Lineage Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Caitlin Burrows - Goldman Sachs - Analyst : Hi. Good morning, everyone. You mentioned in the prepared remarks that 50% has to pay is directly tied to the import-export business. So is the other 50% consumption or can you go through that? And I think we've just been surprised on how volatile the food business can be. So can you give some more color on how that food imports-exports business is able to be so volatile and similar for consumption, like how does economic uncertainty impact on customer inventory? And I guess that's a lot, but hopefully it all ties together.

Question: Caitlin Burrows - Goldman Sachs - Analyst : I heard 50, so thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Caitlin Burrows - Goldman Sachs - Analyst : Got it. And then maybe just if you could add to -- realized 15% is a different scale than 50%, but on that import-export business, is it just a certain food center being consumed less today than they would have been previously? Or how does that actually end up happening and impacting it?

Question: Brendan Lynch - Barclays - Analyst : Thanks for taking my question. On the assets for bigger acquired from Tyson, can you talk about where they are in the supply chain? And what their level of commitment to you is that over the long term for those specific assets? Yes, obviously, it's a long-term agreement, a multi-year agreement.

Question: Brendan Lynch - Barclays - Analyst : Very good. Thank you for on the just borrow -- (multiple speakers)

Question: Sameer Khanna - Bank of America - Analyst : Good morning, everybody. Greg, just maybe talk around your occupancy rate. I mean occupancy was down because we would have thought maybe a little bit even more, but how to think about the cadence of occupancy as we go through the year? I know you talked about a recovery in the second half. So any color on that would be helpful.

Question: Sameer Khanna - Bank of America - Analyst : I guess as a follow-up to that, I mean, what gives you the confidence of that sort of return back to seasonality? I know the comps get easier in the second half, but you kind of highlighted the delays in decision making by customers. And I guess what are you seeing and changes to that customer behavior to kind of give you that confidence given the uncertainty? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Michael Carroll - RBC - Analyst : Greg, can you provide some more color on your storage and service rental rates and both, looks like there are down a decent amount every year and sequentially? I guess what's driving this weaknesses? Lineage cutting rates to win market share or is there a mix shift? I guess what's going on with those numbers?

Question: Sameer Khanna - Bank of America - Analyst : Where's the minimum resets stores' numbers coming down on impacting that rent number, because that is that all kind of already through in the numbers in 1Q? And I believe you kind of highlighted that, so we should think about that kind of at a good level today, not any incremental weakness in could build back up over time may be in line with inflation?

Question: Michael Mueller - JP Morgan - Analyst : I guess, first, can you talk about some examples of where you're seeing customer pauses? Are you seeing it more with producers or is it more from retailers? Just some color to it would be great.

Question: Michael Mueller - JP Morgan - Analyst : And then, I guess second question had an acquisition and development required returns change when you're dealing with kind of somewhat of an anchor customer candidates as opposed to just normal course, one-off activity? I would say these are all the deals that we announced today are in line with our historical expectations. And we love the customer. We think we're going to be able to help of time with our technology and automation. We think we can really partnered with Abbott and streamline their supply chain even more than that deals are accretive to us in line with our steels. Yes, I mean, Tyson's is very much a win-win for both parties. And we will be worked really closely over many, many bond fund on these agreements. And we very much want our customers do well. And we think we'll do well and it's a wonderful day.

Question: Craig Mailman - Citi - Analyst : Good morning, guys. Just wanted to follow up on kind of the changing assumptions here. I mean, if it hadn't been for the Tysons deal essentially would have lower guidance here by $0.05. I mean, what's the biggest pressure point as you guys reevaluated kind of the risk of tariffs? Is it, you know, further erosion in occupancy rate margin? What worries you the most visibility perspective?

Question: Craig Mailman - Citi - Analyst : Okay. And then just on the volume kind of resets here with customers and sort of the lower price points, I mean, how much of that is happening with renewal agreements versus pricing pressure trying to poach clients from competitors to bring in kind of new deals?

Question: Craig Mailman - Citi - Analyst : So, we work through that or it will be more stable going forward?

Question: Alex Goldfarb - Piper Sandler - Analyst : Hey, good morning out. There are two questions. First, if we look at the non-same-store pool, that seems to be where you guys are experiencing a much bigger occupancy drop. So just wanted to get a little bit more color. That's my first question.

Question: Alex Goldfarb - Piper Sandler - Analyst : Okay. And then the second half question is we've been at EO. For the past few quarters, we've been talking about this normalization of inventory levels and obviously, you guys have a lot of experience in the business, but it does seem that each quarter it seems to be the next quarter. So just curious, as you look at the normalization of inventory levels and the stable consumption that you guys see in the food business, is there something different about this cycle versus your 15-plus years in the in the business that seems to be taking longer for inventories to normalize? Because I mean, COVID was a few years ago, presumably the destocking occur to a few years ago, and the tenant should have been back, especially pre-April 2. So just sort of curious why it seems to just be taking a little bit longer than what we initially spoke about? I think it was back on the on your initial earnings call.

Question: Blaine Heck - Wells Fargo - Analyst : Just a few with respect to the agreement with Tyson, can you talk about the age and condition of the four properties that you acquired, whether they might need any redevelopment or repositioning as Tyson moves from those properties into Hazelton and then eventually the two new developments? And then also, what the yield is on the assets that are being acquired if you could share that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Blaine Heck - Wells Fargo - Analyst : Okay, great. That's helpful. And then second question, can you talk about how we should think about the sources of funding pass? The cash that you guys hold on the balance sheet for the total spend on the acquisition and development agreement? And maybe how you think about additional capacity or dry powder for investments kind of incorporating this deal? The Bellingham acquisition with the additional spend on development under way and potentially any debt paydowns that you might be considering?

Question: Nick Thillman - Baird - Analyst : Hey, good morning, guys. Maybe wanted to touch some on the variable costs within the business and the labor in particular. I guess, what do you guys seeing on the labor front when it comes wages or practice wage pressures kind of have abated at this point? And then what are you guys kind of doing understand levels with volume expected to be a little bit lower on the import export? I guess, how are you adjusting to this type of environment?

Question: Nick Thillman - Baird - Analyst : That's helpful. And then maybe just following up on an earlier question of the $25 million of EBITDA, are you able to break that down between Tyson and the Bellingham acquisition?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Yes, good morning, everyone. I was hoping you could dive a little deeper into the guidance really get it unseen. You're gaining a $0.05 from all the acquisition activity, including will talk a little bit about all the other moving parts, whether it is a, you know, with now expecting like newest by, you know, X amount and operations but we're picking up this amount from a better cost. Just to kind of get to the general sense of how guidance still kind of ends up being flat, but understanding some of the moving parts a little bit better.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : That's helpful. And then if I could ask a quick second question. Could you talk about the business in terms of how the domestic is performing relative to the international operations? Is one genuinely feeling better than the others? Is there more risk in one of the other? Just kind of curious how that's shaping up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Ronald Kamdem - Morgan Stanley - Analyst : Hey, great. Just two quick ones. So starting with [sort] of same store on line. I know the previous guidance, obviously, I have 2% to 5% constant currency. The presentation says Q2 should be sort of down as much as 1Q, if I'm understanding that correctly. So just trying to think about the cadence of the what's baked into the second half of the year. Obviously, we'll often an exact number on it. But are you guys thinking about sat down and recovery in the second half of the year?

Question: Ronald Kamdem - Morgan Stanley - Analyst : Great. And then my second question is just up just a little bit more color on what you're hearing from tenants and sort of their level of inventory and sort of post tariffs. And so for us, and are there any sort of sectors whether it's food or seafood, protein, is there any one or other that's better or worse position than any other sort of post tariffs announcement?

Question: Steve Sakwa - Evercore ISI - Analyst : Yes, thanks. Good morning. I don't know if you guys saw there was a major article about the Chinese that canceled the major, I guess four quarter from US, obviously, given the tariff situation. And I'm just curious how that sort of transaction ripples back through the system here in the US and could things like that in some cases, put upward pressure on occupancy? Or how do you sort of think about that in light of the comments, Greg, you sort of made about customer uncertainty with kind of the import export business?

Question: Steve Sakwa - Evercore ISI - Analyst : Okay. Thanks. And then maybe just sorry, did you want to say something else,

Question: Steve Sakwa - Evercore ISI - Analyst : Okay. And the second question, just I guess you think about capital deployment and like this Tyson's deal, does the economic uncertainty maybe create more opportunities for you guys as customers look to kind of shed costs and streamline their business? And how are you thinking about those deals? And maybe the return hurdles in light of kind of where your stock has traded since the IPO and uncertainty in the bond market or you are you raising your investment hurdles? Do you think this can create more opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Ki Bin Kim - Truist - Analyst : Good morning. Going back to the Tyson deal, ultimately, what was the value proposition for Tyson? Was it just cost savings or and LinOS or just more sustainable operations, just [the result raw].

Question: Ki Bin Kim - Truist - Analyst : Great. Thank you. On the trade uncertainties, one of the things the administration of time about is not just tarrifs, but perhaps, improving the balance of trade through exports, especially like agricultural exports. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call I'm not sure if you and the food producers have had much dialogue with administration, but any kind of insights you can share what this potential could be? And how real that I feel like or would it be like all soybeans and not touch the cold storage warehouse?

Question: Michael Goldsmith - UBS - Analyst : Good morning. Thanks for taking my question, how much room do you think your current tenants have within their current commitments to utilize before they would need to take on more space?

Question: Michael Goldsmith - UBS - Analyst : Just the follow-up of supply, how much supply delivered over the last year is yet to be absorbed? And then also, how much supply is going to be delivered in 2025 that is on lease to the main industry?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Good morning. First question, I just wanted to follow up on the minimum volume guarantees, which decreased 200 basis points, sequentially to 42% level. That decrease occurred before the tariff announcements. And I realize there's uncertainty around how inventory levels will trend in the near term with the uncertainty around trade flows and inventory. But in terms of those changes, I just wanted to clarify if that was predominantly first quarter reset of sorts or whether you do expect that process to be ongoing throughout the year? And whether or not the fixed commits, the percent of fixed commits might might fall further perhaps below 40%?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. And then separate question on the Tysons transaction. With regard to the existing facilities that we'll be transitioned to the public warehouses, will those warehouses experienced a decrease in occupancy in '27 or '28 during that transition? How will that handoff happen? Just curious whether or not we should expect how those operations sort of trend during that transition period, if they need to fill up and operating like [Lisapor] or development aspects during that period.

Question: Vikram Malhotra - Mizuho - Analyst : Morning. Thanks for the question. Just going back to the guidance, just to get it right because to pinpoint where it seems to warehouse. Even with the double solution and NOI growth, kind of growth, just to understand, high levels to keep the guidance back, you must have baked something in. I say it in another way like it starts to go tomorrow, would you still be hitting your original guide or there's some other offset like you maintain the guidance. One of the other components that you're cutting, assuming kind of the expansion comes in well below your original expectations?

Question: Vikram Malhotra - Mizuho - Analyst : Got it. And then I guess just you talked a lot about opportunities on the external growth side. Obviously, Tyson is a solid deal. Wondering just given kind of how the stock's performed and, obviously, the embedded value, what about considering a big buyback or even just other ways to kind of highlight value? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 12:00PM, LINE.OQ - Q1 2025 Lineage Inc Earnings Call

Question: Vikram Malhotra - Mizuho - Analyst : Okay. And then just one, if I can clarify, like how much of this -- the -- I guess the challenged same-store, you've got a big global portfolio, the scale, et cetera. Are you able to share any like industry stats to kind of show how maybe the Lineage portfolio is outperforming even in this environment? Like what's happened to economic occupancy changes across your peers or just the overall growth? Any stats you can share that would highlight Lineage still outperforming fundamentally?