The ODP Corporation Announces Fourth Quarter and Full Year 2020 Results

Fourth Quarter 2020 Summary(1)
*Total reported sales of $2.3 billion, down 9% versus last year
*GAAP operating income of $21 million and net income of $18 million, or $0.34 per share, versus $74 million and $55 million, respectively in prior year
*Adjusted operating income of $44 million, down from $92 million in fourth quarter of 2019; and adjusted EBITDA of $89 million, down from $156 million in the fourth quarter of 2019
*Adjusted net income of $30 million, or adjusted earnings per share of $0.55, each down 56% year-over-year
*Operating cash outflow of $4 million and adjusted free cash outflow of $4 million, versus $152 million and $135 million, respectively in prior year
*$1.7 billion of total available liquidity including $729 million in cash and cash equivalents

Full Year 2020 Summary(1)
*Total reported sales of $9.7 billion, down 9% versus last year
*GAAP operating loss of $252 million and net loss of $319 million, or $(6.05) per share, driven primarily by non-cash asset impairment charges recognized in the second quarter of 2020
*Adjusted operating income of $300 million, compared to $367 million in 2019; and adjusted EBITDA of $491 million
*Adjusted net income of $189 million, or adjusted earnings per share of $3.50, down 17% and 15%, respectively year-over-year
*Operating cash flow of $485 million and adjusted free cash flow of $474 million, versus $366 and $310 million, respectively in prior year

“I am extremely proud of our team for delivering solid results and advancing our B2B pivot and digital transformation despite the challenges posed by the pandemic. I want to thank all of our associates for their continued commitment and dedication, not only for driving these results, but also for maintaining their focus on measures to keep our customers and employees safe throughout the COVID-19 outbreak,” said Gerry Smith, chief executive officer of The ODP Corporation.

“The positive dynamics of our ecosystem and low cost model focus helped offset many of the challenges posed by the COVID-19 pandemic. We pivoted our value proposition, reaching customers through leveraging our diverse channels to market and broad product categories. We drove strong performance in cleaning, office technology and workspaces, and personal protective equipment (PPE) categories, partially offsetting challenges in core supply categories which were negatively impacted by business shutdowns and school closures related to the pandemic. Our omni-channel performance was outstanding, experiencing stronger demand during this unusual period, especially for our curb-side pick-up and buy on-line, pick-up in store (BOPIS) offerings. Our digital presence continued to expand, highlighted by a 15% increase in demand through our BSD eCommerce channel. In all, we delivered solid performance throughout the year,” Smith added.

“While we expect that conditions caused by the COVID-19 pandemic will persist for at least the first half of 2021, the actions and investments we have made during 2020 allow us to continue to work to meet our customers’ expanded needs through all channels. We are also maintaining our focus on driving our low-cost model, while working to evolve our B2B platform to expand into higher growth and higher value market categories. We’ve made significant progress on our B2B pivot and digital transformation, recently enhancing our senior team and accelerating our technology development by adding an industry-leading eProcurement software platform. This component of our digital transformation combined with our valuable physical asset base, has been recognized by one of the leading technology companies in the world, Microsoft, whom we are collaborating with to transform how businesses buy and sell in the over $8 trillion B2B commerce market,” he added.

Consolidated Results – Reported (GAAP) Results
Total reported sales for the fourth quarter of 2020 were $2.3 billion, a decrease of 9% compared to the fourth quarter of 2019. The year-over-year decrease in revenue was primarily the result of lower sales driven by impacts related to the COVID-19 pandemic. Product sales in the fourth quarter were down 7% relative to the prior year period. Service revenue in the fourth quarter was down 20% related to lower comparable sales at CompuCom and lower sales of services in our BSD and Retail Division, both of which were negatively impacted by the COVID-19 outbreak.

The Company reported operating income of $21 million in the fourth quarter of 2020, compared to $74 million in the prior year period. GAAP operating results in the fourth quarter included a total of $23 million of charges which include $8 million of non-cash asset impairment charges and $15 million of merger and restructuring costs. Associated with planned store closures, the Company recognized asset impairment charges of $8 million in the fourth quarter of 2020 including $6 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 were $15 million in the fourth quarter, primarily associated with the Maximize B2B Restructuring Plan. Net income was $18 million, or $0.34 per diluted share in the fourth quarter of 2020, compared to $55 million, or $1.00 per diluted share in the fourth quarter of 2019.

Total reported sales for the full year 2020 period were $9.7 billion, a decrease of 9% over the same period last year, primarily the result of lower sales driven by impacts related to the COVID-19 pandemic. Product sales for the year were down 7% from the prior year. Service revenue was down 17% year over year. ODP reported full year 2020 operating loss of $252 million, compared to operating income of $191 million in 2019. Primary drivers of the comparable reduction are lower operating results, $375 million increase in non-cash asset impairment charges with $363 million related to goodwill and other intangible assets at CompuCom and in the Company’s contract business combined, largely related to the effects of the COVID-19 outbreak on current business conditions, and a $5 million increase in merger and restructuring costs. Net loss in 2020 was $319 million, or $(6.05) per diluted share, compared to net income of $99 million, or $1.80 per diluted share, in 2019.
details and more at: https://investor.theodpcorp.com/news-releases/news-release-details/odp-corporation-announces-fourth-quarter-and-full-year-2020

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