AMERICOLD REALTY TRUST (COLD) FY 2023 MD&A

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements included in this Annual Report on Form 10-K. In addition, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described under Item 1A of this Annual Report on Form 10-K. Refer to our Annual Report on Form 10-K as filed on February 27, 2023, for a discussion of the comparative results of operations for the years ended December 31, 2022 and 2021.

Management’s Overview

We are a global leader in temperature-controlled storage, logistics, real estate and value added services, and are focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. Our self-administered and self-managed REIT operates 245 temperature-controlled warehouses globally, encompassing approximately 1.5 billion cubic feet, with 197 warehouses in North America, 27 in Europe, 19 warehouses in Asia-Pacific, and two warehouses in South America as of December 31, 2023

Our business includes three primary business segments: warehouse, transportation and third-party managed, and we have minority interests in two joint ventures, SuperFrio (operates 35 temperature-controlled warehouses in Brazil), and RSA JV (operates 2 temperature-controlled warehouses in Dubai).

Focus on Our Operational Effectiveness and Cost Structure

Our ongoing initiatives, some of which are detailed below, focus on streamlining business operations and reducing costs. This includes i) centralizing processes; ii) implementing operational standards; iii) adopting new technology; iv) enhancing health and safety programs; v) leveraging our purchasing power; and vi) fully integrating acquired assets and businesses. Such realignments have allowed us to acquire new talent and strengthen our service offerings.

Additionally, as part of our initiatives to streamline our business processes and to reduce our cost structure, we have evaluated and exited less strategic and profitable markets or business lines, including the sale of certain warehouse assets, the exit of certain leased facilities, and the exit of certain managed warehouse agreements. Through our process of active portfolio management, we continue to evaluate our markets and offerings.

Strategic Shifts in our Transportation and Third Party Managed Segments

We have undertaken a strategic shift in our transportation segment, moving away from less profitable and scalable services toward value-added programs such as regional, national, truckload and retailer-specific multi-vendor consolidation services. These programs aim to enhance efficiency, reduce costs, boost client retention, and maintain high occupancy levels in our temperature-controlled warehouses. Our transportation service offerings have also expanded in recent years through acquisitions, including a dedicated fleet service offering.

In the fourth quarter of 2022, we strategically transitioned the management of our largest third-party managed customer’s warehouses to a new third-party provider. As part of this transition, we have agreed to continue to processing certain costs for employee benefit programs for this customer. The impact of this transition is further detailed below in the historically significant customer section herein.

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Project Orion

In February 2023, we announced our transformation program, “Project Orion,” designed to drive future growth and achieve our long-term strategic objectives, through investment in our technology systems and business processes across our global platform. The project includes the implementation of a new, best-in-class, cloud-based enterprise resource planning (“ERP”) software system. Since going public in 2018, we have acquired over 100 facilities, or approximately 40% of our total warehouse facility network. Project Orion will enable us to better integrate many of these recent acquisitions and position us well for the integration of future acquisitions. The primary goals of this project are to streamline standard processes, reduce manual work and incrementally improve our business analytics capabilities. Highlights of the project include implementing centralized customer billing operations, a global payroll and human capital management platform, next-generation plant maintenance capabilities, global procurement functionality and shared-service operations in certain international regions, among others. We expect the benefits of these initiatives to include revenue and margin improvements through pricing data and analytics and heightened customer contract governance, finance and human resources cost reductions, information technology applications and infrastructure rationalization, reduced employee turnover, working capital efficiency and reduced IT maintenance capital expenditures. The activities associated with Project Orion are expected to be substantially complete within three years. Since inception, the Company has incurred $61.8 million of implementation costs related to Project Orion of which $43.9 million has been deferred within “Other Assets” on the Consolidated Balance sheet and $13.9 million and $3.9 million were recognized within Acquisition, cyber incident, and other, net for the years ended December 31, 2023 and 2022 respectively.

For further information regarding Project Orion, refer to Item 1 - Business included herein on Form 10-K.

Other cost reduction initiatives

To reduce facility costs we have invested in energy efficiency projects, including LED lighting, thermal energy storage, motion-sensor technology, variable frequency drives, third party efficiency reviews, real-time energy consumption monitoring, rapid open and close doors, and alternative-power generation technologies. We have also fine tuned our refrigeration systems, implemented energy management practices, and increased our participation in power demand response programs with some of our power suppliers. These initiatives have allowed us to reduce our energy consumption and spend.

Lastly, we have implemented rainwater harvesting in certain locations to reduce water demand and wastewater treatment costs while managing stormwater runoff.

Key Factors Affecting Our Business and Financial Results

Cybersecurity Incident

On April 26, 2023, the Company became aware of a cybersecurity incident impacting a certain number of our systems and partially impacting operations for a limited period of time (the “Cyber incident”). The Company engaged an external cyber security expert to initiate responses to contain, remediate, and commence a forensic investigation. Actions taken included preventative measures such as shutting down certain operating systems and supplementing existing security monitoring with additional scanning and other protective measures. The Company also notified law enforcement and its customers, informing them of both the incident and management’s efforts to minimize its impact on the Company’s daily operations. Technology information systems were reintroduced in a controlled phased approach and all locations successfully resumed normal operations as of June 30, 2023.

The Company is continuing to invest in information technology with the intent of strengthening its information

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security infrastructure. We engaged a leading cybersecurity defense firm that completed a forensic investigation of the incident and provided recommended actions in response to the findings. The Company has completed many of the recommended remediation activities. For example, the Company reset all credentials across the enterprise and strengthened security tooling across its servers and workstations. The Company has also reinforced its strategy to further strengthen the resiliency of its information security infrastructure, which is intended to accelerate the detection, response, and recovery from security and technical incidents. The Company is also engaged with cyber security experts to manage the remediation. Incremental charges recorded in conjunction with remediation and response efforts associated with the Cyber incident were $28.9 million during the year ended December 31, 2023, and have been recorded within “Acquisition, cyber incident, and other, net” in the Consolidated Financial Statements. This amount was primarily comprised of incremental internal labor costs, professional fees, customer claims, and related insurance deductibles.

The Company estimates the impact to lost revenue and net operating income in the warehouse segment as a result of this incident during the year ended December 31, 2023 was approximately $15.0 million and $9.0 million, respectively. The Company maintains insurance coverage for cyber security incidents and business interruption and is seeking reimbursement of costs and the impact from business interruption associated with the Cyber incident in accordance with the terms of its policies. Disputes over the extent of insurance coverage for claims are not uncommon, and there will be a time lag between the initial occurrence of costs and the receipt of any insurance proceeds.

Seasonality

We specialize in providing services to businesses within the food industry whose businesses are often seasonal or cyclical. On average the first and second quarter segment contributions are relatively consistent. On a portfolio-wide basis, physical occupancy rates are generally the lowest during May and June and gradually increase thereafter, due to annual harvests and our customers’ focus on building inventories for end-of-year holidays, which generally peak between mid-September and early December. The external temperature reaches annual peaks for a majority of our portfolio during the third and fourth quarter of the year resulting in increased power expenses.

To manage earnings volatility due to seasonality, we have implemented fixed commitment contracts with certain customers. These fixed commitment contracts obligate our customers to pay for guaranteed warehouse space to maintain required inventory levels, particularly during peak occupancy periods. Our diverse customer base also mitigates the impact of seasonality as peak demand for various products occurs at different times of the year (for example, demand for ice cream is typically highest in the summer while demand for frozen turkeys usually peaks in the late fall). Additionally, our southern hemisphere operations in Australia, New Zealand and South America complement the growing and harvesting cycles in North America and Europe, further balancing seasonality’s impact on our operations.

Foreign Currency Translation Impact on Our Operations

Our consolidated revenues and expenses are subject to variations caused by the net effect of foreign currency translation on revenues and expenses incurred by our operations outside the United States. Future fluctuations of foreign currency exchange rates and their impact on our Consolidated Statements of Operations are inherently uncertain. As a result of the relative size of our international operations, these fluctuations may be material on our results of operations. Our revenues and expenses from our international operations are typically denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of foreign currency fluctuations on our results of operations and margins is partially mitigated.

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The following table shows a comparison of underlying average exchange rates of the foreign currencies that impacted our U.S. dollar-reported revenues and expenses during the periods discussed herein together with a comparison against the exchange rates of such currencies at the end of the applicable periods presented herein. The rates below represent the U.S. dollar equivalent of one unit of the respective foreign currency. Amounts presented in constant currency within our results of operations are calculated by applying the average foreign exchange rate from the comparable prior year period to actual local currency results in the current period, rather than the actual exchange rates in effect during the respective period. While constant currency metrics are a non-GAAP calculation and do not represent actual results, the comparison allows the reader to understand the impact of the underlying operations in addition to the impact of changing foreign exchange rates.

(1)Represents the relevant average foreign exchange rates in effect in the comparable prior period applied to the activity for the current period. The average foreign currency exchange rates we apply to our operating results are derived from third party reporting sources for the periods indicated.

Historically Significant Customer

For the years ended December 31, 2022, and 2021 one customer accounted for more than 10% of our total revenues, with revenues received of $264.2 million and $285.6 million respectively. The Company and this customer transitioned the management of this customer’s warehouses to a new third-party provider during the fourth quarter of 2022, and we are no longer serving this customer in the third-party managed segment. Of the revenues received from this customer $255.2 million and $273.1 million represented reimbursements for certain expenses we incurred during the years ended December 31, 2022 and 2021, respectively, that were offset by matching expenses included in our third-party managed cost of operations.

How We Assess the Performance of Our Business

Segment Contribution Net Operating Income NOI

We evaluate the performance of our primary business segments based on their NOI contribution to our overall results of operations which aligns with how our decision makers evaluate performance.

•Warehouse segment contribution NOI is calculated as warehouse segment revenues less its cost of operations (excluding any Depreciation and amortization, Impairment of indefinite and long-lived assets, corporate-level Selling, general, and administrative and corporate-level Acquisition, cyber incident, and other, net).

•Warehouse rent and storage contribution NOI is calculated as warehouse rent and storage revenues less power and other facilities cost.

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•Warehouse services operations NOI is calculated as warehouse services revenues less labor and other service costs.

•Transportation segment contribution NOI is calculated as transportation segment revenues less its cost of operations.

•Third-party managed segment contribution NOI is calculated as third-party managed segment revenues less its cost of operations.

•Contribution NOI margin for each of these operations is calculated as the applicable contribution NOI measure divided by the applicable revenue measure.

Segment NOI and NOI margin contribution metrics help investors understand revenue, costs, and earnings among service types. These NOI contribution measures are supplemental and are not measurements of financial performance under U.S. GAAP. We provide reconciliations of these measures in the results of operations sections below.

Same Store Analysis

We believe that same store metrics are key performance indicators commonly used in the real estate industry. Evaluating the performance of our real estate portfolio on a same store basis allows investors to evaluate performance in a way that is consistent period to period. We define our “same store” population once annually at the beginning of the current calendar year. Our population includes properties owned or leased for the entirety of two comparable periods with at least twelve consecutive months of normalized operations prior to January 1 of the current calendar year. We define “normalized operations” as properties that have been open for operation or lease, after development or significant modification (e.g., expansion or rehabilitation subsequent to a natural disaster). Acquired properties are included in the “same store” population if owned by us as of the first business day of the prior calendar year (e.g. January 1, 2022) and are still owned by us as of the end of the current reporting period, unless the property is under development. The “same store” pool is also adjusted to remove properties that were sold or entered development subsequent to the beginning of the current calendar year.

Beginning January of 2024, changes in ownership structure (e.g., purchase of a previously leased warehouse) will no longer result in a facility being excluded from the same store population, as management believes that actively managing its real estate is normal course of operations. Additionally, management will begin to classify new developments (both conventional and automated facilities) as a component of the same store pool once the facility is considered fully operational and both inbounding and outbounding product for at least twelve consecutive months prior to January 1 of the current calendar year. These changes reflect a better alignment of our disclosures with industry practices.

For all same store properties (as defined above), we calculate “same store contribution NOI”, “same store rent and storage contribution NOI”, “same store services contribution NOI”, and the related margins in the same manner as described above. To ensure comparability in our period-to-period operating results, we also calculate same store contribution NOI measures on a constant currency basis, removing the impact of foreign exchange rate fluctuations by using prior period exchange rates to translate current period results into US dollars. These metrics isolate the operating performance of a consistent set of properties and thus eliminates the effects of changes in portfolio composition and currency fluctuations.

The following table shows the number of same-store and non-same store warehouses in our portfolio as of December 31, 2023. The non-same store warehouse count in the table below includes the partial period impact of sites exited during the periods presented.

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(1) The non-same store facility count of 21 consists of: three sites acquired through acquisition, 12 sites in the expansion and development phase, three leased sites that we purchased, one temporarily leased facility in Australia, one leased facility we ceased operating during fourth quarter of 2022 in anticipation of the upcoming lease maturity, and one leased site we exited in preparation to lease to a third party.

Same store financial metrics are not a measurement of financial performance under U.S. GAAP. In addition, other companies providing temperature-controlled warehouse storage and handling and other warehouse services may not define same store or calculate same store financial metrics in a manner consistent with our definitions and calculations. Same store financial measures should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Constant Currency Metrics

As discussed above under “Key Factors Affecting Our Business and Financial Results—Foreign Currency Translation Impact on Our Operations,” our consolidated revenues and expenses are subject to variations outside our control that are caused by the net effect of foreign currency translation on revenues generated and expenses incurred by our operations outside the United States. As a result, in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we analyze our business performance based on certain constant currency reporting that represents current period results translated into U.S. dollars at the relevant average foreign exchange rates applicable in the comparable prior period. We believe that the presentation of constant currency results provides a measurement of our ongoing operations that is meaningful to investors because it excludes the impact of these foreign currency movements that we cannot control.

Constant currency results are not measurements of financial performance under U.S. GAAP, and our constant currency results should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below. Our discussion of the drivers of our performance below are based upon U.S. GAAP.

Components of Our Results of Operations

Warehouse

Rent, storage, and warehouse services. Our primary source of revenues are rent, storage, and warehouse services fees. Rent and storage revenues are related to the storage of frozen, perishable or other products in our warehouses. We also offer a wide array of value added services including: i) receipt, labeling and storage of goods, ii) customized order retrieval and packaging, iii) blast freezing and ripening, iv) government approved periodic inspections, fumigation, and other treatment services, and v) e-commerce fulfillment.

Rent, storage, and warehouse services cost of operations consist of labor, power, other facilities costs, and other service costs.

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Labor, the most significant part of warehouse expenses, covers wages, benefits, workers' compensation, and can vary due to factors like workforce size, customer needs, compensation levels, third-party labor usage, collective bargaining agreements, customer requirements, productivity, labor availability, government policies, medical insurance costs, safety programs, and discretionary bonuses.

The cost of power, also a significant cost of operations, fluctuates based on the price of power in the regions that our facilities operate and the required temperature zone or freezing required. We may, from time to time, hedge our exposure to changes in power prices through fixed rate agreements or, to the extent possible and appropriate, through rate escalations or power surcharge provisions within our customer contracts.

Other facilities costs include utilities other than power, property taxes and insurance, sanitation, repairs and maintenance, operating lease rent charges, security, and other related facilities costs.

Other services costs include equipment costs, warehouse consumables (e.g. shrink-wrap), employee protective equipment, warehouse administration and other related services costs.

Transportation

Transportation services revenue is derived from fees charged for transportation of our customers products, often including fuel and capacity surcharges.

Transportation services cost of operations are primarily affected by third-party carrier costs, which are influenced by carrier factors like driver and equipment availability. In select markets, we use our drivers and assets, incurring costs like wages, fuel, tolls, insurance, and maintenance to operate these assets.

Third-Party Managed

Third-party managed services. Reimbursements that we receive for expenses incurred for warehouses that we manage on behalf of third party owners are recognized as third-party managed services revenues. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs.

Third-party managed services cost of operations, which are recognized on a pass through basis, primarily consist of labor charges similar to those described above as a component of warehouse costs of operations.

Consolidated Operating Expenses

Depreciation and amortization charges relate to the depreciation of buildings and equipment related improvements, leasehold improvements, material handling equipment, furniture, fixtures, and our computer equipment. Amortization relates primarily to intangible assets for customer relationships.

Selling, general, and administrative expenses consist primarily of non-warehouse related labor, administrative, business development, marketing, engineering, human resources, information technology, performance and time based incentive compensation, communications, travel, professional fees, bad debt, training, and office supplies.

Acquisition, cyber incident, and other, net consists of non-recurring or non-routine costs including acquisition related costs, costs related to Project Orion, litigation and settlement costs outside of the normal course of business, severance, terminated site operations costs, and Cyber incident related costs, net of insurance recoveries all of which are not representative of our normal course of operations.

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Impairment of indefinite and long-lived assets represents the impairment of goodwill and other long lived assets whose values are considered unrecoverable.

(Gain) loss on sale of real estate represents gains or losses recognized from the sale of Company owned real estate.

Interest expense is associated with interest charged on unsecured revolving credit facilities, term loans, and notes.

Loss on debt extinguishment, modifications and termination of derivative instruments is representative of charges associated with prior debt extinguishments and modifications as well as the termination of derivative instruments.

Loss from investments in partially owned entities represents the Company’s share of earnings and/or losses related to its equity method investments in various joint ventures.

Impairment of related party loan receivable represents impairment charges associated with the loan issued to the Comfrio joint venture which is further described in Note 3-Business Combinations and Asset Acquisitions of the consolidated financial statements.

Loss on put option represents the fair value of put option associated with the Comfrio joint venture further described in Note 3-Business Combinations and Asset Acquisitions of the consolidated financial statements.

Other, net primarily includes foreign currency remeasurement, interest income, gains and losses on disposal of non-real estate assets, and other miscellaneous transactions.

Presentation

A detailed discussion of the 2023 year-over-year changes can be found below and a detailed discussion of the 2022 year-over-year changes can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” on Form 10-K filed with the SEC on February 27, 2023.

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Results of Operations

Comparison of Results for the Years Ended December 31, 2023 and 2022

Warehouse Segment

The following table presents the operating results of our warehouse segment for the years ended December 31, 2023 and 2022.

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.

(2)Includes real estate rent expense of $37.5 million and $42.0 million for the year ended December 31, 2023 and 2022, respectively.

(3)Includes non-real estate rent expense (equipment lease and rentals) of $14.3 million and $12.9 million for the year ended December 31, 2023 and 2022, respectively.

On a constant currency basis, our warehouse segment revenues increased $109.4 million, or 4.7%, during the year ended December 31, 2023, compared to the same period in the prior year. This growth was driven by $94.2 million of growth in our same store pool on a constant currency basis, and $15.2 million of growth in our non- same store pool, further discussed below.

On a constant currency basis, our warehouse segment cost of operations increased $17.0 million, or 1.0%, during the year ended December 31, 2023, compared to the prior year. The cost of operations for our same store pool increased $13.4 million and for our non-same store pool by $3.7 million, both on a constant currency basis, for reasons further described below.

On a constant currency basis, warehouse segment NOI contribution increased $92.3 million, or 14.5% during the year ended December 31, 2023, as compared to the same period of the prior year. The NOI for our same store pool increased $80.9 million, or 12.8%, on a constant currency basis, for reasons further described below.

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Same Store and Non-Same Store Analysis

The following table presents revenues, cost of operations, contribution NOI and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the years ended December 31, 2023 and 2022.

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period.

On a constant currency basis, same store revenues increased by $94.2 million primarily due to our pricing initiatives, rate escalations, an average increase in economic occupancy of 433 basis points, partially offset by a decline in throughput due to changes in consumer demand and behaviors due to the challenging economic environment and the inability to move product in certain warehouses during the second quarter 2023 Cyber incident.

Same store costs of operations increased by $13.4 million, on a constant currency basis, primarily driven by higher labor and other facilities. Labor costs increased as a result of annual wage increases and the increasing cost associated with health benefits. Other facilities costs increased as a result of higher insurance, taxes, and maintenance. These costs were partially offset by a reduction in other services costs as a result of reduced throughput due to changes in consumer demand and behaviors due to the challenging economic environment, the second quarter 2023 cyber incident, and a decrease in power costs as the European energy market has relatively stabilized.

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(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period.

n/a - not applicable, the change in actual and constant currency metrics does not apply to site count.

n/r- not relevant

Non-same store revenue increased by $15.2 million on a constant currency basis, due to the ramp of our recently completed expansion and developments, the three month inclusion during 2023 of the Safeway acquisition, the 12 month inclusion during 2023 of our De Bruyn acquisition, and the six month inclusion during 2023 of the cold storage facility acquisition in Ormeau, Australia, partially offset by the decrease associated with strategic exits of certain leased facilities during 2022.

Non-same store costs of operations increased $3.7 million on a constant currency basis, which was related to growth in our recently completed expansions and developments, and the Safeway, De Bruyn and Ormeau acquisitions, in our non-same store pool, partially offset by lower costs associated with lease exits and the contribution of our Chilean facility to a joint venture in 2022.

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The following table provides certain operating metrics to explain the drivers of our same store performance.

(1)We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account the actual pallet commitment specified in each customers’ contract, and subtracting the physical pallet positions.

(2)We define average physical occupancy as the average number of occupied pallets divided by the estimated number of average physical pallet positions in our warehouses for the applicable period. We estimate the number of physical pallet positions by taking into account actual racked space and by estimating unracked space on an as-if racked basis. We base this estimate on a formula utilizing the total cubic feet of each room within the warehouse that is unracked divided by the volume of an assumed rack space that is consistent with the characteristics of the relevant warehouse. On a warehouse by warehouse basis, rack space generally ranges from three to four feet depending upon the type of facility and the nature of the customer goods stored therein. The number of our pallet positions is reviewed and updated quarterly, taking into account changes in racking configurations and room utilization.

n/r- not relevant

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Economic occupancy for our same store pool was 84.3% for the year ended December 31, 2023, an increase of 433 bps over the prior year. Economic occupancy growth as compared to the prior year was primarily due to improvements in customer service initiatives which drives higher win rates, as well as our customers’ increase in food production levels during the first half of 2023. Same store rent and storage revenues per economic occupied pallet increased 5.3% on a constant currency basis period-over-period, primarily driven by our pricing initiative, contractual rate escalations and business mix. Our economic occupancy for our same store pool for the year ended December 31, 2023 was higher than our average physical occupancy of 76.5% by 772 basis points due to managements increased focus on securing fixed commitments from customers.

Throughput pallets for our same store pool decreased 6.9% from 37.8 million pallets for the year ended December 31, 2022. This decrease was primarily the result of a decline in end-consumer demand and behaviors due to the challenging economic environment, in addition to the second quarter 2023 Cyber incident and resulting system outages.

On a constant currency basis, our same store warehouse services revenue per throughput pallet increased 7.7% during the year ended December 31, 2023 as compared to the prior year. This is primarily due to our pricing initiatives and contractual rate escalations.

Transportation Segment

The following table presents the operating results of our transportation segment for the years ended December 31, 2023 and 2022.

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.

On a constant currency basis, transportation revenues decreased $69.4 million, or 22.1%, compared to the prior year. The decrease was primarily due to the strategic transition of transportation business in the United Kingdom to a 3PL model, the softening of transportation demand in the general macro-environment, partially offset by higher rates in our consolidation business, acquisitions and expansions in Australia. Additionally, the Cyber incident resulted in cancellations of customer transportation orders due to system outages.

On a constant currency basis, transportation cost of operations decreased $64.6 million, or 24.3%, compared to the prior year. The decrease was due to the same factors contributing to the decline in revenue mentioned above.

On a constant currency basis, transportation segment margin increased 236 basis points compared to the prior year. The increase in margin was primarily due to rate increases, partially offset by lost business as a result of the Cyber incident.

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Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the years ended December 31, 2023 and 2022.

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.

The decreases in third-party managed revenue, cost of operations, and segment contribution were primarily due to the strategic exit of operations of our historically largest domestic customer in this segment. During the fourth quarter 2022, management completed the exit of one of its largest third-party providers.

Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was $353.7 million for the year ended December 31, 2023, an increase of $22.3 million, or 6.7%, compared to $331.4 million for the year ended December 31, 2022. This increase was primarily due to acquisitions, expansions and developments, partially offset by the favorable impact of foreign currency translation.

Selling, general, and administrative. Corporate-level selling, general and administrative expenses were $226.8 million for the year ended December 31, 2023, a decrease of $4.3 million, or 1.9%, compared to $231.1 million for the year ended December 31, 2022. This decrease was primarily driven by an increase in the capitalization of certain costs associated with resources dedicated to the Company’s in-process automated developments, and costs recognized related to Project Orion and Cyber incident recovery efforts recognized within Acquisition, cyber incident and other, net on the Consolidated Statements of Operations or capitalized on the Consolidated Balance Sheets.

Also contributing to the decrease was incremental stock-based compensation expense in the prior year associated with one-time grants that did not recur in 2023 and the ongoing benefit of cost reduction efforts in response to the challenging economic environment. For the years ended December 31, 2023 and 2022, corporate-level selling, general and administrative expenses were 8.5% and 7.9% of total revenues, respectively.

Acquisition, cyber incident, and other, net. Corporate-level acquisition, cyber incident and other, net expenses include the following:

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Acquisition, cyber incident, and other, net. Corporate-level acquisition, cyber and other expenses were $64.1 million for the year ended December 31, 2023, an increase of $31.6 million compared to $32.5 million for the year ended December 31, 2022.

Cyber incident related costs, net of insurance recoveries consists of costs related to the 2023 Cyber incident further described in Note 1-Description of the Business of the Consolidated Financial Statements. During the year ended December 31, 2022 cyber incident related costs, net of insurance recoveries consisted of insurance recoveries received for the cyber event in 2020.

Project Orion expenses represent the non-capitalizable portion of our Project Orion costs, which is an investment in and transformation of our technology systems, business processes and customer solutions. The project includes the implementation of a new, state-of-the-art, cloud-based enterprise resource planning (“ERP”) software system.

Severance cost increased $5.1 million due to the realignment of certain international operations and senior leadership changes.

Acquisition and integration related costs decreased $15.0 million due to less integration costs related to prior acquisitions and reduction in professional fees due to less acquisition activity.

Other, net costs for the year ended December 31, 2023 relates to insurance deductibles for damages in our warehouses as a resulting from a hail storm and roof collapse.

During the year ended December 31, 2023 the Company incurred charges related to the termination of the Americold Retirement Income Plan (“ARIP”) resulting in the recognition of a $2.5 million settlement loss. Refer to Note 1-Description of the Business of the Consolidated Financial Statements for additional information.

Impairment of indefinite and long-lived assets. For the year ended December 31, 2023, we recorded goodwill impairment charges of $236.5 million to our Europe warehouse business as a result of our annual goodwill impairment evaluation process. For the year ended December 31, 2022, we recorded impairment charges of $7.4 million. The charges incurred during the year ended December 31, 2022 include $3.2 million of goodwill impairment as we strategically shifted our focus to our core warehouse portfolio and are no longer serving one of our largest historical customers in the third-party managed segment, an impairment charge of “Assets under construction” of $2.2 million associated with a development project which management determined it would no

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longer pursue, and aggregate charges of $1.7 million of “Buildings, property and equipment” associated with the anticipated exit of certain leased facilities.

Loss (gain) from sale of real estate. For the year ended December 31, 2023, we recorded a $2.3 million gain from the sale of real estate related to the sale of a facility in Canada. The proceeds of the sale were used to repay outstanding Canadian-denominated Revolver short-term borrowings. For the year ended December 31, 2022, we recorded a $5.7 million loss from the sale of real estate related to a facility where a customer exercised its option to purchase the facility and we recorded a loss for the excess book value.

Other Expense and Income

The following table presents other items of income and expense for the years ended December 31, 2023 and 2022.

Interest expense. Interest expense was $140.1 million for the year ended December 31, 2023, an increase of $24.0 million, or 20.6%, compared to $116.1 million for the year ended December 31, 2022. The average effective interest rate of our outstanding debt increased from 3.65% for the year ended December 31, 2022 to 4.08% for the year ended December 31, 2023, primarily due to the rising interest rates associated with our floating rate borrowings under our Senior Unsecured Credit Facility, and an increase in average outstanding borrowings from $3.0 billion during the year ended December 31, 2022 to $3.1 billion during the year ended December 31, 2023, partially offset by the impact of our interest rate swaps.

Loss on debt extinguishment, modifications and termination of derivative instruments. Loss on debt extinguishment, modifications and termination of derivative instruments of $2.5 million for the year ended December 31, 2023 decreased as compared to the year ended December 31, 2022 primarily due to expenses related to debt modifications that occurred during 2022 that totaled $0.6 million. Additionally, during each of the years ended 2023 and 2022, we recorded $2.5 million for the amortization of fees paid for the interest rate swaps terminated during 2020. The amortization for these fees will end in August 2024.

Loss from investments in partially owned entities. We reported a loss of $1.4 million and $0.9 million from our partially owned entities for the years ended December 31, 2023 and December 31, 2022, respectively. The increase is primarily due to a $0.4 million increase in our share of losses from the LATAM joint venture, which was sold during 2023.

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Impairment of related party loan receivable. Impairments of related party loan receivable was $22.0 million for the year ended December 31, 2023. During the fourth quarter of 2022, the Company entered into a loan agreement with Comfrio, in which Comfrio borrowed $25.0 million from Americold at a 10% annual fixed interest rate. During the second quarter of 2023, the Company fully impaired the remaining balance as the loan was deemed uncollectible.

Loss on put option. Loss on put option was $56.6 million for the year ended December 31, 2023, which represents the loss we recognized when the exercise of the Comfrio put was deemed probable. See Note 3-Business Combinations and Asset Acquisitions of the Consolidated Financial Statements herein for further details.

Loss from discontinued operations, net of tax Loss from discontinued operations, net of tax was $10.5 million for the year ended December 31, 2023, an increase of $2.1 million, or 24.7%, compared to $8.4 million for the year ended December 31, 2022. This increase was primarily due $4.6 million disposal costs, our share of losses as minority equity owners in the Comfrio joint venture of $4.1 million, as well as operating losses of $2.6 million, partially offset by the gain on the sale of Comfrio of $1.1 million recorded during the year ended December 31, 2023. During the year ended December 31, 2022, expenses of $8.4 million consists of our share of losses as minority equity owners in the Comfrio joint venture.

Other, net. The following table presents items included in other, net for the years ended December 31, 2023 and 2022.

During the year ended December 31, 2023, the Company was awarded a $10.0 million settlement as a plaintiff related to an ongoing lawsuit with a vendor previously engaged to perform automation related services at one of its facilities. The settlement consisted of i) $5.8 million related to lost profits which will be recognized ratably from 2024 - 2029; ii) $3.0 million related to lost profits related to prior periods through December 31, 2023, which was recognized in Other, net on the Consolidated Statements of Operations; iii) $1.1 million recorded as a reduction of previously capitalized automation equipment; and iv) less than $0.1 million recorded as a reduction to legal fees recognized in Selling, general, and administrative expenses on the Consolidated Statements of Operations.

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Income Tax Benefit

Income tax benefit from continuing operations for the year ended December 31, 2023 was $2.3 million, which represented a decrease of $16.5 million, from an income tax benefit from continuing operations of $18.8 million, for the year ended December 31, 2022. The tax benefit was principally created by an $8.4 million tax benefit in foreign losses generated from continuing operations in 2023, compared to a tax benefit of $17.2 million of foreign losses from continuing operations in 2022.A non-recurring adjustment of $6.5 million tax benefit was recognized in 2022 for the deconsolidation of our Chilean subsidiary. Additionally, we recorded a $3.8 million tax expense to account for a valuation allowance established in a foreign jurisdiction in 2023 as compared to a $1.3 million tax benefit in 2022 for the release of valuation allowance in the U.S.; other adjustments consisted of a $2.3 million tax expense in 2023 compared to a $6.2 million tax expense in 2022. Other adjustments primarily consisted of share-based compensation, state tax expense, other nondeductible/permanent items.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures as supplemental performance measures of our business: FFO, Core FFO, Adjusted FFO, EBITDAre, Core EBITDA, and net debt to pro-forma Core EBITDA.

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(a)Maintenance capital expenditures include capital expenditures made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology.

(b)During the year ended December 31, 2023, management excluded losses from discontinued operations from Core FFO applicable to common stockholders and Adjusted FFO applicable to common stockholders and included certain losses from discontinued operations for NAREIT FFO. For purposes of comparability using this same approach, the following adjusted historical results are recasted as follows:

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•these measures do not reflect our historical or future cash requirements for maintenance capital expenditures or growth and expansion capital expenditures;

•these measures do not reflect changes in, or cash requirements for, our working capital needs;

•these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

•these measures do not reflect our tax expense or the cash requirements to pay our taxes; and

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.

We use EBITDAre and Core EBITDA as measures of our operating performance and not as measures of liquidity. The table below reconciles EBITDAre and Core EBITDA to net (loss) income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

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(a)During the year ended December 31, 2023, management included certain losses from discontinued operations in NAREIT EBITDAre. For purposes of comparability using this same approach, the following adjusted historical results recasted are as follows:

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Liquidity and Capital Resources

We currently expect that our principal sources of funding for working capital, facility acquisitions, business combinations, expansions, maintenance and renovation of our properties, development projects, debt service and distributions to our stockholders will include:

•current cash balances;

•cash flows from operations;

•our Senior Unsecured Revolving Credit Facility;

•our ATM Equity Program; and

•other forms of debt financings and equity offerings, including capital raises through joint ventures.

We expect that our funding sources as noted above are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include:

•operating activities and overall working capital;

•capital expenditures;

•capital contributions and investments in joint ventures;

•debt service obligations; and

•quarterly stockholder distributions.

We expect to utilize the same sources of capital we will rely on to meet our short-term liquidity requirements to also meet our long-term liquidity requirements, which include funding our operating activities, our debt service obligations and stockholder distributions, and our future development and acquisition activities.

We are a well-known seasoned issuer with an effective shelf registration statement filed on March 17, 2023, which registered an indeterminate amount of common shares, preferred shares, depositary shares and warrants, as well as debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by us. As circumstances warrant, we may issue equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We may use the proceeds for general corporate purposes, which may include the repayment of outstanding indebtedness, the funding of development, expansion and acquisition opportunities and to increase working capital.

On March 17, 2023, we entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $900.0 million of our common shares through an ATM Equity Program (the “2023 ATM Equity Program”).Sales of our common stock made pursuant to the 2023 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. During the year ended December 31, 2023, we sold 13,244,905 common shares sold under the 2023 ATM Equity Program for net proceeds of $412.6 million. The net proceeds from sales of our common stock pursuant to the March 2023 ATM Equity Program were used to repay a portion on the revolver borrowings.

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On November 9, 2023, we entered into an equity distribution agreement that was substantially identical to and replaced the March 2023 equity distribution agreement, and pursuant to which we may sell, from time to time, up to an additional $900.0 million of our common shares through our ATM Equity Program.

Security Interests in Customers’ Products

By operation of law and in accordance with our customer contracts (other than leases), we typically receive warehouseman’s liens on products held in our warehouses to secure customer payments. Such liens permit us to take control of the products and sell them to third parties in order to recover any monies receivable on a delinquent account, but such products may be perishable or otherwise not available to us for re-sale. Historically, in instances where we have warehouseman’s liens and our customer sought bankruptcy protection, we have been successful in receiving “critical vendor” status, which has allowed us to fully collect on our accounts receivable during the pendency of the bankruptcy proceeding.

Our bad debt expense was $6.4 million, (of which $1.5 million was recorded within Acquisition, cyber incident, and other, net and the remainder within Rent, storage, and warehouse services cost of operations within the Consolidated Statements of Operations) and $5.9 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we maintained bad debt allowances of approximately $21.6 million, which we believed to be adequate. The decrease in bad debt expense is driven primarily by the decrease in revenue as well as a slight decrease in the aged accounts receivable.

Dividends and Distributions

We are required to distribute 90% of our taxable income (excluding capital gains) on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to stockholders from cash flows from our operating activities. While historically we have satisfied this distribution requirement by making cash distributions to our stockholders, we may choose to satisfy this requirement by making distributions of cash or other property. All such distributions are at the discretion of our Board of Directors. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. We have distributed at least 100% of our taxable income annually since inception to minimize corporate-level federal income taxes. Amounts accumulated for distribution to stockholders are invested primarily in interest-bearing accounts, which are consistent with our intention to maintain our status as a REIT.

As a result of this distribution requirement, we cannot rely on retained earnings to fund our ongoing operations to the same extent that other companies which are not REITs can. We may need to continue to raise capital in the debt and equity markets to fund our working capital needs, as well as potential developments in new or existing properties, acquisitions or investments in existing or newly created joint ventures. In addition, we may be required to use borrowings under our revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status.

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Outstanding Indebtedness

The following table summarizes our outstanding indebtedness as of December 31, 2023 (in thousands):

The variable rate debt shown above bears interest at interest rates based on various one-month SOFR, CDOR, SONIA, BBSW, EURIBOR, and BKBM rates, depending on the respective agreement governing the debt, including our global revolving credit facilities. As of December 31, 2023, our debt had a weighted average term to maturity of approximately 5.3 years , assuming exercise of extension options.

For further information regarding outstanding indebtedness, please see Note 9-Debt and Note 10-Derivatives to our consolidated financial statements included in this 2023 Annual Report on Form 10-K as filed with the SEC.

Credit Ratings

Our capital structure and financial practices have earned us investment grade credit ratings from three nationally recognized credit rating agencies. We have investment grade ratings of BBB with a stable outlook from Fitch, BBB with a Stable Trends outlook from DBRS Morningstar, and an investment grade rating of Baa3 with a stable outlook from Moody’s. These credit ratings are important to our ability to issue debt at favorable rates of interest, among other terms. Refer to our risk factor “Adverse changes in our credit ratings could negatively impact our financing activity” for further details regarding the potential impacts from changes to our credit ratings.

Maintenance Capital Expenditures and Repair and Maintenance Expenses

We utilize a strategic approach to recurring maintenance capital expenditures and repair and maintenance expenses to maintain the high quality and operational efficiency of our warehouses and ensure that our warehouses meet the “mission-critical” role they serve in the cold chain.

Maintenance Capital Expenditures

Maintenance capital expenditures are capitalized investments made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology systems. Examples of maintenance capital expenditures related to

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our existing temperature-controlled warehouse network include replacing roofs and refrigeration equipment, and upgrading our racking systems. Examples of maintenance capital expenditures related to personal property include expenditures on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. Examples of maintenance capital expenditures related to information technology include expenditures on existing servers, networking equipment and current software. Maintenance capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building or costs which are incurred to bring a building up to Americold’s operating standards. The following table sets forth our recurring maintenance capital expenditures for the years ended December 31, 2023 and 2022.

(1) Excludes $0.7 million and $9.9 million of deferred acquisition maintenance capital expenditures incurred for the years ended December 31, 2023 and 2022, respectively.

Repair and Maintenance Expenses

We incur repair and maintenance expenses that include costs of normal maintenance and repairs and minor replacements that do not materially extend the life of the property or provide future economic benefits. Repair and maintenance expenses consist of expenses related to our existing temperature-controlled warehouse network and its existing supporting personal property and are reflected as operating expenses on our income statement. Examples of repair and maintenance expenses related to our warehouse portfolio include ordinary repair and maintenance on roofs, racking, walls, doors, parking lots and refrigeration equipment. Examples of repair and maintenance expenses related to personal property include ordinary repair and maintenance expenses on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. The following table sets forth our repair and maintenance expenses for the years ended December 31, 2023 and 2022.

External Growth, Expansion and Development Capital Expenditures

External growth expenditures represent asset acquisitions or business combinations. Expansion and development capital expenditures are investments made to support both our customers and our warehouse expansion and development initiatives. It also includes investments in enhancing our information technology platform. Examples of capital expenditures associated with expansion and development initiatives include funding of construction costs, increases to warehouse capacity and pallet positions, acquisitions of reusable incremental material handling

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equipment, and implementing energy efficiency projects, such as thermal energy storage, LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, rapid-close doors and alternative-power generation technologies. Examples of capital expenditures to enhance our information technology platform include the delivery of new systems and software and customer interface functionality.

Acquisitions

During the year ended December 31, 2023 we completed the acquisition of Safeway, Ormeau, and Comfrio (subsequently disposed during 2023). During the year ended December 31, 2022, we completed the acquisitions of De Bruyn Cold Storage. Refer to Note 3-Business Combinations and Asset Acquisitions of the Consolidated Financial Statements for details of the purchase price allocation for each acquisition.

Expansion and development

The expansion and development expenditures for the year ended December 31, 2023 are primarily driven by $16.7 million related to our two fully-automated, build-to-suit, development sites in Connecticut and Pennsylvania, $13.3 million for the Spearwood, Australia expansion, $16.3 million related to our Russellville expansion, $11.9 million related to Atlanta Major Market Strategy Phase 2, and $5.0 million related to the Allentown facility. During the year ended December 31, 2023, we also incurred capitalized interest of $13.2 million and capitalized compensation and travel expense aggregating to $17.5 million related to our ongoing expansion and development projects.

The expansion and development expenditures for the year ended December 31, 2022 are primarily driven by $37.5 million related to our two fully-automated, build-to-suit, development sites in Connecticut and Pennsylvania, $26.0 million for the Spearwood, Australia expansion, $13.5 million related to the Dunkirk, NY development, $18.8 million in our Dublin expansion, $8.8 million for the Barcelona expansion, $24.0 million related to our Russellville expansion, $12.4 million related to Atlanta Major Market Strategy Phase 2, and $8.4 million related to the Rochelle facility. During the year ended December 31, 2022, we also incurred capitalized interest of $11.8 million and capitalized insurance, and compensation and travel expense aggregating to $5.5 million related to our ongoing expansion and development projects.

Expansion and development initiatives also include $17.3 million and $22.5 million of corporate initiatives and smaller customer driven growth projects incurred during 2023 and 2022, respectively, which are projects designed to reduce future spending over the course of time. This category reflects return on investment projects, conversion of leases to owned assets, and other cost-saving initiatives.

Finally, we incurred approximately $14.9 million and $1.5 million during 2023 and 2022, respectively, for contemplated future expansion or development projects.

The following table sets forth our acquisitions, expansion and development capital expenditures for the years ended December 31, 2023 and 2022 (in thousands).

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Historical Cash Flows

The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

Operating Activities

For the year ended December 31, 2023, our net cash provided by operating activities was $366.2 million, a increase of $66.2 million, or 22.1%, compared to $300.0 million for the year ended December 31, 2022. The increase is primarily due to higher warehouse segment contribution and improved collection of accounts receivable.

Investing Activities

For the year ended December 31, 2023 cash used for additions to property, buildings and equipment was $264.5 million reflecting investments in our various expansion and development projects and capitalized maintenance capital expenditures.

Additionally, we invested $65.8 million for the asset acquisitions of Safeway, Ormeau and Green Bay and $46.7 million in the acquisition of Comfrio in 2023. Additionally, during the year ended December 31, 2023 we invested $4.0 million for the formation of the RSA joint venture and funded related party loans of $15.0 million and $1.7 million to joint ventures Comfrio and RSA, respectively. Finally, we incurred $4.6 million in selling costs related to the sale of Comfrio. These cash outflows were partially offset by $36.9 million in proceeds from the sale of our remaining equity interest to the LATAM JV partner and $8.1 million in proceeds from the sale of various assets.

For the year ended December 31, 2022 cash used for additions to property, buildings and equipment was $308.4 million reflecting investments in our various expansion and development projects and maintenance capital expenditures. Additionally, we invested $15.8 million for the acquisition of De Bruyn Cold Storage and $14.6 million in acquisitions of property, buildings, and equipment for the buyout of two previously leased facilities. Finally, we invested $14.4 million primarily for the formation of the LATAM joint venture and immaterial capital contributions to the SuperFrio joint venture.

Financing Activities

Our net cash used by financing activities was $0.3 million for the year ended December 31, 2023. Cash used by financing activities and consisted of $716.3 million in proceeds from our revolving line of credit and $412.6 million in proceeds from issuance of common stock. These cash inflows were partially offset by

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$832.5 million of repayments on our revolving line of credit, $242.2 million of distributions paid, and $57.1 million of payments related to lease obligations.

Our net cash provided by financing activities was $23.3 million for the year ended December 31, 2022. Cash provided by financing activities during 2022 consisted of $529.4 million in proceeds from our revolving line of credit and $470.0 million received in connection with the increase of our Senior Unsecured Term Loan Tranche A-1 and Deferred Draw A-3. These cash inflows were partially offset by $413.9 million of repayments on our revolving line of credit, $238.7 million of distributions paid, $269.7 million of repayments on our mortgage notes and $41.7 million of payments related to lease obligations..

Critical Accounting Estimates

Our discussion and analysis of our historical financial condition and results of operations for the periods described is based on our audited consolidated financial statements and our unaudited interim consolidated financial statements, each of which has been prepared in accordance with U.S. GAAP. The preparation of these historical financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments in certain circumstances that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For more information on our significant critical accounting policies and estimates, see Note 2- Summary of Significant Accounting policies to our Consolidated Financial Statements included in this Annual Report on Form 10-K. The following critical accounting discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations and cash flows to those of other companies.

Goodwill Impairment Evaluation

The Company evaluates the carrying value of goodwill each year as of October 1 and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company may use both qualitative and quantitative approaches when testing goodwill for impairment. For selected reporting units where we use the qualitative approach, we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative impairment test.

When quantitatively evaluating whether goodwill of a reporting unit is impaired, the Company compares the fair value of its reporting units to its carrying amounts, including goodwill. The assumptions used in the quantitative impairment test are estimates and use Level 3 inputs. The Company estimates the fair value of its reporting units using a methodology, or combination of methodologies, including a discounted cash flow analysis and/or a market-based valuation. The estimates of future cash flows are subject, but not limited to the following inputs and assumptions: revenue growth rates, operating costs and margins, capital expenditures, tax rates, long-term growth rate, macro economic conditions, and discount rates, which are affected by expectations about future market and

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economic conditions. The assumptions and inputs are based on risk-adjusted growth rates and discount factors accommodating multiple viewpoints that consider the full range of variability contemplated in the current and potential future economic situations. The market-based multiples approach assesses the financial performance and market values of other market-participant companies. If the estimated fair value of each of the reporting units exceeds the corresponding carrying value, no impairment of goodwill exists. If the reporting unit carrying value exceeds the reporting unit fair value an impairment charge is recorded for the difference between fair value and carrying value, limited to the amount of goodwill in the reporting unit. As of October 1, 2023, our reporting units which had a goodwill balance included the following: North America warehouse, North America transportation, Europe warehouse and Asia-Pacific warehouse.

Goodwill Impairment

As of October 1, 2023, as a result of its annual evaluation, the Company determined its goodwill within the Europe warehouse reporting unit, a component of the warehouse operating segment, was fully impaired. Accordingly, the Company recognized a goodwill impairment loss of $236.5 million within Impairment of indefinite and long-lived assets in the Consolidated Statements of Operations during the year ended December 31, 2023. Factors that led to this conclusion include i) the impact of historic and sustained increases in inflation and interest rates on the reporting unit’s weighted average costs of capital which was beyond the Company’s control, ii) inability to achieve local operating results at historical underwritten values, and iii) increased tax rates applicable in the related European jurisdictions. The Company engaged the assistance of a third-party valuation firm to perform the goodwill quantitative impairment test, which entailed an assessment of the Europe Warehouse reporting unit’s fair value relative to the carrying value that was derived using the income approach. The assumptions used in the quantitative impairment test are estimates and use Level 3 inputs. The estimation of the net present value of future cash flows is based upon varying economic assumptions, including assumptions such as revenue growth rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount rates. Of these assumptions, the discount rates are the most subjective and/or complex. These assumptions are based on risk-adjusted discount factors accommodating viewpoints that consider the full range of variability contemplated in the current and potential future economic situations. There is no remaining goodwill related to the Europe warehouse reporting unit following this impairment. The results of our 2023 impairment test for our reporting units other than Europe warehouse indicated that the estimated fair value of each of our reporting units was in excess of the corresponding carrying amount as of October 1, and no impairment of goodwill existed.

In 2022, the Company strategically shifted its focus to the core warehouse portfolio, terminating and winding down business with one of the largest customers in the North America third-party managed reporting unit resulting in a goodwill impairment charge of $3.2 million. There is no remaining goodwill related to the North America third-party managed reporting unit following this impairment, as the remaining business is immaterial. Historically, our reporting units have generated sufficient returns to recover the value of goodwill.

Business Combinations

We describe our accounting policy for business combinations and related estimates in Note 2- Summary of Significant Accounting Policies to the Consolidated Financial Statements. Additionally, we have disclosed all business combinations completed during 2023 and 2022 in Note 3-Business Combinations and Asset Acquisitions to the Consolidated Financial Statements.

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Revenue Recognition

We describe our revenue recognition policy in Note 2- Summary of Significant Accounting Policies to the Consolidated Financial Statements. Additionally, we have disclosed disaggregated revenue from contracts with customers for 2023, 2022, and 2021 by segment and geographic region in Note 22-Revenues from Contracts with Customers to the Consolidated Financial Statements.

New Accounting Pronouncements

See Note 2- Summary of Significant Accounting policies to our consolidated financial statements included in this Annual Report on Form 10-K.

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