The ODP Corp (ODP, Financial) released its 8-K filing on August 7, 2024, reporting a challenging second quarter with revenue and earnings falling short of analyst estimates. The company, which operates an integrated B2B distribution platform, faced significant headwinds, including reduced business spending and fewer retail locations.
Company Overview
The ODP Corp operates through several divisions: ODP Business Solutions, Office Depot Division, Veyer Division, and Varis Division. The company serves a wide range of customers from small businesses to large enterprises, providing office supplies, technology, furniture, and business services. The Veyer Division, which focuses on supply chain and distribution, is a major revenue driver.
Q2 2024 Financial Performance
For the second quarter of 2024, The ODP Corp reported:
| Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Sales | $1,717 million | $1,907 million | $3,586 million | $4,013 million |
| Operating Income | $0.4 million | $60 million | $41 million | $172 million |
| Net Income (Loss) | $(4) million | $43 million | $27 million | $127 million |
| Adjusted EPS | $0.56 | $1.22 | $1.89 | $3.30 |
The company reported a 10% decline in sales compared to the same period last year, primarily due to lower sales in the Office Depot Division and ODP Business Solutions Division. The GAAP operating income was significantly lower at $0.4 million, compared to $60 million in Q2 2023. The net loss from continuing operations was $4 million, or $(0.12) per diluted share, compared to a net income of $43 million, or $1.09 per diluted share, in the prior year period.
Challenges and Strategic Initiatives
The ODP Corp faced several challenges during the quarter, including cautious business spending, weaker consumer activity, and onboarding issues with new customers. The company is actively working on Project Core, aimed at driving cost savings and implementing growth initiatives. The project is expected to generate over $100 million in annual cost savings when fully implemented.
"We are executing Project Core while taking actions to improve top-line trends in both our B2B and B2C businesses," said Gerry Smith, CEO of The ODP Corporation.
Division Performance
ODP Business Solutions Division: Reported sales were $917 million, down 8% year-over-year. The division faced challenges due to weaker macroeconomic conditions and onboarding issues with new customers.
Office Depot Division: Reported sales were $799 million, down 12% year-over-year, impacted by 58 fewer retail locations and lower consumer demand.
Veyer Division: Generated sales of $1.2 billion, providing strong logistics support and driving external EBITDA growth.
Share Repurchases and Liquidity
The company repurchased nearly 2.4 million shares at a cost of $104 million in Q2 2024, bringing the total repurchases to $191 million year-to-date. The ODP Corp had total available liquidity of $831 million, including $190 million in cash and cash equivalents.
Balance Sheet and Cash Flow
As of June 29, 2024, The ODP Corp reported total assets of $3,653 million and total liabilities of $2,760 million. The company generated $43 million in operating cash flow from continuing operations and reported capital expenditures of $19 million for the quarter.
Outlook and Guidance
The company updated its full-year 2024 guidance, now expecting sales of at least $7 billion and adjusted EPS of $4.25 to $5.00 per share. The ODP Corp remains focused on improving its top-line trajectory and capturing long-term growth opportunities.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from The ODP Corp for further details.
