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The ODP Corporation (ODP) CEO Gerry Smith on Q4 2021 Results – Earnings Call Transcript


The ODP Corporation (NASDAQ:ODP) Q4 2021 Earnings Conference Call February 23, 2022 9:00 AM ET

Company Participants

Tim Perrott – Vice President of Investor Relations

Gerry Smith – Chief Executive Officer

David Bleisch – Executive Vice President, Chief Legal & Administrative Officer

Anthony Scaglione – Executive Vice President & Chief Financial Officer

Conference Call Participants

Chris McGinnis – Sidoti & Company

Michael Lasser – UBS

William Kafoure – Elevation


Good morning and welcome to The ODP Corporation’s Fourth Quarter and Full Year 2021 Earnings Conference Call. All lines will be on a listen-only mode for today’s call, after which instructions will be given in order to ask a question. At the request of The ODP Corporation, today’s call is being recorded.

I would like to introduce Tim Perrott, Vice President, Investor Relations. Mr. Perrott, you may now begin.

Tim Perrott

Good morning and thank you for joining us for The ODP Corporation’s fourth quarter 2021 earnings conference call. This is Tim Perrott, and I’m here with Gerry Smith, our CEO; and Anthony Scaglione, our Executive Vice President and CFO. Also joining us today is David Bleisch, our Executive Vice President and Chief Legal and Administrative Officer.

We will begin today’s call with David who will provide commentary regarding our decision to pause separation activities as we evaluate a potential sale of the consumer business. After David’s commentary, Gerry will provide an update on the business, focusing much of his commentary on our accomplishments in the year, including our operational performance and the progress we’re making on all of our initiatives to drive shareholder value. After Gerry’s comments, Anthony will then review the company’s financial results, including highlights of our divisional performance. And following Anthony’s comments, we will open up the line for your questions.

Before we begin, I need to inform you that certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company’s current expectations concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in the company’s filings with the US Securities and Exchange Commission. Also during the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, presentation slides that accompany today’s comments, and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investor.theodpcorp.com. Today’s call and slide presentation is being simulcast on our website and will be archived there for at least one year.

I will now turn the call over to David Bleisch, Our Executive Vice President and Chief legal and Administrative Officer. David?

David Bleisch

Thank you Tim and good morning. As a reminder on June 4, 2021 USR Parent, the owner of Staples, the Sycamore Partners subsidiary, made a public proposal to acquire the ODP Corporation’s consumer business, including the Office Depot and OfficeMax retail stores business, the company’s direct channel business office depot.com, and Office Depot and OfficeMax, intellectual property, including all brand names for $1 billion. In December 2021, the company’s board of directors received a non-binding proposal from another third party to acquire the company’s consumer business, the terms which are confidential. On January 14, 2022, the company announced that its board of directors was delaying the previously announced plan to separate the company into two independent publicly traded companies so that it could 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. The company remains in conversations with interested parties as it further evaluates the potential value of the proposed transactions.

I’ll now turn the call over to our Chief Executive Officer Gerry Smith.

Gerry Smith

Thank you, David. And good morning to everyone joining our call today. We appreciate you joining us this morning and hope that all of our listeners and their families continue to remain safe and healthy. I’m excited to be here with you today to discuss our results and accomplishments for 2021, as well as our strong finish in the fourth quarter. Our performance reflects our team’s continued commitment to our low cost model, and to the core tenets that drive our business, position us to deliver strong results while making significant progress on our strategic initiatives to further unlock shareholder value. I’ve never been more excited about the opportunities ahead for our business. And I’m extremely proud of our team’s efforts in delivering these results. It’s a much more demanding macro-economic and market backdrop, and a follow on to David’s comments, we’re also excited to be working with the interested parties on potential sale to consumer business and hope to have an update in the next few months on where we stand in the negotiations.

Now turning to slide 5 in the presentation, the challenges posed by the pandemic and the macro economic environment over the past year were significant. The resurgence of COVID delayed the back to the office plans for many of our customers and impacts the timing of school re-openings. Furthermore, supply chain and sourcing constraints, labor shortages and inflationary pressures created additional challenges for us, as well for most companies in many industries. I am proud that our team once again rose to meet these challenges, delivering strong performance while also advancing our strategic initiatives to drive shareholder value, a key outcome which is helping us to align our assets to support the go-to-market strategies across our business units.

We remain true to the core tenets that drive our business, addressing the market dynamics, pursuing new avenues for growth and positioning our business to unlock future value for all of our stakeholders. As I’ve mentioned in previous calls, these tenets form the foundation of our strategy and are rooted in driving a low cost model, expanding our value proposition and moving into higher value businesses through the addition of new growth engines. As reflected in the results, we’ve been executing along these priorities, utilizing the strength of our business model and the flexibility of our infrastructure to address the market demands. We continue to derive our low cost model, enabling us to provide compelling value for our customers and helping us generate strong operating results.

We’re also continuing to evolve our platform to serve customers in new ways whether at home, on the road or in the office, expanding our value proposition and providing a broader set of products and services. We’re also investing and evolving into higher value business markets, including the launch of our digital platform business Varis and leveraging our supply chain and distribution capabilities to support our future businesses. It is not just what we accomplished, it’s also how we drove up performance has shown on slide 6. At a heart of our approach is our winning 5C culture. I’m very proud of the culture we have created at ODP, and the foundation provides as we support our community, attract new talent, and continue to execute upon our strategic priorities. I think a true testament to our 5C culture is the strong team we have built over the past few years, attracting the best and brightest talent across a broad range of industries, including technology, business commerce, supply chain and finance. I can’t express…


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