Lineage (NASDAQ:LINE) reported second-quarter results that exceeded its internal expectations and consensus estimates as warehouse occupancy improved and cost-control efforts helped offset continued trade-related volume pressure.
Adjusted EBITDA totaled approximately $320 million for the quarter, while adjusted funds from operations, or AFFO, was about $198 million, or $0.76 per share. President and Chief Executive Officer Greg Lehmkuhl said the company’s operational trends continued to stabilize, though its full-year outlook still reflects competitive pressures in some U.S. markets and trade-related volume headwinds.
Warehouse occupancy improves, while throughput remains pressured
In the Global Warehousing segment, total warehouse net operating income was approximately $367 million. Same-store NOI declined 2.9% from a year earlier, a result Chief Financial Officer Robb LeMasters said was ahead of expectations. Favorable foreign exchange contributed 90 basis points to same-store NOI during the quarter.
Same-store physical occupancy increased 90 basis points year over year, marking an improvement after declines during 2025. Same-store rent, storage and blast revenue per physical pallet declined 0.7%, while services revenue per throughput pallet increased 2.1%.
Same-store throughput pallets fell 1.8% year over year, including a 14% decline in container volumes as tariff uncertainty continued to weigh on higher-turning port-related business. International container volume represents about 15% of Lineage’s warehouse throughput, according to management.
Lehmkuhl said the company expects to begin lapping the steep volume declines recorded in 2025 during late third quarter and into the fourth quarter. He also said inventory de-stocking by customers has largely reset to more historical levels, while broader supply conditions are stabilizing despite pockets of pressure from new capacity in about 15% of U.S. markets.
Lineage expects to achieve a 1% to 2% net customer pricing increase for 2026, following the completion of most of its annual pricing discussions. However, it maintained its expectation that revenue per pallet for the full year will be slightly lower because of trade and customer-mix factors.
Guidance raised for same-store NOI and AFFO
The company raised its full-year outlook for same-store NOI growth to a range of negative 3% to flat, compared with prior guidance of negative 4% to negative 1%. It also increased AFFO guidance to $2.80 to $3.05 per share, from $2.75 to $3.00.
Lineage maintained the midpoint of its adjusted EBITDA guidance while narrowing the range. Total warehouse NOI growth is still expected to range from negative 2% to positive 1%, as improved same-store performance is offset by the impact of a fire at its Big Bear facility in Los Angeles.
LeMasters said foreign exchange is expected to be a relatively minor year-over-year factor during the balance of 2026. He expects third-quarter same-store NOI growth to be the lowest reported level of the year because of difficult comparisons, followed by close to flat year-over-year same-store NOI growth in the fourth quarter as import-export comparisons ease and new business ramps.
Administrative expenses, excluding stock-based compensation, were approximately $118 million in the second quarter. The company narrowed its full-year administrative expense forecast to $460 million to $470 million, with expenses expected toward the lower end of the prior quarterly range of $120 million to $125 million in each of the final two quarters.
Big Bear fire expected to reduce EBITDA by $15 million
Lineage said a fire at its roughly 500,000-square-foot Big Bear facility is expected to reduce adjusted EBITDA by about $15 million during the third and fourth quarters, reflecting lost revenue and added costs while the site recovers. The facility has about 85,000 pallet positions, representing approximately 1% of the company’s global capacity.
The company said it shifted customer volumes to surrounding facilities and expects to retain the significant majority of the affected business. Management said it believes the fire began during third-party testing of a rooftop solar array owned and operated by Altus, and that Lineage is pursuing options to hold the company accountable.
Lineage said it has insurance coverage for the event and expects business interruption insurance ultimately to recover lost profit. Such recoveries would be recognized below the EBITDA line and are not included in current guidance. Repair, remediation, legal, community-support and related one-time costs will be excluded from adjusted EBITDA, as will offsetting insurance recoveries.
The company committed more than $3.3 million to nonprofits and direct assistance for the local community during cleanup and remediation efforts.
GIS outlook reduced after settlement and carrier-rate pressure
Global Integrated Solutions NOI was $61 million in the quarter. Excluding the prior-year disposition of its Spain Transportation business, segment revenue grew 5%, driven by U.S. transportation and food-service operations.
However, accelerating truckload and less-than-truckload carrier rates pressured margins because the company passes those costs through to customers with a lag. GIS also recorded a $7 million legal settlement tied to an employment matter from prior years. Excluding the settlement, LeMasters said GIS generated an underlying margin of 19%.
Lineage lowered its full-year GIS NOI outlook to negative 4% to negative 2%, from prior guidance of flat to positive 2%. Management expects margins to recover over time as carrier rates are incorporated into customer pricing.
Development, technology and balance-sheet initiatives
Lineage has 20 facilities under construction or in ramp-up and stabilization, representing $1.1 billion of investment and more than $134 million of expected incremental NOI at stabilization. Development projects were 71% pre-leased as of the quarter’s end.
The company also expanded its LinOS operating platform to 14 conventional sites and said it remains on track to reach 20 such facilities by year-end. Lehmkuhl said the initiative is meeting internal savings targets across the 14 locations and should begin contributing modestly in the fourth quarter, with increasing impact expected in 2027 and 2028. Lineage has targeted $110 million of EBIT impact from LinOS.
At quarter-end, Lineage had approximately $7.8 billion of net debt and $1.6 billion of total liquidity. Reported leverage was about 6.0 times, while adjusted net debt to transaction-adjusted EBITDA was approximately 5.3 times. The company reiterated its goal of bringing reported leverage into a range of 5.0 to 5.5 times.
LeMasters said Lineage is progressing on a strategic portfolio review and expects to provide a comprehensive update by year-end. He said the company sees a disconnect between public and private valuations for cold-storage assets and is evaluating transactions that could increase financial flexibility while preserving capacity for future investments, acquisitions and shareholder returns.
About Lineage (NASDAQ:LINE)
Lineage Logistics, Inc (NASDAQ: LINE) is a leading provider of temperature-controlled industrial real estate and supply chain solutions. The company specializes in refrigerated and frozen storage, transportation, and ancillary services designed to support the global perishable goods industry. From food manufacturers and distributors to retailers and foodservice operators, Lineage offers tailored temperature management solutions that help clients optimize inventory turnover, reduce waste, and maintain product quality throughout the cold chain.
Lineage’s core services include ambient, refrigerated and frozen warehousing, cross-docking, transloading, and dedicated transportation.
