Leading workplace solutions provider joins forces with strategic reseller partner to enhance procurement efficiency and deliver a curated customer experience
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 6, 2024– The ODP Corporation (NASDAQ:ODP) (“ODP,” or the “Company”), a leading provider of products, services and technology solutions to businesses and consumers, today announced a partnership with a large, growing strategic reseller organization, offering quality office, furniture, print, promotional and facility resource solutions to large multi-site companies. This partnership, worth up to $1.5 billion spanning a 10-year period, will leverage the reseller provider’s expertise in creating custom, results-driven e-commerce solutions and the Company’s extensive fulfillment centers and delivery network.
“This collaboration enables a leader in reseller services to leverage our comprehensive product and service offerings, national distribution and award-winning e-commerce platform to service their customers,” said David Centrella, EVP of The ODP Corporation and President of ODP Business Solutions. “This partnership reflects our commitment to providing solutions that address unique business needs.”
“This partnership underscores ODP’s commitment to providing value-added solutions that will help businesses and vendors thrive in today’s competitive landscape,” said Nisha Brown, VP of Marketing & Product Management at ODP Business Solutions. “We’re excited about the opportunities this brings to our customers and the broader business community.”
To learn more about The ODP Corporation, visit theodpcorp.com.
About The ODP Corporation The ODP Corporation (NASDAQ:ODP) is a leading provider of products and services through an integrated business-to-business (B2B) distribution platform and omnichannel presence, which includes world-class supply chain and distribution operations, dedicated sales professionals, online presence and a network of Office Depot and OfficeMax retail stores. Through its operating companies Office Depot, LLC; ODP Business Solutions, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, The ODP Corporation (“the Company”), based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” “aim” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.
Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
Third Quarter Revenue of $1.8 Billion with GAAP EPS of $2.04; Adjusted EPS of $0.71
Significant New Business Wins Improving Future Growth Profile
Progress on B2B Pivot; Pursuing Core Opportunities in New Adjacent Industry Segments
Company Repurchased Approximately $295 Million of Shares Year to Date
Company Completes Varis Sale Subsequent to Quarter End
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 6, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the third quarter ended September 28, 2024.
Third Quarter 2024 Summary(1)(2)(3)
Total reported sales of $1.8 billion, down 11% versus the prior year on a reported basis. The decrease in reported sales is largely related to lower sales in its Office Depot Division, primarily due to 53 fewer retail locations in service compared to the previous year and reduced transactions, as well as lower sales in its ODP Business Solutions Division
GAAP operating income of $102 million and net income from continuing operations of $68 million, or $2.04 per diluted share, versus $108 million and $82 million, respectively, or $2.09 per diluted share, in the prior year period
Adjusted operating income of $41 million, compared to $112 million in the third quarter of 2023; adjusted EBITDA of $62 million, compared to $138 million in the third quarter of 2023. Adjusted operating income in the third quarter of 2024 excludes $70 million of income related to legal matter monetization where the Company is engaged in legal proceedings as a plaintiff
Adjusted net income from continuing operations of $24 million, or adjusted diluted earnings per share from continuing operations of $0.71, versus $85 million or $2.17, respectively, in the prior year period. Adjusted net income from continuing operations in the third quarter of 2024 excludes $70 million of income or $51 million of income, net of tax related to legal matter monetization where the Company is engaged in legal proceedings as a plaintiff
Operating cash flow from continuing operations of $81 million and adjusted free cash flow of $68 million, versus $120 million and $102 million, respectively, in the prior year period
Repurchased 3 million shares at a cost of $102 million in the third quarter of 2024; Repurchased a total of approximately $141 million of shares when including purchases made in the third quarter and post quarter through the current date
$728 million of total available liquidity including $192 million in cash and cash equivalents, of which $11 million is presented in Current assets held for sale related to the Varis Division, at quarter end
“Our results in the quarter were below expectations, primarily driven by our retail division, as challenging macroeconomic conditions impacted our performance,” said Gerry Smith, chief executive officer of The ODP Corporation. “Weaker macroeconomic conditions led to more cautious consumer and business spending, impacting demand in our B2C and B2B divisions during the highly competitive back-to-school season. This was further compounded by major hurricanes negatively affecting our customer base and operations in our largest service areas.
“Despite these challenges, we’re making significant progress on our B2B pivot and initiatives to improve top-line trends. We’re leveraging our differentiated core strengths to pivot towards higher growth B2B opportunities, and we are beginning to see promising traction at both our ODP Business Solutions and Veyer Divisions. At Veyer, we continue to attract new third-party relationships, including launching service for one of the world’s largest social media-focused e-commerce platforms, positioning our supply chain business to pursue growth in a new high value industry segment. At Business Solutions, we secured one of the largest multi-year B2B contracts in our history, potentially generating up to $1.5 billion in revenue over a 10-year period. Additionally, we are making progress and actively pursuing opportunities in new, higher growth, adjacent industry segments where our core strengths also resonate. We’re building key distribution relationships in growing industry segments that spotlight our supply chain proficiency, our ability to supply products beyond office supplies, and our commitment to service excellence,” Smith continued.
“We are excited about our progress and we’re allocating capital to fast-forward investments in our core business to capture these growth opportunities and generate the highest return for shareholders. Considering these core investments, along with our year-to-date performance against the challenging macroeconomic backdrop, we are amending our guidance for 2024. Additionally, we advanced Project Core and streamlined our operations by completing the sale of Varis, while continuing to assess and refine our retail strategy. While the progress we are making will take time to reflect in our results, we are confident that we’re on the right path, and our team is committed and focused on driving operational excellence to create long-term shareholder value,” Smith concluded.
Consolidated Results
Reported (GAAP) Results Total reported sales for the third quarter of 2024 were $1.8 billion, a decrease of 11% compared with the same period last year, driven primarily by lower sales in both its consumer and business-to-business (B2B) divisions. Lower sales in its consumer division, Office Depot, was primarily due to lower retail and online consumer traffic and transactions, as well as 53 fewer stores in service compared to last year related to planned store closures. Sales at ODP Business Solutions Division were lower compared to last year and generally consistent with the first half of 2024, largely driven by macroeconomic factors causing more cautious spending among business customers and fewer transactions. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions, and continued to execute across its growth strategy, delivering supply chain and procurement solutions to new third-party customers and driving increases in external revenue.
The Company reported GAAP operating income of $102 million in the third quarter of 2024, down compared to GAAP operating income of $108 million in the prior year period. Operating results in the third quarter of 2024 included $61 million of credits, primarily due to the Company recognizing $70 million of income in its Condensed Consolidated Statement of Operations related to legal matter monetization where the Company is engaged in legal proceedings as a plaintiff. This was partially offset by $2 million in net merger and restructuring expenses and $7 million non-cash asset impairment related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net income from continuing operations was $68 million, or $2.04 per diluted share in the third quarter of 2024, down compared to net income from continuing operations of $82 million, or $2.09 per diluted share in the third quarter of 2023.
Adjusted (non-GAAP) Results(1) Adjusted results for the third quarter of 2024 exclude charges and credits totaling $61 million as described above and the associated tax impacts.
Third quarter 2024 adjusted EBITDA was $62 million compared to $138 million in the prior year period. This included depreciation and amortization of $24 million in the third quarter of 2024 and 2023
Third quarter 2024 adjusted operating income was $41 million, down compared to $112 million in the third quarter of 2023
Third quarter 2024 adjusted net income from continuing operations was $24 million, or $0.71 per diluted share, compared to $85 million, or $2.17 per diluted share, in the third quarter of 2023, a decrease of 67% on a per share basis
Division Results
ODP Business Solutions Division Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue of $3.7 billion.
Reported sales were $916 million in the third quarter of 2024, down 8% compared to the same period last year. The decrease in sales was related primarily to weaker macroeconomic conditions, more cautious business spending environment, lower sales conversion, and fewer customers
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 44% of total ODP Business Solutions’ sales, flat with the prior year
Executing initiatives to convert strong pipeline of potential new business and implementing several initiatives to regain top-line traction. Recent customer wins include signing one of the largest contracts in Company history, potentially generating up to $1.5 billion in revenue over a 10-year period
Making progress on establishing presence in new, adjacent industry segments, where the Company’s core competencies resonate, leveraging its distribution and supply chain proficiency, ability to supply products beyond office supplies, and commitment to service excellence
Operating income was $28 million in the third quarter of 2024, down compared to $56 million in the same period last year on a reported basis. As a percentage of sales, operating income margin was 3%, down 250 basis points compared to the same period last year
Office Depot Division Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an eCommerce presence.
Reported sales were $861 million in the third quarter of 2024, down 15% compared to the prior year on a reported basis. Lower sales were partially driven by 53 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in major product categories, lower average order volume, and lower online sales. The Company closed nine retail stores in the quarter and had 885 stores at quarter end. Sales were down 10% on a comparable store basis
Store and online traffic were lower year over year due to macroeconomic factors causing sluggish consumer activity and demand during the highly competitive back-to-school season
Operating income was $23 million in the third quarter of 2024, compared to operating income of $66 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 3%, down 380 basis points compared to the same period last year
Veyer Division Nationwide supply chain, distribution, procurement and global sourcing operation supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and business next-day delivery to 98.5% of US population.
In the third quarter of 2024, Veyer provided support for its internal customers, ODP Business Solutions and Office Depot, as well as its third-party customers, generating sales of $1.2 billion
Operating income was $9 million in the third quarter of 2024, compared to $10 million in the prior year period driven by the flow through impact of lower sales to internal customers partially offset by the contribution related to services to third-party customers
Launched supply chain services for one of the world’s largest social media-focused e-commerce companies to deliver warehousing and fulfillment services for their online sales
In the third quarter of 2024, sales generated from third-party customers increased by approximately 30% compared to the same period last year, resulting in sales of $14 million. EBITDA of $3 million in the quarter represented a 3% decrease year over year, driven by Veyer’s investment in resources to support the launch of services for new customer additions
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization valid through March 31, 2027. During the third quarter of 2024, the Company repurchased 3 million shares at a cost of $102 million. Since the end of the third quarter of 2024, the Company repurchased additional shares for $38 million.
“We’ve executed on our capital plan throughout the year, both investing in our business and returning approximately $295 million in capital to shareholders through share repurchases thus far in 2024,” said Adam Haggard, senior vice president and interim co-chief financial officer of The ODP Corporation. “As we move forward, we are prioritizing our capital allocation towards investing in the core business to capture high-return B2B growth opportunities that we believe will generate long-term value for shareholders. Considering this focus, while mindful of the ongoing challenging macroeconomic environment and our results year-to-date, we expect to substantially moderate the pace of share repurchases.”
The number of shares to be repurchased under the authorization in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The new share repurchase authorization could be suspended or discontinued at any time as determined by the Board of Directors.
Balance Sheet and Cash Flow
As of September 28, 2024, ODP had total available liquidity of approximately $728 million, consisting of $192 million in cash and cash equivalents, including $11 million that is presented in Current assets held for sale related to the Varis Division, and $536 million of available credit under the Fourth Amended Credit Agreement. Total debt was $246 million.
For the third quarter of 2024, cash provided by operating activities of continuing operations was $81 million, which included $10 million in restructuring spend, compared to cash provided by operating activities of continuing operations of $120 million in the third quarter of the prior year, which included $3 million in restructuring spend. The year-over-year change in operating cash flow is related to lower sales and the timing of certain working capital items.
Capital expenditures in the third quarter of 2024 were $22 million versus $20 million in the prior year period, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $68 million in the third quarter of 2024, compared to $102 million in the prior year period.
Progress on Project Core
As the Company previously announced, Project Core is an enterprise-wide cost improvement plan designed to create further efficiencies throughout its business, focused on driving enhanced operating results and shareholder value. The Company continues to make significant progress under Project Core and is in position to realize in-year savings of approximately $50 million and annualized savings of over $100 million when fully implemented. Restructuring and related charges associated with these actions are now estimated to be in the range of $40 million to $50 million, excluding those related to the Varis Division, and are expected to be substantially incurred throughout 2024.
Varis Division Update
Subsequent to the quarter, the Company sold its Varis Division, while retaining a minority interest of 19.9% after the sale. Under the terms of the related agreement, the Company will fund up to $4 million of expenses that may be incurred by Varis following the transaction date until December 31, 2025, and has no further obligations to contribute capital to Varis. The terms of the sale of Varis did not result in a materially different impact than previously estimated on our financial statements.
“We have completed the sale of Varis that aligns with our stated objectives of finalizing our capital commitment to the business, while providing ODP with a continued invested interest in the opportunities ahead,” added Smith.
2024 Guidance
“Our performance to date in 2024 has clearly been below expectations, impacted by deteriorating macroeconomic conditions, a challenging competitive landscape, and severe weather conditions,” said Smith. “As we look at the balance of the year, we are working to reposition our business and are fast-forwarding investments in resources necessary to pursue the new and exciting opportunities in our B2B and supply chain businesses. As we continue to assess our retail operations, we believe that our investments in our B2B pivot will help position ODP to generate value in the very large and growing market segments where our competitive advantage and customer focus resonates,” he added.
The Company is amending its 2024 full-year guidance as follows:
Updated full-year guidance for 2024
The Company’s full year guidance for 2024 includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, and Adjusted Earnings per Share (fully diluted). These measures exclude charges or credits not indicative of core operations, which may include but not be limited to restructuring charges, capital expenditures, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures.
The ODP Corporation will webcast a call with financial analysts and investors on November 6, 2024, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform or that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including benefits related to Project Core; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited- source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
Third quarter sales of $172 million, EPS of $(0.03), Adjusted EBITDA of $4.3 million Makes progress on strategic portfolio actions Provides updated guidance for full year 2024
NEW ALBANY, Ohio, Nov. 04, 2024 (GLOBE NEWSWIRE) — CVG (NASDAQ: CVGI), a diversified industrial products and services company, today announced financial results for its third quarter ended September 30, 2024.
As a result of strategic portfolio actions, results from the Cab Structures and Industrial Automation businesses have been reclassified to discontinued operations for current and prior periods. The results and comparisons presented below reflect continuing operations unless otherwise noted.
Third Quarter 2024 Highlights(Results from Continuing Operations; compared with prior year, where comparisons are noted)
Revenues of $171.8 million, down 15.3%, due primarily to a global softening in customer demand.
Operating loss of $1.1 million, adjusted operating loss of $0.4 million, down compared to operating income and adjusted operating income of $8.9 million. The decrease in operating income was driven primarily by lower sales volumes and operational inefficiencies.
New business wins in the quarter of approximately $18 million when fully ramped, bringing the year-to-date total to $95 million; these wins were concentrated in our Electrical Systems segment, and include meaningful wins in our Vehicle Solutions segment.
Net loss from continuing operations of $0.9 million, or $(0.03) per diluted share and adjusted net loss of $0.4 million, or $(0.01) per diluted share, compared to net income of $4.7 million, or $0.14 per diluted share and adjusted net income of $4.7 million, or $0.14 per diluted share.
Adjusted EBITDA of $4.3 million, down 64.8%, with an adjusted EBITDA margin of 2.5%, down from 6.0%.
James Ray, President and Chief Executive Officer, said, “Since taking over the CEO role eleven months ago, we have been tirelessly focused on reshaping the CVG operating model to create a more streamlined, lower cost, and customer-focused company. Our CVG team has been working diligently to divest non-strategic portfolio assets like Cab Structures and Industrial Automation, execute new program launches in Vehicle Solutions, initiate restructuring actions, pay down debt, and expand our global footprint in critical regions of Mexico and Morocco. Market conditions have made this transformation process even more difficult this year, as weaker customer demand and shifting production schedules have created operational and supply chain challenges. As a result of both market conditions and our portfolio actions, we have experienced incremental operational inefficiencies this year affecting our financial performance, especially during the third quarter. We are not happy with our performance and have taken significant steps to change the forward direction with expected performance improvement.”
Mr. Ray continued, “In addition to portfolio and restructuring actions, we’ve made senior management changes to drive growth in our Electrical Systems business and improve the efficiency of our supply chain and manufacturing operations while addressing structural costs and right sizing the company. This is an inflection point for CVG with many key actions completed this year. Despite softer end markets and slower new program ramps, we expect the actions we are taking today to help us reshape the company, driving incremental profitability with minimal added costs when customers’ demand improves. We believe this intense focus on operational excellence will make CVG more resilient and position us for margin expansion and growth with a commitment to value creation.”
Andy Cheung, Chief Financial Officer, added, “Despite a challenging third quarter due to both external market conditions and internal operational issues, we successfully concluded multiple significant portfolio moves. The majority of proceeds from these actions were used to pay down debt. Executing these transactions led to short-term production inefficiencies that weighed on results during the quarter. We are currently addressing these operational issues to improve manufacturing capabilities and future competitiveness. With a more focused portfolio, we see potential to further streamline our enterprise cost structure. Ultimately, we expect these strategic actions will reposition our business for growth and margin expansion in 2025 and beyond.”
Third Quarter Financial Results from Continuing Operations (amounts in millions except per share data and percentages)
Consolidated Results from Continuing Operations
Third Quarter 2024 Results
Third quarter 2024 revenues were $171.8 million, compared to $202.9 million in the prior year period, a decrease of 15.3%. The overall decrease in revenues was due to lower sales as a result of a softening in customer demand in our Vehicle Solutions and Electrical Systems segments.
Operating loss in the third quarter 2024 was $1.1 million compared to operating income of $8.9 million in the prior year period. The decrease in operating income was attributable to the impact of lower sales volumes, unfavorable mix, operational inefficiencies and increased restructuring charges. Third quarter 2024 adjusted operating loss was $0.4 million, compared to adjusted operating income of $8.9 million in the prior year period.
Interest associated with debt and other expenses was $2.4 million and $2.5 million for the third quarter 2024 and 2023, respectively.
Net loss from continuing operations was $0.9 million, or $(0.03) per share, for the third quarter 2024 compared to net income of $4.7 million, or $0.14 per diluted share, in the prior year period. Third quarter 2024 adjusted net loss was $0.4 million, or $(0.01) per share, compared to adjusted net income of $4.7 million, or $0.14 per diluted share.
On September 30, 2024, the Company had $14.0 million of outstanding borrowings on its U.S. revolving credit facility and no outstanding borrowings on its China credit facility, $30.9 million of cash and $146.3 million of availability from the credit facilities, resulting in total liquidity of $177.2 million.
Third Quarter 2024 Segment Results
Vehicle Solutions Segment
Revenues were $97.3 million compared to $115.2 million for the prior year period, a decrease of 15.6%, due to lower sales volume as a result of decreased customer demand and the wind-down of certain programs.
Operating income was $5.1 million, compared to $8.3 million in the prior year period, a decrease of 37.9%, primarily attributable to lower customer demand, operational remediation investments, and increased freight costs, partially offset by lower SG&A expenses due to the gain on the sale of a building of $3.5 million. Third quarter 2024 adjusted operating income was $3.8 million compared to $8.3 million in the prior year period.
Electrical Systems Segment
Revenues were $43.4 million compared to $53.9 million in the prior year period, a decrease of 19.5%, primarily due to a global softening in the Construction & Agriculture end-markets and the phase out of certain lower margin business.
Operating loss was $0.4 million compared to operating income of $5.9 million in the prior year period, a decrease of 106.6%. The decrease in operating income was primarily attributable to lower sales volumes, restructuring activities, and unfavorable foreign exchange. Third quarter 2024 adjusted operating income was $0.9 million compared to $5.9 million in the prior year period.
Aftermarket & Accessories Segment
Revenues were $31.1 million compared to $33.8 million in the prior year period, a decrease of 8.0%, primarily as a result of lower sales volume due to a reduction of backlog in the prior period as well as decreased customer demand.
Operating income was $3.1 million compared to $4.3 million in the prior year period, a decrease of 27.0%. The decrease in operating income was primarily attributable to lower sales volumes, operational inefficiencies and restructuring activities. Third quarter 2024 adjusted operating income was $3.9 million compared to $4.3 million in the prior year period.
Outlook
CVG issued the following outlook for the full year 2024 which reflects both market developments and strategic portfolio actions undertaken:
Metric
Prior 2024 Outlook (1)
Revised 2024 Outlook (1)
Net Sales
$730- $780
$710 – $740
Adjusted EBITDA
$28 – $36
$20 – $25
(1) This outlook excludes any contribution from CVG’s Cab Structures or Industrial Automation businesses in 2024. On October 1, 2024, CVG closed the previously announced sale of the Cab Structures business, and received the final installment of the purchase price. Separately, CVG closed the sale of the Industrial Automation business on October 30, 2024.
This outlook reflects, among others, current industry forecasts for North America Class 8 truck builds. According to ACT Research, 2024 North American Class 8 truck production levels are expected to be at 316,000 units. The 2023 actual Class 8 truck builds according to the ACT Research was 340,247 units.
Based on industry data, we continue to project global agriculture market demand for our customers’ products to be down 15% to 20% and construction market demand to be down 10% to 15% in 2024.
GAAP to Non-GAAP Reconciliation
A reconciliation of GAAP to non-GAAP financial measures referenced in this release is included as Appendix A to this release.
Conference Call
A conference call to discuss this press release is scheduled for Tuesday, November 5, 2024, at 8:30 a.m. ET. Management intends to reference the Q3 2024 Earnings Call Presentation during the conference call. To participate, dial (800) 549-8228 using conference code 04909. International participants dial (289) 819-1520 using conference code 04909.
This call is being webcast and can be accessed through the “Investors” section of CVG’s website at ir.cvgrp.com, where it will be archived for one year.
A telephonic replay of the conference call will be available for a period of two weeks following the call. To access the replay, dial (888) 660-6264 using access code 04909#.
Company Contact Andy Cheung Chief Financial Officer CVG IR@cvgrp.com
Investor Relations Contact Ross Collins or Stephen Poe Alpha IR Group CVGI@alpha-ir.com
About CVG
At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries and communities we serve. Information about the Company and its products is available on the internet at www.cvgrp.com.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release may contain forward-looking statements about the Company’s expectations for future periods with respect to its plans to improve financial results, the future of the Company’s end markets, changes in the Class 8 and Class 5-7 North America truck build rates, performance of the global construction and agricultural equipment business, the Company’s prospects in the wire harness, and electric vehicle markets, the Company’s initiatives to address customer needs, organic growth, the Company’s strategic plans and plans to focus on certain segments, competition faced by the Company, volatility in and disruption to the global economic environment and the Company’s financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including those included in the Company’s filings with the SEC. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
NEW ALBANY, Ohio, Oct. 31, 2024 (GLOBE NEWSWIRE) — Commercial Vehicle Group (the “Company” or “CVG”) (NASDAQ: CVGI), a diversified industrial products and services company, is pleased to announce the appointment of two leaders to its executive leadership team. Peter Lugo joins the Company as President of our Electrical Systems segment, effective November 1, 2024. Mr. Lugo succeeds Richard Tajer, who will remain an employee of the Company until December 31, 2024. In addition, Carlos Jimenez has joined as Executive Vice President, Global Operations and Supply Chain. These appointments support CVG’s goals of growing its Electrical Systems business and improving overall operational execution, respectively. Both executives will report to James Ray, President and Chief Executive Officer of CVG.
To reinvigorate growth in its Electrical Systems segment, Mr. Lugo is accountable for day-to-day oversight of the electrical business with emphasis on the development and execution of commercial, engineering, and product management strategies while partnering with the operations team to achieve operational and financial goals. He most recently held the role of Senior Vice President, Electrical Products & Engineered Solutions at Southwire, where he led the development and execution of the overall business strategy resulting in sustainable growth through organic and M&A activity, including five acquisitions. Prior to his work at Southwire, Mr. Lugo held progressive leadership roles at Bullard, Eaton Corp., Phillips Petroleum, Switchgear Systems, and General Electric. He holds a bachelor’s degree in electrical engineering from Polytechnical University of Puerto Rico.
To drive operational efficiencies across its manufacturing and supply network, Mr. Jimenez is responsible for the effective operation of the Company’s manufacturing function, developing and executing supply chain strategies and capabilities across CVG’s 20+ plant global manufacturing footprint. He most recently held the role of Vice President, Global Operations at Kennametal, Inc., where he was responsible for supply chain, operational excellence and distribution across 17 plants and 12 distribution centers. Prior to his work at Kennametal, Mr. Jimenez held progressive leadership roles at Stanley Black and Decker, Valeo Group, GKN Driveline, Mars Electronics International, Apisa and Ford Motor Company. He holds a bachelor’s degree in industrial engineering and a degree in business administration, management and operations from INSEAD.
“I extend my thanks to Rich Tajer for his leadership over the last five years. I am very pleased to welcome Peter and Carlos to the CVG executive leadership team, where they will have a critical role helping to position CVG for future success,” said Mr. Ray. “I am confident that these proven executives will accelerate our efforts to navigate some of the challenges we’ve experienced this year and emerge stronger and more resilient than before to best serve the needs of our customers and shareholders.”
About CVG
At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve. Information about CVG and its products is available at www.cvgrp.com.
LOS ANGELES, Oct. 30, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported financial results for the fiscal third quarter ended September 29, 2024.
Andy Wiederhorn, Chairman of FAT Brands, said, “Over the last three years, we have expanded our brand portfolio to include 18 distinct concepts while our footprint has increased tenfold, now encompassing over 2,300 locations across more than 40 countries and 49 U.S. states or territories. We opened 22 new units during the third quarter, bringing our year-to-date openings to 71 new units and are on track to end the year with 100 new units.”
Wiederhorn added, “We have signed 225 development deals year-to-date versus 226 deals in all of 2023, bringing our current development pipeline to approximately 1,000 locations. This is a strong indicator of confidence within the FAT franchise system.”
Ken Kuick, Co-Chief Executive Officer of FAT Brands, said, “We continue to prioritize accelerated growth in our Polished Casual category, particularly through Twin Peaks, our fastest-growing concept. Year to date, we opened nine new lodges, bringing our total to 115 locations. We also completed our first Smokey Bones to Twin Peaks conversion in Lakeland, Florida during the third quarter, with our second conversion underway and several more planned for next year.”
Rob Rosen, Co-Chief Executive Officer of FAT Brands, said, “In May, Twin Peaks and Smokey Bones, as a combined entity, took a significant step towards becoming a standalone public company. We view this potential IPO or alternative transaction as a strategic opportunity to unlock value for FAT shareholders. Shortly, we intend to refinance Twin Peaks’ securitization debt, which will optimize our financial structure prior to any IPO or other transaction.”
Fiscal Third Quarter 2024 Highlights
Total revenue grew 31.1% to $143.4 million compared to $109.4 million in the fiscal third quarter of 2023
System-wide sales grew 6.4% in the fiscal third quarter of 2024 compared to the prior year fiscal quarter
Year-to-date system-wide same-store sales declined 2.7% compared to the prior year
22 new store openings during the fiscal third quarter of 2024
Net loss of $44.8 million, or $2.74 per diluted share, compared to $24.7 million, or $1.59 per diluted share, in the fiscal third quarter of 2023
EBITDA(1) of $1.7 million compared to $10.8 million in the fiscal third quarter of 2023
Adjusted EBITDA(1) of $14.1 million compared to $21.9 million in the fiscal third quarter of 2023
Adjusted net loss(1) of $38.0 million, or $2.34 per diluted share, compared to adjusted net loss(1) of $17.1 million, or $1.14 per diluted share, in the fiscal third quarter of 2023
(1) EBITDA, adjusted EBITDA and adjusted net loss are non-GAAP measures defined below, under “Non-GAAP Measures”. Reconciliation of GAAP net loss to EBITDA, adjusted EBITDA and adjusted net loss are included in the accompanying financial tables.
Summary of Fiscal Third Quarter 2024 Financial Results
Total revenue increased $34.0 million, or 31.1%, in the third quarter of 2024 to $143.4 million compared to $109.4 million in the same period of 2023, driven by the acquisition of Smokey Bones in September 2023 and revenues from new restaurant openings.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net loss and advertising fees. Costs and expenses increased $49.5 million, or 48.1%, in the third quarter of 2024 to $152.2 million compared to the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and increased activity from Company-owned restaurants and the Company’s factory.
General and administrative expense increased $10.0 million, or 41.0%, in the third quarter of 2024 to $34.5 million compared to $24.5 million in the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and increased professional fees related to pending litigation.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and increased $37.6 million, or 63.6%, in the third quarter of 2024, primarily due to the acquisition of Smokey Bones in September 2023 and higher company-owned restaurant sales.
Depreciation and amortization increased $3.7 million, or 52.5% in the third quarter of 2024 compared to the same period in the prior year, primarily due to the acquisition of Smokey Bones in September 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Refranchising net loss, comprised of restaurant operating costs, net of food sales, was $0.2 million in the third quarter of 2024 compared to $0.4 million in the third quarter of 2023.
Advertising expenses decreased $1.6 million in the third quarter of 2024 compared to the prior year period. These expenses vary in relation to advertising revenues.
Total other expense, net, for the third quarter of 2024 and 2023 was $35.8 million and $32.6 million, respectively, which is inclusive of interest expense of $35.5 million and $29.7 million, respectively. This increase is primarily due to new debt issuances. Total other expense, net, for the third quarter of 2023 also consisted of a $2.7 million net loss on the extinguishment of debt.
Adjusted net loss(1) was $38.0 million, or $2.34 per diluted share, compared to adjusted net loss(1) of $17.1 million, or $1.14 per diluted share, in the fiscal third quarter of 2023.
Key Financial Definitions
New store openings – The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.
Same-store sales growth – Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open and in the FAT Brands system for at least one full fiscal year. For stores that were temporarily closed, sales in the current and prior period are adjusted accordingly. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Additionally, when we acquire a brand, it may take several months to integrate fully each location of said brand into the FAT Brands platform. Thus, we do not include stores in the comparable base until they have been open and in the FAT Brands system for at least one full fiscal year.
System-wide sales growth – System-wide sales growth reflects the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand only when the brand is owned by FAT Brands. Because of acquisitions, new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.
Conference Call and Webcast
FAT Brands will host a conference call and webcast to discuss its fiscal third quarter 2024 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, Chairman of the Board, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 1-877-704-4453 from the U.S. or 1-201-389-0920 internationally. A replay will be available after the call until Wednesday, November 20, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 13748855. The webcast will be available at www.fatbrands.com under the “Investors” section and will be archived on the site shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 units worldwide. For more information, please visit www.fatbrands.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, the timing and performance of new store openings, our ability to conduct future accretive acquisitions and our pipeline of new store locations. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents that we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
Non-GAAP Measures (Unaudited)
This press release includes the non-GAAP financial measures of EBITDA, adjusted EBITDA and adjusted net loss.
EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. We use the term EBITDA, as opposed to income from operations, as it is widely used by analysts, investors, and other interested parties to evaluate companies in our industry. We believe that EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. EBITDA is not a measure of our financial performance or liquidity that is determined in accordance with generally accepted accounting principles (“GAAP”), and should not be considered as an alternative to net loss as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP.
Adjusted EBITDA is defined as EBITDA (as defined above), excluding expenses related to acquisitions, refranchising loss, impairment charges, and certain non-recurring or non-cash items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
Adjusted net loss is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP. Adjusted net loss is defined as net loss plus the impact of adjustments and the tax effects of such adjustments. Adjusted net loss is presented because we believe it helps convey supplemental information to investors regarding our performance, excluding the impact of special items that affect the comparability of results in past quarters to expected results in future quarters. Adjusted net loss as presented may not be comparable to other similarly titled measures of other companies, and our presentation of adjusted net loss should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure to analyze changes in our underlying business from quarter to quarter based on comparable financial results.
Reconciliations of net loss presented in accordance with GAAP to EBITDA, adjusted EBITDA and adjusted net loss are set forth in the tables below.
LOS ANGELES, Oct. 30, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT), a leading global franchising company and parent company of iconic brands including Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Twin Peaks, Fazoli’s, Smokey Bones and 11 other restaurant concepts, announced today that its Board of Directors has declared the Company’s fiscal 2024 fourth quarter cash dividend of $0.14 per share on each outstanding share of Class A common stock and Class B common stock. The dividend is payable on November 29, 2024 to holders of record of Class A common stock and Class B common stock as of the close of business on November 15, 2024.
The declaration and payment of future dividends, as well as the amounts thereof, are subject to the discretion of the Company’s Board of Directors. The amount and size of any future dividends will depend upon the Company’s future results of operations, financial condition, capital levels, cash requirements and other factors. There can be no assurance that the Company will declare and pay dividends in future periods.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands Inc. (NASDAQ: FAT) (the Company) is a leading global franchising company that strategically acquires, markets and develops quick service, fast casual and casual dining restaurant concepts around the world. The Company currently owns eighteen restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean, Ponderosa and Bonanza Steakhouses and franchises and owns over 2,300 units worldwide. For more information, please visit www.fatbrands.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these risks, uncertainties and contingencies. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this press release.
LOS ANGELES, Oct. 23, 2024 (GLOBE NEWSWIRE) — FAT(Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”), a leading global franchising company and parent company of iconic brands including Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, Fazoli’s and 13 other restaurant concepts, today announced that the Company will host a conference call to review its third quarter 2024 financial results on Wednesday, October 30, 2024 at 5:00 PM ET. A press release with third quarter 2024 financial results will be issued prior to the conference call that day.
The conference call can be accessed live over the phone by dialing 1-877-704-4453 from the U.S. or 1-201-389-0920 internationally. A replay will be available after the call until Wednesday, November 20, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 13748855. Hosting the call will be Andy Wiederhorn, Chairman, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call will also be webcast live from the corporate website at www.fatbrands.com, under the “Investors” section. A replay of the webcast will be available through the corporate website shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
BOCA RATON, Fla.–(BUSINESS WIRE)–Oct. 23, 2024– The ODP Corporation (NASDAQ:ODP) (“ODP,” or the “Company”), a leading provider of products, services, and technology solutions to businesses and consumers, will announce third quarter 2024 financial results before the market open on Wednesday, November 6th, 2024. The ODP Corporation will webcast a call with financial analysts and investors that day at 9:00 am Eastern Time which will be accessible to the media and the general public.
To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event. A copy of the earnings press release, supplemental financial disclosures and presentation will also be available on the website.
About The ODP Corporation The ODP Corporation (NASDAQ:ODP) is a leading provider of products and services through an integrated business-to-business (B2B) distribution platform and omnichannel presence, which includes world-class supply chain and distribution operations, dedicated sales professionals, online presence and a network of Office Depot and OfficeMax retail stores. Through its operating companies Office Depot, LLC; ODP Business Solutions, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
ODP and ODP Business Solutions are trademarks of ODP Business Solutions, LLC. Office Depot is a trademark of The Office Club, LLC. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of Veyer, LLC. Grand&Toy is a trademark of Grand & Toy, LLC in Canada. Any other product or company names mentioned herein are the trademarks of their respective owners.
NEW ALBANY, Ohio, Oct. 22, 2024 (GLOBE NEWSWIRE) — CVG (NASDAQ: CVGI) will hold its quarterly conference call on Tuesday, November 5, 2024, at 8:30 a.m. ET, to discuss third quarter 2024 financial results. CVG will issue a press release and presentation prior to the conference call.
Toll-free participants dial (800) 549-8228 using conference code 04909. International participants dial (289) 819-1520 using conference code 04909. This call is being webcast and can be accessed through the “Investors” section of CVG’s website at ir.cvgrp.com where it will be archived for one year.
A telephonic replay of the conference call will be available until November 19, 2024. To access the replay, toll-free callers can dial (+1) 888 660 6264 using access code 04909#, and toll callers in North America and other locations can dial (+1) 289 819 1325.
About CVG
At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve. Information about the Company and its products is available on the internet at www.cvgrp.com.
Investor Relations Contact: Ross Collins or Stephen Poe Alpha IR Group CVGI@alpha-ir.com
NEW ALBANY, Ohio, Oct. 02, 2024 (GLOBE NEWSWIRE) — Commercial Vehicle Group (the “Company” or “CVG”) (NASDAQ: CVGI), a diversified industrial products and services company, announced it has completed the sale, effective October 1, 2024, of its Cab Structures business with operations in Kings Mountain, North Carolina to a Volvo Group company. As part of the sale, CVG received a total of $40 million, with $20 million received on September 6, 2024, and the remaining $20 million received on October 1, 2024.
James Ray, President and CEO of CVG, stated, “This is a positive transaction for both companies and supports CVG’s efforts to optimize our portfolio toward higher-growth products and markets in line with our ongoing strategic transformation plan. We’re happy to see the plant in good hands as Kings Mountain employees will benefit from being integrated into their customer’s operations. We’re grateful for their contributions to CVG over the years.”
CVG and Volvo are committed to a smooth transition for our customers, suppliers, and the employees.
About CVG
At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries, and communities we serve. Information about CVG and its products is available at www.cvgrp.com.
Investor Relations Contact: Ross Collins or Stephen Poe Alpha IR Group CVGI@alpha-ir.com
Net income of $0.2 million for the quarter compared with a net loss of $3.5 million for the prior year quarter, which included a $3.8 million gain on the divestiture of the Lori Goldstein brand.
Net licensing revenues grew 16% from the second quarter of 2023, driven by new licenses and new brand launches.
Direct Operating Costs and Expenses of $3.1 million for the quarter, a reduction of $2.1 million or 40% from the prior year’s quarter.
Adjusted EBITDA for the quarter approaches break-even for the quarter, compared with Adjusted EBITDA of negative $1.3 million for the prior year quarter.
NEW YORK, Aug. 14, 2024 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with significant expertise in livestream shopping and social commerce, today announced its financial results for the quarter ended June 30, 2024.
Robert W. D’Loren, Chairman and Chief Executive Officer of Xcel commented, “I am very pleased by our results for the quarter. We have emerged from the discontinuance of certain businesses under our Project Fundamentals plan and anticipate that we will grow strongly heading into 2025.”
Second Quarter 2024 Financial Results
Total revenue for the second quarter of 2024 was $3.0 million, representing a decrease of approximately $3.8 million (-56%) from the second quarter of 2023. This decline was almost entirely driven by the decrease in net product sales due to the Company’s discontinuance of all of its wholesale businesses as part of its Project Fundamentals plan in 2023. Partially offsetting the decrease in net product sales was an increase of approximately $0.4 million (+16%) in net licensing revenue, driven by new licensing agreements entered into in 2023 and new brand launches.
Net income attributable to Xcel Brands for the quarter was approximately $0.2 million, or $0.01 per share, compared with a net loss of $3.5 million, or ($0.18) per share, for the prior year quarter. The current quarter includes a $3.8 million gain on the divestiture of the Lori Goldstein brand as well as non-cash charges of $1.2 million related to the exit and sublease of our prior office space which was completed in the first quarter of 2024.
After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $0.3 million, or ($0.01) per share for the current quarter and a net loss of approximately $2.1 million, or ($0.10) per share, for the prior year quarter.
Adjusted EBITDA improved significantly on a year-over-year basis to nearly break-even for the current quarter as compared with negative $1.3 million for the prior year quarter, primarily as a result of the restructuring of our business and entry into the new long-term license agreements in 2023 for our Halston, Judith Ripka, C Wonder, and Longaberger brands.
Six Month 2024 Financial Results
Total revenue for the current six-month period was $5.1 million, representing a decrease of approximately $7.7 million (-60%) from the prior year’s six-month period. This decline was almost entirely driven by the decrease in net product sales due to the Company’s discontinuance of all of its wholesale businesses as part of its Project Fundamentals plan in 2023. Partially offsetting the decrease in net product sales was an increase of approximately $0.4 million (+8%) in net licensing revenue, driven by new licensing agreements entered into in 2023 and new brand launches.
Net loss attributable to Xcel Brands for the six months ended June 30, 2024, was approximately $6.1 million, or $(0.28) per share, compared with a net loss of $9.1 million, or ($0.46) per diluted share, for the prior year comparable period. The current six-month period includes a $3.8 million gain on the divestiture of the Lori Goldstein brand as well as non-cash charges of $3.5 million related to the exit and subleasing of our prior office space which was completed in the first quarter of 2024.
After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $2.1 million, or ($0.10) per share for the current six-month period and a net loss of approximately $5.6 million, or ($0.28) per share, for the prior year six-month period.
Adjusted EBITDA improved significantly on a year-over-year basis to negative $1.6 million for the current year period as compared with negative $3.3 million for the six months ended June 30, 2023, primarily as a result of the restructuring of our business in prior year and entry into the new long-term license agreements for our Halston, Judith Ripka, C Wonder, and Longaberger brands.
Balance Sheet
The Company’s balance sheet at June 30, 2024, reflected stockholders’ equity of approximately $44 million, cash and cash equivalents of approximately $0.9 million, and working capital, exclusive of the current portion of lease obligations and deferred revenue, of approximately $1.1 million.
As of June 30, 2024, the Company had $4.5 million of term loan debt outstanding, net of deferred finance costs of $0.2 million, of which $1.0 million is recorded as short-term debt.
Conference Call and Webcast
The Company will host a conference call with members of the executive management team to discuss these results with additional comments and details at 5:00 p.m. Eastern Time on August 13, 2024. A webcast of the conference call will be available live on the Investor Relations section of Xcel’s website at www.xcelbrands.com. Interested parties unable to access the conference call via the webcast may dial 800-715-9871 or 646-307-1963 and use the conference ID 7639516. A replay of the webcast will be available on Xcel’s website.
About Xcel Brands
Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, licensing, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as social commerce. Xcel owns the Halston, Judith Ripka, and C. Wonder brands, as well as the Tower Hill by Christie Brinkley co-branded collaboration, and holds noncontrolling interests in the Isaac Mizrahi brand and Orme Live. Xcel also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true modern consumer products sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retail, and e-commerce channels to be everywhere its customers shop. The company’s brands have generated in excess of $5 billion in retail sales via livestreaming in interactive television and digital channels alone, and over 20,000 hours of live-stream and social commerce. Headquartered in New York City, Xcel Brands is led by an executive team with significant live streaming, production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. www.xcelbrands.com
Forward Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “ongoing,” “could,” “estimates,” “expects,” “intends,” “may,” “appears,” “suggests,” “future,” “likely,” “goal,” “plans,” “potential,” “projects,” “predicts,” “seeks,” “should,” “would,” “guidance,” “confident” or “will” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the “Risk Factors” section and elsewhere in the Company’s Annual Report on form 10-K for the year ended December 31, 2023 and its other filings with the SEC, which may cause our or our industry’s actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Non-GAAP net income and non-GAAP diluted EPS are non-GAAP unaudited terms. We define non-GAAP net income as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of amortization of trademarks, income (loss) from equity method investments, stock-based compensation and cost of licensee warrants, gains on sales of assets and investments, gain on lease termination, asset impairment charges, and income taxes. Non-GAAP net income and non-GAAP diluted EPS measures do not include the tax effect of the aforementioned adjusting items, due to the nature of these items and the Company’s tax strategy.
Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net (loss) income attributable to Xcel Brands, Inc. stockholders before depreciation and amortization, income (loss) from equity method investments, interest and finance expenses (including loss on extinguishment of debt, if any), accretion of lease liability for exited lease, income taxes, other state and local franchise taxes, stock-based compensation and cost of licensee warrants, gains on sales of assets and investments, gain on lease termination, asset impairment charges, and losses from discontinued businesses.
Management uses non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to our results of operations. Management believes non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus these non-GAAP measures provide supplemental information to assist investors in evaluating our financial results. Adjusted EBITDA is the measure used to calculate compliance with the EBITDA covenant under our term loan agreement.
Non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate these measures in a different manner than we do. In evaluating non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this document. Our presentation of non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.
D. Anthony Scaglione to pursue another career opportunity
BOCA RATON, Fla.–(BUSINESS WIRE)–Aug. 14, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced that D. Anthony Scaglione, executive vice president and chief financial officer, is stepping down from his role to pursue another career opportunity and that his last day will be September 13, 2024.
“On behalf of ODP, I want to thank Anthony for his significant contributions to ODP over the past four years,” said Gerry Smith, chief executive officer of the Company. “Under his financial leadership, ODP has made great strides in its transformation and has strengthened its foundation to be able to deliver profitable growth in the future. Anthony is supported by a talented finance team that will continue to serve the company and its shareholders. We thank Anthony for all his efforts and wish him well in his new role.”
Anthony Scaglione said, “It has been a privilege to work as part of the ODP team and I’m proud of the progress we have made toward achieving our strategic goals. ODP is well positioned with a strong balance sheet and dedicated team to continue driving forward its strategic transformation to create shareholder value.”
As the Company formulates its plans to fill the chief financial officer role and to ensure a smooth transition, Mr. Scaglione will continue to work closely with Mr. Smith until his departure date, supported by the Company’s experienced financial reporting and accounting team.
About The ODP Corporation
The ODP Corporation is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, The ODP Corporation, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” “aim” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.
Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
Second Quarter Revenue of $1.7 Billion with GAAP EPS of $(0.12); Adjusted EPS of $0.56
Progress on Project Core to Drive Future Cost Savings and Implementing Growth Initiatives
Company Repurchased $191 Million of Shares Year to Date
Company Provides Update on Varis Sale Process
BOCA RATON, Fla.–(BUSINESS WIRE)–Aug. 7, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the second quarter ended June 29, 2024.
Second Quarter 2024 Summary(1)(2)(3)
Total reported sales of $1.7 billion, down 10% versus the prior year on a reported basis. The decrease in reported sales is largely related to lower sales in its Office Depot Division, primarily due to 58 fewer retail locations in service compared to the previous year and reduced transactions, as well as lower sales in its ODP Business Solutions Division
GAAP operating income of approximately $400 thousand and net income (loss) from continuing operations of $(4) million, or $(0.12) per diluted share, versus $60 million and $43 million, respectively, or $1.09 per diluted share, in the prior year period
Adjusted operating income of $33 million, compared to $67 million in the second quarter of 2023; adjusted EBITDA of $57 million, compared to $95 million in the second quarter of 2023
Adjusted net income from continuing operations of $20 million, or adjusted diluted earnings per share from continuing operations of $0.56, versus $48 million or $1.22, respectively, in the prior year period
Operating cash flow from continuing operations of $(1) million and adjusted free cash flow of $5 million, versus $(8) million and $(24) million, respectively, in the prior year period
Repurchased nearly 2.4 million shares at a cost of $104 million in the second quarter of 2024; Repurchased a total of approximately $141 million of shares when including purchases made in the second quarter and post quarter through the current date
$831 million of total available liquidity including $190 million in cash and cash equivalents, of which $10 million is presented in Current assets held for sale related to the Varis Division, at quarter end
“We are executing Project Core while taking actions to improve top-line trends in both our B2B and B2C businesses,” said Gerry Smith, chief executive officer of The ODP Corporation. “Our performance in the quarter was below our expectations, impacted by more cautious business spending and weaker consumer activity, along with new customer onboarding challenges impacting revenue traction at ODP Business Solutions. Additionally, retail store traffic trends, while improving sequentially, remained sluggish. Although market challenges impacted Office Depot and ODP Business Solutions, we continued to see progress in Veyer, as they executed across their growth strategies, attracting new third-party customers and improving their external EBITDA. Furthermore, we continued to buy back our shares, returning over $100 million of our stock in the quarter and over $190 million year to date,” he added.
“While we are pacing below our prior expectations for the year, we are not standing still. We’re taking actions to improve our top-line trajectory and we remain focused on capturing the long-term opportunities derived by our strong value proposition, solid balance sheet, and flexible foundation. In addition to our efforts under Project Core, which we expect will create over $100 million in annual cost savings when fully implemented, we are executing on initiatives to accelerate sales pipeline conversion, drive additional avenues for growth with existing customers, and leverage our deep customer relationships to solve more of their procurement challenges. This is what we call the Power of 1 – the ability to add value to our customers through offering one more product or suite of products to help them succeed. For example, we recently were awarded a sizeable order for standalone air conditioning units for a government entity — something not top of mind when you think of ODP Business Solutions, but it showcases the trust customers have in our capabilities to source, deliver, and solution during a time of need – all through the Power of 1. Additionally, we are set early for the upcoming back-to-school season and well positioned with our Education 365 approach, connecting customers within the education sector.”
“Although we are disappointed by our first half performance and outlook for the remainder of the year, we are committed to driving growth back into the business, remaining focused on converting the numerous opportunities in our pipeline, strengthening our position in the second half of the year and having impact in 2025 and beyond. We have several prospects at both ODP Business Solutions and Veyer that we expect to close in the second half that will boost revenue growth velocity as we exit this year. With these opportunities, coupled with our full realization of Project Core, we expect to exit 2024 with a stronger profile,” he continued.
“Despite the near term top-line challenges, we remain committed and encouraged about the future and confident in our operational excellence approach. Our team remains focused on executing the necessary steps to position us for long term growth and profitability,” Smith concluded.
Consolidated Results
Reported (GAAP) Results Total reported sales for the second quarter of 2024 were $1.7 billion, a decrease of 10% compared with the same period last year, driven by lower sales in both its consumer and business-to-business (B2B) divisions. Lower sales in its consumer division, Office Depot, was primarily due to 58 fewer stores in service compared to last year related to planned store closures, as well as lower retail and online consumer traffic and transactions. Sales at ODP Business Solutions Division were lower compared to last year, largely driven by macroeconomic factors causing more cautious spending among business customers, as well as continued challenges related to the onboarding of new customers and fewer transactions. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions and continued to execute across its growth strategy, delivering supply chain and procurement solutions to new third-party customers and driving external EBITDA.
The Company reported GAAP operating income of approximately $400 thousand in the second quarter of 2024, down compared to GAAP operating income of $60 million in the prior year period. Operating results in the second quarter of 2024 included $33 million of charges, primarily related to $25 million in net merger and restructuring expenses and $8 million non-cash asset impairment primarily related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net loss from continuing operations was $4 million, or $(0.12) per diluted share in the second quarter of 2024, down compared to net income from continuing operations of $43 million, or $1.09 per diluted share in the second quarter of 2023.
Adjusted (non-GAAP) Results(1) Adjusted results for the second quarter of 2024 exclude charges and credits totaling $33 million as described above and the associated tax impacts.
Second quarter 2024 adjusted EBITDA was $57 million compared to $95 million in the prior year period. This included depreciation and amortization of $24 million and $25 million in the second quarter of 2024 and 2023, respectively
Second quarter 2024 adjusted operating income was $33 million, down compared to $67 million in the second quarter of 2023
Second quarter 2024 adjusted net income from continuing operations was $20 million, or $0.56 per diluted share, compared to $48 million, or $1.22 per diluted share, in the second quarter of 2023, a decrease of 54% on a per share basis
Division Results
ODP Business Solutions Division Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue of nearly $4 billion.
Reported sales were $917 million in the second quarter of 2024, down 8% compared to the same period last year. The decrease in sales was related primarily to weaker macroeconomic conditions, more cautious business spending, new customer onboarding challenges, and lower sales conversion
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 43% of total ODP Business Solutions’ sales
Continued strong pipeline of potential new business and implementing several initiatives to regain top-line traction
Operating income was $29 million in the second quarter of 2024, down 36% compared to the same period last year on a reported basis. As a percentage of sales, operating income margin was 3%, down 140 basis points compared to the same period last year
Office Depot Division Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an eCommerce presence.
Reported sales were $799 million in the second quarter of 2024, down 12% compared to the prior year on a reported basis. Lower sales were partially driven by 58 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in major product categories and lower online sales. The Company closed 9 retail stores in the quarter and had 894 stores at quarter end. Sales were down 7% on a comparable store basis
Store and online traffic were lower year over year due to macroeconomic factors causing sluggish consumer activity
Operating income was $17 million in the second quarter of 2024, compared to operating income of $35 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 2%, down 170 basis points compared to the same period last year
Veyer Division Nationwide supply chain, distribution, procurement and global sourcing operation supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and next-day delivery to 98.5% of US population.
In the second quarter of 2024, Veyer provided support for its internal customers, ODP Business Solutions and Office Depot, as well as its third-party customers, generating sales of $1.2 billion
Operating income was $5 million in the second quarter of 2024, compared to $6 million in the prior year period driven by the flow through impact of lower sales to internal customers partially offset by the contribution related to services to external third-party customers
In the second quarter of 2024, sales generated from third-party customers were in-line with the same period last year and EBITDA generated from third-party customers increased by 17% year over year, resulting in sales of $10 million and EBITDA of $4 million
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization valid through March 31, 2027. During the second quarter of 2024, the Company repurchased nearly 2.4 million shares at a cost of $104 million. Since the end of the second quarter of 2024, the Company repurchased additional shares for $37 million.
“Our capital allocation strategy balances investing in the future of our business while continuing to enhance value for shareholders through share repurchases under our buyback authorization,” stated Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “We have executed under this approach, investing in our business and repurchasing over $190 million of our stock thus far in 2024. Moving forward, we will continue to balance our capital allocation strategy remaining mindful of market conditions and business performance as we continue to drive our low-cost business model through Project Core.”
The number of shares to be repurchased under the authorization in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The new share repurchase authorization could be suspended or discontinued at any time as determined by the Board of Directors.
Balance Sheet and Cash Flow
As of June 29, 2024, ODP had total available liquidity of approximately $831 million, consisting of $190 million in cash and cash equivalents, including $10 million that is presented in Current assets held for sale related to the Varis Division, and $641 million of available credit under the Fourth Amended Credit Agreement. Total debt was $183 million.
For the second quarter of 2024, cash used in operating activities of continuing operations was $1 million, which included $25 million in restructuring spend, compared to cash used in operating activities of continuing operations of $8 million in the second quarter of the prior year, which included $1 million in restructuring spend. The year-over-year change in operating cash flow is largely related to the timing of certain working capital items.
Capital expenditures in the second quarter of 2024 were $19 million versus $17 million in the prior year period, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $5 million in the second quarter of 2024, compared to $(24) million in the prior year period.
Progress on Project Core
As the Company previously announced, Project Core is a plan designed to create further efficiencies throughout its business, focused on driving enhanced operating results and shareholder value. This broad-based plan includes cost improvement actions across the entire enterprise, optimizing its organizational structure to support future growth of the business. The Company continues to make significant progress under Project Core and is in position to realize in-year savings of approximately $50 million and annualized savings of over $100 million when fully implemented. Restructuring and related charges associated with these actions are now estimated to be in the range of $40 million to $50 million, excluding those related to the Varis Division, and are expected to be substantially incurred throughout 2024.
Varis Division Update
The Company has entered into a non-binding term sheet agreement with a third-party for the sale of Varis. Under the proposed terms, the Company would retain an approximately 20% current stake in the entity. However, there can be no assurances regarding the ultimate timing of this proposed transaction or that such transaction will be completed.
“After a thorough process, we have arrived at a path forward for Varis that aligns with our stated objectives of finalizing our capital commitment to the business, while providing ODP with a continued invested interest in the opportunities ahead. We expect to announce further details of the proposed transaction upon close, which we expect to be completed in the third quarter,” added Smith.
2024 Guidance
“Our performance in the first half of the year was clearly below expectations, placing us behind our goals for the year,” said Smith. “The initiatives we are taking to improve our top-line trajectory, along with our low-cost model, high touch service approach, and strong value proposition, give us confidence in our ability to improve our performance and position us for greater stability and growth in the future. Considering our slow start to the first half of the year, as well as the uncertain macroeconomic environment and the potential variability of the timing of our initiatives, we are updating our 2024 guidance as follows”:
Updated full-year guidance for 2024
*Adjusted Earnings per Share (fully diluted) (EPS) guidance for 2024 excludes potential discrete (tax) items that may affect quarter to quarter fluctuations and includes expected impact from share repurchases
The Company’s full year guidance for 2024 includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share (fully diluted) and Adjusted Free Cash Flow. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to restructuring charges, capital expenditures, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures.
“As a result of our first half performance, along with a continuing challenging macro environment and lower than anticipated sales pipeline conversion in ODP Business Solutions, we are lowering our full year outlook. While first half results were below our expectations, our team remains focused on executing upon opportunities in our business to grow our top line, leveraging our low-cost business model, strong balance sheet, and diverse routes to market,” said Scaglione.
The ODP Corporation will webcast a call with financial analysts and investors on August 7, 2024, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
(1)
As presented throughout this release, adjusted results represent non-GAAP financial measures and exclude charges or credits not indicative of core operations and the tax effect of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. Reconciliations from GAAP to non-GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is defined as cash flows from operating activities less capital expenditures. Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free Cash Flow is defined as Free Cash Flow excluding cash charges associated with the Company’s Project Core Restructuring, and related expenses. Adjusted Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
FORWARD LOOKING STATEMENTS This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform or that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including a potential sale of Varis on the terms proposed or at all and benefits related to Project Core; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited- source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
