The ODP Corporation (“ODP,” or the “Company”) (NASDAQ: ODP), a leading provider of business services, products and digital workplace technology solutions through an integrated B2B distribution platform, today announced results for the third quarter ended September 26, 2020.
Third Quarter 2020 Summary(1)
*Total reported sales of $2.5 Billion, down 9% versus last year and up 18% sequentially compared to the second quarter of 2020. Sequential sales performance represents an 800 basis points trend improvement when comparing year-over-year revenue performance
*GAAP operating income of $102 million and net income of $57 million, or $1.04 per share, each down approximately 5% year-over-year
*Improved working capital conversion resulted in operating cash flow of $309 million and adjusted free cash flow of $312 million, versus $212 and $209 million, respectively in prior year
*$1.7 billion of total available liquidity including $743 million in cash
*“Strong execution by our team resulted in improving revenue and operating results as the business environment continues to recover from the impact of the COVID-19 pandemic. I want to thank our associates for their continued commitment in driving these results, while maintaining their focus on measures to help keep our customers and employees safe throughout these challenging times,” said Gerry Smith, chief executive officer of The ODP Corporation.
“Our improved results reflect the continued focus on our low cost model and the positive dynamics of our ecosystem, which combines our diverse routes to market with an expanded product portfolio and flexible supply chain capabilities, meeting the needs of businesses and consumers alike. Our value proposition continued to resonate with customers whether working from home or in the office, driving growth in home office technology and workspace categories, and strong demand through our eCommerce channel, which was up 20% over last year and approaching over $1.2 billion in sales on an annual run-rate basis. Our trusted supply chain and distribution capabilities reliably met the essential needs of our customers, generating interest in new business relationships and expanded services. These factors drove sequential revenue growth, delivered operating income nearly flat with the pre-COVID environment last year, and helped generate over $300 million in adjusted free cash flow. These accomplishments are a testament to the power of our ecosystem and were achieved despite a back-to-school selling season that has been delayed due to conditions caused by the pandemic. With the building blocks in place supporting our strong foundation, we are confident in our future opportunities and driving profitable growth,” he added.
Reported (GAAP) Results
Total reported sales for the third quarter of 2020 were $2.5 billion, a decrease of 9% compared to the third quarter of 2019. The year-over-year decrease in revenue was primarily the result of lower sales in the Business Solutions Division (BSD) and CompuCom Division driven by impacts related to the COVID-19 pandemic. On a sequential basis compared to the second quarter of 2020, total reported sales increased 18%, driven by strong eCommerce sales and demand for work and learn-from-home products. Product sales in the third quarter were down 7% relative to the prior year period. Service revenue was down 19% in the third quarter related to lower comparable sales at CompuCom and sales of services in our BSD and Retail Divisions, all of which were negatively impacted by the COVID-19 outbreak.
The Company reported operating income of $102 million in the third quarter of 2020, compared to $108 million in the prior year period. GAAP operating results in the third quarter included a total of $36 million of charges which include $10 million of non-cash asset impairment charges and $26 million of merger and restructuring costs. Asset impairment charges of $10 million in the third quarter of 2020 included $7 million related to the impairment of operating lease right-of-use (ROU) assets associated with the Company’s retail store locations, with the remainder primarily relating to the impairment of fixed assets. Merger and restructuring costs of $26 million include $5 million in restructuring charges associated with the Business Acceleration Program (“BAP”), $17 million in restructuring charges associated with the Maximize B2B Restructuring Plan, and $3 million in merger, acquisition and integration-related expenses. Net income was $57 million, or $1.04 per diluted share in the third quarter of 2020, compared to $60 million, or $1.09 per diluted share in the third quarter of 2019.
details at: https://investor.theodpcorp.com/news-releases/news-release-details/odp-corporation-announces-third-quarter-2020-results