The ODP Corporation Announces First Quarter 2022 Results
First Quarter Revenue of
Commitment to Low-Cost Model Helped Drive GAAP Operating Income of
Improved Back-to-Office Trends Drove Growth in Business Solutions Division
Continued to Make Progress on Strategic Initiatives Including Unlocking the Value of the Consumer Business and the Operational Alignment Supporting Future Operations
Further Advancement of Varis Platform and Digital Business Commerce Capabilities
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Consolidated (in millions, except per share amounts) (1) |
1Q22 |
1Q21 |
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Sales |
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Sales change from prior year period |
0% |
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Operating income |
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Adjusted operating income (2) |
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Net income from continuing operations |
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Diluted earnings per share from continuing operations |
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Adjusted net income from continuing operations (2) |
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Adjusted earnings per share from continuing operations (most dilutive) (2) |
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Adjusted EBITDA (2) |
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Operating Cash Flow from continuing operations |
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Free Cash Flow (3) |
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Adjusted Free Cash Flow (4) |
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First Quarter 2022 Summary(1)(2)(4)
-
Total reported sales of
$2.2 billion , flat versus last year; higher sales in our BSD division, partially offset by lower sales in our Retail division driven by 114 fewer retail locations in service compared to the prior year as a result of planned store closures -
GAAP operating income of
$76 million and net income from continuing operations of$55 million , or$1.09 per diluted share, versus$69 million and$63 million , or$1.12 per diluted share, respectively in the prior year -
Adjusted operating income of
$88 million , compared to$93 million in the first quarter of 2021; adjusted EBITDA of$125 million , compared to$133 million in the first quarter of 2021 -
Adjusted net income from continuing operations of
$64 million , or adjusted diluted earnings per share from continuing operations of$1.27 , versus$68 million or$1.22 , respectively in the prior year -
Operating cash flow from continuing operations of
$30 million and adjusted free cash flow of$16 million , versus$103 million and$96 million , respectively in the prior year -
$1.4 billion of total available liquidity including$557 million in cash and cash equivalents
“Our team’s continued commitment to the core tenets that drive our business helped us deliver strong results while making progress on all of our initiatives to unlock shareholder value,” said
“We’ve also continued to make progress on all of our strategic initiatives, including our commitment to maximize the value of our consumer business, and our efforts to align our assets with the go-to-market strategies in our B2C, B2B, distribution, and digital platform businesses. We’re advancing our new digital platform business, Varis, receiving positive feedback from key build partners as we move closer to a broader launch of the platform later this year. We’re also excited about the progress we are making on our supply chain and purchasing services provider, Veyer, and the future value we expect to create in support of our B2B and B2C businesses and as we offer logistics services to other third parties in the future,” he added.
“As we move closer to concluding the strategic initiatives we previously outlined, we remain committed to maximizing the value of our consumer business and driving growth on our B2B platform. We also continue to expect our results this year to be generally in a range consistent with the prior year on a comparable basis,” Smith concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the first quarter of 2022 were
The Company reported operating income of
Adjusted (non-GAAP) Results (1)(2)
Adjusted results for the first quarter of 2022 exclude charges and credits totaling
-
First quarter of 2022 adjusted EBITDA was
$125 million compared to$133 million in the prior year period. This included adjusted depreciation and amortization(5) of$34 million and$36 million in the first quarters of 2022 and 2021, respectively
-
First quarter 2022 adjusted operating income was
$88 million compared to$93 million in the first quarter of 2021
-
First quarter 2022 adjusted net income from continuing operations was
$64 million , or$1.27 per diluted share, compared to$68 million , or$1.22 per diluted share, in the first quarter of 2021
First Quarter Division Results
Business Solutions Division (BSD)
-
Reported sales were
$1.2 billion in the first quarter of 2022, up 9% compared to the same period last year - Sales generated through BSD’s enterprise contract channel increased year-over-year as more business and education customers began to return to the workplace and classroom
- Partially offsetting this increase was lower sales through the Company’s eCommerce channel compared to the same period last year related to lower sales of pandemic related products that were in strong demand last year
- Stronger sales across the majority of offerings including core supply categories, workspaces, copy and print services, and cleaning and breakroom, were partially offset by lower year-over-year sales in technology products, as well as the ongoing challenges related to supply chain and sourcing impacting certain product categories
- Adjacency category sales including cleaning and breakroom, furniture, technology, and copy and print, increased to 46% of total BSD sales
-
Operating income was
$33 million in the first quarter of 2022, up 94% over the same period last year, or 120 basis points as a percentage of sales, driven by higher volume and lower SG&A expenses helping to offset increased supply chain costs
Retail Division
-
Reported sales were
$943 million in the first quarter of 2022, down 9% compared to the prior year period primarily due to 114 fewer retail outlets at the end of the first quarter compared to the prior year, associated with planned store closures. The Company closed 6 retail stores in the quarter and had 1,032 stores at quarter end - Lower traffic trends in the quarter were offset by stronger sales-per-shopper, as well as strong omni-channel sales in the quarter supported by our 20-minute pick-up guarantee
- Increase in demand for copy and print services were offset by lower sales of cleaning and PPE products as well as technology and PC products which were negatively impacted by supply chain and sourcing challenges
-
Operating income was
$89 million in the first quarter of 2022, down 11% over the same period last year; as a percentage of sales, operating income was 9% of sales, slightly lower year over year
Progress on Strategic initiatives
The Company continued to make significant progress on all of its strategic initiatives to unlock shareholder value, including progress on its separation activities, potential sale of its Consumer business, and advancing its digital platform business.
Separation Activities and Evaluation of Potential Sale of Consumer Business
Afforded by the flexibility of its holding company structure, the Company continued to execute upon its operational separation of its Consumer and B2B businesses. These activities supported the Company’s previously announced plans to separate its business and align its operating assets to support its B2C, B2B, distribution, and digital platform businesses. The Company made significant progress in all areas of the separation including organizational structure, operating and supply chain mechanics, IT support, and market-based commercial agreements, all supporting the near-term and future state of the business.
During the first quarter, the Company announced that its Board of Directors determined to delay the previously announced public company separation to evaluate a potential sale of the Company’s consumer business and that it had received a non-binding proposal from another third party to acquire the Company’s consumer business, the terms of which are confidential. The Company’s Board of Directors continues to carefully review the proposals with the assistance of its financial and legal advisors to determine the course of action that it believes is in the best interests of the Company and its shareholders. While the Company has made significant progress in concluding this review, there can be no assurance that a sale of the consumer business will take place nor the terms of any such sale.
Capital Allocation
As previously announced on
“The Board of Directors continues to evaluate its future capital allocation plans and the eventual outcome of that process. The actions to date continue to reflect the confidence the Board of Directors has in our business solutions provider and platform transformation strategy and our capability to deliver shareholder value through disciplined capital allocation,” said
Progress on Varis
Aligned with its strategy to drive growth in high value industry segments, the Company continues to make strong progress on its digital platform business, Varis. Varis is a technology company focused on fulfilling the growing demand for a modern, trusted, digital B2B platform that transforms how businesses buy and sell. Led by
Commentary and 2022 Expectations
“We continue to make strong progress across our strategic initiatives while driving impressive results in the quarter,” said Smith. “Our team remains committed to unlocking value by concluding our review to maximize the value of our consumer business, launching our digital platform business, and building upon our B2B platform for the benefit of all of our stakeholders. While we expect that the conditions related to both the supply chain and inflationary environment will persist in the quarters ahead, we are in an excellent position as we continue leveraging our assets to meet our customers’ needs. We’ll also continue to use a balanced approach to capital deployment, working with our Board on potential future share repurchases and investing to capture the large market opportunity through our digital platform business, supply chain operations, and B2B presence,” Smith added.
The Company continues to anticipate generating annual revenue, operating and cash flow results in a range consistent with the prior year on a comparable basis, and expects to refine and update its outlook for 2022 as conditions related to the pandemic and supply chain challenges dissipate, and further progress is made on its previously disclosed strategic initiatives.
Balance Sheet and Cash Flow
As of
For the first quarter of 2022, cash provided by operating activities from continuing operations was
Capital expenditures in the first quarter of 2022 were
As part of the ongoing commitment and support of its strategic initiatives, the Company retired approximately
|
(1) |
Reflects the reclassification of the financial results of the CompuCom Division to Discontinued operations, net of tax in the Consolidated Statements of Operations for all periods presented. The Company also reclassified the related assets and liabilities as assets and liabilities held for sale on the accompanying Consolidated Balance Sheets. Cash flows from the Company’s discontinued operations are presented in the Consolidated Statements of Cash Flows for all periods. |
|
(2) |
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. |
|
(3) |
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. |
|
(4) |
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, the Business Acceleration Program, and the planned separation of the consumer business. 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. |
|
(5) |
Adjusted depreciation and amortization each represents a non-GAAP financial measure and excludes accelerated depreciation caused by updating the salvage value and shortening the useful life of depreciable fixed assets to coincide with planned store closures under an approved restructuring plan, but only if impairment is not present. Accelerated depreciation charges are restructuring expenses. 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. |
About
ODP, ODP Business Solutions and
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 adverse effects of an unsolicited tender offer on our business, operating results or financial condition; 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 its strategic plans, including the proposed separation or sale of its consumer business, and the high costs in connection with these transactions may not be recouped if these transactions are not consummated; 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
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CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) (Unaudited) |
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13 Weeks Ended |
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2022 |
|
|
2021 |
|
||
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Sales |
|
$ |
2,178 |
|
|
$ |
2,174 |
|
|
Cost of goods sold and occupancy costs |
|
|
1,694 |
|
|
|
1,679 |
|
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Gross profit |
|
|
484 |
|
|
|
495 |
|
|
Selling, general and administrative expenses |
|
|
396 |
|
|
|
401 |
|
|
Asset impairments |
|
|
2 |
|
|
|
12 |
|
|
Merger, restructuring and other operating expenses, net |
|
|
10 |
|
|
|
13 |
|
|
Operating income |
|
|
76 |
|
|
|
69 |
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1 |
|
|
|
— |
|
|
Interest expense |
|
|
(5 |
) |
|
|
(7 |
) |
|
Other income, net |
|
|
2 |
|
|
|
11 |
|
|
Income from continuing operations before income taxes |
|
|
74 |
|
|
|
73 |
|
|
Income tax expense |
|
|
19 |
|
|
|
10 |
|
|
Net income from continuing operations |
|
|
55 |
|
|
|
63 |
|
|
Discontinued operations, net of tax |
|
|
— |
|
|
|
(10 |
) |
|
Net income |
|
$ |
55 |
|
|
$ |
53 |
|
|
Basic earnings (loss) per share |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
1.14 |
|
|
$ |
1.17 |
|
|
Discontinued operations |
|
|
— |
|
|
|
(0.18 |
) |
|
Net basic earnings (loss) per share |
|
$ |
1.14 |
|
|
$ |
0.99 |
|
|
Diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
1.09 |
|
|
$ |
1.12 |
|
|
Discontinued operations |
|
|
— |
|
|
|
(0.17 |
) |
|
Net diluted earnings (loss) per share |
|
$ |
1.09 |
|
|
$ |
0.95 |
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CONSOLIDATED BALANCE SHEETS (In millions, except shares and par value) |
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2022 |
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2021 |
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(Unaudited) |
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ASSETS |
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Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
557 |
|
|
$ |
514 |
|
|
Receivables, net |
|
|
572 |
|
|
|
495 |
|
|
Inventories |
|
|
866 |
|
|
|
859 |
|
|
Prepaid expenses and other current assets |
|
|
58 |
|
|
|
52 |
|
|
Current assets held for sale |
|
|
— |
|
|
|
469 |
|
|
Total current assets |
|
|
2,053 |
|
|
|
2,389 |
|
|
Property and equipment, net |
|
|
466 |
|
|
|
477 |
|
|
Operating lease right-of-use assets |
|
|
899 |
|
|
|
936 |
|
|
|
|
|
464 |
|
|
|
464 |
|
|
Other intangible assets, net |
|
|
52 |
|
|
|
54 |
|
|
Deferred income taxes |
|
|
209 |
|
|
|
219 |
|
|
Other assets |
|
|
386 |
|
|
|
326 |
|
|
Total assets |
|
$ |
4,529 |
|
|
$ |
4,865 |
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
975 |
|
|
$ |
950 |
|
|
Accrued expenses and other current liabilities |
|
|
959 |
|
|
|
994 |
|
|
Income taxes payable |
|
|
14 |
|
|
|
11 |
|
|
Short-term borrowings and current maturities of long-term debt |
|
|
18 |
|
|
|
20 |
|
|
Current liabilities held for sale |
|
|
— |
|
|
|
290 |
|
|
Total current liabilities |
|
|
1,966 |
|
|
|
2,265 |
|
|
Deferred income taxes and other long-term liabilities |
|
|
155 |
|
|
|
159 |
|
|
Pension and postretirement obligations, net |
|
|
21 |
|
|
|
22 |
|
|
Long-term debt, net of current maturities |
|
|
181 |
|
|
|
228 |
|
|
Operating lease liabilities |
|
|
714 |
|
|
|
753 |
|
|
Total liabilities |
|
|
3,037 |
|
|
|
3,427 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock — authorized 80,000,000 shares of
shares — 65,357,585 at
and 48,455,951 at |
|
|
1 |
|
|
|
1 |
|
|
Additional paid-in capital |
|
|
2,687 |
|
|
|
2,692 |
|
|
Accumulated other comprehensive loss |
|
|
(1 |
) |
|
|
(6 |
) |
|
Accumulated deficit |
|
|
(562 |
) |
|
|
(617 |
) |
|
16,249,028 shares at |
|
|
(633 |
) |
|
|
(632 |
) |
|
Total stockholders’ equity |
|
|
1,492 |
|
|
|
1,438 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
4,529 |
|
|
$ |
4,865 |
|
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CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) |
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|
13 Weeks Ended |
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|
2022 |
|
|
2021 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
55 |
|
|
$ |
53 |
|
|
Loss from discontinued operations, net of tax |
|
|
— |
|
|
|
(10 |
) |
|
Net income from continuing operations |
|
|
55 |
|
|
|
63 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
34 |
|
|
|
38 |
|
|
Charges for losses on receivables and inventories |
|
|
6 |
|
|
|
7 |
|
|
Asset impairments |
|
|
2 |
|
|
|
12 |
|
|
Gain on disposition of assets, net |
|
|
(3 |
) |
|
|
— |
|
|
Compensation expense for share-based payments |
|
|
9 |
|
|
|
10 |
|
|
Deferred income taxes and deferred tax asset valuation allowances |
|
|
10 |
|
|
|
6 |
|
|
Changes in working capital and other operating activities |
|
|
(83 |
) |
|
|
(33 |
) |
|
Net cash provided by operating activities of continuing operations |
|
|
30 |
|
|
|
103 |
|
|
Net cash used in operating activities of discontinued operations |
|
|
— |
|
|
|
(17 |
) |
|
Net cash provided by operating activities |
|
|
30 |
|
|
|
86 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(21 |
) |
|
|
(12 |
) |
|
Businesses acquired, net of cash acquired |
|
|
— |
|
|
|
(28 |
) |
|
Proceeds from disposition of assets |
|
|
6 |
|
|
|
1 |
|
|
Settlement of company-owned life insurance policies |
|
|
1 |
|
|
|
7 |
|
|
Net cash used in investing activities of continuing operations |
|
|
(14 |
) |
|
|
(32 |
) |
|
Net cash provided by (used in) investing activities of discontinued operations |
|
|
67 |
|
|
|
(1 |
) |
|
Net cash provided by (used in) investing activities |
|
|
53 |
|
|
|
(33 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Net payments on long and short-term borrowings |
|
|
(6 |
) |
|
|
(6 |
) |
|
Debt retirement |
|
|
(43 |
) |
|
|
— |
|
|
Share purchases for taxes, net of proceeds from employee share-based Transactions |
|
|
(14 |
) |
|
|
(23 |
) |
|
Other financing activities |
|
|
(1 |
) |
|
|
(1 |
) |
|
Net cash used in financing activities of continuing operations |
|
|
(64 |
) |
|
|
(30 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
1 |
|
|
|
1 |
|
|
Net increase in cash and cash equivalents |
|
|
20 |
|
|
|
24 |
|
|
Cash and cash equivalents at beginning of period |
|
|
537 |
|
|
|
729 |
|
|
Cash and cash equivalents at end of period – continuing operations |
|
$ |
557 |
|
|
$ |
753 |
|
|
Supplemental information on non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
$ |
35 |
|
|
$ |
10 |
|
|
Business acquired in exchange for common stock issuance |
|
|
— |
|
|
|
35 |
|
|
Other current receivable obtained from disposition of discontinued operations |
|
|
30 |
|
|
|
— |
|
|
Promissory note receivable obtained from disposition of discontinued operations |
|
|
55 |
|
|
|
— |
|
|
Earn-out receivable obtained from disposition of discontinued operations |
|
|
9 |
|
|
|
— |
|
|
BUSINESS UNIT PERFORMANCE (In millions) (Unaudited) |
||
|
Business Solutions Division (in millions) |
1Q22 |
1Q21 |
|
Sales |
|
|
|
Sales change from prior year |
9% |
|
|
Division operating income |
|
|
|
Division operating income margin |
2.7% |
1.5% |
|
Retail Division (in millions) |
1Q22 |
1Q21 |
|
Sales |
|
|
|
Sales change from prior year |
(9)% |
|
|
Division operating income |
|
|
|
Division operating income margin |
9.4% |
9.6% |
GAAP to Non-GAAP Reconciliations
(Unaudited)
We report our results in accordance with accounting principles generally accepted in
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, the Business Acceleration Program, and the planned separation of the consumer business.
|
(In millions, except per share amounts) |
||||||||||||||||||||
|
Q1 2022 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
|
Assets impairments |
|
$ |
2 |
|
|
|
0.1 |
% |
|
$ |
2 |
|
|
$ |
— |
|
|
|
— |
% |
|
Merger, restructuring and other operating expenses, net |
|
$ |
10 |
|
|
|
0.5 |
% |
|
$ |
10 |
|
|
$ |
— |
|
|
|
— |
% |
|
Operating income |
|
$ |
76 |
|
|
|
3.5 |
% |
|
$ |
(12 |
) |
|
$ |
88 |
|
(6) |
|
4.0 |
% |
|
Income tax expense |
|
$ |
19 |
|
|
|
0.9 |
% |
|
$ |
(3 |
) |
|
$ |
22 |
|
(8) |
|
1.0 |
% |
|
Net income from continuing operations |
|
$ |
55 |
|
|
|
2.5 |
% |
|
$ |
(9 |
) |
|
$ |
64 |
|
(9) |
|
2.9 |
% |
|
Earnings per share from continuing operations (most dilutive) |
|
$ |
1.09 |
|
|
|
|
|
|
$ |
(0.18 |
) |
|
$ |
1.27 |
|
(9) |
|
|
|
|
Depreciation and amortization |
|
$ |
34 |
|
|
|
1.6 |
% |
|
$ |
— |
|
|
$ |
34 |
|
(10) |
|
1.6 |
% |
|
Q1 2021 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
|
Assets impairments |
|
$ |
12 |
|
|
|
0.6 |
% |
|
$ |
12 |
|
|
$ |
— |
|
|
|
— |
% |
|
Merger, restructuring and other operating expenses, net |
|
$ |
13 |
|
|
|
0.6 |
% |
|
$ |
13 |
|
|
$ |
— |
|
|
|
— |
% |
|
Operating income |
|
$ |
69 |
|
|
|
3.2 |
% |
|
$ |
(25 |
) |
|
$ |
93 |
|
(6) |
|
4.3 |
% |
|
Other income, net |
|
$ |
11 |
|
|
|
0.5 |
% |
|
$ |
7 |
|
|
$ |
4 |
|
(7) |
|
0.2 |
% |
|
Income tax expense |
|
$ |
10 |
|
|
|
0.5 |
% |
|
$ |
(12 |
) |
|
$ |
22 |
|
(8) |
|
1.0 |
% |
|
Net income from continuing operations |
|
$ |
63 |
|
|
|
2.9 |
% |
|
$ |
(6 |
) |
|
$ |
68 |
|
(9) |
|
3.1 |
% |
|
Earnings per share from continuing operations (most dilutive) |
|
$ |
1.12 |
|
|
|
|
|
|
$ |
(0.10 |
) |
|
$ |
1.22 |
|
(9) |
|
|
|
|
Depreciation and amortization |
|
$ |
38 |
|
|
|
1.7 |
% |
|
$ |
2 |
|
|
$ |
36 |
|
(10) |
|
1.7 |
% |
|
GAAP to Non-GAAP Reconciliations (Unaudited) |
||||||||
|
|
|
13 Weeks Ended |
|
|||||
|
|
|
|
|
|
|
|
||
|
Adjusted EBITDA: |
|
2022 |
|
|
2021 |
|
||
|
Net income |
|
$ |
55 |
|
|
$ |
53 |
|
|
Discontinued operations, net of tax |
|
|
— |
|
|
|
(10 |
) |
|
Net income from continuing operations |
|
|
55 |
|
|
|
63 |
|
|
Income tax expense |
|
|
19 |
|
|
|
10 |
|
|
Income from continuing operations before income taxes |
|
|
74 |
|
|
|
73 |
|
|
Add (subtract) |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(1 |
) |
|
|
— |
|
|
Interest expense |
|
|
5 |
|
|
|
7 |
|
|
Adjusted depreciation and amortization (10) |
|
|
34 |
|
|
|
36 |
|
|
Charges and credits, pretax (11) |
|
|
12 |
|
|
|
18 |
|
|
Adjusted EBITDA |
|
$ |
125 |
|
|
$ |
133 |
|
| 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. | |
|
(6) |
Adjusted operating income for all periods presented herein exclude merger, restructuring and other operating expenses, net, and asset impairments (if any). |
|
(7) |
Adjusted other income, net for the first quarter of 2021 excludes credits for the release of certain liabilities of our former European Business of |
|
(8) |
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. |
|
(9) |
Adjusted net income from continuing operations and adjusted earnings per share from continuing operations (most dilutive) for all periods presented exclude merger, restructuring and other operating expenses, net, asset impairments (if any), European Business liabilities release (if any), and exclude the tax effect of the charges or credits not indicative of core operations. |
|
(10) |
Adjusted depreciation and amortization for all periods presented herein exclude accelerated depreciation caused by updating the salvage value and shortening the useful life of depreciable fixed assets to coincide with the planned store closures under an approved restructuring plan, but only if impairment is not present. Accelerated depreciation charges are restructuring expenses and included in the Charges and credits, pretax line item. |
|
(11) |
Charges and credits, pretax for all periods presented include merger, restructuring and other operating expenses, net, asset impairments (if any), and European Business liabilities release (if any). |
|
GAAP to Non-GAAP Reconciliations (Unaudited) |
||||||||
|
|
|
13 Weeks Ended |
|
|||||
|
|
|
|
|
|
|
|
||
|
Free cash flow |
|
2022 |
|
|
2021 |
|
||
|
Net cash provided by operating activities from continuing operations |
|
$ |
30 |
|
|
$ |
103 |
|
|
Capital expenditures |
|
|
(21 |
) |
|
|
(12 |
) |
|
Free cash flow |
|
|
9 |
|
|
|
91 |
|
|
Adjustments for certain cash charges: |
|
|
|
|
|
|
|
|
|
Maximize B2B Restructuring Plan |
|
|
2 |
|
|
|
4 |
|
|
Business Acceleration Program |
|
|
— |
|
|
|
1 |
|
|
Planned separation of consumer business |
|
|
5 |
|
|
|
— |
|
|
Adjusted free cash flow |
|
$ |
16 |
|
|
$ |
96 |
|
|
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. |
|
Store Statistics (Unaudited) |
||||||||
|
|
|
Q1 |
|
|
Q1 |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Retail Division: |
|
|
|
|
|
|
|
|
|
Stores opened |
|
|
— |
|
|
|
— |
|
|
Stores closed |
|
|
6 |
|
|
|
8 |
|
|
Total retail stores ( |
|
|
1,032 |
|
|
|
1,146 |
|
|
Total square footage (in millions) |
|
|
22.7 |
|
|
|
25.3 |
|
|
Average square footage per store (in thousands) |
|
|
22.0 |
|
|
|
22.1 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220504005274/en/
Investor Relations
561-438-4629
Tim.Perrott@officedepot.com
Media Relations
561-438-1594
Danny.Jovic@officedepot.com
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