Operational Excellence and Disciplined Capital
Allocation Drive Solid Operating Performance and Strong EPS
Growth
Second Quarter Revenue of $1.9 Billion with
GAAP EPS of $0.87; Adjusted EPS of $0.99
GAAP Operating Income of $46 Million; GAAP Net
Income of $34 Million; Adjusted EBITDA of $86 Million
Repurchased $31 Million of Shares in the Second
Quarter of 2023
Updates Full-Year 2023 Guidance
The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a
leading provider of products, services, and technology solutions to
businesses and consumers, today announced results for the second
quarter ended July 1, 2023.
Consolidated (in millions, except
per share amounts)
2Q23
2Q22
YTD23
YTD22
Selected GAAP and Non-GAAP
measures:
Sales
$1,908
$2,034
$4,016
$4,212
Sales change from prior year period
(6)%
(5)%
Operating income
$46
$28
$141
$104
Adjusted operating income (1)
$53
$54
$152
$143
Net income from continuing operations
$34
$20
$107
$75
Diluted earnings per share from continuing
operations
$0.87
$0.39
$2.61
$1.49
Adjusted net income from continuing
operations (1)
$39
$39
$114
$104
Adjusted earnings per share from
continuing operations (fully diluted) (1)
$0.99
$0.79
$2.80
$2.06
Adjusted EBITDA (1)
$86
$91
$217
$216
Operating Cash Flow from continuing
operations
$(8)
$(114)
$149
$(84)
Free Cash Flow (2)
$(31)
$(135)
$97
$(127)
Adjusted Free Cash Flow (3)
$(30)
$(121)
$103
$(106)
Second Quarter 2023
Summary(1)(2)(3)
- Total reported sales of $1.9 billion, down 6% versus the prior
year, primarily due to lower sales in its Office Depot consumer
division, largely driven by 68 fewer retail locations in service
compared to the prior year, as well as lower retail and online
consumer traffic and transactions
- GAAP operating income of $46 million and net income from
continuing operations of $34 million, or $0.87 per diluted share,
versus $28 million and $20 million, or $0.39 per diluted share,
respectively in the prior year
- Adjusted operating income of $53 million, compared to $54
million in the second quarter of 2022; adjusted EBITDA of $86
million, compared to $91 million in the second quarter of 2022
- Adjusted net income from continuing operations of $39 million,
or adjusted diluted earnings per share from continuing operations
of $0.99, versus $39 million or $0.79, respectively in the prior
year
- Operating cash flow from continuing operations of ($8 million)
and adjusted free cash flow of ($30 million), versus $(114 million)
and $(121 million), respectively in the prior year
- Repurchased 724 thousand shares for $31 million in the second
quarter of 2023
- $1.1 billion of total available liquidity including $335
million in cash and cash equivalents at quarter end
“Our continued focus on operational excellence and disciplined
capital allocation drove solid operating results and a strong
increase in earnings per share,” said Gerry Smith, chief executive
officer of The ODP Corporation. “ODP Business Solutions led the
way, expanding its margin profile and driving an impressive
year-over-year increase in operating income. Veyer added new
third-party business, remaining on-track to more than double
external EBITDA in 2023, and Varis continues to onboard customers
and incorporate feedback and new features onto its platform. While
the weaker macroeconomic environment and somewhat sluggish consumer
activity created top-line headwinds in our consumer business during
the quarter, Office Depot continued to provide a superior customer
experience and we are encouraged by our expanded assortment, which
positions us well for the upcoming back-to-school selling
season.”
“Combining our solid operating performance with our continued
disciplined capital allocation, which included repurchasing about
$31 million of our shares in the quarter, we drove an impressive
25% year-over-year increase in adjusted earnings per share in the
second quarter,” Smith continued.
“Our low-cost business model, multiple routes to market, and
strong balance sheet have us well positioned to continue navigating
the ongoing challenging macroeconomic conditions. Moving ahead, we
will continue to drive operational excellence across our four
business units and prioritize capital allocation, remaining
squarely focused on driving value for our shareholders,” Smith
concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the second quarter of 2023 were $1.9
billion, a decrease of 6% compared with the same period last year.
This was driven primarily by lower sales in its consumer division,
Office Depot, primarily due to 68 fewer stores in service compared
to last year related to planned store closures, as well as lower
retail and online consumer traffic. Sales at ODP Business Solutions
Division were flat year over year, as increases in sales for paper
and certain adjacency categories, and flexible pricing strategies,
were largely offset by lower sales in product categories including
ink, toner, office supplies and personal protective equipment.
Additionally, Veyer provided strong logistics support for the ODP
Business Solutions and Office Depot Divisions, and began to capture
additional demand for its supply chain and procurement solutions
among other third-party customers.
The Company reported operating income of $46 million in the
second quarter of 2023, up 64% compared to operating income of $28
million in the prior year period. Operating results in the second
quarter of 2023 included $7 million of charges. These charges
consisted primarily of $6 million associated with non-cash asset
impairments largely related to the operating lease right-of-use
(ROU) assets associated with the Company’s retail store locations.
Net income from continuing operations was $34 million, or $0.87 per
diluted share in the second quarter of 2023, up from $20 million,
or $0.39 per diluted share in the second quarter of 2022.
Adjusted (non-GAAP) Results(1)
Adjusted results for the second quarter of 2023 exclude charges
and credits totaling $7 million as described above and the
associated tax impacts.
- Second quarter of 2023 adjusted EBITDA was $86 million compared
to $91 million in the prior year period. This included depreciation
and amortization of $29 million and $34 million in the second
quarters of 2023 and 2022, respectively
- Second quarter of 2023 adjusted operating income was $53
million compared to $54 million in the second quarter of 2022
- Second quarter of 2023 adjusted net income from continuing
operations was $39 million, or $0.99 per diluted share, compared to
$39 million, or $0.79 per diluted share, in the second quarter of
2022, an increase of 25% on a per share basis
Division Results
ODP Business Solutions Division
Leading B2B distribution solutions provider serving small,
medium and enterprise level companies with an annual
trailing-twelve-month revenue in excess of $4 billion
- Reported sales were $1.0 billion in the second quarter of 2023,
flat compared to the same period last year, as return to the office
trends and flexible pricing strategies were offset by higher levels
of unemployment and other macroeconomic factors
- Drove strong sales in paper and adjacency categories, including
furniture, cleaning and breakroom supplies, and copy and print
services
- Total adjacency category sales, including cleaning and
breakroom, furniture, technology, and copy and print, were 44% of
total ODP Business Solutions’ sales
- Continued strong pipeline and signed renewed business in excess
of $100 million in customer agreements
- Operating income was $45 million in the second quarter of 2023,
up 25% over the same period last year, related primarily to higher
gross margins. As a percentage of sales, operating income margin
was 4.5%, up 100 basis points compared to the same period last
year
Office Depot Division
Leading provider of retail consumer and small business products
and services distributed via Office Depot and OfficeMax retail
locations and an award-winning eCommerce presence
- Reported sales were $0.9 billion in the second quarter of 2023,
down 13% compared to the prior year period partially due to 68
fewer retail outlets in service associated with planned store
closures, as well as lower demand relative to last year in certain
product categories and lower online sales. The Company closed 7
retail stores in the quarter and had 952 stores at quarter end.
Sales were down approximately 8% on a comparable store basis
- Store traffic and demand relative to last year was negatively
impacted by the recovery from the pandemic as a greater percentage
of customers returned to the office, as well as weaker
macroeconomic activity and higher unemployment
- Operating income was $35 million in the second quarter of 2023,
compared to operating income of $49 million during the same period
last year. As a percentage of sales, operating income was 4%, or
down approximately 90 basis points compared to the same period last
year. This result was primarily driven by the flow through impact
from lower sales and impacts related to inflation
Veyer Division
Veyer is a supply chain, distribution, procurement and global
sourcing operation, supporting Office Depot and ODP Business
Solutions, as well as other third-party customers. Assets and
capabilities of Veyer include approximately 9 million square feet
of infrastructure; ~100 facilities (distribution centers,
cross-docks, and direct import centers); a large private fleet of
vehicles; and next-day delivery to 98.5% of US population
- In the second quarter of 2023, Veyer provided strong support
for its internal customers, ODP Business Solutions and Office
Depot, as well as for its third-party customers, generating sales
of $1.3 billion
- Operating income was $6 million in the second quarter of 2023,
down from $8 million in the prior year period related to lower
sales in Office Depot
- In the quarter relative to last year, sales and EBITDA
generated from third party customers was up nearly 62% and over
141%, respectively, resulting in sales of approximately $10 million
and EBITDA of $3 million in the quarter
Varis Division
Varis is a tech-enabled B2B indirect procurement marketplace
launched in the fourth quarter of 2022, which provides buyers and
suppliers a seamless way to transact through the platform’s
consumer-like buying experience and advanced spend management
tools
- Successfully launched the platform in the fourth quarter of
2022; onboarding new customers, incorporating feedback, and adding
new features to the platform
- Varis generated revenues in the quarter of $2 million, an
increase of $1 million compared to the second quarter of 2022
- Operating loss was $14 million, compared to an operating loss
of $16 million in the second quarter of 2022, primarily driven by
lower employee related costs and as the division continued to
invest in its business and worked to onboard customers
Share Repurchases
The Company continued to execute under its previously announced
$1 billion share repurchase authorization, available through
year-end 2025. During the second quarter of 2023, the Company
repurchased 724 thousand shares for $31 million. Since the
inception of the authorization beginning in November 2022, the
Company has repurchased approximately 8.3 million shares for $387
million.
The number of shares to be repurchased in the future and the
timing of such transactions will depend on a variety of factors,
including market conditions, regulatory requirements, and other
corporate considerations. The current authorization could be
suspended or discontinued at any time as determined by the Board of
Directors.
Balance Sheet and Cash Flow
As of July 1, 2023, ODP had total available liquidity of
approximately $1.1 billion, consisting of $335 million in cash and
cash equivalents and $811 million of available credit under the
Third Amended Credit Agreement. Total debt was $181 million.
For the second quarter of 2023, cash used by operating
activities of continuing operations was $8 million, which included
$1 million in restructuring and other spend, compared to cash used
by operating activities of continuing operations of $114 million in
the second quarter of the prior year, which included $14 million in
restructuring and other spend. The year-over-year improvement in
operating cash flow largely related to stronger operating results,
prudent inventory management, and timing of certain working capital
items.
Capital expenditures in the second quarter of 2023 were $23
million versus $21 million in the prior year period, reflecting
continuing growth investments in the Company’s digital
transformation, distribution network, and eCommerce capabilities.
Adjusted Free Cash outflow(3) was $30 million in the second quarter
of 2023, a significant improvement compared to $121 million outflow
in the prior year period.
“I would like to thank our entire team for their continued
efforts on carefully managing inventory and other working capital
items, which resulted in significantly stronger year-over-year cash
flow in the quarter,” said Anthony Scaglione, executive vice
president and chief financial officer of The ODP Corporation. “As
we move into the second half of the year, we will maintain our
disciplined approach and focus on managing operating costs,
maximizing cash flow in our business, and optimizing our capital
allocation plan,” Scaglione added.
Updated 2023 Expectations
“We remain cautiously optimistic about the second half of the
year and are excited about the opportunity to continue driving
operational excellence and delivering strong value for our
shareholders,” said Smith. “While we recognize that the challenging
macroeconomic environment is causing somewhat sluggish consumer
activity and market disruptions, we're enthusiastic about our
strong position and are focused on driving the assets we control to
deliver long-term profitable growth. Through executing along our
three horizons strategy, driving our four business unit model, and
remaining focused on prudently deploying capital to maximize
shareholder value, we’re on a path to unlocking ODP's potential,
creating a compelling value proposition for all of our
stakeholders.”
The Company’s full year guidance for 2023 included in this
release includes non-GAAP measures, such as adjusted EBITDA,
Adjusted Operating Income, Adjusted Earnings per Share and Adjusted
Free Cash Flow. These measures exclude charges or credits not
indicative of core operations, which may include but not be limited
to merger integration expenses, restructuring charges,
acquisition-related costs, executive transition costs, asset
impairments and other significant items that currently cannot be
predicted without unreasonable efforts. The exact amount of these
charges or credits are not currently determinable but may be
significant. Accordingly, the Company is unable to provide
equivalent GAAP measures or reconciliations from GAAP to non-GAAP
for these financial measures without unreasonable effort.
The Company is updating its full year guidance for 2023 as
follows:
Previous 2023 Guidance
Updated 2023 Guidance
Sales
$8.0 - $8.4 billion
Revised to approximately $8
billion
Adjusted EBITDA
$400 - $430 million
Affirmed
Adjusted Operating Income
$270 - $300 million
Affirmed
Adjusted Earnings per Share(*)
$4.50 - $5.10 per share
Revised to $5.00 - $5.30 per
share
Adjusted Free Cash Flow(**)
$200 - $230 million
Affirmed
Capital Expenditures
$100 - $120 million
Affirmed
*Adjusted Earnings per Share (EPS)
guidance for 2023 excludes potential discrete (tax) items that may
affect quarter to quarter fluctuations and includes expected impact
from share repurchases
**Adjusted Free Cash Flow is defined as
cash flows from operating activities less capital expenditures
excluding cash charges associated with the Company’s Maximize B2B
Restructuring and expenses incurred in connection with our
previously planned separation of the consumer business and
re-alignment
“We delivered solid performance in the first half of the year
and remain in a strong capital position with our low-cost business
model mindset,” said Scaglione. “While we’re cautious on the state
of the consumer and general macroeconomic conditions, our continued
focus on operational excellence has us well positioned to continue
driving solid results for the balance of the year. Our updated
guidance assumes stabilization in overall economic trends in the
second half of 2023 and reflects our expectations for revenue
trends given first half performance, confirming the low end of our
previous full-year revenue guidance range, while reaffirming all
other operating metrics and increasing our earnings per share
guidance given our strong performance to date, lower than expected
interest and tax expense, and continued share buyback activity,”
Scaglione added.
The ODP Corporation will webcast a call with financial analysts
and investors on August 9, 2023, at 9:00 am Eastern Time, which
will be accessible to the media and the general public. To listen
to the conference call via webcast, please visit The ODP
Corporation’s Investor Relations website at
investor.theodpcorp.com. A replay of the webcast will be available
approximately two hours following the event.
(1)
As presented throughout this release,
adjusted results represent non-GAAP financial measures and exclude
charges or credits not indicative of core operations and the tax
effect of these items, which may include but not be limited to
merger integration, restructuring, acquisition costs, and asset
impairments. Reconciliations from GAAP to non-GAAP financial
measures can be found in this release as well as on the Company’s
Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is
defined as cash flows from operating activities less capital
expenditures. Free Cash Flow is a non-GAAP financial measure and
reconciliations from GAAP financial measures can be found in this
release as well as on the Company’s Investor Relations website at
investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free
Cash Flow is defined as Free Cash Flow excluding cash charges
associated with the Company’s Maximize B2B Restructuring, and
expenses incurred in connection with our previously planned
separation of the consumer business and re-alignment. Adjusted Free
Cash Flow is a non-GAAP financial measure and reconciliations from
GAAP financial measures can be found in this release as well as on
the Company’s Investor Relations website at
investor.theodpcorp.com.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of
products, services, and technology solutions through an integrated
business-to-business (B2B) distribution platform and omni-channel
presence, which includes world-class supply chain and distribution
operations, dedicated sales professionals, a B2B digital
procurement solution, online presence, and a network of Office
Depot and OfficeMax retail stores. Through its operating companies
Office Depot, LLC; ODP Business Solutions, LLC; Veyer, LLC; and
Varis, Inc, The ODP Corporation empowers every business,
professional, and consumer to achieve more every day. For more
information, visit theodpcorp.com.
ODP and ODP Business Solutions are trademarks of ODP Business
Solutions, LLC. Office Depot is a trademark of The Office Club,
LLC. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of
Veyer, LLC. Varis is a trademark of Varis, Inc. Grand&Toy is a
trademark of Grand & Toy, LLC in Canada. ©2023 Office Depot,
LLC. All rights reserved. Any other product or company names
mentioned herein are the trademarks of their respective owners.
FORWARD LOOKING STATEMENTS
This communication may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements or disclosures may discuss goals, intentions
and expectations as to future trends, plans, events, results of
operations, cash flow or financial condition, the potential impacts
on our business due to the unknown severity and duration of the
COVID-19 pandemic, or state other information relating to, among
other things, the Company, based on current beliefs and assumptions
made by, and information currently available to, management.
Forward-looking statements generally will be accompanied by words
such as “anticipate,” “believe,” “plan,” “could,” “estimate,”
“expect,” “forecast,” “guidance,” “expectations”, “outlook,”
“intend,” “may,” “possible,” “potential,” “predict,” “project,”
“propose” or other similar words, phrases or expressions, or other
variations of such words. These forward-looking statements are
subject to various risks and uncertainties, many of which are
outside of the Company’s control. There can be no assurances that
the Company will realize these expectations or that these beliefs
will prove correct, and therefore investors and stakeholders should
not place undue reliance on such statements.
Factors that could cause actual results to differ materially
from those in the forward-looking statements include, among other
things, highly competitive office products market and failure to
differentiate the Company from other office supply resellers or
respond to decline in general office supplies sales or to shifting
consumer demands; competitive pressures on the Company’s sales and
pricing; the risk that the Company is unable to transform the
business into a service-driven, B2B platform that such a strategy
will not result in the benefits anticipated; the risk that the
Company will not be able to achieve the expected benefits of its
strategic plans, including its strategic shift to maintain all of
its businesses under common ownership; the risk that the Company
may not be able to realize the anticipated benefits of acquisitions
due to unforeseen liabilities, future capital expenditures,
expenses, indebtedness and the unanticipated loss of key customers
or the inability to achieve expected revenues, synergies, cost
savings or financial performance; the risk that the Company is
unable to successfully maintain a relevant omni-channel experience
for its customers; the risk that the Company is unable to execute
the Maximize B2B Restructuring Plan successfully or that such plan
will not result in the benefits anticipated; failure to effectively
manage the Company’s real estate portfolio; loss of business with
government entities, purchasing consortiums, and sole- or limited-
source distribution arrangements; failure to attract and retain
qualified personnel, including employees in stores, service
centers, distribution centers, field and corporate offices and
executive management, and the inability to keep supply of skills
and resources in balance with customer demand; failure to execute
effective advertising efforts and maintain the Company’s reputation
and brand at a high level; disruptions in computer systems,
including delivery of technology services; breach of information
technology systems affecting reputation, business partner and
customer relationships and operations and resulting in high costs
and lost revenue; unanticipated downturns in business relationships
with customers or terms with the suppliers, third-party vendors and
business partners; disruption of global sourcing activities,
evolving foreign trade policy (including tariffs imposed on certain
foreign made goods); exclusive Office Depot branded products are
subject to additional product, supply chain and legal risks;
product safety and quality concerns of manufacturers’ branded
products and services and Office Depot private branded products;
covenants in the credit facility; general disruption in the credit
markets; incurrence of significant impairment charges; retained
responsibility for liabilities of acquired companies; fluctuation
in quarterly operating results due to seasonality of the Company’s
business; changes in tax laws in jurisdictions where the Company
operates; increases in wage and benefit costs and changes in labor
regulations; changes in the regulatory environment, legal
compliance risks and violations of the U.S. Foreign Corrupt
Practices Act and other worldwide anti-bribery laws; volatility in
the Company’s common stock price; changes in or the elimination of
the payment of cash dividends on Company common stock;
macroeconomic conditions such as higher interest rates and future
declines in business or consumer spending; increases in fuel and
other commodity prices and the cost of material, energy and other
production costs, or unexpected costs that cannot be recouped in
product pricing; unexpected claims, charges, litigation, dispute
resolutions or settlement expenses; catastrophic events, including
the impact of weather events on the Company’s business; the
discouragement of lawsuits by shareholders against the Company and
its directors and officers as a result of the exclusive forum
selection of the Court of Chancery, the federal district court for
the District of Delaware or other Delaware state courts by the
Company as the sole and exclusive forum for such lawsuits; and the
impact of the COVID-19 pandemic on the Company’s business. The
foregoing list of factors is not exhaustive. Investors and
shareholders should carefully consider the foregoing factors and
the other risks and uncertainties described in the Company’s Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K filed with the U.S. Securities and Exchange
Commission. The Company does not assume any obligation to update or
revise any forward-looking statements.
THE ODP CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
amounts)
(Unaudited)
13 Weeks Ended
26 Weeks Ended
July 1,
June 25,
July 1,
June 25,
2023
2022
2023
2022
Sales
$
1,908
$
2,034
$
4,016
$
4,212
Cost of goods sold and occupancy costs
1,493
1,603
3,119
3,296
Gross profit
415
431
897
916
Selling, general and administrative
expenses
362
377
745
773
Asset impairments
6
3
10
5
Merger, restructuring and other operating
expenses, net
1
23
1
34
Operating income
46
28
141
104
Other income (expense):
Interest income
2
1
4
2
Interest expense
(5
)
(4
)
(10
)
(9
)
Other income, net
4
3
6
5
Income from continuing operations before
income taxes
47
28
141
102
Income tax expense
13
8
34
27
Net income from continuing operations
34
20
107
75
Discontinued operations, net of tax
—
7
—
7
Net income
$
34
$
27
$
107
$
82
Basic earnings per share
Continuing operations
$
0.89
$
0.40
$
2.70
$
1.54
Discontinued operations
—
0.15
—
0.14
Net basic earnings per share
$
0.89
$
0.55
$
2.70
$
1.68
Diluted earnings per share
Continuing operations
$
0.87
$
0.39
$
2.61
$
1.49
Discontinued operations
—
0.15
—
0.14
Net diluted earnings per share
$
0.87
$
0.54
$
2.61
$
1.63
THE ODP CORPORATION
CONSOLIDATED BALANCE
SHEETS
(In millions, except shares
and par value)
July 1,
December 31,
2023
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
335
$
403
Receivables, net
516
536
Inventories
836
828
Prepaid expenses and other current
assets
38
36
Current assets held for sale
13
107
Total current assets
1,738
1,910
Property and equipment, net
347
352
Operating lease right-of-use assets
893
874
Goodwill
467
464
Other intangible assets, net
43
46
Deferred income taxes
158
182
Other assets
315
321
Total assets
$
3,961
$
4,149
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Trade accounts payable
$
864
$
821
Accrued expenses and other current
liabilities
903
1,005
Income taxes payable
6
17
Short-term borrowings and current
maturities of long-term debt
9
16
Total current liabilities
1,782
1,859
Deferred income taxes and other long-term
liabilities
122
122
Pension and postretirement obligations,
net
16
16
Long-term debt, net of current
maturities
172
172
Operating lease liabilities
708
693
Total liabilities
2,800
2,862
Commitments and contingencies
Stockholders’ equity:
Common stock — authorized 80,000,000
shares of $0.01 par value; issued shares — 66,597,105 at July 1,
2023 and 65,636,015 at December 31, 2022; outstanding shares —
38,187,362 at July 1, 2023 and 42,213,046 at December 31, 2022
1
1
Additional paid-in capital
2,737
2,742
Accumulated other comprehensive loss
(71
)
(77
)
Accumulated deficit
(344
)
(451
)
Treasury stock, at cost — 28,409,744
shares at July 1, 2023 and 23,422,969 shares at December 31,
2022
(1,162
)
(928
)
Total stockholders’ equity
1,161
1,287
Total liabilities and stockholders’
equity
$
3,961
$
4,149
THE ODP CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
26 Weeks Ended
July 1,
June 25,
2023
2022
Cash flows from operating
activities:
Net income
$
107
$
82
Income from discontinued operations, net
of tax
—
7
Net income from continuing operations
107
75
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
59
68
Amortization of debt discount and issuance
costs
1
—
Charges for losses on receivables and
inventories
10
8
Asset impairments
10
5
Gain on disposition of assets, net
(1
)
(3
)
Compensation expense for share-based
payments
18
19
Deferred income taxes and deferred tax
asset valuation allowances
23
12
Changes in working capital and other
operating activities
(78
)
(268
)
Net cash provided by (used in) operating
activities of continuing operations
149
(84
)
Net cash provided by (used in) operating
activities of discontinued operations
—
—
Net cash provided by (used in) operating
activities
149
(84
)
Cash flows from investing
activities:
Capital expenditures
(51
)
(43
)
Businesses acquired, net of cash
acquired
(10
)
—
Proceeds from disposition of assets
101
6
Settlement of company-owned life insurance
policies
1
2
Net cash provided by (used in) investing
activities of continuing operations
41
(35
)
Net cash provided by investing activities
of discontinued operations
5
74
Net cash provided by investing
activities
46
39
Cash flows from financing
activities:
Net payments on long and short-term
borrowings
(9
)
(11
)
Debt retirement
(165
)
(43
)
Debt issuance
165
—
Share purchases for taxes, net of proceeds
from employee share-based transactions
(23
)
(17
)
Repurchase of common stock for
treasury
(231
)
—
Other financing activities
—
(3
)
Net cash used in financing activities of
continuing operations
(263
)
(74
)
Net cash used in financing activities of
discontinued operations
—
—
Net cash used in financing activities
(263
)
(74
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
1
(1
)
Net decrease in cash, cash equivalents and
restricted cash
(67
)
(120
)
Cash, cash equivalents and restricted cash
at beginning of period
404
537
Cash, cash equivalents and restricted cash
at end of period
$
337
$
417
Supplemental information on non-cash
investing and financing activities
Right-of-use assets obtained in exchange
for new operating lease liabilities
148
113
Promissory note receivable obtained from
disposition of discontinued operations
59
55
Cash taxes paid, net
19
—
Cash interest paid, net of amounts
capitalized and non-recourse debt
10
—
Earn-out receivable obtained from
disposition of discontinued operations
9
9
Right-of-use assets obtained in exchange
for new finance lease liabilities
3
—
Other current receivable obtained from
disposition of discontinued operations
—
30
Transfer from additional paid-in capital
to treasury stock for final settlement of the accelerated share
repurchase agreement
—
29
THE ODP CORPORATION
BUSINESS UNIT
PERFORMANCE
(In millions)
(Unaudited)
ODP Business Solutions Division
2Q23
2Q22
YTD23
YTD22
Sales (external)
$999
$995
$2,004
$1,973
Sales (internal)
$3
$5
$7
$11
% change of total sales
0%
1%
Division operating income
$45
$36
$84
$55
% of total sales
4%
4%
4%
3%
Office Depot Division
2Q23
2Q22
YTD23
YTD22
Sales (external)
$897
$1,031
$1,991
$2,225
Sales (internal)
$8
$8
$17
$15
% change of total sales
(13)%
(10)%
Division operating income
$35
$49
$120
$145
% of total sales
4%
5%
6%
6%
Comparable store sales decrease
(8)%
N/A
(5)%
N/A
Veyer Division
2Q23
2Q22
YTD23
YTD22
Sales (external)
$10
$7
$17
$10
Sales (internal)
$1,312
$1,409
$2,725
$2,937
% change of total sales
(7)%
(7)%
Division operating income
$6
$8
$21
$16
% of total sales
0%
1%
1%
1%
Varis Division
2Q23
2Q22
YTD23
YTD22
Sales (external)
$2
$1
$4
$4
Sales (internal)
$0
$0
$0
$0
% change of total sales
100%
—%
Division operating loss
$(14)
$(16)
$(31)
$(31)
% of total sales
(700)%
(1600)%
(775)%
(775)%
THE ODP CORPORATION GAAP to Non-GAAP
Reconciliations (Unaudited)
We report our results in accordance with accounting principles
generally accepted in the United States (“GAAP”). We also review
certain financial measures excluding impacts of transactions that
are not related to our core operations (“non-GAAP”). Management
believes that the presentation of these non-GAAP financial measures
enhances the ability of its investors to analyze trends in its
business and provides a means to compare periods that may be
affected by various items that might obscure trends or developments
in its business. Management uses both GAAP and non-GAAP measures to
assist in making business decisions and assessing overall
performance. Non-GAAP measures help to evaluate programs and
activities that are intended to attract and satisfy customers,
separate from expenses and credits directly associated with Merger,
restructuring, and certain similar items. Certain non-GAAP measures
are also used for short and long-term incentive programs.
Our measurement of these non-GAAP financial measures may be
different from similarly titled financial measures used by others
and therefore may not be comparable. These non-GAAP financial
measures should not be considered superior to the GAAP measures,
but only to clarify some information and assist the reader. We have
included reconciliations of this information to the most comparable
GAAP measures in the tables included within this material.
Free cash flow is a non-GAAP measure, which we define as cash
flows from operating activities less capital expenditures. We
believe that free cash flow is an important indicator that provides
additional perspective on our ability to generate cash to fund our
strategy and expand our distribution network. Adjusted free cash
flow is also a non-GAAP measure, which we define as free cash flow
excluding cash charges associated with the Company’s Maximize B2B
Restructuring, and the previously planned separation of the
consumer business and re-alignment.
(In millions, except per share amounts)
Q2 2023
Reported (GAAP)
% of Sales
Less: Charges &
Credits
Adjusted (Non-GAAP)
% of Sales
Asset impairments
$
6
0.3
%
$
6
$
—
—
%
Merger, restructuring and other operating
expenses, net
$
1
0.1
%
$
1
$
—
—
%
Operating income
$
46
2.4
%
$
(7
)
$
53
(4)
2.8
%
Income tax expense
$
13
0.7
%
$
(2
)
$
15
(5)
0.8
%
Net income from continuing operations
$
34
1.8
%
$
(5
)
$
39
(6)
2.0
%
Earnings per share from continuing
operations (fully diluted)
$
0.87
$
(0.12
)
$
0.99
(6)
Depreciation and amortization
$
29
1.5
%
$
—
$
29
1.5
%
Q2 2022
Reported (GAAP)
% of Sales
Less: Charges &
Credits
Adjusted (Non-GAAP)
% of Sales
Asset impairments
$
3
0.1
%
$
3
$
—
—
%
Merger, restructuring and other operating
expenses, net
$
23
1.1
%
$
23
$
—
—
%
Operating income
$
28
1.4
%
$
(26
)
$
54
(4)
2.7
%
Income tax expense
$
8
0.4
%
$
(7
)
$
15
(5)
0.7
%
Net income from continuing operations
$
20
1.0
%
$
(19
)
$
39
(6)
1.9
%
Earnings per share from continuing
operations (fully diluted)
$
0.39
$
(0.40
)
$
0.79
(6)
Depreciation and amortization
$
34
1.7
%
$
—
$
34
1.7
%
THE ODP CORPORATION
GAAP to Non-GAAP
Reconciliations
(Unaudited)
YTD 2023
Reported (GAAP)
% of Sales
Less: Charges &
Credits
Adjusted (Non-GAAP)
% of Sales
Asset impairments
$
10
0.2
%
$
10
$
—
—
%
Merger, restructuring and other operating
expenses, net
$
1
0.0
%
$
1
$
—
—
%
Operating income
$
141
3.5
%
$
(11
)
$
152
(4)
3.8
%
Income tax expense
$
34
0.8
%
$
(4
)
$
38
(5)
0.9
%
Net income from continuing operations
$
107
2.7
%
$
(7
)
$
114
(6)
2.8
%
Earnings per share from continuing
operations (most dilutive)
$
2.61
$
(0.19
)
$
2.80
(6)
Depreciation and amortization
$
59
1.5
%
$
—
$
59
1.5
%
YTD 2022
Reported (GAAP)
% of Sales
Less: Charges &
Credits
Adjusted (Non-GAAP)
% of Sales
Asset impairments
$
5
0.1
%
$
5
$
—
—
%
Merger, restructuring and other operating
expenses, net
$
34
0.8
%
$
34
$
—
—
%
Operating income
$
104
2.5
%
$
(39
)
$
143
(4)
3.4
%
Income tax expense
$
27
0.6
%
$
(10
)
$
37
(5)
0.9
%
Net income from continuing operations
$
75
1.8
%
$
(29
)
$
104
(6)
2.5
%
Earnings per share from continuing
operations (most dilutive)
$
1.49
$
(0.57
)
$
2.06
(6)
Depreciation and amortization
$
68
1.6
%
$
—
$
68
1.6
%
13 Weeks Ended
26 Weeks Ended
July 1,
June 25,
July 1,
June 25,
Adjusted EBITDA:
2023
2022
2023
2022
Net income
$
34
$
27
$
107
$
82
Discontinued operations, net of tax
—
7
—
7
Net income from continuing operations
34
20
107
75
Income tax expense
13
8
34
27
Income from continuing operations before
income taxes
47
28
141
102
Add (subtract)
Interest income
(2
)
(1
)
(4
)
(2
)
Interest expense
5
4
10
9
Depreciation and amortization
29
34
59
68
Charges and credits, pretax (7)
7
26
11
39
Adjusted EBITDA
$
86
$
91
$
217
$
216
Amounts may not foot due to rounding. The sum of the quarterly
amounts may not equal the reported amounts for the year due to
rounding.
(4)
Adjusted operating income for all periods
presented herein exclude merger, restructuring and other operating
expenses, net, and asset impairments (if any).
(5)
Adjusted income tax expense for all
periods presented herein exclude the tax effect of the charges or
credits not indicative of core operations as described in the
preceding notes.
(6)
Adjusted net income and adjusted earnings
per share (fully diluted) for all periods presented exclude merger,
restructuring and other operating expenses, net, asset impairments
(if any), and exclude the tax effect of the charges or credits not
indicative of core operations.
(7)
Charges and credits, pretax for all
periods presented include merger, restructuring and other operating
expenses, net, asset impairments (if any).
THE ODP CORPORATION
GAAP to Non-GAAP
Reconciliations
(Unaudited)
13 Weeks Ended
26 Weeks Ended
July 1,
June 25,
July 1,
June 25,
Free cash flow
2023
2022
2023
2022
Net cash provided by operating activities
of continuing operations
$
(8
)
$
(114
)
$
149
$
(84
)
Capital expenditures
(23
)
(21
)
(51
)
(43
)
Change in restricted cash impacting
working capital
—
—
(1
)
—
Free cash flow
(31
)
(135
)
97
(127
)
Adjustments for certain cash charges:
Maximize B2B Restructuring Plan
1
1
4
3
Previously planned separation of consumer
business and re-alignment
—
13
2
18
Adjusted free cash flow
$
(30
)
$
(121
)
$
103
$
(106
)
Amounts may not foot due to rounding. The sum of the quarterly
amounts may not equal the reported amounts for the year due to
rounding.
THE ODP CORPORATION
Store Statistics
(Unaudited)
Q2
YTD
Q2
2023
2023
2022
Office Depot Division:
Stores opened
—
—
—
Stores closed
7
28
12
Total retail stores (U.S.)
952
—
1,020
Total square footage (in millions)
21.1
—
22.5
Average square footage per store (in
thousands)
22.1
—
22.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809992062/en/
Tim Perrott Investor Relations 561-438-4629
Tim.Perrott@theodpcorp.com
ODP (NASDAQ:ODP)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
ODP (NASDAQ:ODP)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024