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    LINE
    Earnings call· Jun 2026(Q2 FY26)

    Lineage Q2 FY26 earnings call LINE

    Aug 5, 2026 Source

    Executive summary

    Lineage Q2 FY26 — Strong Operational Trends and Raised Outlook

    Lineage reported better-than-expected Q2 FY26 results, driven by stabilizing operational trends and strong execution. The company raised its full-year same-store NOI and AFFO guidance, despite headwinds from trade volumes and the Big Bear fire. Strategic initiatives like the LinOS rollout and portfolio review are progressing, positioning Lineage for long-term growth in a rationalizing cold storage industry.

    Highlights

    5

    • Adjusted EBITDA was approximately $320 million, ahead of both internal expectations and consensus estimates.

    • Total AFFO was approximately $198 million or $0.76 per share, also ahead of expectations.

    • Same-store physical occupancy increased 90 basis points year-over-year, marking an inflection point.

    • Full year same-store NOI guidance raised to a range of negative 3% to 0% (from negative 4% to negative 1%).

    • Full year AFFO guidance raised to $2.80 to $3.05 per share (from $2.75 to $3).

    Concerns

    5

    • Same-store NOI declined 2.9% year-over-year, though an improvement from prior periods.

    • Same-store throughput pallets declined 1.8% year-over-year due to pressure on higher turning trade-related port volumes.

    • Global Integrated Solutions (GIS) NOI outlook lowered due to a $7 million legal settlement and accelerating carrier rates.

    • The Big Bear fire is estimated to cause an approximately $15 million adjusted EBITDA drag in Q3 and Q4.

    • Expiration of prior year interest rate hedges continues to drive year-over-year AFFO decline.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full year same-store NOI growth
    negative 3% to 0%
    high materiality
    High
    Full year AFFO per share
    $2.80 to $3.05
    high materiality
    High
    Full year admin guidance
    $460 million to $470 million
    medium materiality
    High
    Full year total warehouse NOI growth
    negative 2% to positive 1%
    medium materiality
    Medium
    Full year throughput and service metrics
    down modestly
    medium materiality
    Medium
    Net pricing increase
    1% to 2%
    medium materiality
    High
    Q3 2026 same-store NOI growth (YoY)
    lowest reported level of the year, probably a bit below Q2 levels
    medium materiality
    High
    Q4 2026 same-store NOI growth (YoY)
    close to flat
    medium materiality
    High
    LinOS EBITDA impact
    $110 million
    high materiality
    High
    Reported leverage target
    5.0x to 5.5x
    high materiality
    High
    Divestiture proceeds
    over $1 billion
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Global Warehouse
    Total warehouse supply was approximately $367 million. Same-store NOI declined 2.9% year-over-year, benefiting by 90 basis points from favorable FX. Strong commercial execution by the sales team led to improved physical occupancy. Throughput and services revenue per throughput pallet were slightly ahead of expectations, despite challenging import volume environment.
    Same-store physical occupancy: up 0.9% YoYRent storage and blast revenue per physical pallet: declined 0.7% YoYServices revenue per thermal pallet: increased 2.1%Same-store throughput pallets: declined 1.8% YoY
    		$367 million-2.9%——
    Global Integrated Solutions (GIS)
    GIS NOI was $61 million. Excluding the impact of last year's Spain transportation disposition, the segment saw solid underlying revenue growth of 5%, driven by momentum in U.S. transportation and food service. Margins were impacted by accelerating truckload and LTL carrier rates and a $7 million legal settlement. Excluding the settlement, underlying margin was 19%.
    		—5%—19%

    Operational metrics

    21
    Adjusted EBITDA
    $320 million
    Q2 FY26

    Ahead of internal expectations and consensus estimates.

    Total AFFO
    $198 million
    Q2 FY26

    Ahead of expectations.

    AFFO per share
    $0.76
    Q2 FY26

    Ahead of expectations. Year-over-year decline primarily due to expiration of prior year interest rate hedges.

    Administrative expenses
    $118 million
    Q2 FY26

    Excludes stock-based compensation; modestly better than expected due to timing and cost management.

    Net debt
    $7.8 billion
    Q2 FY26

    As of quarter-end.

    Total liquidity
    $1.6 billion
    Q2 FY26

    As of quarter-end, includes revolver capacity.

    Big Bear fire adjusted EBITDA drag
    $15 million
    Q3-Q4 FY26

    Estimated impact from lost revenue and incremental costs during recovery period. This impact is approximately $0.05-$0.06 per share. Insurance recovery expected below EBITDA line.

    GIS legal settlement
    $7 million
    Q2 FY26

    Not contemplated in prior guidance, stemming from an employment matter for prior years.

    Capital invested in projects
    $1.1 billion
    Cumulative

    Investment in 20 facilities under construction or ramping.

    Incremental NOI from projects
    $134 million
    Annual

    Expected when 20 facilities are stabilized.

    Pre-leased level of development pipeline
    71%
    Q2 FY26

    Reflects strong customer demand for modern assets.

    Container volumes
    -14%YoY
    Q2 FY26

    Impacted by trade-related port volumes, representing 15% of warehouse throughput.

    Industry inflation outperformed
    750
    H1 FY26

    Achieved by driving costs out of the operating cost base.

    Nonprofit commitment for Big Bear fire
    $3.3 million
    Q2 FY26

    Committed to local nonprofits through direct systems to support the community during cleanup and remediation.

    Idled facilities
    10
    FY25

    Idled last year as part of supply management.

    Idled facilities
    5
    YTD FY26

    Idled this year, taking out 2.5 million sq ft of capacity.

    Idled capacity
    2.5 million
    YTD FY26

    Represents about 1% of U.S. capacity.

    GLP-1 drug impact on business
    <1%
    Long-term

    Based on most current research, not expected to have a material impact.

    Confectionery revenue opportunity
    multiple hundreds of millions
    Over time

    Expected to become a top 10 category for the company.

    Development pipeline IRR
    13%up from 12% in Q1
    Q2 FY26

    Reflects the aging of the portfolio before it becomes part of the base.

    Economic vs physical occupancy spread
    400 to 600
    Q2 FY26

    Consistent with Q1, reflecting customer need for extra capacity for seasonal or other purposes.

    Industry KPIs

    4
    MetricValueDetails
    Occupancy rate80%%
    Net debt adjusted EBITDA5.3xx
    Leasing spread cash basis1% to 2%%
    Same store noi growth cash vs net effective-2.9%%

    Orderbook & backlog

    1
    Development pipeline under construction$1.1 billionQ2 FY26

    Capital invested in 20 projects under construction or ramping, expected to deliver $134 million incremental NOI when stabilized.

    Deals & partnerships

    1
    Key confectionery accountNew customer win for cold storage and logistics services

    Secured a key confectionery account that launched successfully in June. Product was previously flowing through traditional food service, not third-party cold storage.

    Capital programs

    3
    LinOS conventional rolloutunderway
    Spent to date: 14 conventional sites

    Benefit: $110 million EBITDA impact goal

    Expanded to 14 total conventional sites, hitting internal savings targets, on track to deliver 20 conventional buildings by year-end.

    Hazelton automated mega buildramping

    Benefit: best-in-class service

    New state-of-the-art, fully automated project, now one of 25 fully automated facilities in the portfolio. Delivering best-in-class service due to LinOS investment.

    Tyson facilities (2 new builds)under construction

    Benefit: similar performance to Hazelton

    The remaining two Tyson facilities being built will use the same technology as Hazelton and deliver similar performance.

    Risks & headwinds

    7
    Competitive dynamics in domestic marketsOngoing

    Pockets of pressure in about 15% of U.S. markets

    Mitigation: Superior value proposition, operational execution, and ability to grow share despite competition.

    Trade-related volume headwindsExpected to ease late Q3 into Q4 2026

    International container volumes down 14% in Q2

    Mitigation: Expect to begin lapping 2025 steep volume declines; adjusting labor according to mix and service activity.

    Accelerating truckload and LTL carrier ratesNear-term

    Impacted GIS margins in Q2

    Mitigation: Rates are passed through to customers, but with a lag; expect margin recapture as new market rates are absorbed into customer pricing over time.

    Big Bear facility fireQ3 and Q4 2026

    Approximately $15 million adjusted EBITDA drag in Q3 and Q4

    Mitigation: Relocated customers to nearby facilities, pursuing all options to hold Altus (solar array operator) accountable, carrying insurance for event, working with insurance partners for remediation and financial impact.

    Geopolitical concernsOngoing

    Ongoing political concerns impacting international container volumes

    Mitigation: Remaining cautious, but expect U.S. agricultural trade to become a tailwind longer term beyond tariff resolution.

    Customer inventory destockingBehind us

    Levels built up during COVID have reset closer to historical norms

    Mitigation: Inventories have at least stabilized, some customers are rebuilding.

    Expiration of prior year interest rate hedgesFY26

    Primary driver of year-over-year AFFO decline

    Mitigation: Underlying AFFO trends showing meaningful improvement excluding this impact.

    What to watch in Q3 FY26

    5

    Strategic Portfolio Review Update

    by year-end 2026
    CurrentEvaluating options, firm timetables around key transactional work streams
    TargetMeaningful update on the lion's share of transactions

    Why it matters

    This will clarify the path to achieving leverage targets and potential capital recycling activities, impacting future financial flexibility and M&A capacity.

    We now have firm timetables around key transactional work streams, and we're confident we'll be in a position to provide a comprehensive update by year-end.

    Q&A highlights

    8

    Why was average warehouse occupancy up sequentially to 80% from 79.9% in Q1, despite Q2 typically being a seasonal step-down? Was it due to company actions, customer behavior, or the [indiscernible] outbreak?

    Same-store occupancy was up 90 basis points year-over-year, a first since going public. Sequentially, it was down about 1% in occupied pallets, which was slightly better than the typical 3% sequential decline seen in USDA data, indicating better-than-expected performance.

    “Sequentially, we actually saw about what we thought actually a little bit better. So we were down sequentially. And in terms of occupied pallets about 1%. We revealed the USDA data is not perfect. Generally, it looks to be down about 3% sequentially. So we would know that that's slightly better than what we thought on occupancy and an occupied pallet basis.”

    asked by [indiscernible] · answered by Robb LeMasters

    2 min read6 chapters

    Detailed Narrative

    01

    Cold Storage Industry Dynamics and Outlook

    Lineage believes the cold storage industry is undergoing a rationalization, favoring larger, more sophisticated providers. The three primary headwinds (supply, inventory destocking, and trade impacts) are now abating, with supply stabilizing, destocking behind, and trade headwinds expected to ease📎 by year-end. The company sees these as cyclical, not structural, and expects them to move in a positive direction, reinforcing the critical infrastructure role of cold storage.

    02

    LinOS Technology Platform Rollout

    The LinOS platform, already successful in automated buildings, is expanding to conventional warehouses. It is currently deployed in 14 conventional sites, hitting internal savings targets, and is on track to reach 20 by year-end. This technology is seen as deepening Lineage's competitive moat, enabling best-in-class service and cost efficiency, as demonstrated by the Hazelton automated mega build and new Tyson facilities.

    03

    Strategic Portfolio Review and Capital Allocation

    Lineage is conducting a strategic portfolio review to increase financial flexibility, capitalize on potential M&A opportunities, and maintain a strong balance sheet. The company aims to reduce its reported leverage from 6.0x to a target range of 5.0x to 5.5x, which would require divesting over $1 billion in assets. A meaningful update on these transactions is expected by year-end 2026, with cash proceeds potentially spilling into early 2027.

    04

    Impact of GLP-1 Drugs on Food Industry

    Based on recent Cornell research and other studies, Lineage believes the impact of GLP-1 drugs on its business will be minimal. Even under aggressive adoption scenarios, GLP-1 penetration is projected to be in the mid-to-high teens of the adult population, with calorie reductions concentrated in snacks and packaged foods, not fresh and frozen. The most current research suggests an impact of less than 1% on Lineage's commodity mix.

    05

    Big Bear Facility Fire and Mitigation

    A fire occurred at Lineage's Big Bear facility in Los Angeles, which represents approximately 1% of its total global capacity. The company committed over $3.3 million to local nonprofits for community support and remediation. An estimated $15 million adjusted EBITDA drag is expected in Q3 and Q4 due to lost revenue and incremental costs, but insurance is expected to cover the financial impact, with recoveries recognized below the EBITDA line.

    06

    New Business Wins and Category Expansion

    Lineage secured a key confectionery account win that launched successfully in June, with expectations for continued momentum. This category is anticipated to become a top 10 category for the company over time⏳, potentially generating multiple hundreds of millions in revenue. This growth is driven by customers seeking better service and cost efficiency by moving product from traditional food service channels to third-party cold storage.

    AI-generated summary of the company’s earnings call. Not investment advice.