The ODP (ODP) - 2024 Q4 - Annual Results

Financial Performance - Total reported sales for Q4 2024 were $1.6 billion, a decrease of 10% compared to Q4 2023, primarily due to lower sales in the Office Depot Division and ODP Business Solutions Division[4] - GAAP operating income for Q4 2024 was$ 20 million, down from $52 million in the prior year, with net income from continuing operations of$ 11 million, or $0.36 per diluted share, compared to$ 39 million, or $1.02 per diluted share, in Q4 2023[10] - Adjusted operating income for Q4 2024 was$ 32 million, down from $57 million in Q4 2023, with adjusted EBITDA of$ 58 million compared to $83 million in the prior year[4] - Total reported sales for FY 2024 were$ 7.0 billion, down from $7.8 billion in FY 2023, with GAAP operating income of$ 163 million compared to $330 million in the prior year[19] - Adjusted net income from continuing operations for FY 2024 was$ 114 million, or adjusted diluted earnings per share of $3.30, down from$ 263 million, or $6.61 per diluted share, in FY 2023[19] - ODP Corporation reported Q4 2024 sales of$ 1.624 billion, a decrease of 9.9% from $1.803 billion in Q4 2023[34] - Gross profit for Q4 2024 was$ 331 million, down 16% from $394 million in Q4 2023, resulting in a gross margin of 20.4%[34] - ODP's net income from continuing operations for Q4 2024 was$ 11 million, compared to $39 million in Q4 2023, reflecting a decline of 71.8%[34] - The company reported a net loss of$ 3 million for the full year 2024, compared to a net income of $139 million in 2023[34] - Basic earnings per share from continuing operations for Q4 2024 was$ 0.36, down from $1.06 in Q4 2023[34] - Net income from continuing operations fell from$ 247 million in 2023 to $106 million in 2024, a decrease of 57.1%[38] - The company reported a total operating income of$ 20 million in Q4 2024, down from $52 million in Q4 2023, representing a decline of 61.5%[45] - Earnings per share from continuing operations (fully diluted) decreased to$ 3.08 in Q4 2024 from $6.22 in Q4 2023[46] - The adjusted EBITDA for the 52 weeks ended December 28, 2024, was$ 268 million, down from $459 million in the previous year[50] - Free cash flow for Q4 2024 was$ 9 million, a decrease from $46 million in Q4 2023, while adjusted free cash flow was negative at$ (57) million[50] Cash Flow and Liquidity - Operating cash flow from continuing operations for FY 2024 was $159 million, down from$ 360 million in FY 2023, with adjusted free cash flow of $33 million compared to$ 288 million in the prior year[19] - The company has total available liquidity of approximately $644 million, consisting of$ 166 million in cash and cash equivalents and $478 million of available credit[19] - Cash and cash equivalents at the end of the period dropped from$ 395 million in 2023 to $171 million in 2024, a decrease of 56.7%[38] - Free cash flow for the year was significantly impacted, with net cash provided by operating activities decreasing from$ 331 million in 2023 to $130 million in 2024[38] Restructuring and Strategic Initiatives - The company expects to incur costs between$ 185 million and $230 million related to its "Optimize for Growth" restructuring plan, which is anticipated to generate approximately$ 380 million in EBITDA improvement[25] - The restructuring plan aims to reduce retail exposure and associated liabilities while targeting high-growth opportunities in the B2B marketplace[23] - Total value generated from the restructuring plan is projected to exceed $1.3 billion over its multi-year life[25] - ODP plans to prioritize capital allocation toward core business growth opportunities in the B2B market over share repurchases in 2025[18] - The company plans to suspend growth investments in its consumer and retail business while focusing on B2B sector growth[24] Shareholder Actions - The company repurchased 1.4 million shares at a cost of$ 43 million in Q4 2024, and a total of 8 million shares for $300 million in FY 2024[17] Divisional Performance - Sales for the ODP Business Solutions Division decreased by 8% year-over-year, from$ 3,904 million in FY23 to $3,578 million in FY24[40] - The Office Depot Division reported a 14% decline in external sales, from$ 3,884 million in FY23 to $3,358 million in FY24[40] Asset and Liability Management - Total assets decreased from$ 3,887 million in 2023 to $3,529 million in 2024, a decline of 9.2%[36] - The total current liabilities decreased from$ 1,697 million in 2023 to $1,543 million in 2024, a reduction of 9.1%[36] - The company’s long-term debt increased from$ 165 million in 2023 to $270 million in 2024, an increase of 63.6%[36] - The total stockholders' equity decreased from$ 1,101 million in 2023 to $807 million in 2024, a decline of 26.6%[36] Store Operations - The company closed 22 stores in Q4 2023 and 16 stores in Q4 2024, resulting in a total of 869 retail stores in the U.S. by the end of 2024[53] - Total square footage of retail stores decreased to 19.2 million square feet in 2024 from 20.3 million square feet in 2023[53] Other Financial Metrics - The company incurred$ 33 million in asset impairments in Q4 2024, compared to $17 million in Q4 2023[46] - Merger and restructuring expenses were$ 47 million in Q4 2024, up from $4 million in Q4 2023[46] - The income tax expense for Q4 2024 was$ 40 million, consistent with the 0.6% margin reported in Q4 2023[46] - The company reported a legal matter monetization charge of $(70) million in Q4 2024, which impacted overall financial performance[46]