Lineage faces key test with first post-IPO earnings

Lineage Inc.’s first quarterly report following its $5.1 billion IPO—the largest in the U.S. this year—will serve as a key performance indicator for the company amid concerns over weak demand in the food supply sector.

Lineage faces key test with first post-IPO earnings

Since its July IPO, the $16-billion cold-storage REIT has seen its stock decline by 7%. Wall Street anticipates revenue of $1.3 billion and an adjusted diluted loss per share of $1.73 for the quarter ending in September. Cold-storage companies like Lineage are contending with a challenging consumer environment and lower volumes from food producers, according to RBC Capital Markets analyst Michael Carroll. "Consumers are buying less food, which has been a persistent trend," noted Carroll. "While volumes hint at a potentially improved outlook, food producers are still navigating an uncertain landscape."

Outlook complicated

Shifting data trends further complicate the outlook. USDA statistics on food inventories in cold-storage facilities have shown volatility, with weak levels at the beginning of the year followed by a modest recovery over the last four to five months, Carroll observed. The broader industrial REIT sector has also felt the impact of fluctuating demand. Since Lineage’s IPO, shares of Americold Realty Trust Inc., a direct competitor, have dropped 11%, while an index tracking industrial REITs has declined by 7%. The upcoming earnings report will be closely watched as Lineage and its peers work to stabilize amid ongoing market headwinds.