The ODP Corporation Announces Second Quarter 2022 Results
Second Quarter Revenue of
Low-Cost Model Helped Drive GAAP Operating Income of
Improving Back-to-Office Trends Supported Growth in Business Solutions Division
Recently Approved
Consolidated (in millions, except per share amounts) (1) |
2Q22 |
2Q21 |
YTD22 |
YTD21 |
Sales |
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Sales change from prior year period |
(2)% |
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(1)% |
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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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Second Quarter 2022 Summary(1)(2)(4)
- 2Q22 results consistent with previously issued preliminary results
-
Total reported sales of
$2.0 billion , down 2% versus last year; lower sales in our Retail division driven by 71 fewer retail locations in service compared to the prior year as a result of planned store closures, partially offset by higher sales in our BSD division -
GAAP operating income of
$28 million and net income from continuing operations of$20 million , or$0.39 per diluted share, versus$30 million and$20 million , or$0.35 per diluted share, respectively in the prior year -
Adjusted operating income of
$54 million , compared to$43 million in the second quarter of 2021; adjusted EBITDA of$91 million , compared to$84 million in the second quarter of 2021 -
Adjusted net income from continuing operations of
$39 million , or adjusted diluted earnings per share from continuing operations of$0.79 , versus$33 million or$0.58 , respectively in the prior year -
Operating cash flow from continuing operations of
$(114 million) and adjusted free cash flow of$(121 million) , versus$32 million and$29 million , respectively in the prior year -
$1.4 billion of total available liquidity including$417 million in cash and cash equivalents
“Our team continues to deliver against a challenging macroeconomic environment, driving solid operational and financial results in the second quarter,” said
“The progress we’re making in operationally separating into four distinct businesses, including one B2C and three B2B businesses, is positioning us with greater flexibility, more focused routes-to-market, and greater ability to serve customers to pursue growth. As we announced, we’re reinvesting in the business while returning capital, as evidenced by our new share repurchase authorization and tender offer, highlighting our team’s commitment to creating shareholder value. With our four business unit structure, we’re excited about ODP’s strategic position as we deploy capital to pursue profitable growth and generate strong returns for our shareholders,” he added.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the second quarter of 2022 were
The Company reported operating income of
Adjusted (non-GAAP) Results (1)(2)
Adjusted results for the second quarter of 2022 exclude charges and credits totaling
-
Second quarter of 2022 adjusted EBITDA was
$91 million compared to$84 million in the prior year period. This included adjusted depreciation and amortization(5) of$34 million and$36 million in the second quarters of 2022 and 2021, respectively
-
Second quarter 2022 adjusted operating income was
$54 million compared to$43 million in the second quarter of 2021
-
Second quarter 2022 adjusted net income from continuing operations was
$39 million , or$0.79 per diluted share, compared to$33 million , or$0.58 per diluted share, in the second quarter of 2021
Second Quarter Division Results
Business Solutions Division (BSD)
-
Reported sales were
$1.2 billion in the second quarter of 2022, up 6% compared to the same period last year - Sales generated through BSD’s enterprise contract channel increased year-over-year as more business customers continued to return to the workplace
- 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 stronger demand last year
- Stronger sales across the majority of offerings including core supply categories, cleaning and breakroom products, and copy and print services, were partially offset by lower year-over-year sales in technology, 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 remained at 44% of total BSD sales, flat to the second quarter of 2021
-
Operating income was
$45 million in the second quarter of 2022, up 45% over the same period last year, or 100 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
$811 million in the second quarter of 2022, down 11% compared to the prior year period partially due to 71 fewer retail outlets at the end of the second quarter compared to the prior year, associated with planned store closures. The Company closed 12 retail stores in the quarter and had 1,020 stores at quarter end - Lower traffic trends in the quarter were partially 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, supplies, as well as technology and PC products which were negatively impacted by supply chain and sourcing challenges
-
Operating income was
$46 million in the second quarter of 2022, up 5% over the same period last year; as a percentage of sales, operating income was 5.7% of sales, up 90 basis points year over year. This result was driven by continued cost efficiencies in SG&A and product mix
Better Together
As announced on
The Company continues to transform its operations under its holding company structure into its B2C business and three distinct B2B businesses and digital segments focused on further enhancing value for shareholders and pursuing growth:
-
Office Depot, LLC – a leading provider of retail consumer and small business products and services distributed via approximately 1,000Office Depot and OfficeMax retail locations and an award-winning eCommerce presence (officedepot.com).
-
ODP Business Solutions, LLC – ODP’s leading B2B solutions provider serving small, medium and enterprise level companies (odpbusiness.com). This includes the contract sales channel of ODP’s prior Office Depot Business Solutions Division; Grand & Toy, operating one of the biggest distribution networks serving customers inCanada coast-to-coast via its direct sales force and best in class e-commerce platform (grandandtoy.com); and the Company’s Federation Entities, which comprise more than a dozen regional office supply distribution businesses acquired by ODP as part of its transformation to expand its reach and distribution network into geographic areas that were previously underserved, and which continue to operate under their own brand names.
-
Veyer, LLC – a world-class supply chain, distribution, procurement and global sourcing operation (veyerlogistics.com). Veyer procures and distributes products for bothOffice Depot, LLC andODP Business Solutions, LLC , as well as third-party customers.
-
Varis, LLC – ODP’s B2B digital platform technology business focused on transforming digital commerce between buying organizations and suppliers (govaris.com).
“The progress we’re making on the realignment of our operating businesses enables our dedicated teams to focus on meeting their customers’ needs and executing upon channel specific go-to-market strategies. It will also enable us to provide greater visibility to our stakeholders about these operating businesses’ performance in the future,” said Smith. “We’re better together and remain excited about the value creating opportunities, flexibility, and scale benefits created by our business unit structure.”
Capital Allocation
As previously announced on
2022 Expectations
Consistent with its preannouncement press release on
FY 2022 Guidance |
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Sales |
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Adjusted EBITDA |
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Adjusted Operating Income |
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Adjusted Earnings per Share(4) |
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Adjusted Free Cash Flow (6) |
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“We’re enthusiastic about the numerous opportunities to pursue long-term profitable growth, while enhancing shareholder returns,” said
Balance Sheet and Cash Flow
As of
For the second quarter of 2022, cash used in operating activities from continuing operations was
Capital expenditures in the second quarter of 2022 were
(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 expenses incurred in connection with our previously 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. |
(6) |
The Company’s outlook for 2022 Adjusted Earnings per Share does not include potential impact from the tender offer. |
About
ODP and ODP Business Solutions are trademarks of
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
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) (Unaudited) |
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13 Weeks Ended |
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26 Weeks Ended |
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||||
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2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Sales |
|
$ |
2,034 |
|
|
$ |
2,070 |
|
|
$ |
4,212 |
|
|
$ |
4,244 |
|
Cost of goods sold and occupancy costs |
|
|
1,603 |
|
|
|
1,638 |
|
|
|
3,296 |
|
|
|
3,317 |
|
Gross profit |
|
|
431 |
|
|
|
432 |
|
|
|
916 |
|
|
|
927 |
|
Selling, general and administrative expenses |
|
|
377 |
|
|
|
390 |
|
|
|
773 |
|
|
|
792 |
|
Asset impairments |
|
|
3 |
|
|
|
1 |
|
|
|
5 |
|
|
|
13 |
|
Merger, restructuring and other operating expenses, net |
|
|
23 |
|
|
|
11 |
|
|
|
34 |
|
|
|
23 |
|
Operating income |
|
|
28 |
|
|
|
30 |
|
|
|
104 |
|
|
|
99 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Interest expense |
|
|
(4 |
) |
|
|
(6 |
) |
|
|
(9 |
) |
|
|
(14 |
) |
Other income, net |
|
|
3 |
|
|
|
5 |
|
|
|
5 |
|
|
|
17 |
|
Income from continuing operations before income taxes |
|
|
28 |
|
|
|
29 |
|
|
|
102 |
|
|
|
102 |
|
Income tax expense |
|
|
8 |
|
|
|
9 |
|
|
|
27 |
|
|
|
20 |
|
Net income from continuing operations |
|
|
20 |
|
|
|
20 |
|
|
|
75 |
|
|
|
82 |
|
Discontinued operations, net of tax |
|
|
7 |
|
|
|
(108 |
) |
|
|
7 |
|
|
|
(117 |
) |
Net income (loss) |
|
$ |
27 |
|
|
$ |
(88 |
) |
|
$ |
82 |
|
|
$ |
(35 |
) |
Basic earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.40 |
|
|
$ |
0.36 |
|
|
$ |
1.54 |
|
|
$ |
1.53 |
|
Discontinued operations |
|
|
0.15 |
|
|
|
(1.98 |
) |
|
|
0.14 |
|
|
|
(2.18 |
) |
Net basic earnings (loss) per share |
|
$ |
0.55 |
|
|
$ |
(1.62 |
) |
|
$ |
1.68 |
|
|
$ |
(0.65 |
) |
Diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.39 |
|
|
$ |
0.35 |
|
|
$ |
1.49 |
|
|
$ |
1.47 |
|
Discontinued operations |
|
|
0.15 |
|
|
|
(1.93 |
) |
|
|
0.14 |
|
|
|
(2.10 |
) |
Net diluted earnings (loss) per share |
|
$ |
0.54 |
|
|
$ |
(1.58 |
) |
|
$ |
1.63 |
|
|
$ |
(0.63 |
) |
CONSOLIDATED BALANCE SHEETS (In millions, except shares and par value) |
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2022 |
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2021 |
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|
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(Unaudited) |
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ASSETS |
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Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
417 |
|
|
$ |
514 |
|
Receivables, net |
|
|
566 |
|
|
|
495 |
|
Inventories |
|
|
968 |
|
|
|
859 |
|
Prepaid expenses and other current assets |
|
|
60 |
|
|
|
52 |
|
Current assets held for sale |
|
|
— |
|
|
|
469 |
|
Total current assets |
|
|
2,011 |
|
|
|
2,389 |
|
Property and equipment, net |
|
|
461 |
|
|
|
477 |
|
Operating lease right-of-use assets |
|
|
904 |
|
|
|
936 |
|
|
|
|
464 |
|
|
|
464 |
|
Other intangible assets, net |
|
|
50 |
|
|
|
54 |
|
Deferred income taxes |
|
|
207 |
|
|
|
219 |
|
Other assets |
|
|
377 |
|
|
|
326 |
|
Total assets |
|
$ |
4,474 |
|
|
$ |
4,865 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
917 |
|
|
$ |
950 |
|
Accrued expenses and other current liabilities |
|
|
955 |
|
|
|
994 |
|
Income taxes payable |
|
|
14 |
|
|
|
11 |
|
Short-term borrowings and current maturities of long-term debt |
|
|
17 |
|
|
|
20 |
|
Current liabilities held for sale |
|
|
— |
|
|
|
290 |
|
Total current liabilities |
|
|
1,903 |
|
|
|
2,265 |
|
Deferred income taxes and other long-term liabilities |
|
|
139 |
|
|
|
159 |
|
Pension and postretirement obligations, net |
|
|
18 |
|
|
|
22 |
|
Long-term debt, net of current maturities |
|
|
177 |
|
|
|
228 |
|
Operating lease liabilities |
|
|
724 |
|
|
|
753 |
|
Total liabilities |
|
|
2,961 |
|
|
|
3,427 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock — authorized 80,000,000 shares of |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
2,723 |
|
|
|
2,692 |
|
Accumulated other comprehensive loss |
|
|
(14 |
) |
|
|
(6 |
) |
Accumulated deficit |
|
|
(535 |
) |
|
|
(617 |
) |
|
|
|
(662 |
) |
|
|
(632 |
) |
Total stockholders’ equity |
|
|
1,513 |
|
|
|
1,438 |
|
Total liabilities and stockholders’ equity |
|
$ |
4,474 |
|
|
$ |
4,865 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) |
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|
26 Weeks Ended |
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|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
82 |
|
|
$ |
(35 |
) |
Income (loss) from discontinued operations, net of tax |
|
|
7 |
|
|
|
(117 |
) |
Net income from continuing operations |
|
|
75 |
|
|
|
82 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
68 |
|
|
|
74 |
|
Charges for losses on receivables and inventories |
|
|
8 |
|
|
|
10 |
|
Asset impairments |
|
|
5 |
|
|
|
13 |
|
Gain on disposition of assets, net |
|
|
(3 |
) |
|
|
(3 |
) |
Compensation expense for share-based payments |
|
|
19 |
|
|
|
20 |
|
Deferred income taxes and deferred tax asset valuation allowances |
|
|
12 |
|
|
|
7 |
|
Changes in working capital and other operating activities |
|
|
(268 |
) |
|
|
(68 |
) |
Net cash provided by (used in) operating activities of continuing operations |
|
|
(84 |
) |
|
|
135 |
|
Net cash used in operating activities of discontinued operations |
|
|
— |
|
|
|
(60 |
) |
Net cash provided by (used in) operating activities |
|
|
(84 |
) |
|
|
75 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(43 |
) |
|
|
(28 |
) |
Businesses acquired, net of cash acquired |
|
|
— |
|
|
|
(28 |
) |
Proceeds from disposition of assets |
|
|
6 |
|
|
|
3 |
|
Settlement of company-owned life insurance policies |
|
|
2 |
|
|
|
21 |
|
Net cash used in investing activities of continuing operations |
|
|
(35 |
) |
|
|
(32 |
) |
Net cash provided by (used in) investing activities of discontinued operations |
|
|
74 |
|
|
|
(1 |
) |
Net cash provided by (used in) investing activities |
|
|
39 |
|
|
|
(33 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net payments on long and short-term borrowings |
|
|
(11 |
) |
|
|
(13 |
) |
Debt retirement |
|
|
(43 |
) |
|
|
— |
|
Share purchases for taxes, net of proceeds from employee share-based transactions |
|
|
(17 |
) |
|
|
(23 |
) |
Repurchase of common stock for treasury and advance payment for accelerated share repurchase |
|
|
— |
|
|
|
(46 |
) |
Other financing activities |
|
|
(3 |
) |
|
|
(1 |
) |
Net cash used in financing activities of continuing operations |
|
|
(74 |
) |
|
|
(83 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(1 |
) |
|
|
3 |
|
Net decrease in cash and cash equivalents |
|
|
(120 |
) |
|
|
(38 |
) |
Cash and cash equivalents at beginning of period |
|
|
537 |
|
|
|
729 |
|
Cash and cash equivalents at end of period – continuing operations |
|
$ |
417 |
|
|
$ |
691 |
|
Supplemental information on non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities |
|
$ |
— |
|
|
$ |
2 |
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
|
113 |
|
|
|
37 |
|
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 |
|
|
|
— |
|
Transfer from additional paid-in capital to treasury stock for final settlement of the accelerated share repurchase agreement |
|
|
29 |
|
|
|
— |
|
BUSINESS UNIT PERFORMANCE (In millions) (Unaudited) |
||||
Business Solutions Division (in millions) |
2Q22 |
2Q21 |
YTD22 |
YTD21 |
Sales |
|
|
|
|
Sales change from prior year |
6% |
|
8% |
|
Division operating income |
|
|
|
|
Division operating income margin |
3.7% |
2.7% |
3.2% |
2.1% |
Retail Division (in millions) |
2Q22 |
2Q21 |
YTD22 |
YTD21 |
Sales |
|
|
|
|
Sales change from prior year |
(11)% |
|
(10)% |
|
Division operating income |
|
|
|
|
Division operating income margin |
5.7% |
4.8% |
7.8% |
7.4% |
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 previously planned separation of the consumer business.
(In millions, except per share amounts) |
||||||||||||||||||||
Q2 2022 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
Assets impairments |
|
$ |
3 |
|
|
|
0.1 |
% |
|
$ |
3 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
23 |
|
|
|
1.1 |
% |
|
$ |
23 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
28 |
|
|
|
1.4 |
% |
|
$ |
(26 |
) |
|
$ |
54 |
|
(6) |
|
2.7 |
% |
Income tax expense |
|
$ |
8 |
|
|
|
0.4 |
% |
|
$ |
(7 |
) |
|
$ |
15 |
|
(8) |
|
0.7 |
% |
Net income from continuing operations |
|
$ |
20 |
|
|
|
1.0 |
% |
|
$ |
(19 |
) |
|
$ |
39 |
|
(9) |
|
1.9 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
0.39 |
|
|
|
|
|
|
$ |
(0.40 |
) |
|
$ |
0.79 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
34 |
|
|
|
1.7 |
% |
|
$ |
— |
|
|
$ |
34 |
|
(10) |
|
1.7 |
% |
Q2 2021 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
Assets impairments |
|
$ |
1 |
|
|
|
0.0 |
% |
|
$ |
1 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
11 |
|
|
|
0.5 |
% |
|
$ |
11 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
30 |
|
|
|
1.4 |
% |
|
$ |
(12 |
) |
|
$ |
43 |
|
(6) |
|
2.1 |
% |
Net income from continuing operations |
|
$ |
20 |
|
|
|
1.0 |
% |
|
$ |
(12 |
) |
|
$ |
33 |
|
(9) |
|
1.6 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
0.35 |
|
|
|
|
|
|
$ |
(0.23 |
) |
|
$ |
0.58 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
36 |
|
|
|
1.7 |
% |
|
$ |
— |
|
|
$ |
36 |
|
(10) |
|
1.7 |
% |
GAAP to Non-GAAP Reconciliations (Unaudited) |
||||||||||||||||||||
YTD 2022 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
Assets impairments |
|
$ |
5 |
|
|
|
0.1 |
% |
|
$ |
5 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
34 |
|
|
|
0.8 |
% |
|
$ |
34 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
104 |
|
|
|
2.5 |
% |
|
$ |
(39 |
) |
|
$ |
143 |
|
(6) |
|
3.4 |
% |
Income tax expense |
|
$ |
27 |
|
|
|
0.6 |
% |
|
$ |
(10 |
) |
|
$ |
37 |
|
(8) |
|
0.9 |
% |
Net income from continuing operations |
|
$ |
75 |
|
|
|
1.8 |
% |
|
$ |
(29 |
) |
|
$ |
104 |
|
(9) |
|
2.5 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
1.49 |
|
|
|
|
|
|
$ |
(0.57 |
) |
|
$ |
2.06 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
68 |
|
|
|
1.6 |
% |
|
$ |
— |
|
|
$ |
68 |
|
(10) |
|
1.6 |
% |
YTD 2021 |
|
Reported (GAAP) |
|
|
% of Sales |
|
|
Less: Charges & Credits |
|
|
Adjusted (Non-GAAP) |
|
|
% of Sales |
|
|||||
Assets impairments |
|
$ |
13 |
|
|
|
0.3 |
% |
|
$ |
13 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
23 |
|
|
|
0.5 |
% |
|
$ |
23 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
99 |
|
|
|
2.3 |
% |
|
$ |
(36 |
) |
|
$ |
135 |
|
(6) |
|
3.2 |
% |
Other income, net |
|
$ |
17 |
|
|
|
0.4 |
% |
|
$ |
7 |
|
|
$ |
10 |
|
(7) |
|
0.2 |
% |
Income tax expense |
|
$ |
20 |
|
|
|
0.5 |
% |
|
$ |
(10 |
) |
|
$ |
30 |
|
(8) |
|
0.7 |
% |
Net income from continuing operations |
|
$ |
82 |
|
|
|
1.9 |
% |
|
$ |
(19 |
) |
|
$ |
101 |
|
(9) |
|
2.4 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
1.47 |
|
|
|
|
|
|
$ |
(0.33 |
) |
|
$ |
1.80 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
74 |
|
|
|
1.7 |
% |
|
$ |
2 |
|
|
$ |
72 |
|
(10) |
|
1.7 |
% |
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA: |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net income (loss) |
|
$ |
27 |
|
|
$ |
(88 |
) |
|
$ |
82 |
|
|
$ |
(35 |
) |
Discontinued operations, net of tax |
|
|
7 |
|
|
|
(108 |
) |
|
|
7 |
|
|
|
(117 |
) |
Net income from continuing operations |
|
|
20 |
|
|
|
20 |
|
|
|
75 |
|
|
|
82 |
|
Income tax expense |
|
|
8 |
|
|
|
9 |
|
|
|
27 |
|
|
|
20 |
|
Income from continuing operations before income taxes |
|
|
28 |
|
|
|
29 |
|
|
|
102 |
|
|
|
102 |
|
Add (subtract) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Interest expense |
|
|
4 |
|
|
|
6 |
|
|
|
9 |
|
|
|
14 |
|
Adjusted depreciation and amortization (10) |
|
|
34 |
|
|
|
36 |
|
|
|
68 |
|
|
|
72 |
|
Charges and credits, pretax (11) |
|
|
26 |
|
|
|
12 |
|
|
|
39 |
|
|
|
29 |
|
Adjusted EBITDA |
|
$ |
91 |
|
|
$ |
84 |
|
|
$ |
216 |
|
|
$ |
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. |
|
|
|
(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 half 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 |
|
|
26 Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Free cash flow |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net cash provided by (used in) operating activities of continuing operations |
|
$ |
(114 |
) |
|
$ |
32 |
|
|
$ |
(84 |
) |
|
$ |
135 |
|
Capital expenditures |
|
|
(21 |
) |
|
|
(16 |
) |
|
|
(43 |
) |
|
|
(28 |
) |
Free cash flow |
|
|
(135 |
) |
|
|
16 |
|
|
|
(127 |
) |
|
|
107 |
|
Adjustments for certain cash charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximize B2B Restructuring Plan |
|
|
1 |
|
|
|
11 |
|
|
|
3 |
|
|
|
15 |
|
Business Acceleration Program |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
3 |
|
Previously planned separation of consumer business |
|
|
13 |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
Adjusted free cash flow |
|
$ |
(121 |
) |
|
$ |
29 |
|
|
$ |
(106 |
) |
|
$ |
125 |
|
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) |
||||||||||||
|
|
Q2 |
|
|
YTD |
|
|
Q2 |
|
|||
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|||
Retail Division: |
|
|
|
|
|
|
|
|
|
|
|
|
Stores opened |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stores closed |
|
|
12 |
|
|
|
18 |
|
|
|
55 |
|
Total retail stores ( |
|
|
1,020 |
|
|
|
— |
|
|
|
1,091 |
|
Total square footage (in millions) |
|
|
22.5 |
|
|
|
— |
|
|
|
24.0 |
|
Average square footage per store (in thousands) |
|
|
22.1 |
|
|
|
— |
|
|
|
22.1 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005207/en/
Investor Relations
561-438-4629
Tim.Perrott@officedepot.com
Media Relations
561-438-1594
Danny.Jovic@officedepot.com
Source: