- Total Revenue: $1.6 billion for Q4, down 10% year-over-year.
- GAAP Operating Income: $20 million for Q4, compared to $52 million in the prior year.
- Adjusted Operating Income: $32 million for Q4, down from $57 million in the previous year.
- Adjusted EBITDA: $58 million for Q4, compared to $83 million in the prior year.
- Adjusted Net Income: $20 million or $0.66 per diluted share for Q4, compared to $43 million or $1.13 per diluted share in the prior year.
- Operating Cash Flow: $34 million for Q4, down from $71 million in the prior year.
- Capital Expenditures: $25 million for Q4, flat year-over-year.
- Adjusted Free Cash Flow: Negative $57 million for Q4, compared to positive $48 million in the prior year.
- Full-Year Revenue: $7 billion, down from $7.8 billion in the prior year.
- Full-Year Adjusted Operating Income: $173 million, down from $351 million in the prior year.
- Full-Year Adjusted Net Income: $114 million or $3.30 per share, compared to $263 million or $6.61 per share in the prior year.
- Full-Year Operating Cash Flow: $159 million, down from $360 million in the prior year.
- ODP Business Solutions Revenue: $827 million for Q4, down 9% year-over-year.
- Office Depot Revenue: $784 million for Q4, down 13% year-over-year.
- Same-Store Sales: Down 8% for Office Depot.
- Veyer Third-Party Revenue: $20 million for Q4, up 150% year-over-year.
- Total Liquidity: $644 million, including $166 million in cash and $478 million in available credit.
- Total Debt: $279 million.
Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The ODP Corp (ODP, Financial) is making significant progress in its B2B transformation, expanding beyond traditional office supplies into new, large, and growing industry segments.
- The company secured a landmark agreement with a leading hospitality management company, marking a pivotal step into the $16 billion hospitality supply industry.
- ODP's supply chain and distribution operations are recognized for their strength and reliability, providing a competitive advantage in new markets.
- The company launched its 'Optimized for Growth' restructuring plan to accelerate revenue growth in B2B and reduce reliance on retail.
- ODP's balance sheet remains solid with total liquidity of $644 million, positioning it well for future investments and growth opportunities.
Negative Points
- Total revenue for the fourth quarter was down about 10% compared to the previous year, primarily due to lower sales in the retail business and reduced consumer traffic.
- GAAP operating income decreased significantly from $52 million in the prior year to $20 million in the fourth quarter of 2024.
- The company faced headwinds in its B2B channel, including high inflation, constrained corporate spending budgets, and strong competition.
- ODP's consumer division, Office Depot, experienced a 13% decline in revenue due to fewer stores and lower traffic and transactions.
- Adjusted free cash flow was negative in the quarter, reflecting investments in working capital and new business segments.
Q & A Highlights
Q: Can you discuss the genesis of the hospitality deal and its market reception?
A: Gerry Smith, CEO: The deal originated from an existing relationship on the traditional business side. The customer needed a reliable supply chain, and our capabilities impressed them. This is an invitation-only industry, and our supply chain's reliability was a key differentiator. The deal has opened doors, with inbound calls from other potential customers in the hospitality sector and related industries.
Q: How should we think about the revenue ramp from the hospitality deal?
A: Gerry Smith, CEO: The deal includes exclusive distribution rights for some products and acts as a hunting license. We expect a gradual ramp-up, supported by joint sales efforts and exclusive products. We've dedicated resources to focus on this segment, which we believe is a significant growth opportunity.
Q: What is the timeframe for the Optimize for Growth plan and its expected EBITDA uplift?
A: Adam Haggard, Co-CFO: The plan is a multi-year initiative, expected to span three to four years. We anticipate more savings and costs on the back end, with a net neutral impact initially. The plan aims to generate $380 million in EBITDA uplift over its duration.
Q: Have you considered strategic alternatives for the retail segment?
A: Adam Haggard, Co-CFO: We are always exploring opportunities to maximize shareholder value, which includes considering strategic alternatives for our retail business.
Q: What are your expectations for growth in the B2B office suppliers market and ODP's market share?
A: Adam Haggard, Co-CFO: The office supply market is experiencing macro declines, making market share difficult to gauge. However, we are holding strong in our lane, and while the market is fragmented, we expect our B2B segment to remain consistent.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
