Lineage Inc Q4 2024 Earnings Call Summary

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

Question: Alexander Goldfarb - Piper Sandler - Analyst : Hey, morning out there. So, a question on just the industry overall. You guys talked about inventory levels normalizing after the post-COVID recalibration. You talked about also being at low levels at the same time, there's tariff talk, there's still inflationary pressure, grocery prices, restaurant prices. So, what gives you confidence that the food market, the cold storage market truly has settled out and it sounds like there's some optimism in your tone that things could improve? What are some anecdotes that give you that confidence versus nervousness that the consumer is still under pressure whether it's eating out or eating at home?

Question: Ki Bin Kim - Truist - Analyst : Thanks, I appreciate your commentary and the color you provided on guidance, but I also wondering if you can provide some more details. For example, in occupancy, it sounds like that should still mean negative occupancy next year as the first half of this year REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 1:00PM, LINE.OQ - Q4 2024 Lineage Inc Earnings Call might be a little bit challenging. I'm not sure if that's correct, but if you can provide some details on that and maybe pricing, thank you.

Question: Ronald Camden - Morgan Stanley - Analyst : Hey, just a quick two parter, just I love all the same sort of guidance for the warehouse segment. I love if you could drill in a little bit how much of that is top line versus expense saves, just high level, what's driving that? And then the second question is just that $1.5 billion of capital deployment. Can you talk a little bit more about the pipeline, the kind of opportunities that you're looking at? Thanks.

Question: Ronald Camden - Morgan Stanley - Analyst : Thank.

Question: Todd Thomas - KeyBanc - Analyst : Hi, thanks. Good morning. I wanted to follow up on capital deployment. I realized guidance does not include anything incremental that has not been announced, but how should we think about the mix of equity and debt to fund future investments from here with leverage ending the year at just under 5 times on net debt to adjusted EBITDA basis. And then separately, I was just curious if you could talk about the yield pickup. Related to the $1.3 billion of completed and in process projects that $101 million of NOI, that that opportunity, how should we think about the cadence of that incremental NOI coming online during 2025?

Question: Todd Thomas - KeyBanc - Analyst : Okay, thank you.

Question: Jeremy Klos - Goldman Sachs - Analyst : Hey there, regarding occupancy, any concerns about the gap between economic and physical occupancy? How do you guys think about the spread between those two metrics? Thanks.

Question: Jeremy Klos - Goldman Sachs - Analyst : Got it, thank you.

Question: Blaine Heck - Wells Fargo - Analyst : Great, thanks. Good morning. Can you guys talk about supply and whether you're seeing pressure on rates driven by new supply in any specific markets, and then looking forward to 2025 and beyond, what do deliveries or completions look like broadly. I Guess, will we continue to have supply pressure this year?

Question: Blaine Heck - Wells Fargo - Analyst : Thank you.

Question: Steve Sakwa - Evercore ISI - Analyst : Yeah, thanks. Could you maybe just talk a little bit about the pricing that you're saying on the acquisitions that you're maybe looking at like how was that changed and you know with your cost of capital changing. How are you thinking about pricing on new deals going Forward?

Question: Michael Carroll - RBC - Analyst : Yeah, thanks, Greg. I wanted to circle back on your LinOS comments. I know you indicated that the pilot tests are showing strong initial results. Can you help us understand what that means? I guess what did these pilots prove, and are you seeing better revenue growth and better margins on those assets? I guess how can we clarify that comment that you're seeing stronger results than you expected?

Question: Daniel Guglielmo - Capital One Securities - Analyst : Hello everyone, thank you for taking my question. I know you all have a mix of large and small customers with the TOP25 customers making up about a third of revenues. As we continue to come out of this customer demand kind of draw, are you seeing a divergence REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 1:00PM, LINE.OQ - Q4 2024 Lineage Inc Earnings Call in the speed at which large customers are occupying spaces versus your smaller customers, or are there any trends of note between the two?

Question: Daniel Guglielmo - Capital One Securities - Analyst : Great, thank you.

Question: Michael Goldsmith - UBS - Analyst : Good morning. Thanks a lot for taking my question. I appreciate some of the background on the supply, but just maybe ask a little bit more directly, will competitive supply for 2025, will that be lower, higher, or the same than last. Year? Thanks.

Question: Michael Goldsmith - UBS - Analyst : Thank you very much. Appreciate it.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : I mean, you look at the USDA data that's kind of suggesting that inventory pressures are still existing in the business. There's a lot of talk about kind of continued inflationary pressure on food costs and some of the more recent data around like weaker consumer sentiment. I mean, as you kind of just look at a combination of those things, do you kind of look at that as a dynamic that continues to kind of put pressure on things for a while? I mean, some of your comments today seem like 2025 really is a year of market stabilization. But I just kind of compare it against some of that demand-related data, and I just kind of wonder if that kind of lingers for a little longer than maybe everyone is expecting.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Helpful, thank you.

Question: Michael Muller - J.P. Morgan - Analyst : Yeah, hi, what do you see as more normalized longer-term physical and economic occupancy levels for your portfolio?

Question: Viktor Fediv - Scotiabank - Analyst : Hello, this is Viktor Fediv on with Greg McGinniss. I'd like to ask, so at [NAREIT], you highlighted a new focus on managing your SG&A expenses. Are you able to provide more clarity on the expectations around that for 2025 and how you plan to address going forward?

Question: Viktor Fediv - Scotiabank - Analyst : Yes. Thank you.

Question: Vikram Malhotra - Mizuho - Analyst : Good morning. Thanks for taking the question. I just want to clarify on your kind of occupancy and maybe just NOI comments and assumptions. I think you mentioned, having sort of NOI 47% 1st half and the balance in the second half. That's kind of normal seasonality. So, if I just run that through just to just to clarify, are you, is that embedding basically occupancy falling in the first half and picking up a fair amount in the second and essentially the NOI growth negative in the first half just on you on the on the percentage you gave and a big pick up in the second. Could you clarify that? Thanks.

Question: Vikram Malhotra - Mizuho - Analyst : Thank you.

Question: Ki Bin Kim - Truist - Analyst : Thanks for taking me back. Just two quick follow-ups. First, what is the stock-based comp assumed in your '25 guidance? And second, I'm looking at Page 11 -- I'm sorry, Page 15 on your slide deck. Just curious, why did the non-same-store storage revenue fall? I mean, it looks like your economic occupancy fell 700 basis points, but your average occupied pallets were actually up 2.8%, so just a little confusing. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 1:00PM, LINE.OQ - Q4 2024 Lineage Inc Earnings Call

Question: Ki Bin Kim - Truist - Analyst : Stock-based comp.

Question: Ki Bin Kim - Truist - Analyst : So, what is the normalized run rate?

Question: Ki Bin Kim - Truist - Analyst : Okay, thank you.

Question: Alexander Goldfarb - Piper Sandler - Analyst : Hey, thank you for the follow-up. Just a two-parter here, if you don't mind. One, if you could just give us an update on the lockup or I guess the expiration of lockup of the pre-IPO investors, where you guys stand, and what's going on there? And then the second part is Slide 5 of the presentation really speaks to the outperformance of the platform versus flat year-over-year revenue. And just curious, is this more driven -- that outperformance, is that more driven as you guys acquire assets and you're able to put them on your system? Or do you also see similar outperformance at existing center at existing warehouses, such that and then do you think that this will be able to continue so that the Lineage technology platform that you guys spoke about at the IPO REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 1:00PM, LINE.OQ - Q4 2024 Lineage Inc Earnings Call that that will continue to reflect in results and that we should see this continued outperformance of the metrics versus the top-line revenue?

Question: Jamie Feldman - Wells Fargo - Analyst : Great. Thanks for taking the question. and I think your response to Alex may have answered some of it, but the stock has underperformed since the IPO. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 1:00PM, LINE.OQ - Q4 2024 Lineage Inc Earnings Call What in your conversations with investors, what do you think is most misunderstood? What do you think the key concerns are? And what would you tell people to get more comfortable, especially as we start a new year, and you think business is stabilizing?