Lineage continues to scale back parts of its cold storage network as the industry works through excess warehouse capacity created during the pandemic-era expansion.
During its second-quarter earnings call, the company said the U.S. cold storage market remains approximately 10% overbuilt, prompting operators to adjust their networks. Lineage has already closed five facilities in 2026, following the shutdown of 10 locations last year, leaving around 2.5 million square feet—or roughly 1% of its U.S. portfolio—temporarily idle. Company executives noted that some of these facilities could eventually reopen if market conditions improve.
The company also said it intends to divest about $1 billion of assets to reduce its debt, and aims to bring its net debt-to-adjusted EBITDA down to between 5x and 5.5x from around 6x. Executives believe the recent market correction will be a boon for larger logistics companies with more technology-advanced automation and integrated transportation.
Lineage lost $32 million in the second quarter. Adjusted funds from operations (AFFO) were $0.76 per share, a decrease of $0.05 from the year-ago period.
The company posted consolidated net revenue of $1.36 billion, up 1% from a year ago and a bit above analysts’ estimates of $1.35 billion.
Operationally, performance was mixed. On a same-warehouse basis, physical occupancy reached 75.8%, improving 90 basis points from a year earlier but declining 60 basis points compared with the previous quarter. Pallet throughput fell 2% year over year, while storage revenue per pallet declined 1%.
Executives attributed much of the pressure to a 14% drop in food-related container volumes moving through ports, which reduced warehouse throughput. However, management said food inventories are beginning to stabilize, with several customers indicating they may soon need to replenish stock levels. As a result, the company expects seasonal demand patterns to normalize, although it still anticipates a modest year-over-year decline in both pallet throughput and revenue per pallet. Lineage also reaffirmed its expectation for net pricing growth of between 1% and 2% this year.
Profitability remained under pressure during the quarter. Adjusted EBITDA totaled $320 million, down 2% from the previous year, while the adjusted EBITDA margin slipped to 23.5%, a decline of 60 basis points.
Lineage narrowed its full-year adjusted EBITDA guidance to a range of $1.26 billion to $1.29 billion, leaving the midpoint unchanged. The company said a fire at one of its California facilities is expected to reduce EBITDA by approximately $15 million through lost revenue and transition costs. By comparison, Lineage generated $1.3 billion in adjusted EBITDA during 2025.
The company also raised its full-year AFFO per share guidance to $2.80–$3.05, increasing both the lower and upper ends of the range by $0.05.
Looking ahead, Lineage has 20 facilities currently under construction, projects expected to contribute an additional $134 million in net operating income once completed.
Lineage currently operates approximately 500 facilities with a combined capacity of 3.1 billion cubic feet across North America, Europe and the Asia-Pacific region. In addition to temperature-controlled warehousing, the company offers freight forwarding, customs brokerage, drayage and truck transportation services.
Executives said the combination of strategic facility closures, asset sales and disciplined capacity management is intended to position the company for stronger long-term performance as supply and demand across the cold storage sector gradually return to balance.
