleaf Acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.
(1) Pro forma net income available to common shareholders was adjusted to exclude $9.8 million of acquisition related costs incurred by the Company during the quarter ended March 31, 2019. (2)Adjusted to give effect to the issuance of approximately 42.1 million common shares in connection with the Cloverleaf Acquisition.
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Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings per Common Share Basic and diluted earnings per common share are calculated by dividing the net income or loss attributable to common shareholders by the basic and diluted weighted-average number of common shares outstanding in the period, respectively, using the allocation method prescribed by the two-class method. The Company applies this method to compute earnings per share because it distributes non-forfeitable dividend equivalents on restricted stock units and OP units granted to certain employees and non-employee trustees who have the right to participate in the distribution of common dividends while the restricted stock units and OP units are unvested. During the three months ended March 31, 2020, the weighted-average number of restricted stock units and OP units that participated in the distribution of common dividends was 1,294,365, of which 644,214 restricted stock units currently have vested but will not be settled until additional criteria are met. The shares issuable upon settlement of the 2018 forward sale agreement are reflected in the diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward sale agreement over the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). If and when the Company physically or net share settles the forward sale agreement, the delivery of common shares would result in an increase in the number of shares outstanding and dilution to earnings per share. A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2020 and 2019 is as follows (in thousands):
For the three months ended March 31, 2019, potential common shares under the treasury stock method and the if-converted method were antidilutive because the Company reported a net loss. Consequently, the Company did not have any adjustments in these periods between basic and diluted loss per share related to stock options, restricted stock units and equity forward contract shares. The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted income (loss) per share:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The components of net period benefit cost for the three months ended March 31, 2020 and 2019, respectively, are as follows:
The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Selling, general and administrative” and all other components of net period benefit cost are presented in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations. The Company expects to contribute to all plans an aggregate of $2.5 million in 2020. Multi-Employer Plans The Company contributes to a number of multi-employer benefit plans under the terms of collective bargaining agreements that cover union-represented employees. These plans generally provide for retirement, death, and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods, and benefit formulas. The New England Teamsters & Trucking Industry Multi-Employer Fund (Fund) was significantly underfunded in accordance with Employee Retirement Income Security Act of 1974 (ERISA) funding standards and, therefore, ERISA required the Fund to develop a Rehabilitation Plan, creating a new fund that minimizes the pension withdrawal liability. As a result, current employers participating in the Fund were given the opportunity to exit the Fund and convert to a new fund. During the third quarter of 2017, the Company took the option to exit the Fund and convert to the new fund. The Company’s portion of the unfunded liability (undiscounted), estimated at $13.7 million, will be repaid in equal monthly installments of approximately $38,000 over 30 years, interest free. The Company recognized an expense and related liability equal to the present value of the withdrawal liability upon exiting the Fund, and amortizes the difference between such present value and the estimated unfunded liability through interest expense over the repayment period.
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Investment in Partially Owned Entities (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||
Investment in Partially Owned Entities Tables | As of March 31, 2020, our investment in unconsolidated joint venture accounted for under the equity method of accounting presented in our Condensed Consolidated Balance Sheet consists of the following (in thousands):
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Sale-Leasebacks of Real Estate (Tables) |
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding sale-leaseback financing obligations | The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of March 31, 2020 and December 31, 2019 are as follows:
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Employee Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Benefit Plans | The components of net period benefit cost for the three months ended March 31, 2020 and 2019, respectively, are as follows:
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