Loading...
01/11 18:30
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed performance with a 9% revenue decline and a drop in adjusted EBITDA. Despite improvements in free cash flow and liquidity, the company faces challenges in onboarding new contracts and declining B2B revenue. Market sentiment may be further dampened by unclear guidance on stock buybacks and the impact of store closures. The market cap suggests moderate volatility, leading to a likely negative stock price reaction of -2% to -8% over the next two weeks.
Total Revenue $1.7 billion, a 9% decline year-over-year due to 46 fewer stores, reduced retail and online traffic, and lower sales in ODP business solutions.
Adjusted EBITDA $76 million, down from $91 million year-over-year, reflecting operational challenges and restructuring impacts.
Adjusted Free Cash Flow $45 million, more than double the $17 million generated in the same period last year, driven by improved cash management and inventory conversion.
Operating Income (GAAP) -$32 million, compared to $41 million in the prior year, impacted by $86 million in charges related to restructuring and asset impairments.
Adjusted Operating Income $54 million, down from $66 million year-over-year, reflecting the impact of lower revenues.
Consumer Division Revenue (Office Depot) $838 million, down 11% year-over-year, impacted by store closures and lower traffic, but showing improved trends.
B2B Business Revenue (ODP Business Solutions) $852 million, down 8% year-over-year, affected by soft market demand and a significant customer loss.
Supply Chain Business Revenue (VEYER) $1.2 billion in total sales, with third-party revenue of $17 million, up 89% year-over-year, driven by new customer acquisitions.
Operating Income (Consumer Division) $45 million, with margins improving sequentially despite lower revenues.
Operating Income (B2B Business) $21 million, down from $31 million year-over-year, impacted by lower revenues and fixed-cost deleveraging.
Total Liquidity $653 million, consisting of $185 million in cash and $468 million in available credit.
Capital Expenditures $21 million, down from $31 million year-over-year, focused on B2B growth opportunities.
New Business Contracts: Recently added CoreTrust, a large group purchasing collective with over 3,500 enterprise members, to our portfolio.
Hospitality Market Entry: Announced a strategic partnership with a major hotel management organization, becoming a preferred provider for operating supplies and equipment.
Market Expansion: Expanding into higher growth segments like hospitality and supply chain as a service.
Adjusted Free Cash Flow: Generated $45 million in adjusted free cash flow, more than double the amount from the same period last year.
Store Closures: Closed 12 retail stores in the quarter, with a total of 857 stores remaining.
Optimize for Growth Plan: Executing a restructuring plan to reduce fixed costs and enhance B2B pivot.
Tariff Mitigation Strategies: Diversified sourcing strategy to minimize potential tariff impacts.
Competitive Pressures: The company is facing soft market demand and reduced enterprise spending budgets, which have impacted their B2B business performance. They also noted the loss of a large customer last year, which continues to affect their top-line trends.
Regulatory Issues: The company is evaluating the evolving tariff situation, which poses potential impacts on their operations. They are taking proactive measures to mitigate these impacts by diversifying sourcing strategies and collaborating with vendors.
Supply Chain Challenges: The company has experienced delays in inventory build and sourcing, which have taken longer than anticipated. They are working to build inventory to meet future demand, particularly in the hospitality sector.
Economic Factors: The overall economic environment is characterized by cautious business conditions and restricted enterprise spending, which have contributed to lower sales and demand in their B2B business.
Operational Risks: The company is undergoing a restructuring plan aimed at reducing fixed costs and realigning their business strategy. This includes closing retail stores and eliminating corporate support structures, which may pose operational risks during the transition.
B2B Pivot and Expansion: ODP is focusing on its B2B pivot and expanding into higher growth segments like hospitality and supply chain as a service, leveraging core strengths and distribution capabilities.
Optimize for Growth Plan: The company is executing its Optimize for Growth restructuring plan to realign organizational structure, reduce fixed costs, and enhance operational flexibility.
New Business Contracts: ODP has added significant new business contracts, including CoreTrust, which is expected to contribute to performance in the second half of the year.
Hospitality Market Entry: The company is making progress in the hospitality market, with a strategic partnership covering 15,000 potential customer locations and agreements with leading suppliers.
Cash Flow Management: ODP generated $45 million in adjusted free cash flow, more than double the previous year, indicating strong cash management.
Revenue Expectations: ODP anticipates improving trends in both consumer and B2B businesses, particularly in the second half of the year.
Adjusted Free Cash Flow: The company expects significantly higher adjusted free cash flow generation compared to last year.
Leverage Ratio Improvement: ODP aims for further improvements to its leverage ratio by year-end.
Capex: Capital expenditures were $21 million in Q1 2025, with a focus on B2B growth opportunities.
Market Dynamics: The company is not providing detailed guidance due to market dynamics and ongoing tariff uncertainty.
Adjusted Free Cash Flow: $45 million in Q1 2025, a significant increase from $17 million in Q1 2024.
Total Liquidity: $653 million, consisting of $185 million in cash and cash equivalents and $468 million in available credit.
Total Debt: $262 million.
New Contracts: Over $500 million in annual spend from new contracts won over the past three quarters.
Restructuring Charges: $48 million related to the Optimize for Growth plan.
Store Closures: Closed 12 retail stores in Q1 2025.
The earnings call summary shows mixed signals: strong cash flow and new contracts are positive, but retail revenue and store sales are declining. The Q&A reveals optimism in new deals and operational strategies, but management avoided specifics on growth timelines and strategic alternatives. The lack of guidance due to market dynamics and tariff concerns further contributes to uncertainty. With a market cap of approximately $1.42 billion, the stock is likely to have a neutral reaction, falling between -2% and 2%.
The earnings call reveals a mixed performance with a 9% revenue decline and a drop in adjusted EBITDA. Despite improvements in free cash flow and liquidity, the company faces challenges in onboarding new contracts and declining B2B revenue. Market sentiment may be further dampened by unclear guidance on stock buybacks and the impact of store closures. The market cap suggests moderate volatility, leading to a likely negative stock price reaction of -2% to -8% over the next two weeks.
The earnings call reveals a decline in financial metrics, including revenue, operating income, and net income, alongside reduced guidance for EBITDA and EPS. Despite some positive developments in B2B pivot and new partnerships, the suspension of free cash flow guidance and unclear management responses in the Q&A raise concerns. The market cap suggests moderate volatility, leading to a negative sentiment prediction of -2% to -8%.
The earnings call summary indicates several negative factors: lowered revenue and EPS guidance, significant declines in revenue and EBITDA, and reduced share repurchases. The Q&A further highlights uncertainties, such as the impact of hurricanes and reluctance to provide specific guidance. Despite some positive elements like new deals and Project Core, the overall sentiment is negative, especially considering the lowered guidance and operational challenges. Given the company's market cap and the negative sentiment, the stock price is likely to fall by 2% to 8% over the next two weeks.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
