The ODP Corporation Announces Fourth Quarter and Full Year 2021 Results
The ODP Corporation (NASDAQ: ODP) reported Q4 2021 revenue of $2.0 billion, a 2% decline year-over-year, primarily due to 116 fewer retail locations. However, GAAP operating income rose to $31 million from $20 million in Q4 2020, with a net income of $32 million or $0.61 per diluted share. For the full year, total sales reached $8.5 billion, down 5% from 2020, but operating income increased significantly to $234 million. The company committed over $300 million to shareholders through stock buybacks in 2021 and advanced initiatives in its B2B and digital platforms, despite macroeconomic challenges.
- GAAP operating income increased to $31 million in Q4 2021 from $20 million in Q4 2020.
- Net income from continuing operations rose to $32 million or $0.61 per diluted share in Q4 2021.
- Adjusted operating income for Q4 2021 was $47 million, compared to $40 million in Q4 2020.
- Over $300 million committed to shareholders through stock repurchases in 2021.
- Significant progress on strategic initiatives, including digital platform development and operational separation.
- Q4 2021 revenue decreased by 2% year-over-year, driven by fewer retail locations.
- Full year 2021 sales declined 5% compared to 2020, largely due to lower sales in the Retail Division.
Fourth Quarter Revenue of
Commitment to Low Cost Model Helped Drive GAAP Operating Income of
GAAP Operating Income of
Strategic Initiatives Successes Included Progress on Operational Separation of the Business, Sale of CompuCom, and Further Advancement of Varis Platform and Digital Business Commerce Capabilities
Over
Consolidated (in millions, except per share amounts) (1) |
4Q21 |
4Q20 |
FY21 |
FY20 |
Sales |
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Sales change from prior year period |
(2)% |
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(5)% |
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Operating income |
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Adjusted operating income (2) |
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Net income (loss) from continuing operations |
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Diluted earnings (loss) 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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Fourth Quarter 2021 Summary(1)(2)(4)
-
Total reported sales of
$2.0 billion 2% versus prior year, largely driven by 116 fewer retail locations in service compared to the prior year as a result of planned store closures -
GAAP operating income of
$31 million $32 million $0.61 $20 million $31 million $0.57 -
Adjusted operating income of
$47 million $40 million $87 million $78 million -
Adjusted net income from continuing operations of
$37 million $0.71 $23 million $0.43 -
Operating cash flow from continuing operations of
$88 million $80 million $15 million $20 million -
$1.4 billion $514 million
Full Year 2021 Summary
-
Total reported sales of
$8.5 billion 5% versus the prior year -
GAAP operating income of
$234 million $187 million $3.42 $6 million $63 million $(1.20) -
Adjusted operating income of
$305 million $290 million $465 million $449 million -
Adjusted net income from continuing operations of
$234 million $4.28 $184 million $3.40 -
Operating cash flow from continuing operations of
$344 million $328 million $425 million $422 million
“I’m extremely proud of our team for delivering strong results throughout the year while making significant progress on all of our initiatives to unlock shareholder value,” said
“We’ve executed well upon all of our strategic initiatives that focus on generating greater shareholder value. Over the past year, we have used the flexibility afforded by our holding company structure to align our assets with the go-to-market strategies in our B2C, B2B, distribution, and digital platform businesses. We separated many of the operational components of our business and enhanced our focus on our core capabilities, including through the sale of CompuCom. Additionally, we advanced our new digital platform business, Varis, and remain very encouraged about our early progress. Also, as part of our overall capital structure and in support of our efforts to enhance return for shareholders, we’ve repaid approximately
“Moving forward, we’re committed to unlocking the value of our consumer business and driving growth in our B2B distribution and digital platform businesses. We remain focused on regaining momentum in our enterprise channel as more companies return to the office and as we work to mitigate the ongoing supply chain and inflation challenges. We expect 2022 to be a transformative year in the development of Varis, as we continue to invest in its capabilities, grow customer and supplier relationships, and launch the beta version of the platform with key partners, positioning us to drive future value in the large and growing business commerce market,” Smith concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the fourth quarter of 2021 were
The Company reported operating income of
Total reported sales for the full year 2021 period were
Adjusted (non-GAAP) Results (1)(2)
Adjusted results for the fourth quarter of 2021 exclude charges and credits totaling
-
Fourth quarter of 2021 adjusted EBITDA was
$87 million $78 million $35 million $37 million
-
Fourth quarter 2021 adjusted operating income was
$47 million $40 million
-
Fourth quarter 2021 adjusted net income from continuing operations was
$37 million $0.71 $23 million $0.43
Full year 2021 adjusted operating income was
Fourth Quarter Division Results
Business Solutions Division (BSD)
-
Reported sales were
$1.2 billion 2% compared to the same period last year - Sales generated through the Company’s enterprise contract channel increased year-over-year as more business and education customers slowly began to return to the workplace and classrooms
- This increase was partially offset by lower sales through the Company’s eCommerce channel compared to the same period last year
- Stronger sales in core categories, copy and print services, and furniture were offset by lower year-over-year demand for technology products, as well as challenges related to supply chain and sourcing impacting certain product categories
-
Adjacency categories, including cleaning and breakroom, furniture, technology, and copy and print, remained at
44% of BSD sales, flat year-over-year -
Operating income was
$30 million 67% over the same period last year, driven by higher volume and lower SG&A partially offset by supply chain rate pressure
Retail Division
-
Reported sales were
$885 million 7% compared to the prior year period primarily due to 116 fewer retail outlets at the end of the fourth quarter compared to the prior year, associated with planned closures. The Company closed 46 retail stores in the quarter and had 1,038 stores at quarter end - Lower traffic trends in the quarter were offset by a strong increase in sales-per-shopper, as well as strong omni-channel sales in the quarter and year 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
$54 million 7% over the same period last year; As a percentage of sales, this performance represented an over 80 basis point margin improvement as the Company continued to execute its low cost model approach
Progress on Strategic initiatives
The Company continued to make significant progress against all of its strategic initiatives to unlock shareholder value in the future.
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 businesses into two, independent, publicly-traded companies, by means of a tax-free spin-off, positioning each company to pursue unique market opportunities and growth strategies to improve value for all stakeholders. The Company made significant progress resulting in advancements in all areas of the separation including organizational structure, operating and supply chain mechanics, IT support, and on the anticipated market-based commercial agreements between the companies.
In addition to its planned separation activities, in
Subsequent to the quarter-end, on
The Company’s Board of Directors is carefully reviewing both 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 previously been focusing on completing the public company separation during the first half of 2022, it has determined to delay further work on the separation in order to avoid incurring potentially unnecessary separation costs while it focuses on a potential sale of the consumer business. There can be no assurance that a sale of the consumer business will take place and, if it were to take place, as to the terms of such a sale.
Sale of CompuCom Subsidiary
As announced on
“This action represents an important step in continuing to align our business model and resources towards our core strategy,” said
Enhancing Returns for Shareholders
As part of its ongoing efforts to opportunistically enhance shareholder returns, the Company’s Board of Directors authorized a
“The Board of Directors continues to evaluate its future capital allocation plans and use of proceeds. 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 made tremendous progress on its digital platform business throughout the year. The Company established Varis, 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
2022 Commentary and Expectations
“We continue to execute across our strategic initiatives while driving strong results in 2021,” said Smith. “Our team remains committed to unlocking future value by driving our digital transformation and building upon our B2B platform for the benefit of all of our stakeholders. While we expect that the conditions related to both the pandemic and supply chain and inflationary environment to persist in the quarters ahead, we expect some abatement as we continue leveraging our assets to meet our customers’ needs. In 2022, we will continue to execute upon the strategic path for our consumer business to maximize value for shareholders, work to regain momentum in our enterprise channel as more businesses return to the office, continue to optimize our store footprint, and continue to develop and launch our digital platform business, Varis. We’ll also continue to use a balanced approach to capital deployment, investing to capture the large market opportunity through our digital platform business, supply chain operations, and B2B presence, as well as work with our Board on future share repurchase opportunities,” Smith added.
The Company anticipates generating annual revenue, operating and cash flow results in a range consistent with the prior year, 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 fourth quarter of 2021, cash provided by operating activities from continuing operations was
Capital expenditures in the fourth quarter of 2021 were
As part of the ongoing commitment and support of its strategic initiatives, the Company repurchased
(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. |
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(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. |
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(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. |
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(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
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) |
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13 Weeks Ended |
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52 Weeks Ended |
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2021 |
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2020 |
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2021 |
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2020 |
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(Unaudited) |
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Sales |
|
$ |
2,042 |
|
|
$ |
2,085 |
|
|
$ |
8,465 |
|
|
$ |
8,872 |
|
Cost of goods sold and occupancy costs |
|
|
1,610 |
|
|
|
1,634 |
|
|
|
6,602 |
|
|
|
6,921 |
|
Gross profit |
|
|
432 |
|
|
|
451 |
|
|
|
1,863 |
|
|
|
1,951 |
|
Selling, general and administrative expenses |
|
|
385 |
|
|
|
410 |
|
|
|
1,558 |
|
|
|
1,661 |
|
Asset impairments |
|
|
2 |
|
|
|
8 |
|
|
|
20 |
|
|
|
182 |
|
Merger, restructuring and other operating expenses, net |
|
|
14 |
|
|
|
13 |
|
|
|
51 |
|
|
|
102 |
|
Operating income |
|
|
31 |
|
|
|
20 |
|
|
|
234 |
|
|
|
6 |
|
Other income (expense): |
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Interest income |
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— |
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— |
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|
1 |
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4 |
|
Interest expense |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(28 |
) |
|
|
(42 |
) |
Loss on extinguishment and modification of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12 |
) |
Other income, net |
|
|
5 |
|
|
|
1 |
|
|
|
24 |
|
|
|
6 |
|
Income (loss) from continuing operations before income taxes |
|
|
29 |
|
|
|
14 |
|
|
|
231 |
|
|
|
(38 |
) |
Income tax expense (benefit) |
|
|
(3 |
) |
|
|
(17 |
) |
|
|
44 |
|
|
|
25 |
|
Net income (loss) from continuing operations |
|
|
32 |
|
|
|
31 |
|
|
|
187 |
|
|
|
(63 |
) |
Discontinued operations, net of tax |
|
|
(306 |
) |
|
|
(13 |
) |
|
|
(395 |
) |
|
|
(256 |
) |
Net income (loss) |
|
$ |
(274 |
) |
|
$ |
18 |
|
|
$ |
(208 |
) |
|
$ |
(319 |
) |
Basic earnings (loss) per share |
|
|
|
|
|
|
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|
|
|
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Continuing operations |
|
$ |
0.63 |
|
|
$ |
0.59 |
|
|
$ |
3.54 |
|
|
$ |
(1.20 |
) |
Discontinued operations |
|
|
(6.07 |
) |
|
|
(0.24 |
) |
|
|
(7.47 |
) |
|
|
(4.85 |
) |
Net basic earnings (loss) per share |
|
$ |
(5.44 |
) |
|
$ |
0.35 |
|
|
$ |
(3.93 |
) |
|
$ |
(6.05 |
) |
Diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.61 |
|
|
$ |
0.57 |
|
|
$ |
3.42 |
|
|
$ |
(1.20 |
) |
Discontinued operations |
|
|
(5.87 |
) |
|
|
(0.23 |
) |
|
|
(7.21 |
) |
|
|
(4.85 |
) |
Net diluted earnings (loss) per share |
|
$ |
(5.26 |
) |
|
$ |
0.34 |
|
|
$ |
(3.79 |
) |
|
$ |
(6.05 |
) |
CONSOLIDATED BALANCE SHEETS (In millions, except shares and par value) |
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2021 |
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2020 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
514 |
|
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$ |
729 |
|
Receivables, net |
|
|
495 |
|
|
|
442 |
|
Inventories |
|
|
859 |
|
|
|
916 |
|
Prepaid expenses and other current assets |
|
|
52 |
|
|
|
49 |
|
Current assets held for sale |
|
|
469 |
|
|
|
219 |
|
Total current assets |
|
|
2,389 |
|
|
|
2,355 |
|
Property and equipment, net |
|
|
477 |
|
|
|
542 |
|
Operating lease right-of-use assets |
|
|
936 |
|
|
|
1,107 |
|
|
|
|
464 |
|
|
|
394 |
|
Other intangible assets, net |
|
|
54 |
|
|
|
57 |
|
Deferred income taxes |
|
|
219 |
|
|
|
218 |
|
Other assets |
|
|
326 |
|
|
|
319 |
|
Noncurrent assets held for sale |
|
|
— |
|
|
|
622 |
|
Total assets |
|
$ |
4,865 |
|
|
$ |
5,614 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
|
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|
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|
|
|
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Trade accounts payable |
|
$ |
950 |
|
|
$ |
857 |
|
Accrued expenses and other current liabilities |
|
|
994 |
|
|
|
1,050 |
|
Income taxes payable |
|
|
11 |
|
|
|
10 |
|
Short-term borrowings and current maturities of long-term debt |
|
|
20 |
|
|
|
24 |
|
Current liabilities held for sale |
|
|
290 |
|
|
|
152 |
|
Total current liabilities |
|
|
2,265 |
|
|
|
2,093 |
|
Deferred income taxes and other long-term liabilities |
|
|
159 |
|
|
|
172 |
|
Pension and postretirement obligations, net |
|
|
22 |
|
|
|
42 |
|
Long-term debt, net of current maturities |
|
|
228 |
|
|
|
354 |
|
Operating lease liabilities |
|
|
753 |
|
|
|
935 |
|
Noncurrent liabilities held for sale |
|
|
— |
|
|
|
138 |
|
Total liabilities |
|
|
3,427 |
|
|
|
3,734 |
|
Commitments and contingencies |
|
|
|
|
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|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock — authorized 80,000,000 shares of
shares — 64,704,979 at
and 52,694,062 at |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
2,692 |
|
|
|
2,675 |
|
Accumulated other comprehensive loss |
|
|
(6 |
) |
|
|
(32 |
) |
Accumulated deficit |
|
|
(617 |
) |
|
|
(409 |
) |
shares at |
|
|
(632 |
) |
|
|
(355 |
) |
Total stockholders’ equity |
|
|
1,438 |
|
|
|
1,880 |
|
Total liabilities and stockholders’ equity |
|
$ |
4,865 |
|
|
$ |
5,614 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) |
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|
|
2021 |
|
|
2020 |
|
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Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(208 |
) |
|
$ |
(319 |
) |
Loss from discontinued operations, net of tax |
|
|
(395 |
) |
|
|
(256 |
) |
Net income (loss) from continuing operations |
|
|
187 |
|
|
|
(63 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
146 |
|
|
|
157 |
|
Amortization of debt discount and issuance costs |
|
|
2 |
|
|
|
3 |
|
Charges for losses on receivables and inventories |
|
|
22 |
|
|
|
33 |
|
Asset impairments |
|
|
20 |
|
|
|
182 |
|
(Gain) loss on disposition of assets, net |
|
|
(5 |
) |
|
|
4 |
|
Loss on extinguishment and modification of debt |
|
|
— |
|
|
|
12 |
|
Compensation expense for share-based payments |
|
|
38 |
|
|
|
41 |
|
Deferred income taxes and deferred tax asset valuation allowances |
|
|
(6 |
) |
|
|
11 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease (increase) in receivables |
|
|
(61 |
) |
|
|
185 |
|
Decrease in inventories |
|
|
35 |
|
|
|
76 |
|
Net decrease in prepaid expenses, operating lease right-of-use assets, and other assets |
|
|
281 |
|
|
|
304 |
|
Net decrease in trade accounts payable, accrued expenses, operating lease liabilities, and other current and other long-term liabilities |
|
|
(312 |
) |
|
|
(519 |
) |
Other operating activities |
|
|
(3 |
) |
|
|
(1 |
) |
Total adjustments |
|
|
157 |
|
|
|
488 |
|
Net cash provided by operating activities of continuing operations |
|
|
344 |
|
|
|
425 |
|
Net cash provided by operating activities of discontinued operations |
|
|
2 |
|
|
|
60 |
|
Net cash provided by operating activities |
|
|
346 |
|
|
|
485 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(73 |
) |
|
|
(58 |
) |
Businesses acquired, net of cash acquired |
|
|
(29 |
) |
|
|
(30 |
) |
Proceeds from collection of notes receivable |
|
|
— |
|
|
|
818 |
|
Proceeds from disposition of assets |
|
|
5 |
|
|
|
3 |
|
Settlement of company-owned life insurance policies |
|
|
22 |
|
|
|
13 |
|
Net cash provided by (used in) investing activities of continuing operations |
|
|
(75 |
) |
|
|
746 |
|
Net cash used in investing activities of discontinued operations |
|
|
(4 |
) |
|
|
(10 |
) |
Net cash provided by (used in) investing activities |
|
|
(79 |
) |
|
|
736 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net payments on long and short-term borrowings |
|
|
(25 |
) |
|
|
(341 |
) |
Debt retirement |
|
|
(100 |
) |
|
|
(1,196 |
) |
Debt issuance |
|
|
— |
|
|
|
400 |
|
Cash dividends on common stock |
|
|
— |
|
|
|
(13 |
) |
Share purchases for taxes, net of proceeds from employee share-based transactions |
|
|
(26 |
) |
|
|
(5 |
) |
Repurchase of common stock for treasury and advance payment for accelerated share repurchase |
|
|
(307 |
) |
|
|
(30 |
) |
Other financing activities |
|
|
(1 |
) |
|
|
(8 |
) |
Net cash used in financing activities of continuing operations |
|
|
(459 |
) |
|
|
(1,193 |
) |
Net cash used in financing activities of discontinued operations |
|
|
— |
|
|
|
— |
|
Net cash used in financing activities |
|
|
(459 |
) |
|
|
(1,193 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
— |
|
|
|
1 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
(192 |
) |
|
|
29 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
729 |
|
|
|
700 |
|
Cash, cash equivalents and restricted cash at end of period |
|
|
537 |
|
|
|
729 |
|
Less: cash and cash equivalents of discontinued operations |
|
|
(23 |
) |
|
|
— |
|
Cash and cash equivalents at end of period – continuing operations |
|
$ |
514 |
|
|
$ |
729 |
|
Supplemental information on non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Cash interest paid, net of amounts capitalized and Timber notes/Non-recourse debt |
|
$ |
25 |
|
|
$ |
40 |
|
Cash taxes paid (refunded), net |
|
|
43 |
|
|
|
(14 |
) |
Right-of-use assets obtained in exchange for new finance lease liabilities |
|
|
3 |
|
|
|
29 |
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
|
127 |
|
|
|
117 |
|
Business acquired in exchange for common stock issuance |
|
|
35 |
|
|
|
— |
|
BUSINESS UNIT PERFORMANCE (In millions) (Unaudited) |
||||
Business Solutions Division (in millions) |
4Q21 |
4Q20 |
FY21 |
FY20 |
Sales |
|
|
|
|
Sales change from prior year |
|
|
(2)% |
|
Division operating income |
|
|
|
|
Division operating income margin |
|
|
|
|
Retail Division (in millions) |
4Q21 |
4Q20 |
FY21 |
FY20 |
Sales |
|
|
|
|
Sales change from prior year |
(7)% |
|
(8)% |
|
Division operating income |
|
|
|
|
Division operating income margin |
|
|
|
|
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)
Q4 2021 |
|
Reported
|
|
|
% of
|
|
|
Less:
|
|
|
Adjusted
|
|
|
% of
|
|
|||||
Assets impairments |
|
$ |
2 |
|
|
|
0.1 |
% |
|
$ |
2 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
14 |
|
|
|
0.7 |
% |
|
$ |
14 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
31 |
|
|
|
1.5 |
% |
|
$ |
(16 |
) |
|
$ |
47 |
|
(6) |
|
2.3 |
% |
Income tax expense (benefit) |
|
$ |
(3 |
) |
|
|
(0.1 |
)% |
|
$ |
(11 |
) |
|
$ |
8 |
|
(8) |
|
0.4 |
% |
Net income from continuing operations |
|
$ |
32 |
|
|
|
1.6 |
% |
|
$ |
(5 |
) |
|
$ |
37 |
|
(9) |
|
1.8 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
0.61 |
|
|
|
|
|
|
$ |
(0.10 |
) |
|
$ |
0.71 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
36 |
|
|
|
1.8 |
% |
|
$ |
1 |
|
|
$ |
35 |
|
(10) |
|
1.7 |
% |
Q4 2020 |
|
Reported
|
|
|
% of
|
|
|
Less:
|
|
|
Adjusted
|
|
|
% of
|
|
|||||
Assets impairments |
|
$ |
8 |
|
|
|
0.4 |
% |
|
$ |
8 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
13 |
|
|
|
0.6 |
% |
|
$ |
13 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
20 |
|
|
|
1.0 |
% |
|
$ |
(21 |
) |
|
$ |
40 |
|
(6) |
|
1.9 |
% |
Income tax expense (benefit) |
|
$ |
(17 |
) |
|
|
(0.8 |
)% |
|
$ |
(28 |
) |
|
$ |
11 |
|
(8) |
|
0.5 |
% |
Net income from continuing operations |
|
$ |
31 |
|
|
|
1.5 |
% |
|
$ |
7 |
|
|
$ |
23 |
|
(9) |
|
1.1 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
0.57 |
|
|
|
|
|
|
$ |
0.14 |
|
|
$ |
0.43 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
38 |
|
|
|
1.8 |
% |
|
$ |
1 |
|
|
$ |
37 |
|
(10) |
|
1.8 |
% |
GAAP to Non-GAAP Reconciliations (Unaudited) |
||||||||||||||||||||
2021 |
|
Reported
|
|
|
% of
|
|
|
Less:
|
|
|
Adjusted
|
|
|
% of
|
|
|||||
Assets impairments |
|
$ |
20 |
|
|
|
0.2 |
% |
|
$ |
20 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
51 |
|
|
|
0.6 |
% |
|
$ |
51 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
234 |
|
|
|
2.8 |
% |
|
$ |
(71 |
) |
|
$ |
305 |
|
(6) |
|
3.6 |
% |
Other income, net |
|
$ |
24 |
|
|
|
0.3 |
% |
|
$ |
7 |
|
|
$ |
17 |
|
(7) |
|
0.2 |
% |
Income tax expense |
|
$ |
44 |
|
|
|
0.5 |
% |
|
$ |
(17 |
) |
|
$ |
61 |
|
(8) |
|
0.7 |
% |
Net income from continuing operations |
|
$ |
187 |
|
|
|
2.2 |
% |
|
$ |
(47 |
) |
|
$ |
234 |
|
(9) |
|
2.8 |
% |
Earnings per share from continuing operations (most dilutive) |
|
$ |
3.42 |
|
|
|
|
|
|
$ |
(0.86 |
) |
|
$ |
4.28 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
146 |
|
|
|
1.7 |
% |
|
$ |
3 |
|
|
$ |
143 |
|
(10) |
|
1.7 |
% |
2020 |
|
Reported
|
|
|
% of
|
|
|
Less:
|
|
|
Adjusted
|
|
|
% of
|
|
|||||
Assets impairments |
|
$ |
182 |
|
|
|
2.1 |
% |
|
$ |
182 |
|
|
$ |
— |
|
|
|
— |
% |
Merger, restructuring and other operating expenses, net |
|
$ |
102 |
|
|
|
1.1 |
% |
|
$ |
102 |
|
|
$ |
— |
|
|
|
— |
% |
Operating income |
|
$ |
6 |
|
|
|
0.1 |
% |
|
$ |
(284 |
) |
|
$ |
290 |
|
(6) |
|
3.3 |
% |
Loss on extinguishment and modification of debt |
|
$ |
(12 |
) |
|
|
(0.1 |
)% |
|
$ |
(12 |
) |
|
$ |
— |
|
|
|
— |
% |
Income tax expense |
|
$ |
25 |
|
|
|
0.3 |
% |
|
$ |
(49 |
) |
|
$ |
74 |
|
(8) |
|
0.8 |
% |
Net income (loss) from continuing operations |
|
$ |
(63 |
) |
|
|
(0.7 |
)% |
|
$ |
(247 |
) |
|
$ |
184 |
|
(9) |
|
2.1 |
% |
Earnings (loss) per share from continuing operations (most dilutive) |
|
$ |
(1.20 |
) |
|
|
|
|
|
$ |
(4.60 |
) |
|
$ |
3.40 |
|
(9) |
|
|
|
Depreciation and amortization |
|
$ |
157 |
|
|
|
1.8 |
% |
|
$ |
5 |
|
|
$ |
152 |
|
(10) |
|
1.7 |
% |
|
|
13 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA: |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Net income (loss) |
|
$ |
(274 |
) |
|
$ |
18 |
|
|
$ |
(208 |
) |
|
$ |
(319 |
) |
Discontinued operations, net of tax |
|
|
(306 |
) |
|
|
(13 |
) |
|
|
(395 |
) |
|
|
(256 |
) |
Net income (loss) from continuing operations |
|
|
32 |
|
|
|
31 |
|
|
|
187 |
|
|
|
(63 |
) |
Income tax expense (benefit) |
|
|
(3 |
) |
|
|
(17 |
) |
|
|
44 |
|
|
|
25 |
|
Income (loss) from continuing operations before income taxes |
|
|
29 |
|
|
|
14 |
|
|
|
231 |
|
|
|
(38 |
) |
Add (subtract) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(4 |
) |
Interest expense |
|
|
7 |
|
|
|
7 |
|
|
|
28 |
|
|
|
42 |
|
Adjusted depreciation and amortization (10) |
|
|
35 |
|
|
|
37 |
|
|
|
143 |
|
|
|
152 |
|
Charges and credits, pretax (11) |
|
|
16 |
|
|
|
21 |
|
|
|
64 |
|
|
|
296 |
|
Adjusted EBITDA |
|
$ |
87 |
|
|
$ |
78 |
|
|
$ |
465 |
|
|
$ |
449 |
|
| 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 year-to-date 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), loss on extinguishment and modification of debt (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), European Business liabilities release (if any), and loss on extinguishment and modification of debt (if any). |
|
GAAP to Non-GAAP Reconciliations (Unaudited) |
||||||||||||||||
|
|
13 Weeks Ended |
|
|
52 Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Free cash flow |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Net cash provided by operating activities from continuing operations |
|
$ |
88 |
|
|
$ |
15 |
|
|
$ |
344 |
|
|
$ |
425 |
|
Capital expenditures |
|
|
(26 |
) |
|
|
(9 |
) |
|
|
(73 |
) |
|
|
(58 |
) |
Free cash flow |
|
|
62 |
|
|
|
6 |
|
|
|
271 |
|
|
|
367 |
|
Adjustments for certain cash charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximize B2B Restructuring Plan |
|
|
7 |
|
|
|
12 |
|
|
|
24 |
|
|
|
27 |
|
Business Acceleration Program |
|
|
— |
|
|
|
2 |
|
|
|
3 |
|
|
|
28 |
|
Planned separation of consumer business |
|
|
11 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
Adjusted free cash flow |
|
$ |
80 |
|
|
$ |
20 |
|
|
$ |
328 |
|
|
$ |
422 |
|
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) |
||||||||||||
|
|
Q4 |
|
|
Q4 |
|
|
Full Year |
|
|||
|
|
2020 |
|
|
2021 |
|
|
2021 |
|
|||
Retail Division: |
|
|
|
|
|
|
|
|
|
|
|
|
Stores opened |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stores closed |
|
|
90 |
|
|
|
46 |
|
|
|
116 |
|
Total retail stores ( |
|
|
1,154 |
|
|
|
1,038 |
|
|
|
— |
|
Total square footage (in millions) |
|
|
25.5 |
|
|
|
22.9 |
|
|
|
— |
|
Average square footage per store (in thousands) |
|
|
22.1 |
|
|
|
22.0 |
|
|
|
— |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220223005398/en/
Investor Relations
561-438-4629
Tim.Perrott@officedepot.com
Media Relations
561-438-1594
Danny.Jovic@officedepot.com
Source:
FAQ
What were ODP's Q4 2021 earnings per share?
How did ODP perform in 2021 compared to 2020?
What strategic initiatives did ODP undertake in 2021?
How much did ODP commit to shareholders in 2021?
What challenges did ODP face in 2021?
