Lineage, Inc. (NASDAQ:LINE) Q4 2025 Earnings Call Transcript

Lineage, Inc. (NASDAQ:LINE) Q4 2025 Earnings Call Transcript February 25, 2026

Lineage, Inc. misses on earnings expectations. Reported EPS is $0.02632 EPS, expectations were $0.73.

Operator: Hello, everyone. Thank you for joining and welcome to Lineage, Inc. Fourth Quarter 2025 Earnings Conference Call. After today’s prepared remarks, we will host a question and answer session. To withdraw the question, press star 1 again. I will now hand the call over to Ki Bin Kim, Head of Investor Relations. Please go ahead.

Ki Bin Kim: Thank you. Welcome to Lineage, Inc.’s discussion of its fourth quarter 2025 financial results. Joining me today are W. Gregory Lehmkuhl, Lineage, Inc.’s President and Chief Executive Officer, and Robert C. Crisci, Chief Financial Officer. Our earnings presentation, which includes supplemental financial information, can be found on our Investor Relations website at https://ir.onesinh.com. Following management’s prepared remarks, we will be happy to take your questions. Before we start, I would like to remind everyone that our comments today will include forward looking statements under federal securities law. These statements are subject to numerous risks and uncertainties as described in our filings with the SEC.

These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, reference will be made to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of non-GAAP to GAAP measures can be found in the press release and supplemental package that was issued this morning. Unless otherwise noted, reported figures are rounded and comparisons are of 2025 to 2024. Now I would like to turn the call over to W. Gregory Lehmkuhl.

W. Gregory Lehmkuhl: Thank you, Ki Bin, and good morning, everyone. Let me start by first thanking our valued customers and all our incredible team members at Lineage, Inc. who did an outstanding job driving efficiencies and executing on significant new business wins in the quarter and throughout 2025. I am truly grateful to be working alongside such an outstanding group of men and women each and every day. I will walk through our agenda for this morning. First, I will recap our fourth quarter performance, which came in line or slightly ahead of our expectations on all key metrics. Then we will discuss our 2026 outlook, followed by our latest view of cold storage supply and demand. Following my remarks, I will turn it over to Robert C.

Crisci, our new CFO, who started back in November and has already made meaningful contributions to the business. Robert will walk through the details of our segment performance, expense management initiatives, capital structure, and our outlook for 2026. I will then return to share some closing comments before we open up the line to your questions. Turning to quarterly performance on slide four. During the fourth quarter, total revenue was flat year over year and adjusted EBITDA decreased 2% to $327,000,000. Total AFFO of $214,000,000 and AFFO per share of $0.83 were flat year over year but both ahead of our expectations. AFFO this quarter was propelled by better management of maintenance capital expenditures and more advanced cash tax planning relative to our initial expectations.

Q&A Session

I continue to push the team to optimize every aspect of our business to drive cash flow generation. Robert will expand on these efforts later in his remarks. Full year 2025 adjusted EBITDA declined 2.3% year over year to $1,300,000,000.00 and full year AFFO per share increased 2.4% year over year. Looking at the underlying business drivers. We saw further occupancy stabilization in the fourth quarter. Same store physical occupancy improved sequentially by 400 basis points to 79.3% further signaling that our business is returning to a more normalized seasonality just as we anticipated when providing second half guidance last year. Year over year physical occupancy was down only 50 basis points and improved cadence compared to the first half.

That being said, we are entering 2026 at a slightly lower occupancy level compared to last year. Encouragingly, our economic occupancy continues to track nicely with our physical occupancy. And we expect to maintain a similar spread between the two metrics to what we observed throughout 2025. We look to partner with our customers to manage the seasonal ebb and flow of their inventory levels. And we are comfortable that our physical versus economic occupancy spread is both appropriate and sustainable. As a reminder, we have largely navigated the volume guarantee adjustments stemming from customers’ multiyear inventory destocking post COVID. During the quarter, we grew rent and storage revenue per pallet year over year by more than 1.5% on a same store basis and by over 3% for the total warehouse segment despite headwinds from the industry’s challenging macro environment.

Throughput volumes declined 2.8% and warehouse services per throughput pallet was down 70 basis points as a result of lower import/export volumes we highlighted as a concern in our third quarter call. Our container volumes for the fourth quarter were down 9% year over year. This softer volume and lower price mix weighed on profitability resulting in lower margins for the warehousing sector. Overall, same store NOI was down 5% year over year but was in line with our guide. We continue to see early signs of stabilization in many areas of our business. And in fact, many geographies are stable or growing, including Europe, Asia Pac, Canada, and most U.S. regional markets. While we are not out of the woods yet, we believe we will continue to build on these trends throughout 2026 and drive further productivity to address this temporary new normal.

We plan to deliver significant incremental new business given our strong performance for customers, strategically located assets, and our unmatched breadth of service offerings. Turning to our Global Integrated Solutions segment. In the fourth quarter, GIS saw year over year NOI growth of 15%, led by our U.S. Transportation and foodservice businesses. This rounds out a really great year for the global GIS team who delivered nearly 10% year-over-year growth in 2025. Great job to Greg Bryan and the entire GIS team. Turning to capital investments, which is a compelling driver of upside to our medium term growth model. In the quarter, we invested $170,000,000 of growth capital primarily in our development and we are pleased with the continued progress on these projects.

As a reminder, we have 24 facilities that are under construction, or in the process of ramping and stabilizing. These projects represent over $1,000,000,000 of previously invested capital, a significant amount of our future asset mix. We expect these assets to deliver over $150,000,000,000 of incremental EBITDA once stabilized. A considerable addition to the Lineage, Inc. earnings base. Also, we are not just growing to grow. We are constantly looking to manage our portfolio of assets. In December, we sold a noncore asset in Santa Maria, California, at a mid-6% cap rate for $60,000,000. This is consistent with several other recent private cold storage transactions that were executed around a 6% cap. Further reinforcing the strength and resilience of private market valuations for our real estate.

We are actively looking at numerous options to take advantage of the mispricing between the public and private markets to enhance shareholder value. We think this makes sense, especially as you consider that most recent research implies that we trade at over a 35% discount to our NAV, over an 8.5% implied cap rate, and in our view an even larger discount to the replacement cost of our portfolio. We have plenty of attractive opportunities to redeploy this capital into our balance sheet to further enable strategic acquisitions, customer-led developments, and capital return strategies. This is a very active work stream, and we look forward to updating you in future quarters. We believe these efforts will not only highlight the mismatch between private and public valuations, but also position us to continue to consolidate the U.S. market as opportunities present themselves.

Turning now to our outlook for 2026. We expect same store NOI growth of negative 4% to negative 1%, adjusted EBITDA of $1,250,000,000.00 to $1,300,000,000.0 and AFFO per share of $2.75 to $3 per share. Robert will provide future guidance details in a moment, but I will share the macro assumptions that inform our guidance. In 2026, we expect 1% to 2% net pricing increase in our warehousing segment. While it is only February, we have already worked through 65% of our warehousing revenue base. We also expect our business to track to normal seasonality in 2026, albeit entering the year at a slightly lower occupancy level than we entered 2025. We anticipate that the industry will continue to digest new supply and remain competitive. Our observations mirror what many food producers and distributors are saying.

Global food demand remains stable as highlighted by the recently published Circana and Nielsen data. But the consumer continues to exhibit value seeking behavior, trade down activity, and incrementally shifting their spend from restaurants to retail. Given that we ultimately serve the end customer, whether they choose to eat at home or at a restaurant, buy national or store brands, demand in our business in the long run remains stable. And as I mentioned, we believe that we are past the inventory drawdown after COVID, and remain optimistic that the categories we serve will continue to grow. Overall, we are assuming a similar operating environment as 2025 and not building into our guidance any upside from potential catalysts such as tariff resolution, interest rate reductions, a stronger consumer, or the benefits to the consumer from pending tax relief.

In the meantime, we are not standing by waiting for a stimulus. Lineage, Inc. remains focused on controlling the controllables and driving efficiencies wherever possible. Robert will discuss this more later, but he has helped accelerate our efforts and we expect to remove $50,000,000 annualized admin and indirect cost by the end of this year. These savings will not discourage our investments in our sales, our customer support team, nor our prudent technology investments to stay the industry leader in automation and warehouse execution. We are using this challenging time in the industry to become a better, leaner company with even more positive operating leverage in the future. Turning to slide five. As a reminder, last quarter we collaborated with CBRE to gain additional insights into new supply and demand trends within the industry.

At this point, our analysis is focused on U.S. markets where we have the most accessible data. To recap the analysis we put out recently, CBRE data shows that from 2021 to 2025, U.S. public refrigerated warehouse supply increased 14.5% on a square foot basis, while consumer demand for these categories stored in our network grew 5%. That implies a 9.5% excess capacity across the U.S. over four years. Even so, Lineage, Inc.’s 2025 average physical occupancy was 75%. Only 300 basis points below its 2021 level, despite tariffs, reduced U.S. agricultural exports, and inventory destocking. A testament to our network scale, hardworking commercial team, and the customer’s desire to align with the industry leader. Looking ahead, new supply in 2026 is expected to slow significantly.

Which is logical given the current environment just does not support speculative development. To further mitigate supply side challenges, we are idling buildings where appropriate and finding alternative real estate uses. We also think competitor weaknesses and asset obsolescence could help ease industry capacity. On the demand side, potential catalysts such as tariff resolution, tax stimulus, moderating food inflation, and lower interest rates could serve as meaningful tailwinds to our business. Moving to slide six, using the latest CBRE data, we take a closer look at when the new supply has come online and its magnitude. As new supply is added to the market, customers naturally reassess their options. They decide whether to stay with Lineage, Inc.

or to switch providers. In the near term, this increases competitive pressure. What we have observed is that this customer switching largely occurs in the one to two years after new supply comes online. Then, markets typically begin to stabilize. To break this down, we are focusing on a subset of our U.S. assets that have been in the same store pool since 2021 and represent over a half $1,000,000,000 of our U.S. NOI. The top chart, shown in green, reflects markets that have seen less than 15% cumulative new supply over the last four years. Many of these markets have high barriers to entry, constrained land, challenged permitting, and high building costs. And together, they represent over 60% of our U.S. portfolio. NOI growth in these markets has been relatively insulated from new supply pressure, though they were impacted by inventory destocking coming out of COVID in 2023 and 2024 as well as other macro factors like declines in import/export volumes and tariffs.

Now that customers have rationalized their inventories, we are seeing stabilization in 2026. The next two charts represent markets that have experienced more than 15% cumulative new capacity in the last four years. We further split these into early cycle supply markets, shown in blue, where most of the new capacity was delivered in 2022 and 2023, and late cycle supply markets, shown in gray, where most of the new capacity was delivered in 2024 and 2025. The early cycles chart in blue saw on average same store NOI declines in 2023 and 2024. But thereafter, these markets saw slight organic NOI growth in 2025 and are forecasted to be relatively flat in 2026. To be clear, these markets still carry new capacity overhang. But NOI has begun to stabilize as the inventory destocking is behind us and as the markets absorb the new supply, leading to market rent equilibrium.

Importantly, in many cases, customers who originally left for lower prices have since returned to our network because of our service. With limited incremental new supply over the past couple of years, and with inventory destocking behind us, we have a more favorable outlook for this group, which accounts for 21% of our sampled NOI. Combined, the low new supply markets and the early cycle supply markets make up 85% of our U.S. NOI, and both groups have demonstrated improved NOI stability. Something we expect to continue in 2026. Finally, the gray chart at the bottom represents the late cycle supply segment. These are places where we are seeing the most competitive pressure today as the new supply was delivered more recent. And we expect this competitive pressure to continue into 2026.

These markets make up only about 15% of our U.S. NOI in this pool. Importantly, across the U.S. overall, and especially in these late cycle supply markets, we expect to see a significant decline in new deliveries in 2026. And as the supply is digested, we expect to regain opportunities to grow with our customers. Net net, this data shows while a small portion of our portfolio is navigating a temporary supply demand imbalance, 85% of our NOI in the U.S. is on stable footing. Despite macro headwinds, I am confident that we are well positioned to grow over time as the food industry normalizes, new capacity is absorbed, and our commercial, energy, admin, and productivity initiatives, including LinnOS, continue to accelerate. Now let me turn it over to Robert C.

Crisci. Robert, welcome to Lineage, Inc.

Robert C. Crisci: Thanks, Greg, and good morning, everyone. I joined Lineage, Inc. a little over three months ago, and it has been great meeting our talented team members and many of the investors on this call. These past three months have confirmed my view that Lineage, Inc. is a world class organization, and I look forward to actively engaging further with you all in the months to come. Now on slide seven, you can see our global warehouse set. In the fourth quarter, total warehouse NOI declined 2.4% year over year to $373,000,000 while same store NOI declined 5% year over year to $340,000,000, both in line with our previously provided guidance. In our same warehouse segment, as Greg highlighted, we grew our rent, storage, and blast revenue per physical pallet by 1.7% year over year.

We also saw an impressive sequential growth in our physical utilization of 400 basis points to 79.3%, signaling further evidence of a return to the more normal seasonality Greg forecasted last summer. Conversely, throughput volumes were slightly softer, down 2.8% year over year, services revenue per throughput pallet down 70 basis points. For the full year, total warehouse NOI declined 3.3% to $1,480,000,000.00 while same store NOI growth was minus 5.8%. While our occupancy has been stable, services mix and throughput volume continue to be weighed down by lower import/export volumes related to the shifting tariff announcements during the second half of the year. Keep in mind, volume shifts in certain higher value commodities can incrementally impact results given the attachment of higher value-added services.

Shifting to slide eight. Global Integrated Solutions segment’s EBITDA grew 15% to $61,000,000 in our fourth quarter and was up 9% to $251,000,000 for the full year 2025, continuing this division’s great trends all year. Our fourth quarter NOI margin for GIS improved by 470 basis points to 19.5%. We are continuing to see strong momentum in our U.S. Transportation and food service businesses, due to the value these integrated solutions provide to our customers. As a reminder, we see solid longer term upside in the combined offerings of our GIS businesses and our warehouse segment. Our ability to bring to market a global network of assets to offer customers an end-to-end solution is unique and rewarded by our customers. Turning to September adjusted EBITDA declined 2.4% year over year to $327,000,000 and full year adjusted EBITDA declined 2.3% to $1,300,000,000, both in line with our expectations.

Fourth quarter AFFO per share was flat compared to the prior year at $0.83. And full year AFFO per share grew 2.4% to $3.37 per share. Both ahead of our expectations and consensus. As we progress through the wrap up of 2025, our first full year as a publicly traded REIT, our tax team was able to successfully enhance its tax planning initiatives to substantially drive upside to our guidance. We finished the year with a current tax expense for AFFO of $15,000,000 versus our prior guidance of $30,000,000 to $35,000,000. Our fourth quarter tax expense was better than our expectations by approximately $18,000,000 or $0.07 per share. On a go-forward basis, we expect about half of that beat to be sustainable. Hats off to our tax team for driving continuous improvement in our tax structure.

$0.04 of nonrecurring tax benefits, ultimately, even if we excluded we still came in above the high end of the guidance range. In addition, our heightened cash flow focus allowed us to better manage recurring maintenance capital expenditures allowing us to come in slightly lower than our guidance at $56,000,000 for the quarter. We know investors focus on same store NOI and so do we. But we are also focused on driving every lever of efficiency and cash generation, not just same store metrics. We are proud to see our team members also focused on EBITDA and AFFO output. To that end, today, I want to announce that we have accelerated our internal efforts to drive efficiencies on our admin and indirect expense cost base. We see opportunities to further streamline our organization while continuing to fully support our team members in the field.

We have line of sight to $50,000,000 plus of annualized cost savings by year end 2026 by streamlining and centralizing select functions. We have been studying this opportunity for a couple quarters and believe we can prudently rightsize and combine teams to drive immediate savings and speed up decision making. We see about half of this hitting 2026, and we will describe how we layer this into our guidance further in my prepared remarks. Turning to Slide 10. We ended the quarter with total net debt of $7,700,000,000 and total liquidity of $1,900,000,000. During the quarter, we issued $700,000,000 of seven-year Eurobonds at a 4.125% coupon and locked in a $1,250,000,000.00 floating-to-fixed forward swap at a rate of 3.15% through February 2028.

These fourth quarter transactions come on the back of our inaugural $500,000,000 bond offering issued at a coupon of 5.25% in June 2025. We appreciate the confidence of our fixed income investors and our investment grade rated balance sheet. We welcome all these new global fixed income investors to our call, and I look forward to meeting you in the coming months. On leverage ratios, you can see here that our net debt to adjusted EBITDA was 6.0 times at the end of the quarter. Also on this slide, we added what we hope is a helpful supplemental disclosure commonly asked for by our investors. This metric adjusted net debt to transaction adjusted EBITDA adjusts for the $1,000,000,000 of capital investments made into our development pipeline, the corresponding non-stabilized NOI, and the NOI tied to intra-quarter acquisitions or dispositions.

Under this methodology, which is consistent with the reporting practices of other top companies within the REIT sector, like Prologis and First Industrial, our leverage is 5.2 times. Also, keep in mind that our development projects have been significantly derisked given most of these projects are anchored by customers with long term commitments. Thanks to our new great leader of investor relations, Ki Bin Kim, who many of you know from his prior life. You will notice this and other supplemental disclosure enhancements now into the future. Finally, I would be remiss to not mention the sale of our Santa Maria site. A great example of the shareholder value enhancing transactions we are evaluating. As Greg mentioned, we will explore every opportunity to address the valuation mismatch between the public and private markets, including joint ventures and/or partial monetization action that help generate capital that highlight the locked up potential our world class portfolio.

On page 11, let us discuss our outlook for 2026. We are initiating 2026 guidance with same store NOI growth of minus 4% to minus 1%, total warehouse NOI growth of minus 2% to plus 1%, GIS NOI growth of 0% to 2%, adjusted EBITDA of $1,250,000,000.00 to $1,300,000,000 and AFFO per share of $2.75 to $3 per share. You can also see the additional guidance details we have provided in the past, including admin of $465,000,000 to $480,000,000, stock-based comp of $125,000,000, interest expense, $340,000,000 to $360,000,000, current tax expense for AFFO calculations of $20,000,000 to $30,000,000 and recurring CapEx of $170,180,000,000. Further, we expect our same store NOI cadence to start the year at the lower end of our annual range and see improvement into the second half.

Supporting this outlook will be the ramp of our development projects and the 2025 purchased M&A coming online throughout the year. We will also see acceleration of our productivity and SG&A as we move through the year. As we centralize as and optimized same store NOI. Ultimately, our guidance for admin is $465,000,000 to $480,000,000. Which contemplates the field cost shifts, inflation, higher 2026 bonus. These items will be off by the cost savings initiatives we outlined. Together, these fact factors and the typical seasonal shift from Q4 to Q1 will result in adjusted EBITDA in the 2026 following a sequential decline comparable to that experience in the Eurobond offerings we did in the middle of 2025. ’26 and allow us to focus on continuing to sure the orders Lineage, Inc.

remains extremely well positioned to exit these challenges as an even stronger company by increasing our our future future operating leverage across the business. Allow me to summarize the four key points. First, our industry is showing signs of normalization, with the return normal seasonality, many markets stabilizing after customer inventory destocking largely behind us, and many markets stabilizing after digesting new already in progress productivity issues. Including the OS, that are expected to offset inflation again this year. Third, while not built into our we will continue to look for opportunities to unlock value further further enhancing our liquidity. This will maintain our investment grade rating and enable us to opportunistically take advantage of strategic investment opportunities.

Before turning it over to your

Robert C. Crisci: Savings. We outlined a three. In December of a $100,000,000 run rate savings. Three to five years.

Ki Bin Kim: When I take a step back and look at our company,

W. Gregory Lehmkuhl: The second element of how we thought about our guidance is that while we are seeing great net price put out to the market, we have the same factors that impacted us in 2025 in terms of mix, in terms of import/export just as we look out. So that ultimately will be a little bit of a drag of our revenue per pallet, if you will. Again, we are seeing net pricing of 1% to 2%. That blends just slightly lower. And then the final factor as we thought about it is just, you know, we are fighting inflation overall at the company. We are doing a lot on the productivity side. So we are really striving to keep NOI margin, if you will, flat, but that of course, you have just minor pressure there. We saw a little bit of that in 2025.

So those three factors really kind of blend up and we will see a good pattern as we evolve through the year. As we said, we are starting at the low end. But all the initiatives that Greg outlined really sets us up nicely as we kind of move through year.

Operator: Next question comes from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. Can you talk through the impact of idling assets? How many assets did you idle during the quarter, did that have a positive impact on occupancy, and if you can quantify that? And then also, if you are idling, how should we think about the earnings impact and what has been moving in and out of the same-store pool and the financials?

W. Gregory Lehmkuhl: Sure. Thanks, Michael, and good morning. So last year, we idled 10 sites, and the benefits are obvious. We can move labor, move the customers to adjacent sites, and lower overall cost and increase our occupancy in the receiving sites. For 2026, because our physical occupancy is relatively strong, we do not think we will see quite as many opportunities as in 2025. The overall impact on NOI and occupancy was pretty negligible. We took out around 1% of our supply. As far as how we treat these, we do not add back any of these costs. They roll into our non-same-store pool, AFFO and EBITDA accordingly.

Operator: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Your line is open. Please go ahead.

Caitlin Burrows: Hi, good morning everyone. On dispositions, the noncore SoCal disposition you did, what made that property noncore, and how representative is the mid-6% cap rate in the U.S.? And then are you willing to sell international assets? What types of cap rates are you seeing internationally?

W. Gregory Lehmkuhl: Good morning, Caitlin. The SoCal asset was kind of a medium quality asset in our U.S. portfolio. It was a single user and did not support any of the surrounding public customers in that region. The user wanted to purchase it, it was a reasonable price for us, reasonable valuation, so we decided to go ahead and achieve a little bit of liquidity there. As far as other dispositions, we are looking at the entire portfolio to optimize and are certainly analyzing the public versus private disconnect in valuations. More to come on that as the year progresses—nothing to announce today. I would just comment that looking at the overall environment and transactions, we are pleasantly surprised with some of the comps we are seeing out there that we have been tracking.

Over the past year, we have seen over a billion dollars of transactions—DHL or ColdLink or otherwise—and we are seeing strong mid-teens EBITDA multiples. That ultimately translates into low- to mid-6% cap rates. We feel good about that. We do not have specific geography comments—we will look at whether we are the best owner of that asset or not. We will be very unemotional, and we see the opportunity to create capacity for opportunities that we are almost sure will present themselves. We do not currently have anything on the docket now, but we are looking hard so that as the industry turns, we have the firepower to do what we want to do.

Operator: Your next question comes from the line of Alexander David Goldfarb with Piper Sandler. Please go ahead.

Alexander David Goldfarb: Hey, good morning. Going back to the topic of customers switching, you mentioned one to two years after a tenant takes a new facility they may end up switching. Is this more of a talking point, or are you seeing tangible evidence—like a noticeable uptick in people moving out of new entrants into your facilities? As the supply ebbs, how much is this a real tailwind versus just a talking point?

W. Gregory Lehmkuhl: Thanks, Alex, and happy birthday to you. As we talked about in the prepared materials, we are seeing a clear trend. In the U.S.—really the only region in the world where we are seeing excess supply—60% plus of our markets have not seen excess new supply. We had to work through the destocking there, but those have been on stable ground for some time, and we expect them to be on stable ground in 2026. Directly to your question and why we feel so good about our ability to compete in the medium term, in markets like New Jersey, Dallas, Houston—where new supply hit earliest—we did take a hit, and now we are seeing a lot of customers come back to us because of our service and other structural advantages.

Markets go through this cycle and we are starting to win again, which gives us confidence we can work through this last wave. And the new supply being delivered in ’26 and beyond is declining. Even without supply absorption—which we think can happen faster than some may fear—we think we can win in this existing environment.

Operator: Next question comes from the line of Blaine Matthew Heck with Wells Fargo. Please go ahead.

Blaine Matthew Heck: Thanks. Good morning. High-level question: there has been a lot of attention on the impact of AI. You have done a lot on technology and data analytics already, but how do you see your business being impacted by AI, whether on the warehouse or GIS side?

W. Gregory Lehmkuhl: I am glad you asked that. We have been thinking a lot about this. AI promises to make supply chains more efficient, which could potentially reduce storage needs over time, but supply chains take a long time to change and optimize. What we are seeing right now is that customer inventory levels are effectively at the bottom given a couple of years of destocking after COVID, high interest rates, food inflation, and international trade chaos driven by tariffs. When you take a step back and think about our industry and AI, we think we are one of the most insulated pieces of the supply chain between when food is produced and when it is consumed. AI cannot change when food is produced or when it is consumed, so cold storage is durable and essential in the long term, even in a world of AI.

Think about a frozen chicken, frozen french fries, steak—those will not ship directly from a processing plant to somebody’s home. AI cannot change the seasons nor when seasonal products are harvested, so they will always need to be stored. AI is not going to change the need for people to eat. Our industry has hard, expensive assets required to operate, and AI cannot create nor replicate those. If AI does change how consumers behave—more online shopping, more multichannel—that generally increases the need for warehousing because of more SKUs and assets. For more than ten years we have been a technology-native operator. We are already using AI in cold storage automation across our automation stack, in our energy management initiatives that have shown over many years to offset energy inflation, and in our computer vision technology we call the Lineage Eye in our most tech-forward warehouses.

That technology identifies what the pallet is and its contents and streamlines the inbound process, making receiving more accurate and efficient. We are best positioned to leverage robotics as they get certified for cold—they are quickly getting there—and we are ready to interweave those into our workforce and gain efficiency faster than anybody else in our space. We are also effective acquirers and developers and can apply AI tools to acquired companies and developments better than any other company. Lastly, we have the largest dataset of warehousing data and probably the biggest dataset of temperature-controlled transportation data other than arguably C.H. Robinson. We can harvest that data to provide our customers with insights and help them optimize their supply chain overall.

So yes, AI could help customers optimize supply chains over ten years, but we think we are very much insulated from disruption as an industry, and we see upside across the business here at Lineage, Inc.

Operator: Your next question comes from the line of Michael Albert Carroll with RBC Capital Markets. Please go ahead.

Michael Albert Carroll: Greg, can you provide some color on the seasonal pickup this past quarter? Was it more muted than normal seasonal patterns or in line with historical patterns? If it is in line, can we assume inventory destocking is behind most customers? Occupancy was higher than expected versus consensus in the fourth quarter.

W. Gregory Lehmkuhl: Yes, good question. We returned to a normal seasonal pattern. The uptick happened a little bit later—it happened in July versus June—and then it hit as normal. Two important takeaways: we believe inventory destocking is behind us, and we believe our customers’ inventories are at very low levels given the macro. That underpins our 2026 guidance.

Operator: Your next question comes from the line of Greg Michael McGinniss with Scotiabank. Please go ahead.

Greg Michael McGinniss: I wanted to talk about Integrated Solutions. We saw considerable margin improvement with the European disposition. Is there more room to run in that business? If you get back into Europe, can margins improve further from here?

Robert C. Crisci: The European business we exited frankly did not have comparable margins to the overall base. You take that out, you take the revenue out, and as you look at the fourth quarter, that is the way to think about the underlying business. We still see opportunity overall and good growth in that business, so of course we will leverage the cost there. We think that is a good run rate to be thinking about margins and the profile going forward.

Operator: Your next question comes from the line of Craig Allen Mailman with Citi. Please go ahead.

Craig Allen Mailman: I want to circle back on asset sales and market pricing for assets. You said the 6 cap was on a user sale. Was that already a triple net lease or were you operating it? What do you think pricing would have been on a sale to an investor rather than a user? And Rob, you said pricing may be in the mid-teens EV/EBITDA, translating into low-6% cap rates. Can you bridge that comment?

W. Gregory Lehmkuhl: Overall, it was a lease. It is always hard to say how a different buyer would pay relative to a user sale—we cannot really go there. We think it was a good sale price overall. As mentioned, we are seeing mid-teens EBITDA multiples and low- to mid-6% cap rates. Ultimately, it depends on the region, the mix, and the buyer, but that gives you a general sense.

Operator: Your next question comes from the line of Michael Anderson Griffin with Evercore. Please go ahead.

Michael Anderson Griffin: On the march of alternative uses and helping supply, just curious about your thoughts there.

W. Gregory Lehmkuhl: We think there are several reasons supply could get absorbed faster than simply comparing new supply to roughly 1% end-consumer demand growth. First, alternative uses—particularly power with utilities over time. It is a real opportunity. It will not dramatically change the 2026 supply picture by itself, but we are evaluating our global portfolio, calculating how much excess power we have in a number of buildings already, and looking to see how much more power we can get in areas that would be attractive to data center partners. Second, we believe some new entrants over the last four years will exit the industry. Some of those assets—especially in the most oversupplied markets—will not continue as cold storage, which will take out supply.

Where they are in good markets, we want to be in position to absorb what makes sense into our network. Third, obsolescence. During COVID, when every pallet position was full, it did not make sense to retire old assets because they could still cash flow despite structural disadvantages. We are now seeing some older buildings shuttered and repurposed to residential or other applications. We think that could approach up to 1% a year in coming years. Fourth, the large operators have the advantage to idle facilities and take supply out that way. Between us and others, many buildings were idled last year and more will be this year. And maybe most importantly, even in the current environment, the best capitalized operators with the best service, reputation, technology, scope of services, and customer relationships are going to win.

Even in this environment, we can be successful.

Operator: Your next question comes from the line of Samir Upadhyay Khanal with Bank of America. Please go ahead.

Samir Upadhyay Khanal: Good morning. On the GIS segment guidance for the year, 0% to 2% is a deceleration from 8% last year and double-digit in 4Q. Is that just tougher comps, or something else?

W. Gregory Lehmkuhl: Yes, tougher comps are part of it. There are a couple of other things weighing on our guidance. First is fuel.

Robert C. Crisci: Fuel is down, and we mark up fuel like we do everything else. When fuel declines, especially as is happening now and is forecast in the first half, that weighs on results. Also, as fuel is down and trucking continues to be relatively inexpensive, our rail business does not do as well—modal shifting happens for economic reasons. When truck is strong, rail is weakened. For those two reasons, we are a little more cautious on our GIS guide for 2026.

Operator: Your next question comes from the line of Daniel Edward Guglielmo with Capital One Securities. Please go ahead.

Daniel Edward Guglielmo: Hi, everyone. Thank you for taking my question. Can we get a quick update on the Lean Journey?

W. Gregory Lehmkuhl: About a third of our revenue base is directly supported by a lean manager. We are elevating those resources from a single building or two buildings to regional support and joining their efforts with our LinnOS deployment team. We are deploying technology and process at the same time and are seeing good results—even since the NAREIT conference in December. We remain committed to lean as a philosophy to remove waste from our business. We continue down the same path and see good results. We expect to offset inflation through those efforts and other productivity initiatives even before LinnOS becomes meaningful to our financial results.

Operator: Your next question comes from the line of Vince James Tibone with Green Street. Please go ahead.

Vince James Tibone: Hi. Can you share a January or year-to-date occupancy update? And you commented that the 400 to 600 basis point spread between physical and economic occupancy is expected to be stable, and that you are through a good portion of the volume-based guarantees and resets this year. Last year there was some volatility from 4Q to 1Q. Can you provide more detail on where you are in that process?

W. Gregory Lehmkuhl: January has come in line with our forecast. For modeling purposes, keep in mind the first quarter is seasonally soft. Historically, pre-COVID U.S. data would show the first quarter down roughly three percentage points in occupancy from Q4. We think the seasonal pattern this year will reflect more normal times, so we would expect a step down from Q4 to Q1. Also weighing on Q1 is the ongoing reduction in import/export container volume. In Q4, import/export volume was down 9% year over year, and that trend has continued into the first quarter, which we expect to be a headwind. With regard to volume guarantees and the spread between physical and economic occupancy, 400 to 600 basis points is our normal, and we would expect to hold that trend through the year.

We effectively mark to market the majority of our business each year, so there is no big reset in January. We have already worked through 65% of our revenue base as we sit here today on contract negotiations. That gives us more confidence that the economic versus physical spread will be consistent, and we will be able to achieve net new pricing increases of 1% to 2%.

Robert C. Crisci: I would add it is one of the lowest levels we have seen. If you look at our supplemental and same store data over several quarters, that 6% factor reflects the team’s great work to manage economic versus physical occupancy so it is not a headwind going forward.

Operator: Your next question comes from the line of Brendan James Lynch with Barclays. Please go ahead.

Brendan James Lynch: Good morning. Thanks for taking my question. On the evolving tariff situation and how it will impact your business—post Liberation Day there was some concern around seafood in particular. Is the current 10% or now 15% blanket tariff better or worse than policies in place since April?

W. Gregory Lehmkuhl: Our seafood customers are opportunistic in their ordering—the tariffs drive that, ocean rates drive that, and sales prices in the U.S. drive that. We will see what happens with the Supreme Court hearing—obviously it is being challenged multiple ways. The bull case is tariffs could be lowered on China and Brazil, which could meaningfully increase trading with us given where they have been the last couple of years. But it is really hard to know as these are still being challenged in state and federal courts. If we look at import/export across multiple years, we are at historic lows right now, and that is hurting us, as much of our real estate is in high value, hard-to-replace port markets around the world.

Operator: Your next question comes from the line of Omotayo Tejumade Okusanya with Deutsche Bank. Please go ahead.

Omotayo Tejumade Okusanya: Good morning. On the $50,000,000 of savings discussed—are those mostly G&A, or more focused on site-level operations like labor and power? And how should we think about timing and magnitude through 2026?

Robert C. Crisci: It is both an admin item as well as indirect at the sites. We have been looking at this for a while. We have grown rapidly and have been assessing where we can centralize, optimize, and eliminate overlaps between site and admin functions. We are deploying technologies, including AI, to do more with less. These are never easy decisions. For 2026, roughly half of the $50,000,000 will hit, depending on how initiatives progress. We also did an inventory of site versus corporate spend. We saw opportunity at the site level and are bringing some of those costs into corporate to optimize them. If we had not brought that into corporate, that would have been about a 100 basis point net impact; we would not be surprised if we optimize further and reduce that to something like 75 basis points on a pro forma basis. That gives you a sense for both the $50,000,000 and how it plays in admin.

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

Ki Bin Kim: Thank you everyone for joining the fourth quarter conference call. Have a good week. We are around if you have any questions. Thanks, everybody.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.