The ODP (US:ODP)2025-11-05 11:50Financial Performance - Total reported sales for Q3 2025 were $1.6 billion, a 9% decrease compared to the same period last year, primarily due to lower sales in the Office Depot Division and ODP Business Solutions Division [3]. - GAAP operating income was $34 million, down from $102 million in the prior year, with net income from continuing operations of $23 million, or $0.72 per diluted share, compared to $68 million, or $2.04 per diluted share, in Q3 2024 [5]. - Adjusted net income from continuing operations was $36 million, or adjusted diluted earnings per share of $1.14, an increase of 61% on a per share basis compared to $24 million, or $0.71, in the prior year [9]. - Operating income for the 13 weeks ended September 27, 2025, was $34 million, significantly lower than $102 million for the same period in 2024, representing a decline of 67% [28]. - Net income from continuing operations for Q3 2025 was $23 million, or $0.72 per share, compared to $68 million, or $2.04 per share in Q3 2024 [39][40]. - Year-to-date (YTD) 2025 net income from continuing operations was a loss of $6 million, or $(0.21) per share, compared to a profit of $95 million, or $2.65 per share in YTD 2024 [40]. Cash Flow and Liquidity - Operating cash flow from continuing operations increased to $90 million, up from $81 million in the prior year, reflecting strong cash conversion and prudent working capital management [8]. - Total available liquidity was $730 million, consisting of $182 million in cash and cash equivalents and $548 million of available credit [12]. - Adjusted Free Cash Flow for Q3 2025 was $89 million, up from $68 million in the prior year period [14]. - Free cash flow for Q3 2025 was $78 million, up from $58 million in Q3 2024, while adjusted free cash flow increased to $89 million from $68 million [46]. Sales and Revenue Trends - The ODP Business Solutions Division reported sales of $862 million, a 6% year-over-year decline, but showed improved revenue trends compared to the prior year [9]. - Sales for the 13 weeks ended September 27, 2025, were $1,625 million, a decrease of 9% compared to $1,780 million for the same period in 2024 [28]. - The Business Solutions Division reported external sales of $860 million for 3Q25, down 6% from $914 million in 3Q24 [34]. - The Office Depot Division experienced a 13% decline in external sales, reporting $742 million in 3Q25 compared to $852 million in 3Q24 [34]. - The Veyer Division's external sales increased to $23 million in 3Q25, up from $14 million in 3Q24, marking a growth of 64% [34]. Restructuring and Strategic Changes - The Company expects to incur costs of $185 million to $230 million over the multi-year life of the "Optimize for Growth" restructuring plan, which is anticipated to generate approximately $380 million in EBITDA improvement [18]. - The Company closed 12 retail stores during the quarter, ending with 822 retail locations, reflecting ongoing strategic adjustments [16]. - Total retail stores in the U.S. decreased to 822 in Q3 2025 from 885 in Q3 2024, with 12 stores closed in Q3 2025 [48]. - The company incurred $49 million in asset impairments and $57 million in merger and restructuring expenses for YTD 2025 [40]. Asset and Liability Management - The ODP Corporation's total assets decreased to $3,279 million as of September 27, 2025, down from $3,529 million at the end of 2024 [30]. - Total liabilities decreased to $2,456 million as of September 27, 2025, compared to $2,722 million at the end of 2024 [30]. - The ODP Corporation's cash and cash equivalents increased to $182 million as of September 27, 2025, from $166 million at the end of 2024 [30]. Other Financial Metrics - Gross profit for the 39 weeks ended September 27, 2025, was $1,001 million, down from $1,115 million in the prior year, reflecting a decrease of 10% [28]. - Adjusted EBITDA for Q3 2025 was $62 million, consistent with Q3 2024, while YTD 2025 adjusted EBITDA was $184 million compared to $210 million in YTD 2024 [46]. - Q3 2025 reported operating income was $34 million, representing 2.1% of sales, while adjusted operating income was $38 million, or 2.3% of sales [39].