Hello, everyone. Thank you for joining us, and welcome to Lineage Fourth Quarter 2025 Earnings Conference Call [Operator Instructions] I will now hand the call over to Ki Bin Kim, Head of Investor Relations. Please go ahead.

Thank you. Welcome to Lineage's discussion of its fourth quarter 2025 financial results. Joining me today are Greg Lehmkuhl, Lineage's President and Chief Executive Officer; and Robb LeMasters, Chief Financial Officer. Our earnings presentation, which includes supplemental financial information, can be found on our Investor Relations website at ir.onelineage.com. Following management's prepared remarks, we'll be happy to take your questions. Before we start, I would like to remind everyone that our comments today would include forward-looking statements under federal securities law. These statements are subject to numerous risks and uncertainties as described in our filings with the SEC. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, reference will be made to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of non-GAAP to GAAP measures can be found in the press release and supplemental package that was issued this morning. Unless otherwise noted, reported figures are rounded and comparisons of the fourth quarter of 2025 are to the fourth quarter of 2024. Now I would like to turn the call over to Greg.

Thank you, Ki Bin, and good morning, everyone. Let me start by first thanking our valued customers and all our incredible team members at Lineage, who did an outstanding job driving efficiencies and executing on significant new business wins in the quarter and throughout 2025. I'm truly grateful to be working alongside such an outstanding group of men and women each and every day. I'll walk through our agenda for this morning. First, I'll recap our fourth quarter performance, which came in line or slightly ahead of our expectations on all key metrics. Then we'll discuss our 2026 outlook, followed by our latest view of cold storage supply and demand. Following my remarks, I'll turn it over to Robb LeMasters, our new CFO, who started back in November and has already made meaningful contributions to the business. Robb will walk through the details of our segment performance, expense management initiatives, capital structure and our outlook for 2026. I'll then return to share some closing comments before we open up the line to your questions. Turning to quarterly performance on Slide 4. During the fourth quarter, total revenue was flat year-over-year and adjusted EBITDA decreased 2% to $327 million. Total AFFO of $214 million and AFFO per share of $0.83 were flat year-over-year, but both ahead of our expectations. AFFO this quarter was propelled by better management of maintenance capital expenditures and more advanced cash tax planning relative to our initial expectations. I continue to push the team to optimize every aspect of our business to drive cash flow generation. Robb will expand on these efforts later in his remarks. Full year 2025 adjusted EBITDA declined 2.3% year-over-year to $1.3 billion and full year AFFO per share increased 2.4% year-over-year. Looking at the underlying business drivers, we saw further occupancy stabilization…

Thanks, Greg, and good morning, everyone. I joined Lineage a little over 3 months ago, and it has been great meeting our talented team members and many of the investors on this call. These past 3 months have confirmed my view that Lineage is a world-class organization, and I look forward to actively engaging further with you all in the months to come. Now on Slide 7, you can see our Global Warehouse segment. In the fourth quarter, total warehouse NOI declined 2.4% year-over-year to $373 million, while same-store NOI declined 5% year-over-year to $340 million, both in line with our previously provided guidance. In our same warehouse segment, as Greg highlighted, we grew our rent, storage and blast revenue per physical pallet by 1.7% year-over-year. We also saw an impressive sequential growth in our physical utilization of 400 basis points to 79.3%, signaling further evidence of a return to the more normal seasonality Greg forecasted last summer. Conversely, throughput volumes were slightly softer, down 2.8% year-over-year with services revenue per throughput pallet down 70 basis points. For the full year, total warehouse NOI declined 3.3% to $1.48 billion, while same-store NOI growth was minus 5.8%. While our occupancy has been stable, services mix and throughput volume continue to be weighed down by lower import/export volumes related to the shifting tariff announcements during the second half of the year. Keep in mind, volume shifts in certain higher-value commodities can incrementally impact results given the attachment of higher value-added services. Shifting to Slide 8. Global Integrated Solutions segment's EBITDA grew 15% to $61 million in our fourth quarter and was up 9% to $251 million for the full year 2025, continuing this division's great trends all year. Our fourth quarter NOI margin for GIS improved by 470 basis points to 19.5%.…

[Audio Gap] Now that Robb has walked you through our 2026 guidance, I want to reaffirm that while we're operating in a difficult environment in certain markets, we believe Lineage remains extremely well positioned to exit these challenges as an even stronger company by increasing our future operating leverage across the business. Allow me to summarize with 4 key points. First, our industry is showing signs of normalization with a return to normal seasonality, customer inventory destocking largely behind us and many markets stabilizing after digesting new supply. Second, we are focused on controlling the controllables as highlighted by our $50 million admin and indirect expense saving announcement. These are in addition to our already in progress productivity initiatives, including LinOS that are expected to offset inflation again this year. Third, while not built into our guidance, we see potential headwinds turning into tailwinds, including reduced inflation, interest rate reduction, consumer tax stimulus and international trade stabilization. Lastly, while our balance sheet is already in great shape, we will continue to look for opportunities to unlock value, further enhancing our liquidity. This will maintain our investment-grade rating and enable us to opportunistically take advantage of strategic investment opportunities. Before turning it over to your questions, I'll provide a quick update on LinOS, our proprietary warehouse execution system. As of today, we've deployed LinOS to 10 sites and expect to at least double that number in 2026 before accelerating even further in 2027. We remain confident and on track to deliver the savings we outlined at Nareit in December of $110 million run rate savings over 3 to 5 years. When I take a step back and look at our company, I see the largest best positioned player in a mission-critical business with excellent team members in a resilient long-term industry. The cash flow generation of our company remains strong. Our balance sheet remains solid, and our dividend is well covered and likely to grow over time. We grew this business successfully for 15 years leading up to the IPO, and we believe the industry's fundamentals are stabilizing. Again, I want to thank our global team members for their dedication and commitment to our customers. Operator, at this time, I'd like to open it up for questions.

[Operator Instructions] Your first question comes from Ronald Kamdem with Morgan Stanley.

Great. I just had a question on the same-store NOI guidance. You exited the year down 5%. You talked about sort of the first half versus second half dichotomy in 2026. And the disclosure on the markets that are stabilizing down, I think, is really helpful. But just wondering if you could just contextualize just the conviction on the same-store getting better. And when you think about sort of the markets and the different supply cycle, any sort of numbers on how the same-store NOI ranges between those buckets?

[Audio Gap] that Greg and I talked about. First was on the volume or occupancy side, if you will. We're coming into the year in 2026 at a little bit of a lower level. You can see that in our same-store metrics. So you can see that we're going to ultimately have that as a little bit of a headwind as we go in. That's just a minor headwind as we go into 2026. The second element of how we thought about our guidance is that while we're seeing great net price put out to the market, we have the same factors that impacted us in 2025 in terms of mix, in terms of import/export just as we look out. And so that ultimately will be a little bit of a drag of our revenue per pallet, if you will. Again, we're seeing net pricing of 1% to 2% that blends just slightly lower. And then the final factor as we thought about it is just we are fighting inflation overall as a company. We're doing a lot on the productivity side. And so we're really striving to keep NOI margin, if you will, flat. But then, of course, you have just minor pressure there. We saw a little bit of that in 2025. So those 3 factors really kind of blend up. And we'll see a good pattern as we evolve through the year. As we said, we're starting at the low end, but all the initiatives that Greg outlined really sets us up nicely as we kind of move through the year.

Your next question comes from the line of Michael Goldsmith with UBS.

Can you talk through the impact of idling assets? How many assets did you idle during the quarter? Did that have a positive impact on occupancy? And if you can quantify that? And then also, if you're idling assets, what are the add-backs to earnings just to try to get a better understanding of kind of what has been moving in and out of the same-store pool and the financial aspects.

Sure. Thanks, Michael. So last year, we idled 10 sites and the benefits are obvious. We can move labor, move the customers to adjacent sites and lower our overall cost and increase our occupancy in the receiving sites. This for 2026, because our physical occupancy is relatively strong, we don't think we'll see quite as many opportunities in 2026 as 2025. And the overall impact on the NOI and the occupancy was pretty negligible. We took out less than 1% or around 1% of our supply. And as far as how we treat these, we don't add back any of these costs. They roll into our non-same-store pool and roll up to AFFO and EBITDA accordingly.

Your next question comes from the line of Caitlin Burrows with Goldman Sachs.

On dispositions, the noncore [ SoCal ] disposition you did, what made that property noncore? And how representative is the mid-6% cap rate in the U.S.? And then are you willing to sell international assets? And what types of multiples or cap rates are you seeing in the international assets?

Caitlin. So the [ SoCal ] asset, I would say, was kind of a medium quality asset in our U.S. portfolio. It was a single user and did not support any of the surrounding public customers in that region. And so the user wanted to purchase it. It was a reasonable price for us, reasonable valuation. So we decided to go ahead and achieve a little bit of liquidity there. As far as other dispositions, Robb will probably talk about this on other questions, but we're looking at the entire portfolio to optimize and certainly analyzing the public versus private disconnect in valuations and kind of more to come on that as the year progresses. Nothing to announce today.

Yes. I guess I would just comment, I had the group, as I'm new, kind of look at the overall environment and what we're seeing in terms of transactions and actually pleasantly surprised with some of the comps that I'm seeing out there. Over the past year, we've seen over $1 billion at least of transactions that we've been tracking, whether it's DHL or Cold-Link or otherwise. And of course, we're familiar with the multiple we saw on our property. But we're really seeing strong mid-teens EBITDA multiples. Now sometimes these are in certain geographies, but that ultimately translates into those low 6% to mid-6 cap rates. So we're feeling good about it. I wouldn't say there's any comment we have about specific geographies per your exact question. We'll really look, as Greg said, as are we the best owner of that asset or not. And so we'll be going through an evaluation just of our whole portfolio as we always do. We'll be looking very unemotionally at that. And frankly, we see the opportunity to create capacity for opportunities that we are almost sure will present themselves. We don't currently have anything on the docket now, but we're looking hard as this industry turns, really having the firepower to do whatever we want to do.

Your next question comes from the line of Alexander Goldfarb with Piper Sandler.

Just going back to the topic of customers switching. You mentioned sort of 1 to 2 years after a tenant takes a new facility that they may end up switching. We've been hearing about this for quite some time. And I just want to get a sense, is this more of a talking point? Or are you seeing like tangible or anecdotal evidence where, hey, in the past 6 months, we've seen a noticeable uptick in people moving out of new entrants into your facilities? Just trying to see as the supply ebbs, how much this is really a tailwind versus just something that is a talking point, as I say?

Yes. Thanks, Alex, and happy birthday to you. So as we talked about in the prepared materials, we are seeing a clear trend. So in the U.S., where we're seeing really the only region in the world where we're seeing the excess supply, 60-plus percent of our markets are -- have not seen excess new supply. We had to work through the destocking, but those have been on stable ground for some time, and we expect them to be on stable ground in 2026. Where we're -- directly to your question and why we feel so good about our ability to compete in the medium term is because markets like New Jersey, Dallas, Houston, where this new supply hit earliest, we did take a hit there. And now we're seeing -- this isn't anecdotal. We're seeing a lot of customers come back to us because of our -- because of all the structural advantages we have, especially our service excellence. And so we can group those into a very large pool and say, the NOI went down and now the NOI is up or stabilizing. And then when we look at our 2026 plan, we can see late cycle markets like Allentown and Miami, where we're still facing pressure. But the fact that we've seen so many markets go through this cycle, and we're seeing ourselves starting to win again gives us confidence that we can kind of work through this last wave and the new supply being delivered in '26 and beyond is minimal. And so even without supply absorption, which we think there's lots of reason to believe that will happen faster than some may fear, we think we can win in this existing environment.

Your next question comes from the line of Blaine Heck with Wells Fargo.

More of a high-level question. There's been a lot of attention paid to the impact of AI on different businesses over the last several weeks and months. I know you guys have done a lot on the technology enhancement and data analytics sides already. But in general, how do you see your business being impacted by AI, whether that be on the warehouse or GIS side?

So I'm glad you asked that. We've been thinking a whole lot about this. I mean, so certainly, AI promises to make supply chain more efficient. And that could potentially reduce storage needs over time. But supply chains take a long time to change and optimize. And what we're seeing right now is that customer inventory levels are effectively at the bottom, given a couple of years of destocking after COVID, high interest rates, food inflation, international trade chaos driven by the tariffs, for all these reasons, our customers' inventories are very low. But when you take a step back and you think about our industry and AI, we think we're one of the most insulated from disruption. And actually, at Lineage, we think we have some of the most upside driven from AI. So think about the industry first. So fundamentally, cold storage infrastructure is necessary to bridge the duration between when food is produced and when it's consumed. And AI cannot change when food is produced or when it's consumed. So cold storage is durable and essential in the long term, even in the world of AI. And there's millions of examples of this. But think about a frozen chicken, frozen French fries and steak, we don't think those will ever ship directly from a processing plant directly to somebody's home. And AI can't change the seasons nor when seasonal products are harvested. So they'll always need to be stored. AI is not going to change the need for people need. We're pretty sure that's a durable trend. And our industry has hard expensive assets required to operate our industry and AI cannot create nor replicate those. And if AI does change how consumers behave, so if there's more online shopping, more multichannel, that just generally increases the…

Your next question comes from the line of Michael Carroll with RBC Capital Markets.

Greg, can you provide us some color on the seasonal pickup that was delivered this past quarter? I mean how would you qualify that pickup? Was it more muted than normal seasonal patterns? Or was it in line with the historical patterns? And if it's more in line, I mean, can we assume that the inventory destocking is probably behind most of these customers? Or I guess, how should we think about this occupancy being higher than expected probably in the fourth quarter, at least versus consensus estimates?

Yes. Michael, good question. I mean we kind of called the bottom of inventory destocking in the first quarter of '25, and I think history is proving us right there. And in mid-'25, we said that the seasonal pattern was very much back to a normal seasonal pattern. The uptick happened a little bit later in -- it happened in July versus June and then it hit as normal. So I think 2 things that are really important takeaways here. We believe inventory destocking is behind us. We believe our customers' inventories are at very, very low and lean levels given all the macro factors. We believe normal seasonality has returned, and we think that's evidence -- the evidence of that is our 400 basis points pickup in physical occupancy going into the fourth quarter. And we would expect a similar seasonal pattern, and it varies a little bit each year, year-to-year, but we would expect a similar pattern in 2026, and that's what our guidance is based on.

Your next question comes from the line of Greg McGinniss with Scotiabank.

I just want to talk on the Integrated Solutions. We saw the considerable margin improvement with the European disposition. Is there more room to run on that business? Would you get back into Europe? Can margin improve further from here?

Yes. I'll take that. It's Robb. So we had a really good margin performance in the fourth quarter. I think that's emblematic of kind of how we see the business. Now generally, the GIS segment has a strong Q2 and Q3, so just be aware of that. But overall, the reason the margin really ticked up was just as you shedded that European business, which frankly did not have comparable margin to the overall base, you take that out, you take the revenue out. And really, as you start looking at the fourth quarter, that's the way to start thinking of the underlying business. So we still see opportunity overall. We see good growth in that business. So of course, we'll leverage the cost there. But I think that's a good run rate to kind of be thinking about margins and the profile going forward.

Your next question comes from the line of Craig Mailman with Citi.

I just want to circle back on the asset sales and kind of market potential pricing for assets. I know you guys said the 6 cap was on a user sale. Just curious, was that already a triple net lease? Or were you guys kind of operating that? And what do you think that would have been on a kind of a true sale to an investor rather than a user? And also, Robb, I think you said pricing may be in the mid-teens EBITDA. Correct me if I'm wrong, but you said that translates into the low 6% cap range. Could you kind of just bridge that comment and just provide as much color as you guys can?

Yes. Overall, it was a triple net lease. So that was the property. It's always hard to say with the buyer and so forth, how would they play -- pay relative. We can't really go there. We think it was a good sale price overall. As I mentioned, we're seeing mid-teens EBITDA multiples and low to mid-6 cap rates. So ultimately, I mean, it depends on the region they're sold. It depends on the mix, depends on the buyer, as you say. So I'm just trying to give you a general sense for what it is, but it really matters what geography you're in and so forth and who the buyer is.

Your next question comes from the line of Michael Griffin with Evercore.

I'm curious your thoughts on the feasibility of converting a lot of cold storage facilities out there to alternative uses. I know there have been some reports. I think there was a facility in L.A. that was getting converted to a sound stage. Greg, you talked about the potential for data center conversions. Is this a real catalyst to improve the supply picture? Or I realize any prospective investor would probably have to get in at a favorable basis. So is it just on the margin going to help supply? Just curious your thoughts there.

Sure, Michael. Let me take that question and broaden it a little bit just to our thoughts on overall supply. And so we think there's a bunch of reasons why supply could get absorbed over time faster than if you just take the new supply minus the 1% increase in end consumer demand. The first one is the one you highlighted there is just the alternative uses. I think we are seeing that. There was -- in the last couple of quarters, there was a facility in Atlanta that was quite large. I believe it was about 1 million square feet that was repurposed for residential. We are days away from signing our second small data center installation, and we continue to pursue those types of opportunities as we have excess power in the network already. And we believe we have the ability to dial up power with the utilities over time. So I think this is a really real opportunity. It's not going to dramatically change the supply picture in itself in 2026. But we're evaluating our global portfolio. We've calculated how much excess power we have in a number of buildings already, and we're looking to see how much more power we can get in areas that would be attracted to data center partners. Other things that could impact the supply picture are we believe that some of the new entrants into our industry over the last 4 years based on our channel checks and direct conversations with some of these companies, we think that they'll exit the industry. And we think some of those assets, especially in kind of the most oversupply markets will not continue to be cold storage, and that will take out some supply. And where they're in good markets, if a competitor that…

Your next question comes from the line of Samir Khanal with Bank of America.

I guess, Greg, I'm sorry if I missed this, but when I look at the GIS segment and your guidance for the year, 0% to 2%. I mean it is a decel. You did, I think, 8% last year, double digit in 4Q. Is it just sort of tougher comps? Or is there something I'm missing?

Yes. It's -- I mean we had a great year this year. So there are tougher comps, but there's a couple of things I'd highlight that are weighing on our guidance there. The first one is fuel. Fuel is down, and we actually -- we mark up fuel like we do everything else. So when fuel declines, especially as it's happening right now and is forecast to happen in the first half year, that weighs on our results. Also, as trucks -- as fuel is down and trucking continues to be relatively inexpensive, our rail business doesn't do as well. Modal shifting happens for economic reasons. And when truck is strong, rail is weak. And for those 2 reasons, we're a little bit more cautious on our guide in GIS for 2026.

Your next question comes from the line of Daniel Guglielmo with Capital One Securities.

Can you just give us a quick update on the Lean journey? How many facilities have been done there to date? And as you roll out to additional warehouses, have there been any changes to that program or how you implement it?

Yes. I mean we're up to, call it, 1/3 of our revenue base being directly supported by a Lean manager. We are taking those resources now and elevating them from a single building or 2 buildings to regional support. And we're also kind of joining their efforts with our LinOS deployment team. So we're deploying technology and process at the same time and seeing good results there even since the Nareit conference in December. And so we're committed to Lean as a philosophy, as a way to remove waste from our business, and we continue down the same path we've been on and continue to see good results. And I think that's why you'll see year-over-year, we expect to offset inflation through those efforts and other productivity initiatives even before LinOS gets meaningful to our financial results.

Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets.

I wanted to see if you're able to share in end of January or year-to-date occupancy update. And then I think you commented that the 600 basis point spread between physical and economic occupancy is expected to be stable throughout the year and that you are through a good portion of the volume-based guarantees and resets this year. Last year, there was a little bit of volatility moving from 4Q to 1Q. So I was just wondering if you can provide a little bit more detail on where you're at in that process.

Sure. So January has come in line with our forecast. For modeling purposes, keep in mind that the first quarter is a seasonally soft quarter. Historically, if you just look at kind of pre-COVID USDA data, the first quarter would be down 3-ish percent in occupancy from Q4. And again, we think the seasonal pattern this year will reflect more normal times. And so we would expect a step down from Q4 to Q1. Also weighing on our Q1 is the ongoing reduction in the trend in import/export container volume. If you look at Q4, import/export volume was down 9% year-over-year, and that trend has continued into the first quarter, which we expect to be a headwind for us. With regard to the volume guarantees and the spread between physical and economic occupancy, 400 to 600 basis points is our normal. We would expect to hold that trend through the year. And I think as we've discussed in prior calls, we effectively mark-to-market the majority of our business each year. So there's no big resetting coming here in January. We've already worked through 65% of our revenue base as we sit here today on our contract negotiations. And that just gives us more confidence that the volume guarantee spread will be or the economic physical spread will be consistent, and we'll be able to achieve that net new pricing increases of 1% to 2%.

Yes. I might just comment that it's one of the lowest levels we've seen, if you look at our supplemental, we go back over several quarters, you look at our same-store data, that 6% really represents. So Greg had made comments earlier last year about working through sort of that disparity that we had in economic and physical. So we sort of try to address that as early as we could. As we look at other players having to address that, that is a painful factor, just trying to work through your economic versus physical. And so I think the team has done a great job as I come in here of working that through and not having that as a headwind that others maybe have to contend with in the future.

Your next question comes from the line of Brendan Lynch with Barclays.

I wanted to ask on the evolving tariff situation and how it's going to impact your business. I think post Liberation Day, there were some concerns around seafood in particular. So is the current 10% or I guess it's now 15% blanket tariff better or worse than the tariff policies that have been in place since April?

Yes. Great question. I mean our seafood customers are very opportunistic, I would say, in when they order and the tariffs drive that, the ocean rates drive that, the sales prices here in the U.S. drive that. And we'll see what happens with the Supreme Court hearing. Obviously, it's being challenged multiple ways. I think the bear or the bull case there is that tariffs could be lowered on China and Brazil, which could be meaningfully increasing trading partners with us given where they've sat in the last couple of years and the tariff rates they've been experiencing. But it's just really hard -- it's really hard to know as all these are still being challenged in the state and federal courts. I think we're -- if we look at import/export, we're in -- if you look at multiple years of both the import and export side, we are at a historic low right now, and that's hurting us. It hurt us in the fourth quarter. We expect to hurt us in the first quarter. But we would expect that to normalize at some point, and that could be a meaningful upside to our business as so much of our real estate is in high-value, hard-to-replace port markets around the world.

Your next question comes from the line of Omotayo Okusanya with Deutsche Bank.

The $10 million of savings that was discussed, just wanted to kind of get some clarification around that. Is that mostly G&A type expenses? Is it more of a focus on kind of cost of operations in terms of labor and power? And also, hello...

Go ahead, Omotayo. We can hear you.

Okay. Perfect. And I also want to kind of get a sense of in terms of timing as well, I think you kind of mentioned half of it kind of coming on in '26, but how do we kind of think of beyond 2026?

Yes. Thanks for the question. Yes. So the $50 million of annualized savings that we hope to essentially get our hands around during 2026 to see the full impact of that in 2027 is both an admin thing as well as indirect, if you will. We are seeing opportunities at the indirect side at the sites. These are exercises that we've frankly been looking at for a while. We've been growing quite rapidly as a company. I came into the middle of an exercise that was being done to really look across the company and say, where can we sort of centralize, where can we optimize, where we bring some productivity? Are there overlapping functions that are frankly happening at the sites versus an admin. We're also looking to deploy different technologies and AI and just frankly, figure out how to make -- do more with less. And so these are never easy decisions. So the timing of how we actually see that playing out in 2026, we're roughly think about half of that, but we'll see how the year goes, and we need to progress through all those initiatives. But again, it's about $50 million. Just to touch on how the site level expenditures happen versus the admin. We talked about that 100 basis points. So we went out to the sites and at corporate and sort of tried to do an inventory, and we saw some opportunity at the sites to essentially bring some of those costs in. We would have optimized them anyways, frankly, at the sites. And so as we combine those and actually bring those into corporate, we're sort of saying that, that's going to be a net impact. If we had not sort of brought that into corporate, that would have been a net impact of about 100 basis points. I wouldn't be surprised if we actually figure out how to optimize that even more and bring that at a lower impact, if you will on a pro forma basis to something like 75 basis points, but that gives you a sense for both the $50 million as well as how we see that playing in admin.

There are no further questions at this time. I will now turn the call back to Ki Bin Kim, Head of Investor Relations, for closing remarks.

Thank you, everyone, for joining the fourth quarter conference call. Have a good week, and we're around if you have any questions.

Thanks, everybody.

This concludes today's call. Thank you for attending. You may now disconnect.