Lineage Inc Q2 2025 Earnings Call Transcript

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

Question: Alexander Goldfarb - Piper Jaffray Inc - Analyst : Hey. Good morning out there. I guess for my one question, Greg, at NAREIT, you guys reiterated the guidance from earlier this year. Clearly, you had a chance at that point to revise down. And just want to understand everything was tracking well until basically June 1. And then after that, things fell off. It just seems a little tough again, especially given that you guys had an opportunity to revise them. Just curious what you're thinking and how things were trending then versus what materially happened subsequent to NAREIT that caused you guys to reduce the outlook?

Question: Alexander Goldfarb - Piper Jaffray Inc - Analyst : Thank you.

Question: Ki Bin Kim - Truist Securities - Analyst : Thanks. Good morning. Maybe we can just start off at a higher level. What's the best argument you think you've heard from your clients in terms of why occupancy is too low or throughput volume is too low today versus what, I guess, the industry players and yourselves included might think what is normal going forward. So what are the best argument for that?

Question: Ki Bin Kim - Truist Securities - Analyst : And do you think GLP-1 drugs are having a significant impact on volumes or occupancy?

Question: Ki Bin Kim - Truist Securities - Analyst : All right. Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Brendan Lynch - Barclays Services Corp - Analyst : Great. Thank you for taking my questions. Greg, you mentioned this a bit in your prepared remarks, but can you discuss the pricing strategy in the second quarter for rent storage relative to the first quarter? It looks like you recaptured the trend line on that slide 6, which was a little bit of a REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call surprise given it sounded like you were giving some price concessions in the first quarter to get volume. So maybe just what has changed and what we should expect going forward?

Question: Brendan Lynch - Barclays Services Corp - Analyst : Okay, very good. Thank you.

Question: Ronald Kamdem - Morgan Stanley - Analyst : Hey. Thanks so much. Just a quick two-parter. Just can you talk a little bit more about sort of throughput was down same-store 3.2% this quarter, which decelerated from the last quarter number. Just help us think about sort of what's happening on that front? Is product just being stuck somewhere in the supply chain, is number one. And then the second comment is just updated thoughts on supply in the industry. Thanks.

Question: Ronald Kamdem - Morgan Stanley - Analyst : Helpful. Thank you.

Question: Michael Goldsmith - UBS AG - Analyst : Good morning. Thanks for taking my questions. Can you walk through the assumptions that underpin the third quarter and fourth quarter guidance? And what gives you confidence in the material step-up in trends expected in the fourth quarter? Thanks.

Question: Michael Goldsmith - UBS AG - Analyst : Thanks, again.

Question: Samir Khanal - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Yeah, thank you. Good morning, everybody. I guess, Greg, help us understand how to think about the rebound or the inflection in occupancy? I mean, clearly, there's very little visibility from our side here, right? So is it the macro? Is it the health of the consumer? What should we be paying attention to as we think about the timing of the inflection? And then at this point, I think folks are trying to understand what the trajectory of growth even looks like into the '26. So help us understand kind of what you track and that would be helpful. Thanks.

Question: Samir Khanal - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Okay. 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. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : Hi, thanks. I guess two questions. One, just a follow-up. Are you able to provide for July, any detail around occupancy or some of the specific drivers around warehouse storage in the Services segment? Any specific updates regarding July specifically, it sounds like there was a little bit of a pickup here later in the month? Second question though is around the dynamic between the softness that you experienced in the warehouse business relative to GIS, which grew 8% in the quarter. Can you talk about some of the growth drivers for GIS in the period and what's behind the sharp acceleration in the second half of the year?

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : All right. Thank you.

Question: Craig Mailman - Citibank Cameroon SA - Analyst : Hey. Good morning, guys. Just want to circle back on inventories and kind of how you guys are viewing them going forward? I mean I just heard your comment that a pretty common refrain over here in the last couple of quarters from you and your peer that it doesn't feel like inventories can get any lower for your tenants and yet we're still seeing kind of occupancy from a nominal perspective stay pretty muted. The low-end consumer is under pressure, they're shrinkflation. So even though people are spending the same amount, you're getting less what you're spending. You're seeing fast food companies like McDonald's, see tepid sales because the value proposition isn't there. I guess, is it wishful thinking at this point to think that the trend to seasonality should be confused with an inflection in nominal inventory levels? I mean can't we have both where you get that seasonality, but you're just off a base that's not going to materially improve given the outlook and given the financial situation of a lot of people in the country? I mean I'm just trying to kind of circle the square here because we're -- it just feels like the USDA data has been year-over-year negative for over two years. And yet when we hear from you and your peers, it's just [kind of] say things are going to get better that it doesn't happen, right? And the post-COVID world is just different. I don't know if it's technology improvements on the tenant side. I don't know if it's the shrinkflation, GLP-1s, whatever it is, but it just doesn't feel like the needle is moving back on inventory levels despite that consistent comment that it just doesn't feel like inventories could shrink anymore and still service the end user?

Question: Craig Mailman - Citibank Cameroon SA - Analyst : Great. Thank you.

Question: Michael Carroll - RBC Capital Markets Inc - Analyst : Hey, thanks. Greg, can you provide some color on where cold storage companies are currently trading or at least being valued in the private market? I mean has private market valuations changed as much as we've seen in the public markets? I guess what's the right valuation metric that these assets are traded at? I mean, should we be thinking about EV-to-EBITDA ranges? And I know it's -- each asset is different, each company is different, but what's the typical EV-to-EBITDA range that coal storage companies are trading in the private market today or at least if [trade start] like where do they typically trade at?

Question: Michael Carroll - RBC Capital Markets Inc - Analyst : Like what's the typical EV-to-EBITDA range that assets trade in the private market, I guess, compared to your valuation, I guess, where does that typically go? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Vikram Malhotra - Mizuho Securities USA LLC - Analyst : Thanks for the questions. I have two clarifications. I guess this first one, and I'm still struggling to get a sense of like how conservative you truly are in the back half, given kind of we're still seeing elevated inventory levels. Do you mind just from that chart you've provided, like what is your actual occupancy build just a number sequentially into the second half, whether physical or economic, if you can give? And compare that to -- how does that compare to, say, like recover historical trends, just like how conservative you are, like what -- and give us the exact -- like occupancy from that chart? And then just second question is on G&A. Your G&A did come in, I guess it was a big benefit in 2Q versus we anticipated and the second half assumes a big pickup. So cash G&A, like what is driving that in the second half?

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Thanks. Good morning. Just following up on guidance, can you give us a little bit more color on what's driving the AFFO decline expected in the third quarter versus Q2 despite the increased occupancy, same-store EBITDA, is that all driven by CapEx seasonality? Or is there anything else going on there? And then with respect to the fourth quarter, it's a pretty wide range between $0.78 and $0.94. So can you just share your thoughts on what key drivers would result in AFFO coming in towards the upper or lower end of that range? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Blaine Heck - Wells Fargo Securities LLC - Analyst : Okay. Thanks.

Question: Caitlin Burrows - Goldman Sachs Group Inc - Analyst : Hi, good morning. Maybe just back to the private market valuation discussion. I know you guys have only been public for a year. But I guess, how do you think about the option of being private versus public? And do you think it -- or under what circumstances or do you think it would be better for shareholders to take the company private?

Question: Caitlin Burrows - Goldman Sachs Group Inc - Analyst : Got it. Thanks.

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Yes. Good morning. We talked a lot about just customer trends in the USDA data and -- just kind of curious, the occupancy declines and everything you're seeing in regards to a more tempered outlook. Is this all US centric? Or are you also seeing similar trends in your international business as well?

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Thank you.

Question: Michael Mueller - JPMorgan Chase & Co - Analyst : Yeah, hi. Can you talk about the strategy to manage interest expense going forward after the caps and swaps burn off at year-end?

Question: Michael Mueller - JPMorgan Chase & Co - Analyst : And real quick as a follow-up. Was the new swap you mentioned was that just on the recent quarter and how significant is it?

Question: Michael Mueller - JPMorgan Chase & Co - Analyst : Okay. Thanks.

Question: Nicholas Thillman - Robert W. Baird & Co Inc - Analyst : Hey. Good morning. Greg, maybe just wanted to get your comments on what you're seeing from some of the smaller operators in the space today, what you're seeing they're doing from like a pricing standpoint? Are you seeing them starting to be under more pressure than you? Do you see them exiting the market? I guess, a little commentary because it is you and a larger player that have the small market share, but curious on kind of the more fragmented part of the industry.

Question: Nicholas Thillman - Robert W. Baird & Co Inc - Analyst : Helpful. 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. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Vince Tibone - Green Street - Analyst : Hi. Good morning. Could you discuss the current rollout plan for LinOS over the next several years? And also like what percentage of your facilities are you targeting for LinOS, is it all of them? And then what is it just like a realistic implementation timeline to get all these potential efficiencies flowing through the portfolio?

Question: Vince Tibone - Green Street - Analyst : Great. That's really helpful. Thank you. Maybe just a quick follow-up. Is there any incremental capital we should be thinking about with this broader rollout? Or it's really more of a workflow system, the tech investment has already been made. If you can just talk a little bit about is there a CapEx associated with this?

Question: Vince Tibone - Green Street - Analyst : Great. 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. AUGUST 06, 2025 / 12:00PM, LINE.OQ - Q2 2025 Lineage Inc Earnings Call

Question: Daniel Guglielmo - Capital One Securities Inc - Analyst : Hi, everyone. Thanks for taking my question. The labor expense line accelerated this quarter versus being flattish last quarter. Is there anything to call out there? Are there certain regions or countries where it's been harder to keep employees or where labor rates are rising faster than expected?

Question: Daniel Guglielmo - Capital One Securities Inc - Analyst : Okay. Thank you.