# Americold Realty Trust: Form 10-Q for the period ended Sep 30, 2022

- Company: [Americold Realty Trust](/companies/cold.md) (CIK 1455863)
- Form: 10-Q
- Filed: 2022-11-04
- Accepted by EDGAR: Nov 4, 2022, 16:04 ET
- Period: 2022-09-30
- Accession: 0001628280-22-028446
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1455863/000162828022028446/art-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1455863/000162828022028446/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $746.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $2.16bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2022-07-01 to 2022-09-30 | $57.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2022-01-01 to 2022-09-30 | $171.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $23.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $54.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $30.4m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $82.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | −$3.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | −$16.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | −$8.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | −$22.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | −$0.03 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | −$0.08 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | −$0.03 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | −$0.08 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 269,586,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 269,467,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $182.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $254.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $179.6m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2022-09-30 | $45.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2022-09-30 | $8.00bn | us-gaap:Assets |
| Total liabilities | at 2022-09-30 | $4.18bn | us-gaap:Liabilities |
| Shareholders' equity | at 2022-09-30 | $3.81bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 141,117 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. 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 Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.*

*On May 25, 2022, we consummated our previously-disclosed conversion from a Maryland real estate investment trust to a Maryland corporation (the “Conversion”). Upon the consummation of the Conversion, each of our issued and outstanding shares of beneficial interest was converted into one share of common stock, and the rights of our stockholders began to be governed by the Maryland General Corporation Law and our Articles of Incorporation and Bylaws. The Conversion did not result in any change in CUSIP, trading symbol, federal tax identification number, or any material change in business, offices, assets, liabilities, obligations or net worth, or any change in directors, officers or employees. Despite this conversion, the Company continues to operate as a REIT for U.S. federal income tax purposes.*

### MANAGEMENT’S OVERVIEW

We are the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of September 30, 2022, we operated a global network of 249 temperature-controlled warehouses encompassing approximately 1.5 billion cubic feet, with 202 warehouses in North America, 27 in Europe, 18 warehouses in Asia-Pacific, and two warehouses in South America. In addition, we hold three minority interests in South American joint ventures, one with SuperFrio, which owns or operates 38 temperature-controlled warehouses in Brazil, one with Comfrio, which owns or operates 28 temperature-controlled warehouses in Brazil, and one with the LATAM JV, which owns one temperature-controlled warehouse in Chile. The LATAM joint-venture was created during the second quarter of 2022 and intends to grow our presence in Latin America, excluding Brazil, through development and acquisition over time.

### Components of Our Results of Operations

*Warehouse*. Our primary source of revenues consists of rent, storage, and warehouse services fees. Our rent, storage, and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen, perishable or other products in our warehouses by our customers. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, (10) government-approved temperature-controlled storage and inspection services, (11) fumigation, (12) pre-cooling and cold treatment services, (13) produce grading and bagging, (14) protein boxing, (15) e-commerce fulfillment, and (16) ripening. We refer to these handling and other warehouse services as our value-added services.

Cost of operations for our warehouse segment consist of power, other facilities costs, labor, and other service costs. Labor, the largest component of the cost of operations from our warehouse segment, consists primarily of employee wages, benefits, and workers’ compensation. Trends in our labor expense are influenced by changes in headcount, changes in compensation levels and associated performance incentives, the use of third-party labor to support our operations, changes in terms of collective bargaining agreements, changes in customer requirements and associated work content, workforce productivity, labor availability, governmental policies and regulations, variability in costs associated with medical insurance and the impact of workplace safety programs, inclusive of the number and severity of workers’ compensation claims. Labor expense can also be impacted as a result of discretionary bonuses. In response to the COVID-19 pandemic, we have incorporated certain activities such as staggered break schedules, social distancing, and other changes to process that can create inefficiencies, all of which we expect to continue to incur going forward. Our second largest cost of operations from our warehouse segment is power utilized in the operation of our temperature-controlled warehouses. As a result, fluctuations in the price for power in the regions where we operate may have a significant effect on our financial results. 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. Additionally, business mix impacts power expense depending on the temperature zone or type of freezing required. Other facilities costs include utilities other than power, property insurance, property taxes, sanitation (which include incremental supplies as a result of COVID-19), repairs and maintenance on real estate, rent under real property operating leases, where applicable, security, and other related facilities costs. Other services costs include equipment costs, warehouse consumables (e.g., shrink-wrap and uniforms), personal protective equipment to maintain the health and safety of our associates, warehouse administration and other related services costs.

*Third-Party Managed*. We receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners, with all reimbursements recognized as revenues under the relevant accounting guidance. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs. Cost of operations for our third-party managed segment is reimbursed on a pass-through basis (typically within two weeks).

*Transportation*. We charge transportation fees, which may also include fuel and capacity surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consists primarily of third-party carrier charges, which are impacted by factors affecting those carriers, including driver and equipment availability in certain markets. Additionally, in certain markets we employ drivers and assets to serve our customers. Costs to operate these assets include, wages, fuel, tolls, insurance and maintenance.

*Other Consolidated Operating Expenses*. We also incur depreciation and amortization expenses, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other, net expenses.

Our depreciation and amortization charges result primarily from the capital-intensive nature of our business. The principal components of depreciation relate to our warehouses, including buildings and improvements, refrigeration equipment, racking, leasehold improvements, material handling equipment, furniture and fixtures, and our computer hardware and software. Amortization relates primarily to intangible assets for customer relationships.

Our corporate-level selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, business development, account management, project management, marketing, engineering, supply-chain solutions, human resources and information technology personnel, as well as expenses related to equity incentive plans, communications and data processing, travel, professional fees, bad debt, training, office equipment and supplies. Trends in corporate-level selling, general and administrative expenses are influenced by changes in headcount and compensation levels and achievement of incentive compensation targets. To position ourselves to meet the challenges of the current business environment, we have implemented a shared services support structure to better manage costs and enhance the efficiency of our operations. We have begun to integrate our recent acquisitions into this shared services structure.

Our corporate-level acquisition, litigation and other, net consists of costs that we view outside of selling, general and administrative expenses with a high level of variability from period-to-period, and include the following:

- Acquisition related costs include costs associated with transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as employee retention expense and work associated with information systems and other projects including spending to support future acquisitions, which primarily consist of professional services.
- Litigation costs incurred in order to defend ourselves from litigation charges outside of the normal course of business and related settlement costs.
- Severance costs representing certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies, and reduction in workforce costs associated with exiting or selling non-strategic warehouses.
- Equity acceleration costs representing the unrecognized expense for share-based awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification.
- Non-offering related equity issuance expenses whether incurred through our initial public offering, follow-on offerings or secondary offerings.
- Terminated site operations costs represent expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our condensed consolidated statement of operations.
- Cyber incident related costs include third-party fees incurred in connection with the cyber incident that occurred in November 2020, as well as any incremental costs, internal and external, incurred to restore operations at our facilities and damage claims. Any subsequent reimbursements from insurance coverage for expenses incurred in connection with the event are also reflected within this category.
- Other costs relate to insurance claims, including deductibles, and related recoveries.

### Key Factors Affecting Our Business and Financial Results

### Market Conditions and COVID-19

During the three and nine months ended September 30, 2022 and the year ended December 31, 2021, our business and financial results were negatively impacted by COVID-19 related disruptions and other macro-economic conditions in (i) the food supply chain; (ii) our customers’ production and transportation of goods; (iii) the labor market impacting availability and cost; (iv) the impact of inflation on the cost to provide our services; (v) and the impact of changes in foreign currency exchange rates. Despite the current headwinds, we expect that end-consumer demand for food will remain consistent with historic levels over the long-term. However, current end-consumer demand coupled with food production and transportation challenges throughout the pandemic has driven down holdings in our facilities. As a result, occupancy and throughput volume continue at lower than historical levels experienced prior to COVID-19. We expect this to continue until our customers are able to ramp production back up to pre-pandemic levels for an extended period of time and rebuild inventory in the supply chain.

The unprecedented labor environment continues to be challenging for many companies, including our food manufacturing customers. Labor availability continues to be the primary constraint on food production, along with the continuing spread of COVID-19 and related variants, which also impacts the labor market.

Our business has also been impacted due to inflation during the second half of 2021 and during the three and nine months ended September 30, 2022. We believe we are positioned to address continued inflationary pressure as it arises; however, many of our contracts require that we experience sustained cost increases for an extended period of time ranging up to 60 days before we are able to initiate rate increases or seek remedies under our contracts. As a result of the significant impact of inflation on the cost of providing our storage, services and transportation to customers, during the second half of 2021 we initiated out-of-cycle rate increases in our customer contracts (many of which contain provisions for inflationary price escalators), and expect to continue to monitor further inflation and implement pricing increases as required. We can give no assurance that we will be able to offset the entire impact of inflation or future inflationary cost increases through increased storage or service charges or by operational efficiencies.

Additionally, global supply chains have been volatile following the invasion of Ukraine by Russia which has resulted in sanctions against Russia from the U.S. and a number of European countries. While we do not have warehouses or operations in Russia or Ukraine, our global operations and specifically our European operations may be impacted as a result of the ongoing conflict, including increased power costs and disruptions in inventory transportation, logistics systems and supply chain management. To date, our operations have not been materially impacted by the ongoing conflict.

Refer to “Item 1A - Risk Factors” of our 2021 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as filed with the SEC.

### Acquisitions and Joint Ventures

On July 1, 2022, the Company completed the acquisition of De Bruyn Cold Storage which operates a single facility located in Tasmania, Australia for total consideration of A$23.5 million, or $16.0 million. The acquisition was funded using cash drawn on our Senior Unsecured Revolving Credit Facility. Since the date of acquisition, we have reported the results of this facility within our warehouse segment.

On June 2, 2022, we formed a joint venture, Americold LATAM Holdings Ltd (the “LATAM JV”), with Cold Latam Limited (our “JV partner”), in an effort to help us grow our business and market presence in Latin America, excluding Brazil. Our JV partner committed to invest approximately $209.0 million in exchange for 85% of the total equity interests, and we contributed our Chilean business upon formation of the joint venture and retained the remaining 15% equity interests in the joint venture.

Refer to Note 2 of the Notes to the Condensed Consolidated Financial Statements and Note 3 of our 2021 Annual Report on Form 10-K for further information regarding acquisitions completed prior to 2022.

### Seasonality

We are involved in providing services to food producers, distributors, retailers and e-tailers whose businesses, in some cases, are seasonal or cyclical. In order to mitigate the volatility in our revenue and earnings caused by seasonal business, we have implemented fixed commitment contracts with certain of our customers. Our customers with fixed commitment contracts pay for guaranteed warehouse space in order to maintain their required inventory levels, which is especially helpful to them during periods of peak physical occupancy. The timing of Easter fluctuates between the first and second quarter of the year, however, on average the first and second quarter revenue and NOI are relatively consistent. On a portfolio-wide basis, physical occupancy rates are generally the lowest during May and June. Physical occupancy rates typically exhibit a gradual increase after May and June as a result of annual harvests and our customers building inventories in connection with end-of-year holidays and generally peak between mid-September and early December as a result thereof. The external temperature reaches annual peaks for a majority of our portfolio during the third quarter of the year resulting in increase power expense that negatively impacts NOI, and moderates during the fourth quarter. Typically, we have higher than average physical occupancy levels in October or November, which also tends to result in higher revenues. In light of the ongoing COVID-19 pandemic, we have seen variability in physical occupancy levels as compared to the typical seasonal trends.

Additionally, the involvement of our customers in a cross-section of the food industry mitigates, in part, 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). Our southern hemisphere operations in Australia, New Zealand and South America also help balance the impact of seasonality in our global operations, as their growing and harvesting cycles are complementary to North America and Europe. Each of our warehouses sets its own operating hours based on demand, which is heavily driven by growing seasons and seasonal consumer demand for certain products.

### 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 Condensed 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.

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.

|  | Foreign exchange rates as of September 30, 2022 | Average foreign exchange rates used to translate actual operating results for the three months ended September 30, 2022 | Average foreign exchange rates used to translate actual operating results for the nine months ended September 30, 2022 | Foreign exchange rates as of September 30, 2021 | Prior period average foreign exchange rate used to adjust actual operating results for the three months ended September 30, 2022(1) | Prior period average foreign exchange rate used to adjust actual operating results for the nine months ended September 30, 2022(1) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Argentinian peso | 0.007 | 0.007 | 0.008 | 0.010 | 0.010 | 0.011 |
| Australian dollar | 0.640 | 0.683 | 0.707 | 0.723 | 0.735 | 0.759 |
| Brazilian real | 0.185 | 0.191 | 0.195 | 0.184 | 0.191 | 0.188 |
| British Pound | 1.117 | 1.177 | 1.259 | 1.347 | 1.378 | 1.385 |
| Canadian dollar | 0.723 | 0.766 | 0.780 | 0.789 | 0.794 | 0.799 |
| Chilean Peso | 0.001 | 0.001 | 0.001 | 0.001 | 0.001 | 0.001 |
| Euro | 0.980 | 1.007 | 1.065 | 1.158 | 1.179 | 1.196 |
| New Zealand dollar | 0.560 | 0.613 | 0.647 | 0.690 | 0.701 | 0.712 |
| Poland Zloty | 0.202 | 0.213 | 0.228 | 0.251 | 0.258 | 0.263 |

(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.

### Focus on Our Operational Effectiveness and Cost Structure

We continuously seek to execute on various initiatives aimed at streamlining our business processes and reducing our cost structure, including: realigning and centralizing key business processes and fully integrating acquired assets and businesses; implementing standardized operational processes; integrating and launching new information technology tools and platforms; instituting key health, safety, leadership and training programs; and capitalizing on the purchasing power of our network. Through the realignment of our business processes, we have acquired new talent and strengthened our service offerings. In order to reduce costs in our facilities, we have invested in energy efficiency projects, including LED lighting, thermal energy storage, motion-sensor technology, variable frequency drives for our fans and compressors, third party efficiency reviews and real-time monitoring of energy consumption, rapid open and close doors, and alternative-power generation technologies to improve the energy efficiency of our warehouses. We have also performed fine-tuning of our refrigeration systems, deployed efficient energy management practices, such as time-of-use and awareness, and have increased our participation in Power Demand Response programs with some of our power suppliers. These initiatives have allowed us to reduce our consumption of kilowatt hours and energy spend.

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, the exit of certain managed warehouse agreements, the exit of the China JV during 2019, and the sale of our quarry business during 2020. Through our process of active portfolio management, we continue to evaluate our markets and offerings.

### Strategic Shift within Our Transportation Segment

Several years ago, we initiated a strategic shift in our transportation segment services and solutions. The intention of this strategic shift was to better focus our business on the operation of our temperature-controlled warehouses. Specifically, we have gradually exited certain commoditized, non-scalable, or low margin services we historically offered to our customers, in favor of more profitable and value-added programs, such as regional, national, truckload and retailer-specific multi-vendor consolidation services. We designed each value-added program to improve efficiency and reduce transportation and logistics costs to our warehouse customers, whose transportation spend typically represents the majority of their supply-chain costs. We believe this efficiency and cost reduction helps to drive increased client retention, as well as maintain high occupancy levels in our temperature-controlled warehouses. Over the last several years, we have made significant progress in implementing our strategic initiative of growing our transportation service offering in a way that complements our temperature-controlled warehouse business, such as adding a dedicated fleet service offering through acquisitions. We intend to continue executing this strategy in the future.

### Historically Significant Customer

For the three and nine months ended September 30, 2022 and 2021, one customer accounted for more than 10% of our total revenues. For the three months ended September 30, 2022 and 2021, revenues attributable to this customer were $73.6 million and $79.8 million, respectively. For the nine months ended September 30, 2022 and 2021, revenues attributable to this customer were $226.9 million and $209.8 million, respectively. The substantial majority of this customer’s business relates to our third-party managed segment. The Company and this customer are currently transitioning the management of this customer’s warehouses to a new third-party provider, and our operations are expected to cease during the fourth quarter of 2022. The annual NOI generated from this business was approximately $8.0 million. We are reimbursed for substantially all expenses we incur in managing warehouses on behalf of third-party owners. We recognize these reimbursements as revenues under applicable accounting guidance, but these reimbursements generally do not affect our financial results because they are offset by the corresponding expenses that we recognize in our third-party managed segment cost of operations. Of the revenues received from this customer, $71.2 million and $74.9 million represented reimbursements for certain expenses we incurred during the three months ended September 30, 2022 and 2021, respectively, and $218.9 million and $199.6 million for the nine months ended September 30, 2022 and 2021, respectively, were offset by matching expenses included in our third party managed cost of operations.

### Economic Occupancy of our Warehouses

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. We regard economic occupancy as an important driver of our financial results. Historically, providers of temperature-controlled warehouse space have offered storage services to customers on an as-utilized, on-demand basis. We actively seek to enter into contracts that implement our commercial business rules which contemplate, among other things, fixed storage commitments in connection with establishing new customer relationships. Additionally, we actively seek opportunities to transition our current customers to contracts that feature a fixed storage commitment when renewing existing agreements or upon the change in the anticipated profile of our customer. This strategy mitigates the impact of changes in physical occupancy throughout the course of the year due to seasonality, as well as other factors that can impact physical occupancy while ensuring our customers have the necessary space they need to support their business.

### Throughput at our Warehouses

The level and nature of throughput at our warehouses is an important factor impacting our warehouse services revenues in our warehouse segment. Throughput refers to the volume of pallets that enter and exit our warehouses. Higher levels of throughput drive warehouse services revenues in our warehouse segment as customers are typically billed on a basis that takes into account the level of throughput of the goods they store in our warehouses. The nature of throughput may be driven by the expected turn of the underlying product or commodity. Throughput pallets can be influenced both by the food manufacturers as well as shifts in demand preferences. Food manufacturers’ production levels, which respond to market conditions, labor availability, supply chain dynamics and consumer preferences, may impact inbound pallets. Similarly, a change in inventory turnover due to shift in customer demand may impact outbound pallets.

### How We Assess the Performance of Our Business

### Segment Contribution (Net Operating Income or “NOI”)

We evaluate the performance of our primary business segments based on their contribution (NOI) to our overall results of operations. We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other, net). We use segment contribution (NOI) to evaluate our segments for purposes of making operating decisions and assessing performance in accordance with FASB ASC, Topic 280, *Segment Reporting.*

We also analyze the “segment contribution (NOI) margin” for each of our business segments, which we calculate as segment contribution (NOI) divided by segment revenues.

In addition to our segment contribution (NOI) and segment contribution (NOI) margin, we analyze the contribution (NOI) of our warehouse rent and storage operations and our warehouse services operations within our warehouse segment. We calculate the contribution (NOI) of our warehouse rent and storage operations as rent and storage revenues less power and other facilities cost. We calculate the contribution (NOI) of our warehouse services operations as warehouse services revenues less labor and other service costs. We calculate the contribution (NOI) margin for each of these operations as the applicable contribution (NOI) measure divided by the applicable revenue measure. We believe the presentation of these contribution (NOI) and contribution (NOI) margin measures helps investors understand the relative revenues, costs and earnings resulting from each of these separate types of services we provide to our customers in the same manner reviewed by our management in connection with the operation of our business. These contribution (NOI) measures within our warehouse segment are not measurements of financial performance under U.S. GAAP, and these measures should be considered as supplements, but not as alternatives, 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.

### Same Store Analysis

We define our “same store” population once a year at the beginning of the current calendar year. Our same store population includes properties that were owned or leased for the entirety of two comparable periods and that have reported at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year. We define “normalized operations” as properties that have been open for operation or lease after development or significant modification, including the expansion of a warehouse footprint or a warehouse rehabilitation subsequent to an event, such as a natural disaster or similar event causing disruption to operations. In addition, our definition of “normalized operations” takes into account changes in the ownership structure (e.g., purchase of a previously leased warehouse would result in different charges in the compared periods), which would impact comparability in our warehouse segment contribution (NOI).

Acquired properties will be included in the “same store” population if owned by us as of the first business day of each year, of the prior calendar year and 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 entering development subsequent to the beginning of the current calendar year. As such, the “same store” population for the period ended September 30, 2022 includes all properties that we owned at January 3, which had both been owned and had reached “normalized operations” by January 3, 2022.

We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other, net and gain or loss on sale of real estate). In order to derive an appropriate measure of period-to-period operating performance, we also calculate our same store contribution (NOI) on a constant currency basis to remove the effects of foreign currency exchange rate movements by using the comparable prior period exchange rate to translate from local currency into U.S. dollars for both periods. We evaluate the performance of the warehouses we own or lease using a “same store” analysis, and we believe that same store contribution (NOI) is helpful to investors as a supplemental performance measure because it includes the operating performance from the population of properties that is consistent from period to period and also on a constant currency basis, thereby eliminating the effects of changes in the composition of our warehouse portfolio and currency fluctuations on performance measures.

The following table shows the number of same-store warehouses in our portfolio as of September 30, 2022. The number of warehouses owned or operated in as of September 30, 2022 and excluded as same-store warehouses for the period ended September 30, 2022 is listed below. While not included in the non-same store warehouse count in the table below, the results of operations for the non-same store warehouses includes the partial period impact of sites that were exited during the periods presented.

|  |  |
| --- | ---: |
| Total Warehouses | 249 |
| Same Store Warehouses | 212 |
| Non-Same Store Warehouses (1) | 28 |
| Third-Party Managed Warehouses | 9 |

(1) During the third quarter of 2022, we purchased a facility that was previously leased in New Zealand, which is now included in the non-same store population as a result. Additionally, we completed the acquisition of De Bruyn Cold Storage consisting of one facility which is now included in the non-same store population as a result. Finally, we exited one leased facility which came into our network with the Lago acquisition, and was previously included in the non-same store population.

As of September 30, 2022, our portfolio consisted of 249 total warehouses, including 240 within the warehouse segment and nine in the third-party managed segment. In addition, we hold minority interests in three Brazilian-based joint ventures, Superfrio, which owns or operates 38 temperature-controlled warehouses, and Comfrio, which owns or operates 28 temperature-controlled warehouses. Finally, we hold a minority interest in a recently created LATAM joint venture, which owns one temperature-controlled warehouse, which we contributed to the joint venture during the second quarter of 2022.

Same store contribution (NOI) is 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 contribution (NOI) in a manner consistent with our definition or calculation. Same store contribution (NOI) 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.

### RESULTS OF OPERATIONS

### Comparison of Results for the Three Months Ended September 30, 2022 and 2021

### Warehouse Segment

The following table presents the operating results of our warehouse segment for the three months ended September 30, 2022 and 2021.

*(Dollars in thousands)*

|  | Three Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Rent and storage | $260,249 | $266,362 | $225,234 | 15.5% | 18.3% |
| Warehouse services | 338,728 | 347,209 | 316,813 | 6.9% | 9.6% |
| Total warehouse segment revenues | 598,977 | 613,571 | 542,047 | 10.5% | 13.2% |
| Power | 48,593 | 50,736 | 38,931 | 24.8% | 30.3% |
| Other facilities costs (2) | 58,792 | 60,129 | 53,050 | 10.8% | 13.3% |
| Labor | 256,811 | 262,683 | 245,516 | 4.6% | 7.0% |
| Other services costs (3) | 68,119 | 70,186 | 59,558 | 14.4% | 17.8% |
| Total warehouse segment cost of operations | $432,315 | $443,734 | $397,055 | 8.9% | 11.8% |
| Warehouse segment contribution (NOI) | 166,662 | 169,837 | 144,992 | 14.9% | 17.1% |
| Warehouse rent and storage contribution (NOI) (4) | 152,864 | 155,497 | 133,253 | 14.7% | 16.7% |
| Warehouse services contribution (NOI) (5) | 13,798 | 14,340 | 11,739 | 17.5% | 22.2% |
| Total warehouse segment margin | 27.8% | 27.7% | 26.7% | 108 bps | 93 bps |
| Rent and storage margin(6) | 58.7% | 58.4% | 59.2% | -42 bps | -78 bps |
| Warehouse services margin(7) | 4.1% | 4.1% | 3.7% | 37 bps | 42 bps |

(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 $10.5 million and $11.2 million, on an actual basis, for the third quarter of 2022 and 2021, respectively.

(3) Includes non-real estate rent expense (equipment lease and rentals) of $3.6 million and $2.9 million, on an actual basis, for the third quarter of 2022 and 2021, respectively.

(4) Calculated as rent and storage revenues less power and other facilities costs.

(5) Calculated as warehouse services revenues less labor and other services costs.

(6) Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenues.

(7) Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

Warehouse segment revenues were $599.0 million for the three months ended September 30, 2022, an increase of $56.9 million, or 10.5%, compared to $542.0 million for the three months ended September 30, 2021. On a constant currency basis, our warehouse segment revenues were $613.6 million for the three months ended September 30, 2022, an increase of $71.5 million, or 13.2%, from the three months ended September 30, 2021. This growth was driven by $47.4 million of growth in our same store pool on a constant currency basis primarily due to our pricing initiatives, rate escalations, and improvements in economic occupancy, partially offset by a slight decline in throughput. Approximately $16.5 million of the increase, on a constant currency basis, was driven by acquisitions completed between August 2021 and September 2022, including the growth experienced period-over-period during overlapping periods of ownership. We acquired two facilities on August 2, 2021 as a result of the ColdCo acquisition, one facility on September 1, 2021 as a result of the Newark Facility Management acquisition and three facilities on November 15, 2021 as a result of the Lago Cold Stores acquisition (including one leased facility that was exited upon expiration during the first quarter of 2022 and one leased facility that was exited upon expiration during the third quarter of 2022). Additionally, we acquired one facility on July 1, 2022 as a result of the De Bruyn Cold Storage acquisition and therefore we did not have ownership of these facilities for the entirety of the prior comparable period. Approximately $7.6 million of the increase, on a constant currency basis, was related to growth in our our recently completed expansion and developments in our non-same store pool. The foreign currency translation of revenues earned by our foreign operations had a $14.6 million unfavorable impact during the three months ended September 30, 2022, which was mainly driven by the strengthening of the U.S. dollar against our foreign subsidiaries’ currencies.

Warehouse segment cost of operations was $432.3 million for the three months ended September 30, 2022, an increase of $35.3 million, or 8.9%, compared to the three months ended September 30, 2021. On a constant currency basis, our warehouse segment cost of operations was $443.7 million for the three months ended September 30, 2022, an increase of $46.7 million, or 11.8%, from the three months ended September 30, 2021. The cost of operations for our same store pool increased $27.3 million on a constant currency basis, across most of our cost categories, reflective of inflationary pressure. Approximately $11.7 million of the increase, on a constant currency basis, was driven by the additional facilities in the warehouse segment we acquired in connection with the aforementioned acquisitions. Approximately $7.7 million of the increase was related to growth in our recently completed expansions and developments in our non-same store pool, including incremental start-up costs of $4.3 million during the third quarter of 2022, which have not yet stabilized. These increases are offset by the foreign currency translation of expenses incurred by our foreign operations which had an $11.4 million favorable impact during the three months ended September 30, 2022.

For the three months ended September 30, 2022, warehouse segment contribution (NOI), increased $21.7 million, or 14.9%, to $166.7 million for the third quarter of 2022 compared to $145.0 million for the third quarter of 2021. On a constant currency basis, warehouse segment NOI increased 17.1% from the three months ended September 30, 2021. The NOI for our same store pool increased $20.1 million on a constant currency basis, attributable to revenue and cost of operations factors previously described. Approximately $4.9 million of the increase, on a constant currency basis, was driven by the additional facilities in the warehouse segment as a result of the aforementioned acquisitions, as well as the growth and modest synergies experienced period-over-period during overlapping periods of ownership for sites acquired during 2021. Warehouse segment NOI was negatively impacted by the start-up costs incurred in connection with our expansion and development projects in the non-same store pool as they continue to ramp up prior to stabilization. The foreign currency translation of our results of operations had a $3.2 million unfavorable impact to warehouse segment NOI period-over-period due to the strengthening of the U.S. dollar.

#### Same Store and Non-Same Store Analysis

We had 212 same stores for the three months ended September 30, 2022. Please see “How We Assess the Performance of Our Business—Same Store Analysis” above for a reconciliation of the change in the same store portfolio from period to period. Amounts related to the acquisitions of Bowman Stores, ColdCo, De Bruyn Cold Storage, KMT Brrr!, Lago Cold Stores, Liberty, Newark, one recently leased warehouse in Australia, a recently constructed facility in Denver purchased in November 2021, a leased facility purchased during the second quarter of 2022, a leased facility purchased during the third quarter of 2022, as well as certain expansion and development projects not yet stabilized are reflected within non-same store results.

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 three months ended September 30, 2022 and 2021.

|  | Three Months Ended September 30, 2022 Actual 2022 Constant Currency(1) 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: |
| Number of same store sites | 212 212 | n/a | n/a |
| **Same store revenues:** | **(Dollars in thousands)** |  |  |
| Rent and storage | $225,588 $230,422 $201,574 | 11.9% | 14.3% |
| Warehouse services | 304,091 311,587 293,052 | 3.8% | 6.3% |
| Total same store revenues | 529,679 542,009 494,626 | 7.1% | 9.6% |
| **Same store cost of operations:** |  |  |  |
| Power | 41,381 42,990 34,366 | 20.4% | 25.1% |
| Other facilities costs | 50,648 51,706 46,795 | 8.2% | 10.5% |
| Labor | 223,261 228,411 222,125 | 0.5% | 2.8% |
| Other services costs | 57,878 59,743 52,274 | 10.7% | 14.3% |
| Total same store cost of operations | $373,168 $382,850 $355,560 | 5.0% | 7.7% |
| Same store contribution (NOI) | $156,511 $159,159 $139,066 | 12.5% | 14.4% |
| Same store rent and storage contribution (NOI)(2) | $133,559 $135,726 $120,413 | 10.9% | 12.7% |
| Same store services contribution (NOI)(3) | $22,952 $23,433 $18,653 | 23.0% | 25.6% |
| Total same store margin | 29.5% 29.4% 28.1% | 143 bps | 125 bps |
| Same store rent and storage margin(4) | 59.2% 58.9% 59.7% | -53 bps | -83 bps |
| Same store services margin(5) | 7.5% 7.5% 6.4% | 118 bps | 116 bps |

|  | Three Months Ended September 30, 2022 Actual 2022 Constant Currency(1) 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | --- | --- |
| Number of non-same store sites(6) | 28 27 | n/a | n/a |
| Non-same store revenues: | **(Dollars in thousands)** |  |  |
| Rent and storage | $34,661 $35,940 $23,660 | n/r | n/r |
| Warehouse services | 34,637 35,622 23,761 | n/r | n/r |
| Total non-same store revenues | 69,298 71,562 47,421 | n/r | n/r |
| Non-same store cost of operations: |  |  |  |
| Power | 7,212 7,746 4,565 | n/r | n/r |
| Other facilities costs | 8,144 8,423 6,255 | n/r | n/r |
| Labor | 33,550 34,272 23,391 | n/r | n/r |
| Other services costs | 10,241 10,443 7,284 | n/r | n/r |
| Total non-same store cost of operations | $59,147 $60,884 $41,495 | n/r | n/r |
| Non-same store contribution (NOI) | $10,151 $10,678 $5,926 | n/r | n/r |
| Non-same store rent and storage contribution (NOI)(2) | $19,305 $19,771 $12,840 | n/r | n/r |
| Non-same store services contribution (NOI)(3) | $(9,154) $(9,093) $(6,914) | n/r | n/r |
| Total non-same store margin | 14.6% 14.9% 12.5% | n/r | n/r |
| Non-same store rent and storage margin(4) | 55.7% 55.0% 54.3% | n/r | n/r |
| Non-same store services margin(5) | (26.4)% (25.5)% (29.1)% | n/r | n/r |

47

|  | Three Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total warehouse segment revenues | $598,977 | $613,571 | $542,047 | 10.5% | 13.2% |
| Total warehouse cost of operations | $432,315 | $443,734 | $397,055 | 8.9% | 11.8% |
| Total warehouse segment contribution | $166,662 | $169,837 | $144,992 | 14.9% | 17.1% |

(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.

(2) Calculated as rent and storage revenues less power and other facilities costs.

(3) Calculated as warehouse services revenues less labor and other services costs.

(4) Calculated as rent and storage contribution (NOI) divided by rent and storage revenues.

(5) Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

(6) Non-same store warehouse count of 28 includes one facility acquired through the De Bruyn Cold Storage acquisition on July 1, 2022, one recently leased warehouse in Australia, one recently constructed facility in Denver we purchased in November 2021, three facilities acquired through the Lago Cold Stores acquisition on November 15, 2021, one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, and 12 facilities under development or expansion, one of which was completed during the second quarter of 2022. During the third quarter of 2021, a leased facility from the Liberty Freezers acquisition was exited upon expiration of the lease. During the first quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we ceased operations within a facility that is being prepared for lease to a third-party. During the second quarter of 2022, we purchased a previously leased facility. During the third quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we purchased a previously leased facility in New Zealand. The results of the facilities exited are included in the results above, and the results of these acquisitions are reflected in the results above since date of ownership.

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

n/r - not relevant

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

*Units in thousands except per pallet and site number data - unaudited*

|  | Three Months Ended September 30, 2022 | 2021 | Change |
| --- | ---: | ---: | --- |
| Number of same store sites | 212 | 212 | n/a |
| **Same store rent and storage:** |  |  |  |
| Economic occupancy(1) |  |  |  |
| Average occupied economic pallets | 3,910 | 3,699 | 5.7% |
| Economic occupancy percentage | 80.7% | 76.3% | 437 bps |
| Same store rent and storage revenues per economic occupied pallet | $57.69 | $54.50 | 5.9% |
| Constant currency same store rent and storage revenues per economic occupied pallet | $58.93 | $54.50 | 8.1% |
| Physical occupancy(2) |  |  |  |
| Average physical occupied pallets | 3,644 | 3,375 | 8.0% |
| Average physical pallet positions | 4,847 | 4,848 | 0.0% |
| Physical occupancy percentage | 75.2% | 69.6% | 555 bps |
| Same store rent and storage revenues per physical occupied pallet | $61.91 | $59.72 | 3.7% |
| Constant currency same store rent and storage revenues per physical occupied pallet | $63.24 | $59.72 | 5.9% |
| **Same store warehouse services:** |  |  |  |
| Throughput pallets (in thousands) | 9,146 | 9,263 | (1.3)% |
| Same store warehouse services revenues per throughput pallet | $33.25 | $31.64 | 5.1% |
| Constant currency same store warehouse services revenues per throughput pallet | $34.07 | $31.64 | 7.7% |
| Number of non-same store sites(3) | 28 | 27 | n/a |
| **Non-same store rent and storage:** |  |  |  |
| Economic occupancy(1) |  |  |  |
| Average economic occupied pallets | 447 | 362 | n/r |
| Economic occupancy percentage | 75.3% | 71.9% | n/r |
| Non-same store rent and storage revenues per economic occupied pallet | $77.60 | $65.30 | n/r |
| Constant currency non-same store rent and storage revenues per economic occupied pallet | $80.46 | $65.30 | n/r |
| Physical occupancy(2) |  |  |  |
| Average physical occupied pallets | 399 | 334 | n/r |
| Average physical pallet positions | 593 | 504 | n/r |
| Physical occupancy percentage | 67.3% | 66.3% | n/r |
| Non-same store rent and storage revenues per physical occupied pallet | $86.85 | $70.88 | n/r |
| Constant currency non-same store rent and storage revenues per physical occupied pallet | $90.06 | $70.88 | n/r |
| **Non-same store warehouse services:** |  |  |  |
| Throughput pallets (in thousands) | 1,063 | 879 | n/r |
| Non-same store warehouse services revenues per throughput pallet | $32.58 | $27.03 | n/r |
| Constant currency non-same store warehouse services revenues per throughput pallet | $33.51 | $27.03 | n/r |

(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 actual pallet commitments specified in each customer’s 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.

(3) Non-same store warehouse count of 28 includes one facility acquired through the De Bruyn Cold Storage acquisition on July 1, 2022, one recently leased warehouse in Australia, one recently constructed facility in Denver we purchased in November 2021, three facilities acquired through the Lago Cold Stores acquisition on November 15, 2021, one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, and 12 facilities under development or expansion, one of which was completed during the second quarter of 2022. During the third quarter of 2021, a leased facility from the Liberty Freezers acquisition was exited upon expiration of the lease. During the first quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we ceased operations within a facility that is being prepared for lease to a third-party. During the second quarter of 2022, we purchased a previously leased facility. During the third quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we purchased a previously leased facility in New Zealand. The results of the facilities exited are included in the results above, and the results of these acquisitions are reflected in the results above since date of ownership.

Economic occupancy at our same stores was 80.7% for the three months ended September 30, 2022, an increase of 437 basis points compared to 76.3% for the quarter ended September 30, 2021. Economic occupancy growth as compared to the prior year was due to our customers increase in food production levels, which is benefiting from the improved labor market. Same store rent and storage revenues per economic occupied pallet increased 5.9% period-over-period, primarily driven by our pricing initiative, contractual rate escalations and business mix. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 8.1% period-over-period. Our economic occupancy at our same stores for the three months ended September 30, 2022 was 549 basis points higher than our corresponding average physical occupancy of 75.2%.

Throughput pallets at our same stores were 9.1 million pallets for the three months ended September 30, 2022, a decrease of 1.3% from 9.3 million pallets for the three months ended September 30, 2021. This decrease was the result of a slight change in business mix. Same store warehouse services revenue per throughput pallet increased 5.1% compared to the prior year primarily as a result of our pricing initiative and contractual rate escalations, offset by unfavorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenue per throughput pallet increased 7.7% compared to the prior year.

### Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the three months ended September 30, 2022 and 2021.

|  | Three Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Number of managed sites | 9 |  | 9 | n/a | n/a |
|  | **(Dollars in thousands)** |  |  |  |  |
| Third-party managed revenues | $82,436 | $82,870 | $87,782 | (6.1)% | (5.6)% |
| Third-party managed cost of operations | 78,776 | 79,133 | 83,231 | (5.4)% | (4.9)% |
| Third-party managed segment contribution | $3,660 | $3,737 | $4,551 | (19.6)% | (17.9)% |
| Third-party managed margin | 4.4% | 4.5% | 5.2% | -74 bps | -67 bps |

(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.

Third-party managed revenues were $82.4 million for the three months ended September 30, 2022, a decrease of $5.3 million, or 6.1%, compared to $87.8 million for the three months ended September 30, 2021. On a constant currency basis, third-party managed revenues were $82.9 million for the three months ended September 30, 2022, a decrease of $4.9 million, or 5.6%, from the three months ended September 30, 2021. This decrease was due to lower business volumes in our domestic managed operations and a reduction in certain costs that are a direct pass-through to the customer, discussed below.

Third-party managed cost of operations was $78.8 million for the three months ended September 30, 2022, a decrease of $4.5 million, or 5.4%, compared to $83.2 million for the three months ended September 30, 2021. Third-party managed cost of operations decreased as a result of the lower business volume in our domestic managed operations and lower costs including health care and travel expenses.

Third-party managed segment contribution (NOI) was $3.7 million for the three months ended September 30, 2022, a decrease of $0.9 million, or 19.6%, compared to $4.6 million for the three months ended September 30, 2021.

***Transportation Segment*** The following table presents the operating results of our transportation segment for the three months ended September 30, 2022 and 2021.

*(Dollars in thousands)*

|  | Three Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Transportation revenues | $76,367 | $82,174 | $78,979 | (3.3)% | 4.0% |
| Transportation cost of operations | 65,532 | 71,486 | 72,728 | (9.9)% | (1.7)% |
| Transportation segment contribution (NOI) | $10,835 | $10,688 | $6,251 | 73.3% | 71.0% |
| Transportation margin | 14.2% | 13.0% | 7.9% | 627 bps | 509 bps |

(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.

Transportation revenues were $76.4 million for the three months ended September 30, 2022, a decrease of $2.6 million, or 3.3%, compared to $79.0 million for the three months ended September 30, 2021. The decrease was primarily due to decrease in revenue from the rationalization of certain domestic market operations, lower volume in certain foreign market operations and the unfavorable impact of foreign currency translation, partially offset by higher rates in our consolidation business, acquisitions and expansions in Australia, and the higher revenue associated with brokered transportation costs, inflation in wage and fuel rates and capacity surcharges due to challenges with driver availability.

Transportation cost of operations was $65.5 million for the three months ended September 30, 2022, a decrease of $7.2 million, or 9.9%, compared to $72.7 million for the three months ended September 30, 2021. The decrease was due to the exit of certain domestic market operations, lower volume in certain foreign market operations and the favorable impact of foreign currency translation, partially offset by capacity constraints driving spot market higher than contract rate, which has caused an increase in carrier fees, higher wages and fuel costs impacted by inflation and the acquisitions mentioned above.

Transportation segment contribution (NOI) was $10.8 million for the three months ended September 30, 2022, an increase of 73.3% compared to the three months ended September 30, 2021. Transportation segment margin increased 627 basis points from the three months ended September 30, 2021, to 14.2%. The increase in margin was primarily due to the rate increases implemented during 2022, paired with the exit of certain less profitable market operations.

### Other Consolidated Operating Expenses

*Depreciation and amortization.* Depreciation and amortization expense was $83.7 million for the three months ended September 30, 2022, an increase of $13.1 million, or 18.6%, compared to $70.6 million for the three months ended September 30, 2021. This increase was primarily due to the impact of purchase accounting adjustments made during 2021 which did not recur in 2022, paired with the impact of our recently completed expansion and developments and partially offset by the favorable impact of foreign currency translation.

*Selling, general and administrative*. Corporate-level selling, general and administrative expenses were $57.1 million for the three months ended September 30, 2022, an increase of $11.6 million, or 25.4%, compared to $45.5 million for the three months ended September 30, 2021. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer on-boarding, and engineering and consulting services to support our customers in the cold chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was driven by the resumption of performance-based compensation expense in connection with the short-term incentive plan, higher third-party legal and professional fees due to timing of services performed, higher travel costs and higher share-based compensation expense in connection with the November 2021 retention grant.

*Acquisition, litigation and other, net*. Corporate-level acquisition, litigation and other, net expenses were $4.9 million for the three months ended September 30, 2022, a decrease of $1.5 million compared to the three months ended September 30, 2021. During the three months ended September 30, 2022, we incurred $5.8 million of acquisition and integration related costs, and $1.6 million of severance primarily due to the realignment of certain international operations. These costs were partially offset by a benefit of $2.2 million related to a favorable litigation settlement and $0.3 million related to a leased facility which we acquired, and no longer required the accrual as a result. Refer to Note 3 of the condensed consolidated financial statements for details. During the three months ended September 30, 2021, we incurred $6.3 million of acquisition related expenses primarily comprised of professional fees and integration related costs in connection with completed and potential acquisitions.

*Impairment of indefinite and long-lived assets.* For the three months ended September 30, 2022, the Company recorded impairment charges totaling $6.6 million. This included a ‘Goodwill’ impairment charge of $3.2 million as we are strategically shifting our focus to our core warehouse portfolio, and terminating and winding down business with one of the largest customers in the Third-party managed segment. It also included an impairment charge of ‘Assets under construction’ of $2.2 million associated with a development project which management determined it would no longer pursue and $1.2 million in Warehouse segment assets which we reduced the carrying value of in anticipation of the exit of certain leased facilities. During the three months ended September 30, 2021, the Company recorded impairment charges totaling $1.8 million, related to the write-off of certain software costs for programs which would no longer be used and costs incurred for development projects which management determined it would not continue to pursue.

*Loss from sale of real estate.* For the three months ended September 30, 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 expense and income for the three months ended September 30, 2022 and 2021.

|  | Three Months Ended September 30, Change |
| --- | ---: |
|  | **2022** **2021%** |
| Other (expense) income: | **(Dollars in thousands)** |
| Interest expense | $(30,402) $(25,303) 20.2% |
| Loss on debt extinguishment, modifications and termination of derivative instruments | $(1,040) $(627) 65.9% |
| Other, net | $(2,593) $(57) n/r |
| Loss from investments in partially owned entities | $(1,440) $(489) 194.5% |
| n/r=not relevant |  |

*Interest expense*. Interest expense was $30.4 million for the three months ended September 30, 2022, an increase of $5.1 million, or 20.2%, compared to $25.3 million for the three months ended September 30, 2021. Our effective interest rate of our outstanding debt increased from 3.09% in the third quarter of 2021 to 3.95% in the third quarter of 2022, primarily due to the rising interest rates associated with our Senior Unsecured Credit Facility. In August 2022 we completed a refinancing of our Senior Unsecured Credit Facility and entered into interest rate swaps to fix the interest rate on a substantial portion of the term loans associated facility. Our revolving credit facility borrowings and $175.0 million of the U.S. dollar term loan A-1 facility continue to incur interest under the applicable variable, floating rate. Refer to Note 4 and Note 5 of the Condensed Consolidated Financial Statements regarding the details of these transactions.

*Loss on debt extinguishment, modifications and termination of derivative instruments.* Loss on debt extinguishment, modifications, and termination of derivative instruments was $1.0 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively. For the three months ended September 30, 2022 and 2021, we incurred $0.6 million related to the amortization of fees paid for the termination of interest rate swaps in each of the periods. These interest rate swaps were terminated in 2020 and will amortize through 2024. Additionally, for the three months ended September 30, 2022 we incurred $0.3 million due to the August 2022 refinancing of our Senior Unsecured Credit Facility.

*Other, net.* Other, net was $2.6 million for the three months ended September 30, 2022, an increase of $2.5 million, compared to $0.1 million for the three months ended September 30, 2021. This is primarily due to a $2.1 million increase in foreign currency exchange loss from unfavorable foreign currency exchange rates because of the relative strength of the US dollar against foreign currencies that we transact in and an increase of $1.4 million in loss on asset disposals compared to 2021. This is partially offset by a $0.5 million decrease in non-service pension costs and a $0.5 million increase in various tax incentives.

*Loss from investments in partially owned entities.* Loss from investments in partially owned entities was $1.4 million and $0.5 million for the three months ended September 30, 2022 and 2021, respectively. The increase is primarily driven by higher interest expense incurred by our joint ventures given rising interest rates.

### Income Tax Benefit (Expense)

Income tax benefit for the three months ended September 30, 2022 was $3.4 million, an increase of $3.2 million from an income tax benefit of $0.2 million for the three months ended September 30, 2021. The change in income tax benefit was primarily attributable to the losses generated by our foreign operations for the three months ended September 30, 2022.

### Comparison of Results for the Nine Months Ended September 30, 2022 and 2021

### Warehouse Segment

The following table presents the operating results of our warehouse segment for the nine months ended September 30, 2022 and 2021.

*(Dollars in thousands)*

|  | Nine Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Rent and storage | $732,357 | $746,033 | $642,787 | 13.9% | 16.1% |
| Warehouse services | 971,924 | 992,712 | 888,445 | 9.4% | 11.7% |
| Total warehouse segment revenues | 1,704,281 | 1,738,745 | 1,531,232 | 11.3% | 13.6% |
| Power | 117,698 | 121,542 | 97,315 | 20.9% | 24.9% |
| Other facilities costs (2) | 173,039 | 176,245 | 155,143 | 11.5% | 13.6% |
| Labor | 751,682 | 766,746 | 684,475 | 9.8% | 12.0% |
| Other services costs (3) | 197,957 | 202,808 | 158,747 | 24.7% | 27.8% |
| Total warehouse segment cost of operations | $1,240,376 | $1,267,341 | $1,095,680 | 13.2% | 15.7% |
| Warehouse segment contribution (NOI) | $463,905 | $471,404 | $435,552 | 6.5% | 8.2% |
| Warehouse rent and storage contribution (NOI) (4) | $441,620 | $448,246 | $390,329 | 13.1% | 14.8% |
| Warehouse services contribution (NOI) (5) | $22,285 | $23,158 | $45,223 | (50.7)% | (48.8)% |
| Total warehouse segment margin | 27.2% | 27.1% | 28.4% | -122 bps | -133 bps |
| Rent and storage margin(6) | 60.3% | 60.1% | 60.7% | -42 bps | -64 bps |
| Warehouse services margin(7) | 2.3% | 2.3% | 5.1% | -280 bps | -276 bps |

(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 $31.8 million and $30.7 million, on an actual basis, for the nine months ended September 30, 2022 and 2021, respectively.

(3) Includes non-real estate rent expense (equipment lease and rentals) of $9.2 million and $8.7 million, on an actual basis, for the nine months ended September 30, 2022 and 2021, respectively.

(4) Calculated as rent and storage revenues less power and other facilities costs.

(5) Calculated as warehouse services revenues less labor and other services costs.

(6) Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenues.

(7) Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

Warehouse segment revenues were $1.70 billion for the nine months ended September 30, 2022 an increase of $173.0 million, or 11.3%, compared to $1.53 billion for the nine months ended September 30, 2021. On a constant currency basis, our warehouse segment revenues were $1.74 billion for the nine months ended

September 30, 2022, an increase of $207.5 million, or 13.6%, from the nine months ended September 30, 2021. This growth was driven by $112.7 million of growth in our same store pool on a constant currency basis primarily due to our pricing initiative and rate escalations and an improvement in economic occupancy, partially offset by COVID-19 and the related labor challenges which continued to negatively impact food production during the first half of 2022 and slightly lower throughput. Approximately $76.9 million of the increase, on a constant currency basis, was driven by acquisitions completed during 2021 and 2022, including the growth experienced period-over-period during overlapping periods of ownership. We acquired four facilities on March 1, 2021 as a result of the Liberty acquisition (including one leased facility that was exited upon expiration during the fourth quarter of 2021), two facilities on May 5, 2021 as a result of the KMT Brrr! acquisition, one facility on May 28, 2021 as a result of the Bowman Stores acquisition, two facilities on August 2, 2021 as a result of the ColdCo acquisition, one facility on September 1, 2021 as a result of the Newark Facility Management acquisition, three facilities on November 15, 2021 as a result of the Lago Cold Stores acquisition (including one leased facility that was exited upon expiration during the first quarter of 2022 and another leased facility that was exited during the third quarter of 2022) and one facility on July 1, 2022 as a result of the De Bruyn Cold Storage acquisition, and therefore we did not have ownership of these facilities for the entirety of the prior comparable period. Revenue growth was also due to our recently completed expansion and developments in our non-same store pool, which increased approximately $17.9 million, on a constant currency basis. The foreign currency translation of revenues earned by our foreign operations had a $34.5 million unfavorable impact during the nine months ended September 30, 2022, which was mainly driven by the strengthening of the U.S. dollar over the local currencies in our foreign subsidiaries.

Warehouse segment cost of operations was $1.24 billion for the nine months ended September 30, 2022, an increase of $144.7 million, or 13.2%, compared to the nine months ended September 30, 2021. On a constant currency basis, our warehouse segment cost of operations was $1.27 billion for the three months ended September 30, 2022, an increase of $171.7 million, or 15.7%, from the nine months ended September 30, 2021. The cost of operations for our same store pool increased $93.8 million on a constant currency basis, across most of our cost categories, reflective of the labor inefficiencies and inflationary pressure. Labor was also impacted by employee absenteeism and associated disruption throughout the first quarter of 2022 due to the Omicron variant. Approximately $56.0 million of the increase, on a constant currency basis, was driven by the additional facilities in the warehouse segment we acquired in connection with the aforementioned acquisitions. We also incurred higher costs of $21.8 million related to our recently completed and in progress expansion and development projects, inclusive of incremental start-up costs of $8.7 million during the first nine months of 2022, which have not yet stabilized. Additionally, the foreign currency translation of expenses incurred by our foreign operations had a net $27.0 million favorable impact during the nine months ended September 30, 2022.

For the nine months ended September 30, 2022, warehouse segment contribution (NOI), increased $28.4 million, or 6.5%, to $463.9 million for the nine months ended September 30, 2022, compared to $435.6 million for the nine months ended September 30, 2021. On a constant currency basis, warehouse segment NOI increased $35.9 million period-over-period. Approximately $20.9 million of the increase, on a constant currency basis, was driven by the additional facilities in the warehouse segment as a result of the aforementioned acquisitions, including the growth and synergies experienced period-over-period during overlapping periods of ownership. The NOI for our same store pool increased $18.9 million on a constant currency basis, attributable to revenue and cost of operations factors previously described. This was the result of the various factors previously discussed, and notably the lag in timing of implementing our price initiative as compared to the inflationary pressure on our cost of operations. Additionally, warehouse segment NOI was negatively impacted by the start-up costs incurred in connection with our expansion and development projects in the non-same store pool as they continue to ramp up prior to stabilization. The foreign currency translation of our results of operations had a $7.5 million unfavorable impact to the warehouse segment contribution period-over-period.

#### Same Store and Non-Same Store Analysis

We had 212 same stores for the nine months ended September 30, 2022. Please see “How We Assess the Performance of Our Business—Same Store Analysis” above for a reconciliation of the change in the same store portfolio from period to period. Amounts related to the acquisitions of Bowman Stores, ColdCo, De Bruyn Cold Storage, KMT Brrr!, Lago Cold Stores, Liberty, Newark, one recently leased warehouse in Australia, a recently constructed facility in Denver purchased in November 2021, a leased facility which we purchased during the second quarter of 2022, as well as certain expansion and development projects not yet stabilized are reflected within non-same store results.

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 nine months ended September 30, 2022 and 2021.

|  | Nine Months Ended September 30, 2022 Actual 2022 Constant Currency(1) 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: |
| Number of same store sites | 212 212 | n/a | n/a |
| **Same store revenues:** | **(Dollars in thousands)** |  |  |
| Rent and storage | $638,320 $649,070 $587,474 | 8.7% | 10.5% |
| Warehouse services | 868,332 886,843 835,748 | 3.9% | 6.1% |
| Total same store revenues | 1,506,652 1,535,913 1,423,222 | 5.9% | 7.9% |
| **Same store cost of operations:** |  |  |  |
| Power | 100,338 103,286 87,782 | 14.3% | 17.7% |
| Other facilities costs | 148,538 151,006 138,956 | 6.9% | 8.7% |
| Labor | 653,985 667,375 628,575 | 4.0% | 6.2% |
| Other services costs | 165,673 169,926 142,438 | 16.3% | 19.3% |
| Total same store cost of operations | $1,068,534 $1,091,593 $997,751 | 7.1% | 9.4% |
| Same store contribution (NOI) | $438,118 $444,320 $425,471 | 3.0% | 4.4% |
| Same store rent and storage contribution (NOI)(2) | $389,444 $394,778 $360,736 | 8.0% | 9.4% |
| Same store services contribution (NOI)(3) | $48,674 $49,542 $64,735 | (24.8)% | (23.5)% |
| Total same store margin | 29.1% 28.9% 29.9% | -82 bps | -97 bps |
| Same store rent and storage margin(4) | 61.0% 60.8% 61.4% | -39 bps | -58 bps |
| Same store services margin(5) | 5.6% 5.6% 7.7% | -214 bps | -216 bps |

56

|  | Nine Months Ended September 30, 2022 Actual 2022 Constant Currency(1) 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | --- | --- |
| Number of non-same store sites | 28 27 | n/a | n/a |
| **Non-same store revenues:** | **(Dollars in thousands)** |  |  |
| Rent and storage | $94,036 $96,963 $55,313 | n/r | n/r |
| Warehouse services | 103,593 105,868 52,697 | n/r | n/r |
| Total non-same store revenues | 197,629 202,831 108,010 | n/r | n/r |
| **Non-same store cost of operations:** |  |  |  |
| Power | 17,361 18,256 9,533 | n/r | n/r |
| Other facilities costs | 24,502 25,239 16,187 | n/r | n/r |
| Labor | 97,697 99,371 55,899 | n/r | n/r |
| Other services costs | 32,282 32,882 16,310 | n/r | n/r |
| Total non-same store cost of operations | $171,842 $175,748 $97,929 | n/r | n/r |
| Non-same store contribution (NOI) | $25,787 $27,083 $10,081 | n/r | n/r |
| Non-same store rent and storage contribution (NOI)(2) | $52,173 $53,468 $29,593 | n/r | n/r |
| Non-same store services contribution (NOI)(3) | $(26,386) $(26,385) $(19,512) | n/r | n/r |
| Total non-same store margin | 13.0% 13.4% 9.3% | n/r | n/r |
| Non-same store rent and storage margin(4) | 55.5% 55.1% 53.5% | n/r | n/r |
| Non-same store services margin(5) | (25.5)% (24.9)% (37.0)% | n/r | n/r |

|  | Nine Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Total warehouse segment revenues | $1,704,281 | $1,738,745 | $1,531,232 | 11.3% | 13.6% |
| Total warehouse cost of operations | $1,240,376 | $1,267,341 | $1,095,680 | 13.2% | 15.7% |
| Total warehouse segment contribution | $463,905 | $471,404 | $435,552 | 6.5% | 8.2% |

(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.

(2) Calculated as rent and storage revenues less power and other facilities costs.

(3) Calculated as warehouse services revenues less labor and other services costs.

(4) Calculated as rent and storage contribution (NOI) divided by rent and storage revenues.

(5) Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

(6) Non-same store warehouse count of 28 includes one facility acquired through the De Bruyn Cold Storage acquisition on July 1, 2022, one recently leased warehouse in Australia, one recently constructed facility in Denver we purchased in November 2021, three facilities acquired through the Lago Cold Stores acquisition on November 15, 2021, one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, and 12 facilities under development or expansion, one of which was completed during the second quarter of 2022. During the third quarter of 2021, a leased facility from the Liberty Freezers acquisition was exited upon expiration of the lease. During the first quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we ceased operations within a facility that is being prepared for lease to a third-party. During the second quarter of 2022, we purchased a previously leased facility. During the third quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we purchased a previously leased facility in New Zealand. The results of the facilities exited are included in the results above, and the results of these acquisitions are reflected in the results above since date of ownership.

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

n/r - not relevant

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

*Units in thousands except per pallet and site number data - unaudited*

|  | Nine Months Ended September 30, 2022 | 2021 | Change |
| --- | ---: | ---: | --- |
| Number of same store sites | 212 | 212 | n/a |
| **Same store rent and storage:** |  |  |  |
| Economic occupancy(1) |  |  |  |
| Average occupied economic pallets | 3,821 | 3,694 | 3.4% |
| Economic occupancy percentage | 78.7% | 76.2% | 249 bps |
| Same store rent and storage revenues per economic occupied pallet | $167.06 | $159.05 | 5.0% |
| Constant currency same store rent and storage revenues per economic occupied pallet | $169.87 | $159.05 | 6.8% |
| Physical occupancy(2) |  |  |  |
| Average physical occupied pallets | 3,522 | 3,373 | 4.4% |
| Average physical pallet positions | 4,853 | 4,844 | 0.2% |
| Physical occupancy percentage | 72.6% | 69.6% | 296 bps |
| Same store rent and storage revenues per physical occupied pallet | $181.22 | $174.16 | 4.0% |
| Constant currency same store rent and storage revenues per physical occupied pallet | $184.27 | $174.16 | 5.8% |
| **Same store warehouse services:** |  |  |  |
| Throughput pallets (in thousands) | 26,999 | 27,304 | (1.1)% |
| Same store warehouse services revenues per throughput pallet | $32.16 | $30.61 | 5.1% |
| Constant currency same store warehouse services revenues per throughput pallet | $32.85 | $30.61 | 7.3% |
| Number of non-same store sites(3) | 28 | 27 | n/a |
| **Non-same store rent and storage:** |  |  |  |
| Economic occupancy(1) |  |  |  |
| Average economic occupied pallets | 424 | 301 | n/r |
| Economic occupancy percentage | 72.7% | 74.0% | n/r |
| Non-same store rent and storage revenues per economic occupied pallet | $221.62 | $184.03 | n/r |
| Constant currency non-same store rent and storage revenues per economic occupied pallet | $228.52 | $184.03 | n/r |
| Physical occupancy(2) |  |  |  |
| Average physical occupied pallets | 389 | 275 | n/r |
| Average physical pallet positions | 584 | 406 | n/r |
| Physical occupancy percentage | 66.7% | 67.6% | n/r |
| Non-same store rent and storage revenues per physical occupied pallet | $241.54 | $201.39 | n/r |
| Constant currency non-same store rent and storage revenues per physical occupied pallet | $249.06 | $201.39 | n/r |
| **Non-same store warehouse services:** |  |  |  |
| Throughput pallets (in thousands) | 3,126 | 2,287 | n/r |
| Non-same store warehouse services revenues per throughput pallet | $33.14 | $23.04 | n/r |
| Constant currency non-same store warehouse services revenues per throughput pallet | $33.87 | $23.04 | n/r |

58

(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 actual pallet commitments specified in each customer’s 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.

(3) Non-same store warehouse count of 28 includes one facility acquired through the De Bruyn Cold Storage acquisition on July 1, 2022, one recently leased warehouse in Australia, one recently constructed facility in Denver we purchased in November 2021, three facilities acquired through the Lago Cold Stores acquisition on November 15, 2021, one warehouse acquired through the Newark Facility Management acquisition on September 1, 2021, two facilities acquired through the ColdCo acquisition on August 2, 2021, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, and 12 facilities under development or expansion, one of which was completed during the second quarter of 2022. During the third quarter of 2021, a leased facility from the Liberty Freezers acquisition was exited upon expiration of the lease. During the first quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we ceased operations within a facility that is being prepared for lease to a third-party. During the second quarter of 2022, we purchased a previously leased facility. During the third quarter of 2022, a leased facility from the Lago Cold Stores acquisition was exited upon expiration of the lease, and we purchased a previously leased facility in New Zealand. The results of the facilities exited are included in the results above, and the results of these acquisitions are reflected in the results above since date of ownership.

(4) n/r - not relevant

Economic occupancy at our same stores was 78.7% for the nine months ended September 30, 2022, a increase of 249 basis points compared to 76.2% for the nine months ended September 30, 2021. Economic occupancy was higher than the prior year due to improvements in the labor market which allowed our customers to increase food production levels during the second and third quarter of 2022, partially offset by food production challenges throughout the first quarter of 2022 as a result of the COVID Omicron variant impacting employee absenteeism. Same store rent and storage revenues per economic occupied pallet increased 5.0% period-over-period, primarily driven by our pricing initiative and contractual rate escalations, partially offset by unfavorable foreign currency translation. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 6.8% period-over-period. Our economic occupancy at our same stores was 615 basis points higher than our corresponding average physical occupancy of 72.6%.

Throughput pallets at our same stores were 27.0 million pallets for the nine months ended September 30, 2022, a decrease of 1.1% from the nine months ended September 30, 2021. This decrease was the result of a change in business mix year over year. Same store warehouse services revenues per throughput pallet increased 5.1% period-over-period, as a result of by our our pricing initiative and contractual rate escalations and an increase in higher priced value-added services within the retail sector such as case-picking, blast freezing and repackaging, partially offset by unfavorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenues per throughput pallet increased 7.3% from the nine months ended September 30, 2021.

### Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the nine months ended September 30, 2022 and 2021.

|  | Nine Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Number of managed sites | 9 |  | 9 | n/a | n/a |
|  | **(Dollars in thousands)** |  |  |  |  |
| Third-party managed revenues | $251,782 | $252,987 | $233,027 | 8.0% | 8.6% |
| Third-party managed cost of operations | 240,900 | 241,880 | 222,401 | 8.3% | 8.8% |
| Third-party managed segment contribution | $10,882 | $11,107 | $10,626 | 2.4% | 4.5% |
| Third-party managed margin | 4.3% | 4.4% | 4.6% | -24 bps | -17 bps |

(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.

Third-party managed revenues were $251.8 million for the nine months ended September 30, 2022, an increase of $18.8 million, or 8.0%, compared to $233.0 million for the nine months ended September 30, 2021. On a constant currency basis, third-party managed revenues were $253.0 million for the nine months ended September 30, 2022, an increase of $20.0 million, or 8.6%, from the nine months ended September 30, 2021. The increase was a result of higher business volume in our domestic managed operations paired with higher pass-through costs associated with this business, primarily labor and related costs due to inflation and the challenging labor market.

Third-party managed cost of operations was $240.9 million for the nine months ended September 30, 2022, an increase of $18.5 million, or 8.3%, compared to $222.4 million for the nine months ended September 30, 2021. On a constant currency basis, third-party managed cost of operations was $241.9 million for the nine months ended September 30, 2022, an increase of $19.5 million, or 8.8%, from the nine months ended September 30, 2021. Third-party managed cost of operations increased as a result of the revenue trends described above.

Third-party managed segment contribution (NOI) was $10.9 million for the nine months ended September 30, 2022, an increase of $0.3 million, or 2.4%, compared to $10.6 million for the nine months ended September 30, 2021. On a constant currency basis, third-party managed segment contribution (NOI) was $11.1 million for the nine months ended September 30, 2022, an increase of $0.5 million, or 4.5%.

### Transportation Segment

The following table presents the operating results of our transportation segment for the nine months ended September 30, 2022 and 2021.

*(Dollars in thousands)*

|  | Nine Months Ended September 30, 2022 Actual | 2022 Constant Currency(1) | 2021 Actual | Change Actual | Constant Currency |
| --- | ---: | ---: | ---: | ---: | ---: |
| Transportation revenues | $237,168 | $249,920 | $234,051 | 1.3% | 6.8% |
| Total transportation cost of operations | 204,218 | 216,598 | 211,847 | (3.6)% | 2.2% |
| Transportation segment contribution (NOI) | $32,950 | $33,322 | $22,204 | 48.4% | 50.1% |
| Transportation margin | 13.9% | 13.3% | 9.5% | 441 bps | 385 bps |

(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.

Transportation revenues were $237.2 million for the nine months ended September 30, 2022, an increase of $3.1 million, or 1.3%, compared to $234.1 million for the nine months ended September 30, 2021. On a constant currency basis, transportation revenues were $249.9 million for the nine months ended September 30, 2022, an increase of $15.9 million, or 6.8%, from the nine months ended September 30, 2021. The increase was primarily due to higher rates in our consolidation business, the KMT Brrr! acquisition which closed in early May 2021, acquisitions and expansions in Australia, and the higher revenue associated with brokered transportation costs, inflation in wage and fuel rates and capacity surcharges due to challenges with driver availability. This is partially offset by the net decrease in revenue from the rationalization of certain domestic market operations and the unfavorable impact of foreign currency translation.

Transportation cost of operations was $204.2 million for the nine months ended September 30, 2022, a decrease of $7.6 million, or 3.6%, compared to $211.8 million for the nine months ended September 30, 2021. On a constant currency basis, transportation cost of operations was $216.6 million for the nine months ended September 30, 2022, an increase of $4.8 million, or 2.2%, from the nine months ended September 30, 2021. The decrease was due to the decrease of costs from the exit of certain domestic market operations paired with the favorable impact of foreign currency translation, partially offset by capacity constraints driving spot market higher than contract rate, which has caused an increase in carrier fees, higher wage and fuel costs impacted by inflation and the acquisitions mentioned above.

Transportation segment contribution (NOI) was $33.0 million for the nine months ended September 30, 2022, an increase of $10.7 million compared to the nine months ended September 30, 2021. Transportation segment margin increased 441 basis points from the nine months ended September 30, 2021, to 13.9% from 9.5%. On a constant currency basis, transportation segment contribution was $33.3 million for the nine months ended September 30, 2022, an increase of $11.1 million compared to the nine months ended September 30, 2021. The increase in margin was primarily due to the rate increases implemented during 2022.

### Other Consolidated Operating Expenses

*Depreciation and amortization.* Depreciation and amortization expense was $249.0 million for the nine months ended September 30, 2022, an increase of $16.7 million, or 7.2%, compared to $232.2 million for the nine months ended September 30, 2021. This increase was primarily due to the acquisitions and recently completed developments.

*Selling, general and administrative*. Corporate-level selling, general and administrative expenses were $171.0 million for the nine months ended September 30, 2022, an increase of $37.9 million, or 28.5%, compared to $133.1 million for the nine months ended September 30, 2021. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer on-boarding, and engineering and consulting services to support our customers in the cold chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was driven by the resumption of performance-based compensation expense in connection with the short-term incentive plan, higher third-party legal and professional fees, higher travel costs and higher share-based compensation expense in connection with the November 2021 retention grant.

*Acquisition, litigation and other, net*. Corporate-level acquisition, litigation and other, net expenses were $20.6 million for the nine months ended September 30, 2022, a decrease of $10.4 million compared to the nine months ended September 30, 2021. During the nine months ended September 30, 2022, we incurred $15.9 million of acquisition and integration related expenses, an aggregate $5.1 million of severance related expenses due to the realignment of certain international operations and senior leadership changes, $0.2 million of litigation fees and $0.4 million of facility termination costs in connection with a site we intend to vacate upon lease expiration, partially offset by an aggregate $1.0 million insurance claim recoveries. During the nine months ended September 30, 2021, we incurred $22.9 million of acquisition related expenses composed of professional fees and integration related costs, including severance and employee retention expenses, in connection with completed and potential acquisitions, primarily related to the Agro acquisition. We also incurred $3.5 million of costs related to the cyber event that happened in late 2020.

*Impairment of indefinite and long-lived assets.* For the nine months ended September 30, 2022, the Company recorded impairment charges totaling $6.6 million. This included a ‘Goodwill’ impairment charge of $3.2 million as we are strategically shifting our focus to our core warehouse portfolio, and terminating and winding down business with one of the largest customers in the Third-party managed segment. It also included an impairment charge of ‘Assets under construction’ of $2.2 million associated with a development project which management determined it would no longer pursue and $1.2 million in Warehouse segment assets which we reduced the carrying value of in anticipation of the exit of certain leased facilities. During the nine months ended September 30, 2021, the Company recorded impairment charges totaling $3.3 million, of which $1.7 million related to costs associated with development projects that management determined it would no longer pursue and a charge of $1.6 million for certain software costs that were determined no longer usable.

*Loss from sale of real estate.* For the nine months ended September 30, 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 nine months ended September 30, 2022 and 2021.

|  | Nine Months Ended September 30, Change |
| --- | ---: |
|  | **2022** **2021%** |
| Other (expense) income: | **(Dollars in thousands)** |
| Interest expense | $(82,720) $(77,838) 6.3% |
| Loss on debt extinguishment, modifications and termination of derivative instruments | $(2,284) $(5,051) (54.8)% |
| Other, net | $(1,197) $1,021 n/r |
| Loss from investments in partially owned entities | $(7,199) $(1,250) n/r |
| n/r=not relevant |  |

*Interest expense*. Interest expense was $82.7 million for the nine months ended September 30, 2022, an increase of $4.9 million, or 6.3%, compared to $77.8 million for the nine months ended September 30, 2021. Our effective interest rate of our outstanding debt increased from 3.19% for the nine months ended September 30, 2021 to 3.47% for the nine months ended September 30, 2022 due to rising interest rates associated with our Senior Unsecured Credit Facility. In August 2022, we completed a refinancing of our Senior Unsecured Credit Facility and entered into interest rate swaps to fix the interest rate on a substantial portion of this facility. Our revolving credit facility borrowings and $175.0 million of the U.S.dollar term loan A-1 facility continue to incur interest under the applicable variable, floating rate. Refer to Note 4 and Note 5 of the Condensed Consolidated Financial Statements for additional information regarding these transactions.

*Loss on debt extinguishment, modifications and termination of derivative instruments.* Loss on debt extinguishment, modifications, and termination of derivative instruments of $2.3 million for the nine months ended September 30, 2022 decreased as compared to the nine months ended September 30, 2021 primarily due to the early repayment of $200 million of principal on the Senior Unsecured Term Loan A Facility during the first quarter of 2021, which resulted in a charge of $2.9 million for the write-off of unamortized deferred financing costs, partially offset by approximately $0.3 million recorded loss due to the refinancing occurred in the third quarter of 2022. Additionally, during the nine months ended September 30, 2022 and 2021, we recorded $1.9 million and $2.1 million, respectively, for the amortization of fees paid for the interest rate swaps terminated during 2020.

*Other, net.* Other expense was $1.2 million for the nine months ended September 30, 2022, an increase of $2.2 million, compared to Other income of $1.0 million for the nine months ended September 30, 2021. This is primarily due to a $4.1 million loss in connection with the deconsolidation of our Chilean operations upon contribution to the LATAM JV, $3.1 million increase in foreign currency exchange loss due to unfavorable foreign currency exchange rates because of the relative strength of the US dollar against foreign currencies that we transact in and an increase of $1.8 million in loss on asset disposals compared to 2021. These charges are partially offset by a $3.4 million gain related to the dissolution of the New Market Tax Credit entities during 2022, $1.4 million decrease in non-service pension costs and a $1.9 million increase in various tax incentives and energy rebates.

*Loss from investments in partially owned entities.* Loss from investments in partially owned entities was $7.2 million and $1.3 million for the nine months ended September 30, 2022 and 2021, respectively. The increase is primarily driven by higher interest expense incurred by our joint ventures given rising interest rates.

### Income Tax Benefit (Expense)

Income tax benefit for the nine months ended September 30, 2022 was $16.1 million, an increase of $24.1 million when compared to $8.0 million of income tax expense for the nine months ended September 30, 2021. The change in income tax expense was primarily attributable to the following: 1) $13.8 million increase in deferred tax benefit is primarily due to a year-over-year increase in operating losses generated by our U.S and foreign operations 2) $6.5 million deferred tax benefit in 2022 for the removal of a net deferred tax liability associated with the deconsolidation of our Chilean operations upon contribution to the LATAM JV, 3) $11.7 million deferred tax expense due to the tax effects of the rate change from 19% to 25% in the United Kingdom in 2021. The UK rate impact was partially offset by $7.9 million deferred tax benefit in 2021 for a decrease in valuation allowance related to prior year acquisitions.

### 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 and Core EBITDA.

We calculate funds from operations, or FFO, in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss determined in accordance with U.S. GAAP, excluding extraordinary items as defined under U.S. GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization and our share of reconciling items for partially owned entities. We believe that FFO is helpful to investors as a supplemental performance measure because it excludes the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, FFO can facilitate comparisons of operating performance between periods and among other equity REITs.

We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of gain or loss on the sale of non-real estate assets, acquisition, litigation and other, net, goodwill impairment, share-based compensation expense for the IPO retention grants, loss on debt extinguishment, modifications and termination of derivative instruments, foreign currency exchange loss, gain on extinguishment of New Market Tax Credit structure, and loss on deconsolidation of subsidiary contributed to LATAM joint venture. We also adjust for the impact of Core FFO attributable to partially owned entities. We have elected to reflect our share of Core FFO attributable to partially owned entities since the Brazil joint ventures are strategic partnerships, which we continue to actively participate in on an ongoing basis. The previous joint venture, the China JV, was considered for disposition during the periods presented. We believe that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core business operations. We believe Core FFO can facilitate comparisons of operating performance between periods, while also providing a more meaningful predictor of future earnings potential.

However, because FFO and Core FFO add back real estate depreciation and amortization and do not capture the level of maintenance capital expenditures necessary to maintain the operating performance of our properties, both of which have material economic impacts on our results from operations, we believe the utility of FFO and Core FFO as a measure of our performance may be limited.

We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the effects of amortization of deferred financing costs and pension withdrawal liability, amortization of above or below market leases, non-real estate asset impairment, straight-line net rent, benefit or expense from deferred income taxes, share-based compensation expense from grants of stock options and restricted stock units under our equity incentive plans, excluding IPO grants, non-real estate depreciation and amortization and maintenance capital expenditures. We also adjust for AFFO attributable to our share of reconciling items of partially owned entities. We believe that Adjusted FFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in our business and to assess our ability to fund distribution requirements from our operating activities.

FFO, Core FFO and Adjusted FFO are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO, Core FFO and Adjusted FFO should be evaluated along with U.S. GAAP net income and net income per diluted share (the most directly comparable U.S. GAAP measures) in evaluating our operating performance. FFO, Core FFO and Adjusted FFO do not represent net income or cash flows from operating activities in accordance with U.S. GAAP and are not indicative of our results of operations or cash flows from operating activities as disclosed in our consolidated statements of operations included elsewhere in this Quarterly Report on Form 10-Q. FFO, Core FFO and Adjusted FFO should be considered as supplements, but not alternatives, to our net income or cash flows from operating activities as indicators of our operating performance. Moreover, other REITs may not calculate FFO in accordance with the NAREIT definition or may interpret the NAREIT definition differently than we do. Accordingly, our FFO may not be comparable to FFO as calculated by other REITs. In addition, there is no industry definition of Core FFO or Adjusted FFO and, as a result, other REITs may also calculate Core FFO or Adjusted FFO, or other similarly-captioned metrics, in a manner different than we do. The table below reconciles FFO, Core FFO and Adjusted FFO to net (loss) income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

65

*Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO, and Adjusted FFO*

*(in thousands)*

|  | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net (loss) income | $(8,937) | $5,308 | $(22,429) | $(22,327) |
| Adjustments: |  |  |  |  |
| Real estate related depreciation | 53,139 | 48,217 | 157,077 | 145,368 |
| Loss on sale of real estate | 5,710 | — | 5,710 | — |
| Net loss (gain) on asset disposals | 893 | (1) | 960 | (53) |
| Impairment charges on certain real estate assets | 3,407 | 224 | 3,407 | 1,752 |
| Our share of reconciling items related to partially owned entities | 822 | 463 | 3,201 | 1,590 |
| NAREIT Funds from operations applicable to common shareholders | $55,034 | $54,211 | $147,926 | $126,330 |
| Adjustments: |  |  |  |  |
| Net loss (gain) on sale of non-real estate assets | 310 | (171) | 147 | (594) |
| Acquisition, litigation and other, net | 4,874 | 6,338 | 20,612 | 31,011 |
| Goodwill impairment | 3,209 | — | 3,209 | — |
| Share-based compensation expense, IPO grants | — | — | — | 163 |
| Loss on debt extinguishment, modifications and termination of derivative instruments | 1,040 | 627 | 2,284 | 5,051 |
| Foreign currency exchange loss | 2,488 | 349 | 3,453 | 316 |
| Gain on extinguishment of New Market Tax Credit structure | — | — | (3,410) | — |
| Loss on deconsolidation of subsidiary contributed to LATAM joint venture | — | — | 4,148 | — |
| Our share of reconciling items related to partially owned entities | 136 | 122 | 447 | 365 |
| Core FFO applicable to common shareholders | 67,091 | 61,476 | 178,816 | 162,642 |
| Adjustments: |  |  |  |  |
| Amortization of deferred financing costs and pension withdrawal liability | 1,222 | 1,088 | 3,528 | 3,321 |
| Amortization of below/above market leases | 540 | 1,017 | 1,597 | 1,418 |
| Non-real estate asset impairment | — | 1,560 | — | 1,560 |
| Straight-line net rent | 133 | 411 | 414 | 86 |
| Deferred income taxes (benefit) expense | (4,374) | (3,562) | (19,149) | 1,004 |
| Share-based compensation expense, excluding IPO grants | 6,720 | 4,291 | 22,101 | 14,625 |
| Non-real estate depreciation and amortization | 30,530 | 22,352 | 91,902 | 86,871 |
| Maintenance capital expenditures (a) | (22,586) | (18,938) | (58,810) | (55,157) |
| Our share of reconciling items related to partially owned entities | 57 | (100) | 1,663 | 889 |
| Adjusted FFO applicable to common shareholders | $79,333 | $69,595 | $222,062 | $217,259 |

(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.

We calculate EBITDA for Real Estate, or EBITDAre, in accordance with the standards established by the Board of Governors of NAREIT, defined as, earnings before interest expense, taxes, depreciation and amortization, and adjustment to reflect share of EBITDAre of partially owned entities. EBITDAre is a measure commonly used in our industry, and we present EBITDAre to enhance investor understanding of our operating performance. We believe that EBITDAre provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and useful life of related assets among otherwise comparable companies.

We also calculate our Core EBITDA as EBITDAre further adjusted for acquisition, litigation and other, net, loss from investments in partially owned entities, impairment of indefinite and long-lived assets, foreign currency exchange loss or gain, share-based compensation expense, loss on debt extinguishment, modifications and termination of derivative instruments, net gain on other asset disposals, gain on extinguishment of New Market Tax Credit structure, loss on deconsolidation of subsidiary contributed to LATAM joint venture, and reduction in EBITDAre from partially owned entities. We believe that the presentation of Core EBITDA provides a measurement of our operations that is meaningful to investors because it excludes the effects of certain items that are otherwise included in EBITDAre but which we do not believe are indicative of our core business operations. EBITDAre and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDAre and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDAre and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDAre and Core EBITDA have limitations as analytical tools, including:

- 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.

*Reconciliation of Net Loss to NAREIT EBITDAre and Core EBITDA*

*(In thousands)*

|  | Three Months Ended September 30, 2022 | 2021 | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net (loss) income | $(8,937) | $5,308 | $(22,429) | $(22,327) |
| Adjustments: |  |  |  |  |
| Depreciation and amortization | 83,669 | 70,569 | 248,979 | 232,239 |
| Interest expense | 30,402 | 25,303 | 82,720 | 77,838 |
| Income tax (benefit) expense | (3,368) | (226) | (16,145) | 7,957 |
| Loss on sale of real estate | 5,710 | — | 5,710 | — |
| Adjustment to reflect share of EBITDAre of partially owned entities | 3,383 | 1,854 | 12,796 | 4,288 |
| NAREIT EBITDAre | $110,859 | $102,808 | $311,631 | $299,995 |
| Adjustments: |  |  |  |  |
| Acquisition, litigation, and other, net ¹ | 4,874 | 6,338 | 20,612 | 31,011 |
| Loss on partially owned entities | 1,440 | 490 | 7,199 | 1,251 |
| Impairment of indefinite and long-lived assets | 6,616 | 1,784 | 6,616 | 3,312 |
| Foreign currency exchange loss | 2,488 | 349 | 3,453 | 316 |
| Share-based compensation expense | 6,720 | 4,291 | 22,101 | 14,788 |
| Loss on debt extinguishment, modifications, and termination of derivative instruments | 1,040 | 627 | 2,284 | 5,051 |
| Loss (gain) on other asset disposals | 1,203 | (172) | 1,107 | (647) |
| Gain on extinguishment of New Market Tax Credit structure | — | — | (3,410) | — |
| Loss on deconsolidation of subsidiary contributed to LATAM joint venture | — | — | 4,148 | — |
| Reduction in EBITDAre from partially owned entities | (3,383) | (1,854) | (12,796) | (4,288) |
| Core EBITDA | $131,857 | $114,661 | $362,945 | $350,789 |

68

### LIQUIDITY AND CAPITAL RESOURCES

The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. Separate consolidated financial statements of the Operating Partnership have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

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

- current cash balances;
- cash flows from operations;
- our 2022 Senior Unsecured Revolving Credit Facility;
- our ATM Equity Programs; and
- other forms of debt financings and equity offerings.

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 April 16, 2020, 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 May 10, 2021, 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 “2021 ATM Equity Program”). Sales of our common stock made pursuant to the 2021 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. We intend to use the net proceeds from sales of our common stock pursuant to the 2021 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects. There was no activity under the 2021 ATM Equity Program during the nine months ended September 30, 2022, and we have approximately $809.4 million availability remaining for distribution under the 2021 ATM Equity Program as of September 30, 2022.

### 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 readily salable by us. 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 $0.3 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $4.1 million and $2.5 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, we maintained bad debt allowances of approximately $12.4 million, which we believed to be adequate.

### Collective Bargaining Agreements

As of September 30, 2022, approximately 37% of the Company’s labor force is covered by collective bargaining agreements. Collective bargaining agreements covering less than 2% of the labor force are set to expire through the end of the year.

### 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.

For further information regarding dividends and distributions, see Note 14 to our consolidated financial statements included in our 2021 Annual Report on Form 10-K as filed with the SEC.

### Outstanding Indebtedness

The following table summarizes our outstanding indebtedness as of September 30, 2022 (in thousands):

| Debt Summary: |  |
| --- | ---: |
| Fixed rate | $2,330,029 |
| Variable rate - unhedged | 643,286 |
| Total mortgage notes, senior unsecured notes, term loans and borrowings under revolving line of credit | 2,973,315 |
| Sale-leaseback financing obligations | 173,344 |
| Financing lease obligations | 83,353 |
| Total debt and debt-like obligations | $3,230,012 |
| **Percent of total debt and debt-like obligations:** |  |
| Fixed rate | 80% |
| Variable rate | 20% |
| Effective interest rate as of September 30, 2022 | 3.95% |

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 September 30, 2022, our debt had a weighted average term to maturity of approximately 5.6 years, assuming exercise of extension options.

For further information regarding outstanding indebtedness, please see Note 4 and Note 5 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and Note 9 to our consolidated financial statements included in our 2021 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 negative 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”* in our Annual Report on Form 10-K.

### Maintenance Capital Expenditures and Repair and Maintenance Expenses

We utilize a strategic and preventative approach to 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 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 maintenance capital expenditures for the three and nine months ended September 30, 2022 and 2021.

*(In thousands, except per cubic foot amounts)*

| 2022 | Three Months Ended September 30, 2021 | 2022 | Nine Months Ended September 30, 2021 |  |
| --- | ---: | ---: | ---: | ---: |
| Real estate | $18,426 | $14,497 | $50,115 | $45,398 |
| Personal property | 1,357 | 1,231 | 3,788 | 4,441 |
| Information technology | 2,803 | 3,210 | 4,907 | 5,318 |
| Maintenance capital expenditures(1) | $22,586 | $18,938 | $58,810 | $55,157 |
| Maintenance capital expenditures per cubic foot | $0.015 | $0.013 | $0.040 | $0.038 |

(1) Excludes $21.3 million and $12.8 million of deferred acquisition maintenance capital expenditures incurred for the nine months ended September 30, 2022 and 2021, 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 three and nine months ended September 30, 2022 and 2021.

*(In thousands, except per cubic foot amounts)*

| 2022 | Three Months Ended September 30, 2021 | 2022 | Nine Months Ended September 30, 2021 |  |
| --- | ---: | ---: | ---: | ---: |
| Real estate | $10,323 | $6,435 | $29,454 | $20,760 |
| Personal property | 14,264 | 15,655 | 42,519 | 40,731 |
| Repair and maintenance expenses | $24,587 | $22,090 | $71,973 | $61,491 |
| Repair and maintenance expenses per cubic foot | $0.017 | $0.015 | $0.049 | $0.042 |

72

### External Growth, Expansion and Development Capital Expenditures

External growth expenditures represent asset acquisitions or business combinations. Expansion and development capital expenditures are capitalized 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 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

For information regarding acquisitions completed during 2022, refer to Note 2 of the Notes to the Condensed Consolidated Financial Statements. For information regarding acquisitions completed during 2021, refer to our 2021 Annual Report on Form 10-K which includes details of the purchase price allocation for each acquisition.

#### Expansion and development

The expansion and development expenditures for the nine months ended September 30, 2022 are primarily driven by $25.3 million related to our two fully-automated, build-to-suit, development sites in Connecticut and Pennsylvania, $15.7 million for the Spearwood, Australia expansion, $12.1 million related to the Dunkirk, NY development, $13.7 million in our Dublin expansion, $5.9 million for the Barcelona expansion, $20.4 million related to our Russellville expansion, $11.6 million related to Atlanta Major Market Strategy Phase 2, and $8.0 million related to the Rochelle facility. During the nine months ended September 30, 2022, we also incurred capitalized interest of $8.8 million and capitalized insurance, property taxes, and compensation and travel expense aggregating to $4.2 million related to our ongoing expansion and development projects.

Expansion and development initiatives also include $13.3 million of corporate initiatives and smaller customer driven growth projects, which are 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 $5.5 million during the nine months ended September 30, 2022 for contemplated future expansion or development projects.

The following table sets forth our acquisition, expansion and development capital expenditures for the three and nine months ended September 30, 2022 and 2021.

*(In thousands)*

| 2022 | Three Months Ended September 30, 2021 | 2022 | Nine Months Ended September 30, 2021 |  |
| --- | ---: | ---: | ---: | ---: |
| Acquisitions, net of cash acquired and adjustments | $16,040 | $400,987 | $15,228 | $616,316 |
| Asset acquisitions | 7,705 | — | 14,581 | — |
| Expansion and development initiatives | 32,300 | 75,960 | 144,467 | 243,072 |
| Information technology | 1,637 | 1,682 | 3,398 | 5,255 |
| Growth and expansion capital expenditures | $57,682 | $478,629 | $177,674 | $864,643 |

73

### Historical Cash Flows

*(In thousands)*

|  | Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $182,883 | $164,319 |
| Net cash used in investing activities | $(288,008) | $(945,491) |
| Net cash provided by financing activities | $74,473 | $315,269 |

### Operating Activities

For the nine months ended September 30, 2022, our net cash provided by operating activities was $182.9 million, an increase of $18.6 million, compared to $164.3 million for the nine months ended September 30, 2021. The increase is primarily due to an increase in segment contribution, partially offset by higher selling, general and administrative expenses.

### Investing Activities

Our net cash used in investing activities was $288.0 million for the nine months ended September 30, 2022 compared to $945.5 million for the nine months ended September 30, 2021. Additions to property, buildings and equipment were $254.1 million, reflecting maintenance capital expenditures and investments in our various expansion and development projects. Additionally, we invested $14.6 million in acquisitions of property, buildings, and equipment for the buyout of two previously leased facilities and $15.2 million for the acquisition of De Bruyn Cold Storage. Finally, we invested $4.4 million in capital contributions to the SuperFrio joint venture and the formation of the LATAM joint venture.

Net cash used in investing activities was $945.5 million for the nine months ended September 30, 2021. Cash used in connection with business combinations during 2021 was $616.3 million and related to the Bowman, ColdCo, KMT Brrr!, Liberty and Newark Facility Management acquisitions. Additions to property, buildings and equipment were $313.2 million, reflecting maintenance capital expenditures and investments in the Ahold, Atlanta, New Zealand, Calgary and Russellville expansion and development projects. Additionally, we invested $6.3 million in the SuperFrio joint venture for the nine months ended September 30, 2021, and paid $11.6 million to purchase the noncontrolling interest holders share in the Chilean business, which we now wholly own.

### Financing Activities

Net cash provided by financing activities was $74.5 million for the nine months ended September 30, 2022 compared to $315.3 million for the nine months ended September 30, 2021. Cash provided by financing activities for the current period primarily consisted of $100.7 million in proceeds from our Senior Unsecured Revolving Credit Facility, net of repayments, $200.0 million in proceeds from our refinancing of the term loan under the Senior Unsecured Credit Facility, offset by $179.6 million of quarterly dividend distributions paid, $30.3 million aggregate lease repayments and $11.6 million for payment of debt issuance costs.

Net cash provided by financing activities was $315.3 million for the nine months ended September 30, 2021. Cash provided by financing activities for the current period primarily consisted of $420.2 million net proceeds from equity forward contracts settled during the period upon the issuance of common shares, $590.8 million in proceeds from our revolving line of credit, and $5.2 million of proceeds received upon exercise of stock options, offset by cash outflows of $280.0 million in repayments on the revolving line of credit, $205.2 million for repayments on term loan and mortgage notes, $168.5 million of quarterly dividend distributions paid, $27.5 million of financing lease payments, and $15.8 million in payment of withholding taxes related to share-based payment arrangements.

### SIGNIFICANT ACCOUNTING POLICIES UPDATE

See Note 1 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

### NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

## Market risk

As filed, 2,482 characters.

### Interest Rate Risk

Our future income and cash flows relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

As of September 30, 2022, we had $375.0 million of outstanding USD-denominated variable-rate debt and $250 million of outstanding CAD-denominated variable-rate debt. This consisted of our Senior Unsecured Term Loan A Facility bearing interest at one-month SOFR for the USD tranche and one-month CDOR for the CAD tranche, plus a margin of up to 0.95%. We have entered into interest rate swaps to effectively lock in the floating rates on $200 million of our USD-denominated term loan at a weighted average rate of 4.70% and $250 million of our outstanding CAD-denominated term loan at a weighted average rate of 4.54%. After incorporating the effects of the interest rate swaps, our outstanding variable rate term loan debt is $175 million. Additionally, we had C$50.0 million, £68.5 million, AUD$133.5 million, $233 million USD, €30.5 million, and $13.0 million NZD outstanding of Senior Unsecured Revolving Credit Facility draws. At September 30, 2022, one-month term and daily SOFR was at approximately 3.08% and 2.99%, respectively, one-month CDOR was at 3.69%, one-month SONIA was at 2.19%, one-month AUD BBSW was approximately 2.53%, one-month EURIBOR was approximately 0.70%, and one-month BKBM was approximately 3.41%. The interest rate paid on borrowings can never drop below 0%, although the associated benchmark rate does. Therefore, a 100 basis point increase in market interest rates would result in an increase in annual interest expense to service our variable-rate debt of approximately $6.4 million, and a 100 basis point decrease in market interest rates would result in a $6.3 million decrease in annual interest expense.

### Foreign Currency Risk

As it relates to the currency of countries where we own and operate warehouse facilities and provide logistics services, our foreign currency risk exposure at September 30, 2022 was not materially different than what we disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2021, is hereby incorporated by reference in this Quarterly Report on Form 10-Q.

## Controls and procedures

As filed, 1,976 characters.

### Evaluation of Controls and Procedures

In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2022.

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including the Chief Executive Officer and Chief Financial Officer do not expect that our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the quarter ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 583 characters.

Investing in our common shares involves risks and uncertainties. You should consider and read the information contained in our 2021 Annual Report on Form 10-K, including the risk factors identified in Item 1A of Part I thereof (Risk Factors) and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. Any of the risks discussed in our 2021 Annual Report on Form 10-K and in other reports we file with the SEC, and other risks we have not anticipated or discussed, could have a material adverse impact on our business, financial condition or results of operations.

Filed Nov 4, 2022.
Source: SEC EDGAR, the filing index for accession 0001628280-22-028446. Last ingested by Listed: Nov 5, 2026, 20:22 ET. No prices; not investment advice.