Temperature-controlled warehouse operator Lineage said the market is shaking off the effects of excessive facility construction and post-pandemic inventory destocking.

Management from the Novi, Michigan-based company said Wednesday that new cold storage space grew 14.5% from 2021 through 2025 while demand increased only 5%. With the market roughly 10% oversupplied, management sees fundamentals firming as capacity is expected to increase by just 1.5% this year and customer inventories appear to be at trough levels.

Lineage (NASDAQ: LINE) reported net income of $6 million for the fourth quarter on Wednesday before the market opened. Adjusted funds from operations, which exclude depreciation, acquisition and restructuring costs (among other items), of 83 cents per share, came in flat year over year.

The company reported consolidated net revenue of $1.34 billion, which was also level with the year-ago result, but below the consensus estimate of $1.38 billion.

Table: Lineage’s key performance indicators

On a same-warehouse comparison, pallet throughput declined 3% y/y, but storage revenue per pallet was up 2%. (The metrics declined 1% and 4%, respectively, from the third quarter.)

Physical occupancy was 79.3% in the quarter, 50 basis points lower y/y, but 410 bps better sequentially. Management said roughly 60% of U.S. markets don’t have excess supply, but capacity overhangs still persist in areas like Dallas, Houston and New Jersey.

Lineage idled 10 sites last year, reallocating resources and labor to other parts of its network. It also sold a location in Southern California for $60 million during the fourth quarter. The company has 24 facilities currently under construction, which will add $150 million in annual EBITDA. (Lineage reported $1.3 billion in adjusted EBITDA during 2025.)

The company’s 2026 outlook calls for net pricing increases of 1% to 2% now that the post-Covid inventory drawdown has passed. It has already repriced 65% of its contracts for the year. The guidance assumes no material change in the economy.

Occupancy normally declines 300 bps from the fourth quarter to the first quarter. Management expects a similar decline this year as import volumes remain under pressure.

Lineage has $50 million in annual cost reductions planned, with implementation occurring throughout the year and into 2027. The company previously outlined a plan to generate $110 million in incremental annual EBITDA over the next three to five years from the rollout of its proprietary warehouse automation system, LinOS.

Lineage manages more than 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 3.8% at 11:08 a.m. EST on Wednesday compared to the S&P 500, which was up 0.5%.

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