The ODP Corporation Announces Second Quarter 2022 Results

“Our team continues to deliver against a challenging macroeconomic environment, driving solid operational and financial results in the second quarter,” said Gerry Smith, chief executive officer for The ODP Corporation. “The strength of our distribution platform and flexible pricing strategies helped to offset some of the market wide challenges related to supply chain constraints, higher transportation costs, and inflation. Back-to-office trends continued to rise, helping us deliver another quarter of improved operating results in our contract channel. In our retail channel, our customer experience continues to improve, driving our net promoter scores higher, and our continued focus on cost efficiencies resulted in driving strong year-over-year operating performance. Overall, our team continues to focus on execution and remains committed to our low-cost model approach, enabling us to deliver $54 million in adjusted operating income.”

“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.

Total reported sales for the second quarter of 2022 were $2.0 billion, down 2% compared to the second quarter of 2021 primarily due to fewer retail stores in service and greater market-wide challenges related to the sourcing and supply chain environment relative to last year. Retail Division sales were lower primarily due to 71 planned store closures and lower store traffic, which was offset by higher sales in our BSD Division. The Company drove stronger business-to-business (B2B) sales through its contract channel as more businesses continued to return to the office, which was partially offset by lower sales through its eCommerce channel compared to a year ago. The Company drove strong sales across most major product categories in its BSD Division and strong omni channel sales in its Retail Division.

The Company reported operating income of $28 million in the second quarter of 2022, down compared to operating income of $30 million in the prior year period. GAAP operating results in the second quarter of 2022 included $26 million of charges consisting primarily of $23 million in merger, restructuring and other operating costs largely associated with activities related to the Company’s previously planned separation. The remaining $3 million is associated with non-cash asset impairment charges primarily related to the impairment of operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net income from continuing operations was $20 million, or $0.39 per diluted share in the second quarter of 2022, up from $20 million, or $0.35 per diluted share in the second quarter of 2021.
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