Lineage said the cold storage market is still working through a supply overhang after the industry added too much capacity in response to the pandemic, leaving operators to absorb weaker utilization across parts of the network. The company estimates the market is 10% overbuilt, and it said some locations have recently been idled while a few competitors are close to shutting down.

Lineage (NASDAQ: LINE) said it ceased operations at 10 facilities last year and at five additional locations so far this year. Together, those moves have idled 2.5 million square feet, or about 1% of its U.S. portfolio. The company said on a Wednesday quarterly call with analysts that some of the locations could return to service.

Management also said it plans to sell roughly $1 billion in assets and use the proceeds to reduce debt, with net debt-to-EBITDA expected to move from 6x to a range of 5x to 5.5x. The company said supply rationalization should ultimately benefit scaled providers with automation and transportation capabilities.

Lineage reported a net loss of $32 million for the second quarter on Wednesday before the market opened. Adjusted funds from operations, or AFFO, came in at 76 cents per share, down 5 cents year over year.

Consolidated net revenue was $1.36 billion, up 1% year over year and slightly above the $1.35 billion consensus estimate.

On a same-warehouse basis, physical occupancy was 75.8% in the quarter, 90 basis points higher than a year earlier but 60 basis points lower sequentially. Pallet throughput fell 2% year over year, while storage revenue per pallet declined 1%.

A 14% year-over-year decline in food-related container volumes at ports weighed on throughput. Management said food inventories are stabilizing, adding that some customers have indicated a need to rebuild stocks. Lineage said it expects normal seasonal demand patterns ahead, which would result in a modest year-over-year decline in both pallet throughput and revenue per pallet. The company reiterated its outlook for net pricing to rise 1% to 2%.

Adjusted EBITDA was $320 million, down 2% year over year, and the adjusted EBITDA margin fell 60 basis points to 23.5%.

Lineage narrowed its full-year adjusted EBITDA guidance range to $1.26 billion to $1.29 billion, which implies no change at the midpoint. It said a fire at a California facility will create a $15 million EBITDA headwind because of lost revenue and transition costs. The company reported $1.3 billion in adjusted EBITDA in 2025.

The company raised its AFFO per share guidance range to $2.80 to $3.05, lifting the low and high ends by 5 cents.

Lineage said it has 20 facilities under construction, which are expected to contribute $134 million in incremental net operating income.

The company operates 500 facilities with 3.1 billion cubic feet of space across North America, Europe and the Asia-Pacific region. It also 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 a 0.4% gain for the S&P 500.

Lineage is one of only two publicly traded cold storage providers, making its quarterly results a rare view into broader trends in temperature-controlled warehousing and transportation markets.