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Introduction & Market Context
Lineage Inc (NASDAQ:LINE) released its third quarter 2025 financial results on November 5, showing modest revenue growth but facing headwinds from excess capacity and tariff uncertainties. The cold storage and logistics provider reported a 3% year-over-year increase in revenue to $1.37 billion, while adjusted EBITDA grew 2% to $341 million. Despite these positive operational metrics, the company posted a loss per share of $0.44, contributing to a 4.07% drop in after-hours trading, though the stock rebounded 3.23% in pre-market trading.
Quarterly Performance Highlights
Lineage's Q3 2025 results showed a mixed performance across key metrics. While total revenue increased 3% year-over-year and adjusted EBITDA grew 2%, AFFO per share declined 6% compared to the same period last year. The company noted that prior year AFFO per share was affected by an intra-quarter IPO in Q3 2024.
As shown in the following financial results chart, the company has maintained steady revenue growth over recent quarters, though the pace of EBITDA growth has slowed:
The company's performance varied significantly between its two main business segments. The Global Warehousing segment, which represents the bulk of Lineage's operations, saw same warehouse NOI decline by 3.6% year-over-year, while physical occupancy decreased to 75.2% from 76.3% in the prior year. However, storage revenue per physical occupied pallet increased by 1% year-over-year.
The following slide details the Global Warehousing segment's performance metrics:
In contrast, the Global Integrated Solutions segment delivered strong results with NOI growth of 16% year-over-year. Management highlighted strong performance in North American direct-to-consumer and transportation services in this segment.
Industry Challenges and Company Response
Lineage is navigating a challenging industry environment characterized by excess capacity and uncertain trade conditions. The company's presentation highlighted that total new PRW (public refrigerated warehouse) capacity added to the US market was 10.5% from 2021-2024, with an additional 4.0% expected in 2025 and 1.5% in 2026. With estimated demand growth of only 5% during this period, the industry faces excess capacity of approximately 9.5%.
The following chart illustrates this supply-demand imbalance in the cold storage market:
Tariff uncertainties are also impacting import/export activity and container volumes, resulting in lower services revenue. During the earnings call, CEO Greg Lemko emphasized the company's strategic approach, stating, "We are using our network size and the strength of our operations to perform relatively well in a very challenging environment."
To counter these headwinds, Lineage is focusing on productivity improvements and operational efficiency. The company has implemented labor management initiatives and energy efficiency measures that are helping to offset inflation pressures. As demonstrated in the following chart, productivity improvements are more than offsetting inflation in labor costs:
Financial Position and Capital Structure
Lineage reported total debt outstanding of $6.0 billion with a weighted average interest rate of 2.9% and approximately 3.2 years remaining weighted average term. The company's net debt to adjusted EBITDA ratio stands at 5.8x, indicating a relatively high leverage level.
The following slide provides a comprehensive overview of Lineage's capital structure:
The company also executed new forward-starting SOFR hedges in anticipation of the expiration of existing hedges. Looking ahead to 2026, Lineage forecasts interest expenses to increase to approximately $340-360 million, up from the 2025 guidance of $267-273 million, due to replacing expiring hedges and additional debt from capital deployment.
Guidance and Forward Outlook
Lineage has adjusted its full-year 2025 guidance to the lower end of its previous range, citing decreased import/export activity and less new US business in Q4. The company now expects adjusted EBITDA between $1,290-$1,305 million (previously $1,290-$1,340 million) and AFFO per share of $3.20-$3.30 (previously $3.20-$3.40).
The following slide details the updated guidance for Q4 and full-year 2025:
Despite near-term challenges, management remains optimistic about the company's long-term prospects. The presentation emphasized that the industry remains mission-critical for customers, with underlying consumer demand growing. Management characterized the challenges of excess supply and macro headwinds as short-term, noting that "green shoots of optimism are appearing" with new supply outlook coming down and fresh and frozen food consumption growing.
The company's strategy focuses on three key areas: customer success, network effects, and warehouse productivity. Lineage believes its position as the largest global cold storage provider gives it advantages in procurement leverage, facility consolidation, and technology implementation through its LinOS system.
As shown in the following slide, Lineage outlines its strategic positioning to navigate the current market challenges:
While Lineage faces near-term headwinds from excess capacity and trade uncertainties, the company is leveraging its scale, network, and operational improvements to position itself for long-term success in the cold storage and logistics industry. Investors will be watching closely to see if these strategic initiatives can overcome the current market challenges and return the company to stronger growth in the coming quarters.
Full presentation:
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