The cold storage market is 10% overbuilt, according to FreightWaves' report on Lineage's quarterly call, and the largest publicly traded cold storage provider is responding by idling more facilities and selling assets to reduce debt. Lineage (NASDAQ: LINE) said the industry added too much capacity in response to the pandemic, and the resulting supply overhang is forcing capacity rationalization.
FreightWaves reported that Lineage ceased operations at 10 facilities last year and at 5 locations so far this year, idling 2.5 million square feet, or 1% of its U.S. portfolio. On a Wednesday quarterly call with analysts, the company said some locations could come back online. Lineage also noted that a few competitors are on the brink of shutting down, according to the report.
The closures accompanied second-quarter results that showed a net loss of $32 million, adjusted funds from operations (AFFO) of 76 cents per share, and consolidated net revenue of $1.36 billion, 1% higher year over year and slightly ahead of the $1.35 billion consensus estimate, per FreightWaves.
Q2 operating metrics: occupancy, throughput, revenue per pallet
On a same-warehouse comparison, physical occupancy was 75.8%, 90 basis points better year over year but 60 basis points lower sequentially, FreightWaves reported. Pallet throughput declined 2% y/y, and storage revenue per pallet was down 1%.
| Metric | Q2 2026 | Change y/y |
|---|---|---|
| Same-warehouse physical occupancy | 75.8% | +90 bps |
| Pallet throughput | -- | -2% |
| Storage revenue per pallet | -- | -1% |
| Adjusted EBITDA | $320 million | -2% |
| Adjusted EBITDA margin | 23.5% | -60 bps |
A 14% y/y decline in food-related container volumes at the ports weighed on throughput, according to FreightWaves. Market conditions are stabilizing, however: management said food inventories are stabilizing, with some customers indicating a need to rebuild stocks.
Deleveraging and asset sales
Lineage plans to sell roughly $1 billion in assets, using the proceeds to deleverage the balance sheet from 6x net debt-to-EBITDA to 5-5.5x, FreightWaves reported. Management said supply rationalization will ultimately favor scaled providers with automation and transportation capabilities.
The company also faces a one-time headwind: a fire at a California facility will be a $15-million EBITDA drag due to lost revenue and transition costs, the report said. Lineage narrowed its full-year adjusted EBITDA guidance range to $1.26 billion to $1.29 billion, implying no change at the midpoint. It reported $1.3 billion in adjusted EBITDA in 2025.
Forward outlook and what to watch
Lineage expects normal seasonal demand patterns moving forward, FreightWaves reported, which would result in a modest y/y decline in both pallet throughput and revenue per pallet. The company reiterated its outlook for net pricing to increase by 1% to 2%.
The AFFO per share guidance range was raised to $2.80 to $3.05, 5 cents higher at each end of the range. Lineage has 20 facilities currently under construction, which will add $134 million in incremental net operating income. The company manages 500 facilities with 3.1 billion cubic feet of space across North America, Europe and the Asia-Pacific region, and provides freight forwarding, customs brokerage, drayage and truck transportation.
Shares of LINE were up 1.4% at 10:44 a.m. EDT on Wednesday, compared with the S&P 500, which was up 0.4%, according to FreightWaves. Lineage is one of only two publicly traded cold storage providers, so its quarterly results provide a rare look at macro trends across the temperature-controlled warehousing and transportation markets, the report noted.
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