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Lineage idles additional cold-storage facilities amid oversupply
The company said it has idled 2.5 million square feet across 5 locations this year, and it plans to sell about $1 billion in assets to deleverage its balance sheet.
Lineage (NASDAQ: LINE) said it is idling five additional cold-storage facilities as the market continues to work through oversupply, following excess capacity added after the pandemic. The company estimates the cold storage market is 10% overbuilt, and it warned that some competitors are near shutdown.
The retailer said it ceased operations at 10 facilities last year and idled 5 locations so far this year, totaling 2.5 million square feet, or 1% of its U.S. portfolio. On a quarterly call with analysts, management said some idled sites could return to service, and it pointed to supply rationalization that could favor scaled providers with automation and transportation capabilities.
Lineage plans to sell roughly $1 billion in assets to use the proceeds toward deleveraging its balance sheet, moving its leverage target from 6.0x net debt-to-EBITDA to 5.0x to 5.5x. On Wednesday before the market opened, it reported a net loss of $32 million for the second quarter, while adjusted funds from operations were 76 cents per share.
Operationally, the company reported consolidated net revenue of $1.36 billion, 1% higher year over year and slightly above the $1.35 billion consensus estimate. Same-warehouse physical occupancy was 75.8%, up 90 basis points year over year, and Lineage said a 14% year over year decline in food-related container volumes at the ports weighed on throughput, though it noted food inventories are stabilizing.
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