Americold Ends the Year With Decent Results in Q4; We Maintain Our $31.50 Fair Value Estimate

No-moat-rated Americold Realty COLD reported decent results in the fourth quarter as food manufacturers continued to ramp up production in recent months. The firm reported adjusted funds from operations of $0.29 per share, 6.4% lower than the $0.31 in adjusted FFO during the fourth quarter of 2021. The year-over-year decline in AFFO was partly due to quarterly fluctuations in expenses like maintenance capital expenditure. Core EBITDA, which is less prone to quarterly fluctuations, increased by 10.5% compared with the previous year. Our 2023 AFFO estimate of $1.22 per share is mostly in line with management’s 2023 full-year AFFO guidance of $1.14-$1.24 per share. We do not plan to change our $31.50 fair value estimate for the company as we incorporate the fourth-quarter results.

The impact of increased food production levels by the industry can be seen in the substantial occupancy increases across the company’s portfolio. The economic occupancy rate in the company’s same-store portfolio increased by 630 basis points in the current quarter compared with the previous year, as it was recorded at 85.0%. The same-store physical occupancy rate increased by 770 basis points on a year-over-year basis and was reported at 79.7%. The economic occupancy in the company’s global warehouse portfolio is now on par with prepandemic levels. The management anticipates that economic occupancy can further increase by 0.5% to 1.5% in 2023.

The rent and storage revenue increased by 17.0% compared with the previous year on a constant currency basis in the same-store warehouse portfolio because of higher occupancy rates and rent hikes. The company has guided for warehouse same-store revenue growth of 3.0% to 6.0% in 2023. Same-store warehouse cost of operations increased by 6.2% on a year-over-year basis because of inflationary pressures. This resulted in a same-store NOI increase of 15.4% on a constant currency basis in the fourth quarter when compared with the previous year.