Greetings, and welcome to Americold Realty Trust second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Kevin Reed, Vice President, Investor Relations. Thank you, Mr. Reed. You may begin. Good afternoon. Thank you for joining us today for Americold Realty Trust second quarter 2024 earnings conference call. In addition to the press release distributed this morning, we have filed a supplemental package with additional detail on our results, which is available in the Investor Relations section on our website at www.ir.americold.com. This afternoon's conference call is hosted by Americold's Chief Executive Officer, George Chappelle, President of the Americas, Rob Chambers, and Chief Financial Officer, Jay Wells. Management will make some prepared comments, after which we will open up the call to your questions. On today's call, management's prepared remarks may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. A number of factors could cause actual results to differ materially from those anticipated. Forward-looking statements are based on current expectations, assumptions, and beliefs, as well as information available to us at this time and speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non-GAAP financial measures, including but not limited to, Core EBITDA and AFFO. The full definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the supplemental information package available on the company's website. Now, I will turn the call over to George. Thank you, Kevin, and thank you all for joining our second quarter 2024 earnings conference call. This afternoon, I am pleased to announce our financial results for the quarter, and we'll also highlight key operational metrics. I will then discuss our updated outlook for the remainder of the year. Rob will provide an update on our recent customer initiatives and growth activity, and Jay will discuss our capital position, liquidity, and provide a detailed walkthrough of our updated full year 2024 guidance. I'll begin with an overview of some key financial achievements for the quarter. We generated AFFO of approximately $109 million, or $0.38 per share, an increase of over 36% from Q2 last year. We also generated Core EBITDA of $165 million, an increase of 24.7% year-over-year, resulting in an industry-leading EBITDA margin of 25%. Our performance was driven in large part by continued strength of our same-store warehouse services, where we delivered a second consecutive quarter of double-digit margins, coming in this quarter at 13.2%. To put this in an earnings growth context, increased warehouse services margins resulted in an incremental $40 million of NOI, or roughly $0.14 per share in the second quarter versus prior year, underscoring our ability to drive consistent, profitable, organic growth in a challenging macro environment. Last quarter, we highlighted our expectation that we could deliver services margins of 9% for the full year 2024, a year ahead of our original expectations, which would equate to approximately $100 million of incremental NOI on an annualized basis. Given the current productivity of our workforce, driven by over 2 years of hiring and retention progress, I am happy to report we are now on pace to exceed the $100 million target this year. Combined with new business wins, pricing initiatives, and continued systems and process improvements, global warehouse same-store NOI grew 19.3% year-over-year. Before I touch on our core priorities, I would like to provide an update on Project Orion. As a reminder, in February 2023, we announced our transformation program, Project Orion, designed to drive future growth and achieve our long-term strategic objectives through investment in our technology and business processes across our global platform. The primary goals of this project are to implement standard processes, reduce manual work, and incrementally improve our business analytics capabilities. Highlights of the project include implementing centralized customer billing, a human capital management platform, next-generation warehouse maintenance capabilities, and global procurement functionality, to name a few. Even before the system went live, we saw numerous process improvements that led to increasing margins as we changed the way we work to fit the system in Q1. We went live in North America and Asia Pacific with the first phase of Project Orion in early May, and I'm pleased to report that we have had very little disruption, internally or externally, during and since the implementation. The rollout of Project Orion has been a contributing factor to our strong second quarter results. We expect it to continue to help drive growth and efficiency as we become more proficient in its use, expand its use across more geographies and functions, and unlock incremental functionality included in our new systems, such as embedded artificial intelligence. On a final note regarding technology, we experienced negligible disruption from the recent CrowdStrike outages that happened across the globe a few weeks ago. Now let me review our top priorities and how they contributed to our results. Customer service is at the heart of what we do and a key driver of both occupancy and our continued progress in selling fixed commitment contracts. Our goal is to be the global cold storage provider of choice by delivering the highest quality customer experience through our people, our infrastructure, and our innovations. While economic occupancy showed a slight dip in this quarter to 78.1%, rent and storage revenue derived from fixed commitment storage contracts increased to 56.6%, 240 basis points higher than the previous quarter and 810 basis points higher than the second quarter of 2023. The continued growth of these fixed commitment contracts is a result of delivering the best-in-class customer experience through our high-quality infrastructure. Our customers' willingness to engage in these contracts speaks to the quality of our assets and also acts as a leading indicator of positive things to come as customers sign them in the anticipation of volume growth in the future. With respect to labor management, it's critical to our business that we have a safe, productive, and well-trained workforce to service our customers as efficiently as possible. Over the last two and a half years, we've disclosed the key metrics in this area related to hiring, permanent labor content, retention, and workforce maturity to ensure the foundation we've built to support higher levels of productivity is very visible and should inspire confidence in the sustainability of our warehouse services margins. As we've said many times before, it's the services part of our business that customers value the most, as it provides incremental supply chain benefit beyond simply storing a pallet and keeping it cold. The performance of our workforce not only ensures we service customers well within the dozens of individual services we currently offer, but also allows us to innovate and develop new services that further attract customers to our facilities. The continued refinement of our hiring and retention processes have resulted in a perm to temp hours ratio of 76/24, which is flat year-over-year and a slight decline sequentially due to the seasonality of agricultural harvests that drives a change in work content required from the first quarter to the second. Associate turnover finished the quarter at 38%, a 200 basis point improvement upon the first quarter. Our third key metric, our percentage of associates with less than 12 months of service, now stands at 23%, has improved 600 basis points since the first quarter. As our workforce retention and maturity have improved, it should be no surprise our warehouse services margins have improved in tandem. Moving to pricing. In the second quarter, same-store rent and storage revenue per economic occupied pallet on a constant currency basis increased by 7.2% versus the prior year, and same-store service revenue per throughput pallet on a constant currency basis increased by 12%. Both were driven by pricing put in place in the back half of 2023, coupled with general rate increases, or GRIs, at the beginning of 2024. Pricing comps will compress in the second half of this year as we lap those increases. Our current outlook on pricing looks stable as we anticipate a relatively benign environment for inflation-based rate actions. With regards to development, our priority is to only invest in highly accretive growth projects. The $200 million-$300 million guide for announced development starts in 2024, which is up from $100 million-$200 million last year, and tracking to potentially exceed the current range, is committed to growth that will generate shareholder value across our three primary areas of focus. Our strategic partnerships with Canadian Pacific Kansas City and DP World. Expansion projects, which are most often occupied by existing customers, and customer-dedicated build-to-suit developments. Our strategic partnerships are excellent examples of Americold's unique ability to create value for our shareholders by partnering with global leaders who are experts in adjacent areas of the supply chain, where we can leverage each other's capabilities to identify opportunities to jointly grow our businesses. Through these collaborations, we have $500 million-$1 billion of potential development pipeline. Regarding expansions, I'm pleased to announce that last week we broke ground on roughly a $30 million expansion project in Sydney, Australia. Also in the quarter, we broke ground on an $85 million expansion project in Allentown, Pennsylvania. As a reminder, both expansions were announced in previous quarters, as well as the groundbreakings of our inaugural greenfield projects with our strategic partnerships: a $127 million development in Kansas City with CPKC and our $35 million development with DP World in Dubai. Our planned development starts are tracking towards the high end of our guidance for the year, and further underwriting is progressing well… Whether it's a development or an expansion, we focus on design excellence, specific customer needs, and actual work content that will take place within the walls of the facility. We are the only cold storage company with both automated and conventional facilities along all three nodes of the supply chain, a testament to our design skills, operational capabilities, and knowledge of the overall end-to-end supply chain from farm to fork. Given the customer demand for our unique industry skills, I feel very confident our inorganic growth plans will continue to drive profitable growth for the foreseeable future. Lastly, I want to briefly address our updated full year guidance. Given the progress we have made driving organic growth through productivity and efficiency improvements, pricing, and in combination with the investments we have made in our technological infrastructure, we are raising our full year 2024 AFFO per share guidance to a new range of $1.44-$1.50, with a midpoint of $1.47, an increase of $0.05 per share from previous guidance and represents an approximately 16% increase from 2023. At the midpoint of the new range, our same-store NOI growth guide has increased to 12.5%. Before I turn the call over to Rob, I would be remiss not to touch on the new cold storage landscape with the recent entrance of another publicly traded cold storage company. We think this is an extremely positive event for the industry, bringing more investment dollars to the sector and helping show cold storage is an attractive asset class within industrial real estate. As it relates to Americold, having a true public peer in the space helps make us more competitive and ultimately more efficient and productive for our customers and investors. With that, I will turn it over to Rob. Thank you, George. As George mentioned, I will provide an update on our recent customer initiatives and growth strategy, starting with pricing initiatives. Our pricing initiatives continue to be a strength at Americold as we work tirelessly to ensure we price our business to reflect the value of the service we provide to our customers. We also have and will continue to price our services to offset inflationary pressures as they arise. In the second quarter, same-store rent and storage revenue per economic occupied pallet on a constant currency basis increased by 7.2% versus the prior year. Same-store constant currency services revenue per throughput pallet increased by 12% as a result of rate actions, better revenue capture, and incremental value-added services. We have made great progress in this area. Within our global warehouse segment, we had no material changes to the composition of our top 25 customers, who account for approximately 51% of our global warehouse revenue on a pro forma basis. Our churn rate continues to remain low at approximately 3% of total warehouse revenues, consistent with historical churn rate. As George mentioned, we continue to be successful with increasing our fixed commitments with customers. Within the second quarter, rent and storage revenue derived from fixed commitment storage contracts came in at 56.6%, an increase of approximately $20 million on an annual basis and a 13th straight quarterly record for Americold. As our customer base composition, low churn rate, and progress on fixed commitments demonstrate, Americold continues to be the first choice for the world's largest food manufacturers and grocery retailers when it comes to their temperature-controlled supply chain needs. Our customers want world-class service and to partner with a provider who can support them at every node in the supply chain, from production advantage locations to major market distribution centers, and then ultimately to retail distribution centers. This is a major competitive advantage and uniquely positions Americold within our industry to be the cold storage provider of choice. Turning to growth initiatives. Last quarter, we updated you on the groundbreakings of the inaugural projects with both of our strategic partnerships, the $127 million facility with CPKC and the $35 million facility with DP World. As George mentioned, we are pleased to announce the groundbreaking on both the roughly $30 million expansion project in Sydney, Australia, and the $85 million expansion project in Allentown, Pennsylvania. As a reminder, the Sydney project is a new, dedicated conventional expansion project anchored by one of Australia's largest grocers and will add mission-critical infrastructure in a capacity-constrained market, currently operating at greater than 90% occupancy. It is anticipated to add approximately 13,400 incremental pallets to our current capacity of roughly 18,700 pallets in that market. The Allentown project is a new conventional multi-customer expansion that will be approximately 37,000 pallet positions and approximately 15 million cubic feet. Both projects are on track from a timing and underwriting perspective, and we look forward to updating this progress in future quarters. In addition to these new projects, we continue to make progress ramping the five automated developments that we completed last year. Three of these automated facilities are supporting food manufacturing in Atlanta, Georgia, Russellville, Arkansas, and Spearwood, Australia, and our proven solutions are performing well and delivering in line with expectations. These automated facilities house several of our largest customers at both their key manufacturing and distribution locations. The service levels being delivered by our best-in-class automation exceed industry standards and are a testament to Americold's technical design and implementation capabilities.... Given the success of our automation facilities in this sector, we expect to announce future automated expansions in the coming quarters. We continue to be thoughtful as we proceed with our two customer-dedicated automated retail distribution centers in Lancaster, Pennsylvania, and Plainville, Connecticut. Given the level of complexity and the importance of the customer relationship, we are being deliberate in our approach. At Americold, we're interacting with major global customers, both current and prospective, every day, and a consistent theme in our discussions is the gradual recovery of consumer demand, and we're positioning ourselves to take market share by providing best-in-class solutions. The development projects we mentioned earlier highlight the significant market opportunity that exists, and we are focused on converting that opportunity into outsized growth for Americold. What we're hearing from our customers is the need to partner with someone who understands how to build efficiency and resiliency into their operations to support their future growth. Americold's growth strategy is anchored in being able to create these solutions, and we have developed this capability to a level that is industry-leading. Our Supply Chain Solutions organization is the only group of supply chain scientists in the industry to develop automation at every node of the supply chain, and are laser-focused on the science and analytics behind the design needs that matter most to our customers, including, first, how to best optimize their supply chain. Customers who engage our Supply Chain Solutions group are consistently presented with solutions that drive savings and improve performance as compared to their current network. Our team is utilizing industrial IoT and machine learning applications to drive speed to market with these solutions. Second, how to build and operate the most efficient facilities in the industry. Americold's facilities maximize the cubic footage of the buildings by being 13% more dense than our closest competitor, driving efficiency for our customers and return on invested capital for Americold. The Americold Operating System ensures best practices are utilized across our entire network. Third, when to de- deploy automation versus utilizing conventional solutions. Our Supply Chain Solutions group analyzes the discrete work content associated with the customer or market in which we are building, to determine if and when automation is appropriate versus adding conventional capacity. The result is a tailored solution that meets the needs of our customer or market without unnecessary added cost. Fourth, what the most important value-added services are that Americold can provide. By having a portfolio that includes facilities at every node in the supply chain, we are able to offer dozens of value-added services that drive our same-store warehouse revenue per economically occupied pallet 16% higher than our closest competitor. Fifth, how to create environmentally friendly cold chain solutions. As an example, driving energy efficiency into our buildings. Americold has over 200 buildings in our network that have been recognized by the Global Cold Chain Alliance's Energy Excellence program. That is more than 14 times the number of buildings recognized in the rest of the industry combined. Another example includes our CPKC solution that will convert over 15,000 truckload shipments a year into rail shipments, a much greener mode of transportation. Our customers view Americold as an extension of their own supply chain organization, as evidenced by the long-term, committed, and global nature of our relationships. That type of trust is not built overnight. It's built over decades of industry leadership. Now, I'll turn it over to Jay. Thank you, Rob. Today, I will discuss our capital position and liquidity, and update our full year guidance. Starting with our balance sheet, at quarter end, total net debt outstanding was $3.3 billion. We had total liquidity of $554 million, consisting of cash on hand and revolver availability, and our net debt to pro forma Core EBITDA was approximately 5.3 times. As we discussed last quarter, our expansion in Allentown, our greenfield developments in Kansas City and Dubai, and our new expansion project in Sydney, increased investment spend in the second quarter and will continue for the remainder of this year. Please see page 38 of the IR supplement for additional details on our development projects. Turning to our updated full year 2024 guidance. As George mentioned, we are increasing our AFFO per share to the range of $1.44-$1.50, an approximate 4% increase at the midpoint, and an approximate 16% increase from 2023's AFFO. Before reviewing the individual components of this guidance that are set forth on page 41 of the IR supplement, let me quickly remind everyone of the 2024 same-store pool for the Global Warehouse segment. This pool has 226 facilities, which is approximately 96% of the total number of properties in our warehouse segment. A summary of the 2024 same-store pool historic performance for the second quarter of 2023 is presented on page 33 of the IR supplement. We have nine facilities that are in our 2024 non-same store pool. Now, turning to the individual components of our updated AFFO guidance, and starting with our Global Warehouse segment, we expect full year 2024 same-store constant currency revenue growth to be in the range of 2%-4%. Let me provide more detail around the key drivers of this updated guide. With respect to occupancy and throughput volumes, as we discussed over the past quarter, our previous occupancy guide planned for a good summer grilling season.... With manufacturers and retailers increasing promotional activities to drive consumer demand. The most recent reports from food manufacturers and producers show that consumer continues to be strained by stubborn inflationary pressures, resulting in continued volume challenges. While not new news, it does warrant attention as throughput volumes continue to be muted. Based on the current economic outlook and recent commentary by food producers, we are reducing our expectations for economic occupancy to decline in the range of 200-300 basis points compared to 2023, and throughput volume to decrease in the range of 2%-4%. With respect to pricing, we expect constant currency rent and storage revenue for economic occupied pallet growth to be in the range of 4%-5%, and constant currency services revenue per throughput pallet growth to be in the range of 7%-8%. As a reminder, the pricing guidance reflects our continued pricing and power surcharge initiative to cover known inflation. It also reflects our annual contractual escalation and GRI step-ups, and the commercialization of market-based pricing for contracts that we underwrite or renew. Lastly, with regards to pricing, comps are expected to compress in the second half of this year, as we anticipate a relatively benign environment associated with inflation-based rate actions. For the full year, we are increasing our same-store constant currency NOI growth to now be in the range of 11%-14%. This increase is being driven by higher services margins. Based on productivity and pricing, supported by new systems and processes, we now believe we can deliver services margins of over 11% for the full year of 2024. Please note that service margins were higher in Q2, partly due to the implementation of phase one of Project Orion and a new procurement system, which delayed certain Q2 operating expenses into Q3. If you adjust out these delayed expenses, same-store NOI is forecasted to grow sequentially from the first half to the second half of 2024. With regard to the 2024 non-same store pool, as can be seen on page 33 of the IR supplement, the non-same store pool generated -$2 million of NOI in the second quarter of 2024. For the full year of 2024, we expect the non-same store pool to generate NOI in the range of -$7 million to $1 million. We expect the Managed and Transportation segments NOI to be in the range of $42 million-$47 million. We still expect Core SG&A to be in the range of $219 million-$229 million. Turning to interest expense. For the full year, we are lowering our interest expense range to approximately $133 million-$141 million, a reduction of $2 million at the midpoint due to an increase in capitalized interest. There is no change to our full year cash taxes or maintenance capital expenditures guides. Regarding developments, as George mentioned, we're tracking to be at the high end or to potentially exceed the current guidance range of $200 million-$300 million of announced development starts in 2024. Please keep in mind that our guidance does not include the impact of acquisitions, dispositions, or capital markets activity beyond that which has been previously announced, and please refer to our IR supplement for detail on the additional assumptions embedded in this guidance. Now, let me turn the call back to George for some closing remarks. Thanks, Jay. As the operational and financial results of the second quarter highlight, it's been another great quarter for growth at Americold. The effort put in by our team over the past two and a half years to build a stable, productive workforce, enhanced with our recent technology implementation, has created a solid foundation for sustained, predictable growth. While our company has never operated better, we have stepped up our investment in inorganic growth by investing almost double the amount of money in announced development starts as last year, and now look to exceed those expectations due to the high demand for our design and construction services, coupled with our world-class operating model. We've continued to grow our business through one of the most challenging consumer times in recent history. Over time, the consumer will strengthen and buying habits will normalize. When that happens, we are positioned well to grow at a highly accretive and accelerated rate. As always, I want to give thanks to the over 15,000 associates around the world for their hard work and dedication every day. It's their best-in-class customer service efforts that provide the foundation for our future. For this, I say thank you. We could not do this without you. Thank you again for joining us today, and we will now open the call for your questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star keys. As a reminder, please restrict yourself to one question and one follow-up. One moment, please, while we poll for questions. The first question comes from the line of Mike Mueller, JP Morgan. Please go ahead. Yeah, hi. As it relates to, I guess, the lighter throughput volumes, are there any categories specifically that are driving this? And then do you expect to end the year in positive territory based on the forecast at the end of 2024? Hi, Mike. I would say that no, we don't expect to end up in positive territory on throughput for the year. We'll be down year-over-year based on our updated guide. It's not one category that's driving the throughput down. I would say it's an overall weak consumer in an environment where pricing in the grocery store is suppressing volume. That's been the case now for well over a year, and I think has reached a tipping point very recently. But it's the same story. It's high prices in the grocery store. It's a consumer with less disposable income, and as I said, it's been that trend for the last 12 months. Yeah, good morning, Mike. Yeah. Jay, just to hit a little bit more on that. Yeah. I mean, you look year-over-year, throughput is gonna be down. If you look at, you know, approximately about 1%, if you do the back half of our guide. But if you look at sequentially with seasonality, our throughput is gonna improve in the back half of the year if you look sequentially. Got it. Okay. So by year-end, if we're looking at Q4, you're expecting to be in the positive territory, it sounds like? Sequentially. Sequentially, not year-over-year, I think, Jay. I think as I was answering year-over-year, Jay is going through sequentially. He's 100% correct. There'll be a slight seasonal lift in the back half of the year, sequentially from today, let's say. But year-over-year, we will be down in both the third and the fourth quarter. Thank you. Next question comes from the line of Samir Khanal with Evercore ISI. Please go ahead. Hey, good morning, everybody. George, I guess my question is around economic occupancy. How should we think about that? I know you kind of updated guidance for this year, but, you know, I'm talking even more beyond this year, given that when you look at economic occupancy and the physical occupancy, I mean, there's a spread of about 900 basis points right now. And my only question is, given the macro out there and the challenges and slowdown you spoke about, I mean, could customers sort of deviate from this sort of safety stock idea and say: "Look, why are we paying for space that we're not using at this point?" So, maybe you could provide a bit more color on that into next year. Yeah, I would say that although the gap between physical and economic is 900 basis points, it has narrowed since the first half of the year by 200 basis points. We expect it to narrow further through the second half of this year. You know, when does it come back? It comes back when a consumer has disposable income that comes closer to the pricing in the grocery store, just as we said. Manufacturers do reduce safety stock when demand is down, and demand is down, which is why I believe our economic occupancy is down. When it comes back, as the consumer strengthens, and I think there's hope for that in the second half of the year, with potential interest rate cuts and other activity, putting more money in a consumer's pocket. I think the potential for that is certainly in next year, but maybe even the second half of this year. There seems to be a lot more aggressive talk around interest rate cuts that will help consumer disposable income, that will close the gap to current pricing at the grocery store. That'll raise demands, that'll raise the safety stock, and the whole system grows again. So it's all linked to the consumer, Samir, and right now, the consumer has never been weaker. And then maybe just one other point that I would add, Samir, is, look, we've been in this environment now where it's been a tough consumer for a number of quarters in a row, and yet every quarter you see our fixed commitments in terms of absolute dollars and percentages go up. We're on our thirteenth straight quarter. We're over 56% now, another $20 million this quarter. So I think what you should take from that is that both Americold and our customers continue to benefit from the stability that that provides. It also, I think, as we said in the script, shows that they believe that the second half has some potential in it, as I do. But it does require some consumer help, and it's good to see that now many, many people are talking about the consumer, not only in our industry, but in other industries. It seems as though consensus around interest rate cuts is building pretty quickly. If help is on the way, we're very confident that that will help our business, it'll help occupancy, it'll certainly help throughput. And those tailwinds that I think could be as soon as the second half of this year, should carry into next. Got it. And then just as a follow-up here on pricing for the warehouse business, it still seems to be pretty solid here. I know we've talked about inflation moderating, but it feels like you're still getting good pricing power above inflation here. Does that, like, guide you provided that 4-5 and then 7-8 for the services side, does that sort of... Can you sustain those levels into next year, or does that sort of moderate next year? Yeah. What we said in the prepared remarks is we expect those comps to narrow in the second half of this year. The pricing that you see in the results this quarter all happened in the second half of last year and also in the GRIs we took at the beginning of this year. So those comps will narrow. And you know based on the outlook for inflation we see today, we see the pricing environment is very benign. So I would say the bulk of our pricing going forward, if nothing changes, will be our annual GRIs, with some exceptions along the way that are always exist, whether it's new services or profile adjustments, et cetera. I'd call that normal course business. But when it comes to pricing actions, specific pricing actions, we don't see any necessary where inflation is today. And you probably will see those pricing comps compress in the second half as well as next year. They'll probably be more normalized, not back to pre-COVID, but I would say more normalized. Yeah, if you triangulate our full year guide, it shows that back half of the year, we get to more normal type of increases of 3%-4%. So that's really what's built into our back half guide. Thank you. Next question comes from the line of Josh Dennerlein with Bank of America. Please go ahead. Yeah. Hey, guys. Thanks for the time. George, just wanted to kind of circle up on the service margins. You know, the second quarter in a row where they've come in double digits. Just how are you thinking about where they ultimately, like, stabilize from here? Well, we did just over 13% in the quarter, and then as you remember, Jay mentioned some expense that was deferred to the third quarter. So if you rationalize that, we get to just over 11%, and that's where we adjusted the guide. So if I use 11% as a base, you know, our retention metrics are excellent, pre- they're better than pre-COVID. The systems tailwinds we have are just beginning. The system was just turned on, on May sixth, so we do think there are tailwinds there. So is there some upside to the 11%? We believe there is, as the system gets better used and better understood. But at this point, throughput is still a headwind. So if I net those two together, we're very comfortable with the 11%. You know, all I can say is that's where we are right now. Yeah, you know, I mentioned as part of implementing Project Orion and our new procurement system, certain POs were delayed as part of the process, so we, we could not buy certain types of material for our, our services type business. And if you normalize out that $5 million, it gets the first half of the year at 11.2. So that's how we're saying run rate. That's really what the run rate looks like. Okay. And what about George? I think in the past, you've talked about maybe aspirationally hitting 15% on the service margins. Do you think that's still kind of a good aspirational goal on the service margin and achievable? I think even more achievable than ever before, given where the margins landed this quarter, given we still have the system tailwinds, and we're still not done with retention and all the work we've put into that. In fact, that work will never end. So I would say they're less aspirational than they have ever been to get to 15%, but I'd still say that it takes some commercial work to get there, and that is a different set of muscles than offsetting inflation. So maybe you can comment on that, Rob, but I think the commercial work is probably the long pole in the tent. Yeah, I mean, we're, you know, we're continued on to focus on driving pricing. We know that it'll be compressed, but we wanna see inflation plus with regard to what we're able to accomplish. And then the other area commercially that helps our services margins is incremental value-added services. And we've been very focused on understanding and implementing services that our customers want us to do, that help both them be successful with their supply chain, and Americold drive our services margins. And where we've, you know, seen success with that, we have many, many individual properties that generate services margins in excess of what those aspirational goals are, so we know that we'll be successful getting there. Still aspirational, but much less so given the performance over the last three quarters and the fact that we believe in the sustainability of those margins, based on not only the disclosures we've made around our labor, but also the fact that we feel like there's nowhere to go but improve those numbers, even from where we sit today. Thank you. Next question comes from the line of Greg McGinniss with Scotiabank. Please go ahead. Hey, good morning. We understand this is likely difficult to parse, but could you give us your thoughts on how much of the warehouse services margin increase you think is driven by a more experienced labor pool, the process improvements highlighted last quarter, and then the ERP implementation? I would say that the 2.5 years of work we did on hiring, retention, I mean, literally, you know, hundreds of activities below that to support what I just said, that's the lion's share of the improvement. We just have a more stable, more productive, better trained, better engaged workforce. Now, the other things are definitely contributing factors around, systems in particular, to give people the visibility of how to manage labor better. But, I would say at least 75% of it is just the, the labor training, the hiring, the retention, the engagement, essentially all the work we've done on the workforce. And of course, the other things help, but they're more supporting, an already, well-trained workforce. Yeah, and the ERP system is improving our revenue capture of our value-added services. So you know, that is providing us benefit, but as George said, you know, definitely the labor side is where the biggest benefit is. That's clear. Thank you. Next question comes from the line of Michael Carroll with RBC Capital Markets. Please go ahead. Yep, sorry. Rob, I wanted to follow up on another question earlier regarding the fixed commitments. Can you kind of explain why companies are taking down more fixed commitments even though the occupancy is trending lower? I mean, is there a risk that they will hand back this space, or are they looking further out, thinking that they're going to need it in the near term, and they're gonna wanna take down those commitments to ensure that they have it? Yeah, it's the latter, Mike. I mean, our customers in conversations, they're looking to the future, and they're recognizing that there will be a time that demand will recover and increase, and they wanna make sure they have their space available to them. So I think Americold's built a very strong muscle in terms of the way that we go to market with those fixed commitments and the fact that that represents what we believe market rates should be when we offer fixed commitments. And then our customers see the benefit, not, not just in terms of the stability of making sure that space is available for them now, but ultimately because they, they really do believe that that volume will be there as we go into busy season this year and then out into the future. Remember, those, those fixed commitments tend to be multi-years in length. They're not, they're not short-term fixed commitments. Those are multi-year fixed commitments, and that's the way our customers are viewing them. Okay, and what are your customers telling you right now? I mean, are they happy with their current inventory levels, given the current market challenges? Or, I guess, when do they wanna rebuild their inventories? I mean, are they too short now, and they need to rebuild it soon, or is this a longer term type rebuild that we're talking about? Mike, I think customers would prefer higher demand, higher revenue, better volume. Cutting inventory because demand is down doesn't make many customers happy. What they want is higher demand so they can invest in new products and new activities. And right now the demand situation is suppressing all of that. So you know, during my past in these environments, and I've been through a few, what you're hoping for is some consumer help to get traffic up, get volume up, and the inventory plan takes care of itself once volume is growing. Thank you. Next question comes from the line of Vince Tibone with Green Street. Please go ahead. Hi, good morning. You know, some of your earlier comments suggest that you think the consumer should be, you know, healthier soon. Just what-- In terms of 2024 guidance, you know, what are you implicitly assuming as it relates to the health of the consumer? Are you expecting some back half improvement in the new, you know, kind of throughput and occupancy ranges you provided, or just who... Give us a sense of what macro assumptions you have baked into guidance, that'd be helpful. Yeah, I appreciate that, Vince. We've baked no optimism into the second half of the year, just as we did in the last quarter. We've taken a very, I would say, realistic view of demand. And while we have a very slight seasonal lift in the second half, it is much more slight than we would in normal years. We've even muted the seasonality a bit to take account for the current demand environment. So while I am optimistic, because I think there's a lot of noise on interest rate cuts, even aggressive interest rate cuts, and I think that can help a lot, that gives me the optimism I expressed a little earlier on the call. However, when it comes to our guide, that optimism is not in the volume guide at all. Great, that, that's helpful. And then switching gears, I'm just curious, how would you describe the competitive dynamics between Americold and your new public peer? Just, you know, do tenants often lease space from both of you in the same market? How often are you competing for tenants? And ultimately, like, how hard is it for tenants to maybe switch cold storage providers in a single market? Just if you can provide some comments around this line, that'd be helpful. Yeah, I'll, I'll start, and I'll hand it over to Rob. But you know, we've been competing with everybody in this space for, you know, years. So none of that changes. I mean, every deal that we look at, we're, we're never the only ones there, and I would say every entrant in the space is normally invited to every deal. So, when it comes to the customer overlap, there is some, as you can imagine, because geography matters when, when you're, when you're looking at cold storage facilities, and there's, there's a natural overlap there. But Rob, why don't you go into more detail? Yeah, I mean, I, I would say, Vince, it's probably pretty rare to see, you know, large customers tend to single source 100% of their, their outsourced cold chain. So there tends to be shared wallet across several competitors when you're talking about, you know, the large players in the space. Not always within the same geography, because customers like to try to have large piles of their inventory in one location and not bifurcated across multiple facilities. So, you know, what you see is generally, you know, maybe customers with one provider in a certain region, but maybe multiple providers across several regions. We're obviously very proud of the fact that we have extremely high market share with the largest food manufacturers, the largest grocery retailers. We think that those best-in-class companies like partnering with Americold as a best-in-class company. When it comes to the competitive dynamic, you know, it all starts with customer service. Customer service is the most important thing to our customer. You know, after you go down from customer service, location is probably next, and after location, it would be price. So, you know, we're focused on delivering the best in class customer service, the most comprehensive suite of value-added services, and then from there, we think the rest takes care of itself. I'll just highlight the value-added services. The reason we're so focused on our services margins, our services capability, our work force, et cetera, that's where you can delineate yourself from a competitor. That's where you can add value to a manufacturer or a retailer by doing more work within your facility, freeing up work and theirs to do other things, which most often is produce more product or sell more product. So the one area where I think there's a lot of competitive advantage across the space is in the value-added services area, and that's why we're so intent on running it well and expanding it. Ultimately, it's why we've made the investment that we have in our Supply Chain Solutions group. And, you know, it's an area where, in my prepared remarks, I talked a lot about the differentiators that that group provides, and whether it be the supply chain optimization work that we're able to perform, the design capabilities that we have, the green solutions that we're building, all of those capabilities are differentiators that we've invested significantly in and really resonate with our customer base. Thank you. Next question comes from the line of Nick Thillman with Baird. Please go ahead. Hey, guys. Maybe touching a little bit on throughput. Looking at just 2Q, it's still down year-on-year. Can you, like, adjust what that number would be? I know there's a cybersecurity incident in 2023, second quarter. So what that number would be if you adjust that on a normalized number, just kind of looking at what that would be year-on-year for volumes. I don't know that we ever went back and adjusted volume, Nick. We always said there was $0.03 of earnings lost in that quarter as a result of the cyber incident, but I don't think we ever went back and said normalized throughput and normalized... Well, throughput was the big issue. So, I don't recall ever doing that, so I don't think I can comment on that. We did say we lost $0.03 of earnings in the quarter. You know, that was in our results. So, I don't think we did normalize throughput. Yeah, and for me, you know, I-- again, I'm a sequential guy, and you look at Q1, you know, we're at 86.81. Q2, we're at 87.17, which is a normal sequential trend. So, you know, hard to break it apart more than that, but I would say our sequential throughput trend is normalizing post, you know, all the different disruptions that has happened in the past. Okay, that's helpful. And then just touching on unit economics or just kind of that service margin side of the business, I'm just looking at kind of the labor component of that. Is that more so the actual productivity of labor, or have you also, like, reduced kind of hours for employees, or just staffing levels in general, just given the lower volume? Can you give, like, a mix between those two components? Yeah. If volume goes down and labor goes down, commensurately, margins don't increase, right? I mean, that's the way the math works. So if you look at productivity, which is what we've been driving through the system, we're doing the same amount of work on a relative basis with less people because they're more productive. And the example I've used in the past is if we've had a year ago, 10 people, and they could move 2 pallets an hour, that's 20 pallets an hour. Those same 10 people are now moving 10 pallets an hour. We're moving 100 pallets an hour. Now, we need less people to move the, you know, more pallets. So that's kind of how productivity works, and, and we've been driving that, very, very hard for the last year, as you know, and well, 2.5 years when it comes to rebuilding the workforce, but now seeing improvements in services margins the last, you know, 3 quarters, and that's a result of productivity, taking hold via training and, and other activities, engagement, that says the same people can move more pallets in an hour than they could, 3 quarters ago. Yeah. No, and, and, you know, that's a key productivity stat we follow, and if you look at year-over-year, it's taken our folks, you know, it's better than 10% less time to move a single pallet, and that's really the productivity side, not cutting the labor force side. Thank you. Next question comes from the line of Ki Bin Kim with Truist Securities. Please go ahead. Thank you. Good morning. Just want to go back to the general rate increase topic. You know, if we had a benign inflationary environment of, let's say, like 2%, you know, what does that get you in terms of just organic GRI price increases going forward? Yeah, I'll ask Rob to comment in a minute, but as you know, they come in different sizes, depending on the size of the customer, whether it's a contracted customer or a WSA agreement, etc. But- Rob, why don't you go through the details? Yeah. Yeah, I mean, look, I would say in a normal environment, you're sitting around 3.5%-4.5% on annual GRIs, and then there's incremental, you know, pricing work that we always are focused on. If we have contracts that are coming up for renewal that may have been below market or the focus that we have on new business and the forward view that we take on pricing there. So GRIs end up in that 3.5%-4.5%, and then there's opportunity for upside with other pricing levers that we take. Okay, thanks. And, you know, given a new competitor, at least in the public space... I'm sure you've gone through some of the disclosures. I was just curious, kind of high level, you know, I'm sure there's things that you do really well and other people do well, too. Are there other avenues that you think there are, for improvement? And, you know, I guess, what's the chance that Project Orion goes to, like, there's another, you know, Project Orion Two going forward? Look, when it comes to Project Orion, we're emboldened by the success of Project Orion, and we'll clearly invest in systems in other areas of the company. I think we've got a very strong talent for implementing systems and implementing systems in a way that drives earnings per share. So, we're very emboldened by that. When it comes to our new public competitor, we've been competitors for a long, long time. We don't really see a lot of change in that. We did take a look at the S-11. We published a document on our website. We highlighted some areas where we think we're a little bit better, and I'm sure there are areas where we're not as good. I think I've been saying that for a couple of years now. But the point is, we now feel like we have a competitor. We're very competitive people, and we expect to continue to grow and do very well. Thank you. Next question comes from the line of Craig Mailman with Citi. Please go ahead. Hey, good morning. Maybe just hitting on sort of the trajectory here or risk to rent growth or occupancy as we head into 2025. Just looking at your expiration schedule, I mean, 71% of the kind of fixed commit rents expire through 2026. And there's, you know, a good amount of slack in the system from a physical occupancy standpoint. And you look at the USDA numbers, I mean, you're still below 2016 levels, right? And your tenants are under margin pressure. Just at what point do they say, "We'll keep the space, but we want rent reductions," right? Like, you're talking 3.5%-4.5% GRI increases in a low inflationary environment. But, you know, they've been getting hit over the head with kind of inflationary cost increases the last couple of years, and that their customer is, is stretched. And even with, you know, potential rate declines here, you have unemployment ticking up, you have wage growth slowing, like, the, the customer could be under pressure here, for a while going forward. So I'm just kind of trying to put all the pieces together. I know, you know, your margins are going higher, and that's a positive. But on the other side, right, end user demand is down. You're seeing economic occupancy fall, you're seeing physical occupancy fall, and most real estate supply and demand, right, rents eventually fall in that scenario. So I'm just trying to kind of really bridge all the comments on the call to get a sense of, as we head into 2025, I mean, should we be putting a brake on, on expectations here for continued, kind of same sort of growth, the same way you've had it this year? Well, I was gonna say, the only thing not falling is our earnings per share, right, Craig? I mean, they're up consistently every quarter this year. Well, second, two quarters this year in a row. So, look, all the pricing we pass through to our customers has to do with inflation we incur. I would say 90% of that was labor inflation. As you know, labor is the biggest expense we have in our company. We're, you know, we're not gonna give labor decreases in our company. I'm pretty sure our customers aren't either. So there's no room for price decreases in our business. We haven't expanded margins on price when it comes to inflation. We've recovered the inflation. Now, we've expanded margins by working better internally, as we talked about on the call, and that's what's driven our AFFO per share up both quarters this year, and it'll continue to improve with the new systems we have in place. Throughput and occupancy have been a problem for a year now. I think there's hope because there's wide recognition that interest rates are coming. Interest rate cuts are coming, and that will increase disposable income significantly for the customers that you mentioned or consumers that hit the customers you mentioned. And I think there's a positive outlook there if those interest rates come. But we continue to grow our AFFO. We can do that under any environment, as we've said multiple times, and we don't see an end to that growth. Then, you know, the point that I would add, I mean, look, as George said, over the last 12 months plus, we've been in this environment. You've seen us continue to grow our fixed commitments. You've seen our churn rate remain consistent, and the reason for that is customer service. I said earlier on the call that customer service is what is the most important factor to our customers, because when you have a provider that provides poor service, a 3% or a 4% GRI pales in comparison to the cost associated with poor service. So, you know, our focus there on providing best-in-class customer service is why our customers stay with Americold. It's why our relationships with those big customers are is decades long, and I think we'll just continue to see that grow. Thank you. Next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please go ahead. Yeah. Hi, thanks. Good morning. Just last quarter, you mentioned some positive commentary out of the, the CAGNY conference around the consumer and the potential lift in throughput, that, that was, you know, being discussed through retailer marketing efforts. You know, you're talking about lower throughput now in the, in the second half of the year. Just any sense, you know, sort of what changed between then and now and, and why the promotional activity has not translated? Yeah, I think, number one, the promotional activity did occur. There was a lot of spending around the summer grilling season, going into Memorial Day and straight through July Fourth. So it was not a lack of promotional spending. The problem is the prices in the store are so high right now, even discounted, the consumer did not rise to the occasion of buying more products. And it just gives you an idea of how big the price gap is between selling price at the store and what the consumer has for disposable income. So every activity that we thought would occur did, the promotional spending was very heavy. It just didn't squeeze the gap between price and what a consumer is willing to pay close enough. And gives you an idea, I guess, when we talk about 20%-40% higher prices in the grocery store, depending on the category. You know, while promotional activity is normally aggressive, it typically doesn't go to 40%. And I think the gap left between even the net promotional price and the consumer was too wide. It's as simple as that. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.