Greetings and welcome to the Americold Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Steve Sweat [ph]. Please go ahead.

Good afternoon. We would like to thank you for joining us today for Americold Realty Trust’s fourth quarter and full year 2017 earnings conference call. In addition to the press release distributed this afternoon, we have filed the supplemental package with additional detail on our results, which is available in the Investor Relations section on our website at www.americold.com. On today’s call, management’s prepared remarks and answers to your questions may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. A number of factors that cause actual results to differ materially from those anticipated. Forward-looking statements are based on current expectations, assumptions and beliefs as well as information available to us at this time which speaks only as of the date they are made and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliation to comparable GAAP financial measures is contained in the supplemental information package available on the company’s website. This afternoon, this conference call is hosted by Americold’s Chief Executive Officer, Fred Boehler and Executive Vice President and Chief Financial Officer, Marc Smernoff. Management will make some prepared comments, after which we will open up the call to your questions. Now, I will turn the call over to Fred.

Thank you, Steve. Welcome to the fourth quarter and full year 2017 earnings conference call, our first since we completed our IPO in January. This afternoon, I will begin with a brief overview of our company and our strategy. I will then review details on key operating metrics, which underlie Americold’s performance and results and provide an overview of current market conditions. Then, I will turn the call over to Mark to summarize our recent results and review our balance sheet and liquidity position. After our prepared remarks, we will open the call for your questions. Americold is the world’s largest owner and operator of temperature-controlled warehouses and is the only publicly traded REIT focused solely on this business. While our origin dates back more than 100 years, in 2010, Americold acquired a second largest competitor, effectively doubling the size of the company and kick-starting the opportunity we have today. Beginning in 2013, we brought in best-in-class talent from a variety of industries to run the organization. Since then, we have acquired and developed new facilities to grow and diversify our portfolio, while focusing on developing critical operational infrastructure to efficiently and effectively service our customers. We believe size and scale of our network when combined with operational excellence are keys to the successful temperature-controlled business and provides a meaningful competitive advantage. As important, our system, people and experience provides the keys to driving revenue growth and enhance margins into the future. Now, let me review several critical elements of our company, which we believe provides the building blocks for superior performance. I will start with our size. Today, we are the leader in the temperature-controlled warehousing in the U.S., with over 20% market share and a global market leader with just under 5% market share. At December 31, 2017,…

Thank you, Fred. I will start with an overview of our fourth quarter and full year 2017 financial results and then discuss our pro forma balance sheet and liquidity. Americold has completed its IPO in January of this year. Therefore, our reported results for the fourth quarter and full year 2017 reflect our pre-IPO structure. For the fourth quarter 2017 reported revenue was $401.7 million, 1.8% increase from the same quarter of the prior year. Please note our fourth quarter 2016 revenues were favorably impacted by the timing of revenue recognition associated with certain annual customer contractual volume commitments totaling approximately $5 million. Normalizing for this item, our year-over-year growth for the fourth quarter would have been 3.1%. For the full year 2017, our total revenue grew to $1.54 billion, an increase of 3.6% over 2016. Our fourth quarter 2017 net income was $8 million compared to $12.4 million for the same quarter of the prior year. For the full year 2017, the company reported a net loss of $0.6 million compared to net income of $4.9 million for the prior year. Included in the fourth quarter and year end results is a $5 million charge for an excise tax settlement. Total NOI for the fourth quarter was $100.4 million compared to total NOI of $101 million for the same quarter of the prior year. As discussed our results for the fourth quarter 2016 were favorably impacted by the timing of revenue related to annual volume commitment. Excluding this impact total NOI improved $4.4 million or 4.4% over the same quarter of the prior year. We continue to move our customers to a fixed contractual commitment for storage in which they contractually reserve pallet position. We expect this will reduce the variability in the timing of revenue recognition going forward.…

Thanks Marc. In closing, we are extremely proud of the business we have built. And I would personally like to thank all of our team members for their dedication and hard work to get us to this point. With the completion of our IPO in January combined with our high quality portfolio, operational excellence and a deepened experienced team, we believe we are positioned better than ever to grow our portfolio and drive superior performance to create shareholder value. Operator, this completes our prepared remarks, please open the call for questions.

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ki Bin Kim with SunTrust Robinson Humphrey. Please proceed with your question.

Good afternoon, everyone. Could we first start off with just talking about the underlying tenant demand and where are you seeing pockets of the growing demand, is that the manufacturers, the CPG companies or you guys made a alluded to e-commerce, what are you seeing from that business as well?

Right. So, this is Fred. Thanks for your question. So, look, overall strength we are seeing across the portfolio if you think about it, it’s the food producers and manufacturers are doing well. It needs to go to that point of consumption, which is going to be the retailers and the distributors and the e-commerce folks. So, we see that strong throughputs working all the way through the supply chain channels. Remember, 96% of everything if you find in your grocery store comes through a third-party such as ourselves, so all that product is moving through us and as long as consumption continues to sustain, which we expect it will, we expect all sectors to rise from there.

And is it too early to talk about 2018 guidance in terms of your warehouse rent or services businesses?

Well, we are committed to providing transparent disclosure and believe we have provided significant information to help you understand to model our business. Yes, at this time, we will continue to look at adding additional disclosure and we will consider providing appropriate guidance metrics as well, but we will not be providing formal guidance.

Okay. And could you talk about what will be the drivers to increase the service revenue per pallet going forward, what will cause that?

So, a number of things, clearly, we continue to manage our portfolio and bring on new business sometimes exit business that’s less profitable. So, a lot of it comes down to just the overall mix of the customer base that we have flowing through our facilities is a big driver of that component. Yes, the other thing if I tack on to that, Fred, as we see more work content happen through our network and we are seeing that as SKUs continue to proliferate and as we start to do more work with e-commerce providers that are moving from kind of the case picked down to each, all that work content you will see come through, through higher services right now.

Okay, thank you.

Thank you.

Our next question comes from the line of Michael Carroll with RBC Capital Markets. Please proceed with your question.

Yes, thank you. Can you guys talk a little bit about the current available space in the market in general and can you highlight what specific markets where the market is currently tight right now and are you able to push rents harder in those areas?

Yes. So, when you look at this industry in aggregate, this industry as a whole is pretty tight from a capacity standpoint. Remember, in some of our earlier conversations that the barriers to entry the cost of this infrastructure, is such where people don’t build on spec in this business. So, typically they are building with focus for specific customers or for specific excess demand in our particular market segment. So, as we look across and we have roughly a 140 sites here in the U.S. if I just speak to the U.S. every one of our markets are pretty much at full capacity. So that hence is the opportunity to grow and to develop with our customers in terms of pushing rents necessarily obviously as new commercial arrangements come up and capacity continues to be tight, we take all of that into consideration when we price new business.

And are there any other players today that are looking to start any project on spec given the current fundamentals?

Yes, we really don’t see that in the marketplace. It’s a pretty disciplined industry. Again, building on spec is very dangerous given the infrastructure cost associated with the buildings themselves plus the utilities to be able to maintain it at that temperature until the business comes. So, typically we just don’t see people doing that on spec, it’s usually pretty targeted.

And then do you think you could ramp up your development activities given those fundamentals and it seems pretty conservative your development expectations, are you just being cautious there or is it that you want to make sure you have a tenant before you break ground on any additional building?

Yes. I would say we are measured and disciplined. We certainly we use tools like sales force for example to capture demand out in the marketplace, so we have a pretty good understanding market by market, what type of business demand that we have had, but we have had the turn away due to no capacity. We are obviously very, very close with the big national accounts and monitoring those sides and understanding their needs. So when we are ready to enter a market which we will refer to as market development is very measured. We have that left of the pipeline candidates to come into there and we are currently working with kind of our core anchor tenants if you will to understand that need. So by the time we enter a market on a market driven basis, we feel pretty good about it.

Okay. And could you exceed your development guidance?

Absolutely, if the opportunities are there, right. So when we look at our opportunities from a development standpoint, it’s a combination of customer driven demand, so built-to-suit expands into existing facilities, adding on the manufacturing infrastructure, etcetera. Those projects tend to ebb and flow and you are kind of at the customers largely in terms of when they are ready to start that process. So that can kind of fluctuate from year-to-year. So for example, I think our guidance in general on development is $100 million to $200 million annually. It’s not to say that 1 year like $98 million and next year maybe $200 million. It’s just may depend on how those opportunities flow together.

Okay, great. Thank you.

Our next question comes from line of Dick Schiller with Robert W. Baird & Company. Please proceed with your question.

Thank you. Good afternoon guys and congrats on completing the IPO here.

Thank you. I appreciate it.

I had a quick one from the IPO launch presentation, if I recall the 2018 and 2019 lease expirations, they were rather elevated around 20% for both years, in the supplement this afternoon that that’s down to 7% around both 2018 and 2019, so can you speak to the renewals that were signed there, the overall terms and how it compares to prior lease economics and where a lot of those contracts now, are they the fixed storage committed contracts or was the on-demand type?

Yes. Fairly, we are constantly looking at contracts and renewing the agreements. For example, we are currently in the middle of working a new deal with a customer that’s got a 5-year agreement and were near 3 years. So if opportunities come to us that is the best interest of both parties to open up that contract and extend for another 5-year commitment or a 7-year commitment, we are going to do that. I will remind you that when you look at the vast majority of our business, right, you look at our top 25 customers that represent 61% of our revenue, those customers, the average length of those contracts is 5 years. Such the average length of time that they have been with us is 32 years. So it’s a continual process with us. In addition, when you look at new business that we have been bringing in over the last couple of years, I think we have had 3 years or 4 years straight of record new business acquisition. Everyone of those new business opportunities that come to us are being put together with our new commercial business roles in our underwriting standard. So I would say that each one of those contracts renewals is slightly healthier than the last time we made them doing business with our customer. So, I hope that answers your question?

Yes, definitely good to hear. Looking to margins, it looks like it was driven by a combination of average occupied pallets and are both rental rate increases, in your opinion looking forward, do you see greater potential to push on rate or occupancy of pallets?

Yes. Right now, we are obviously focused on both of those. Our commercial business will ensure that we have appropriate escalation in our contracts going forward. And we have a sales force that’s constantly out selling and working to optimize and bring additional customers into our network.

Great. And last one for me the construction project here in Suburban Chicago, much in your press release the state-of-the-art automation capabilities, how does that change the economics of that specific lease of that facility and would you explore doing similar CapEx investments in other existing properties?

Yes, absolutely. We do see this as a future avenue in select markets, right this isn’t something you are going to see popping up everywhere. It’s usually the big logistics corridors like your Chicago’s, your Atlanta’s, your Northeast Pennsylvania’s, Dallas’ etcetera that you would see this type of investment. This automation will bring us greater efficiencies. It’s also going to help provide better quality and service and reliability if you will for our customers. So, our expectation is and we are already having conversations with our customers both current tenants as well as new tenants that want to come into that facility about longer term agreements.

Great. Thanks, guys.

[Operator Instructions] Our next question comes from the line of Michael Mueller with JPMorgan. Please proceed with your question.

Yes, hey. Marc, I appreciate the comments you made about, it’s about guidance – sorry, I think there is an echo in our line here.

Yes, there is.

Yes, I apologize for that, if somebody on line can you please mute here? Thanks. So, yes, Marc, I guess for the guidance data points now putting them out definitely get that, but if at all possible, I think it would be really helpful, if you could go through and lay out the 2017 quarters, the key stats for the warehouse and services business to publicly get them out there, just because it is a year-over-year business, I mean, most of the stats you put out were year-over-year and it will be helpful to kind of get to the quarter. So, for whatever that’s worth I think that would be very helpful. The second thing is I was wondering, can you talk a little bit about market pricing for some of the acquisitions that you acquired in terms of feedstock multiples plus what you are seeing in the market?

Yes, let me hit the first thing. I would refer you to our supplement. We have provided – all those corresponding metrics are provided in the supplement that’s available on our website. So, I’d please refer you to the supplement and we did provide all of those – the detailed same-store, non-same-store core drivers in our supplement. We also expect to file our 10-K tomorrow and we will have a full MD&A in the 10-K as well. So, I think that will be helpful. So, if you are having trouble of not seeing that, please let me know, but you should be able to see that in the supplement. As it relates to what we are seeing in terms of market pricing on potential acquisitions, not too consistent with our conversation in the past, we are seeing transactions again happened on the cap rate basis in that 6.5% to 8%. The market of spread tests continues to be tight whether it’s based for quality assets in quality markets. Obviously, we are focused now on making acquisitions an important part of our growth plan as we go forward.

Got it. Okay, thank you.

Our next question comes from the line of Joshua Dennerlein with Bank of America/Merrill Lynch. Please proceed with your question.

Hey, good evening guys.

Hey, Joshua.

Can you remind me how much of your debt is floating and doesn’t have hedges on it and if you are looking at like maybe locking in interest rate balance from that un-hedged floating rate debt like swaps or anything, how do you guys think about that?

Yes, we are very comfortable with our debt as we are positioned as I mentioned in our prepared remarks, 64% of overall debt is fixed today, but we obviously continue to evaluate on an ongoing basis to optimize for our structure.

Is that 64% that includes like hedges?

Yes, that would be what’s fixed in the overall business.

That’s it for me. That’s it for me. Thanks.

Okay, thanks.

Our next question comes from the line of Ki Bin Kim with SunTrust Robinson Humphrey. Please proceed with your question.

Thanks. Just a couple of quick ones, how does your tenant watch list look like right now?

I am sorry, can you say that again, Ki Bin.

Do you have any tenants in your credit watch list radar?

No, historically, yes, we don’t – we have historically had seen this in our financials. We had very, very strong collections on our receivables, historically a very low charge-off rate on $1.5 billion I think our target is less than $1 million a year. The other thing I would know for our typical warehouse client very often we receive a warehousing and glean, which gives us a very preferred position in the event that there is our tenant runs into difficulty. Remember, we are providing mission-critical storage in order to keep that product preserved and have value ultimately for the creditors very often and historically we have seen customers we have been afforded critical vendors status which allows us to realize our selection.

Okay. And are you seeing any labor wage pressures in your warehouses given the kind of low unemployment rate environment and maybe some earlier signs of inflation?

I don’t think we have seen big risks as of yet. We are continuously monitoring and assessing our total compensation and total rewards package with the areas that we operate with them. So, I would expect that will continue to see escalation in that as minimum wage rises and that type of thing, but we have protection in our agreements for the most part that if that does get accepted, we are able to pass that forward.

Okay. Thank you, again.

This completes our question-and-answer session. Thank you for joining today’s call. You may now disconnect.