ODP announced an impressive start to the year with first-quarter revenue reaching $1.7 billion, surpassing the market expectation of $1.67 billion. The company attributes this success to positive momentum and improving trends in their core operations. The CEO, Gerry Smith, highlighted the company's focus on enhancing its core business, which resulted in improved EBITDA and a significant increase in free cash flow compared to the previous year.
ODP's consumer division played a pivotal role in achieving higher revenue and better margins sequentially, contributing to the overall positive performance. Despite ongoing challenges, the company remains optimistic about its progress and is taking strategic actions to manage potential tariff-related impacts. ODP is committed to executing foundational strategies to ensure sustained, profitable growth.
With a strong balance sheet, valuable assets, and an efficient supply chain, ODP believes it presents a compelling value proposition for shareholders. The company is confident in its ability to achieve long-term success and capitalize on future opportunities.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for The ODP Corp (ODP, Financial) is $29.33 with a high estimate of $36.00 and a low estimate of $17.00. The average target implies an upside of 115.21% from the current price of $13.63. More detailed estimate data can be found on the The ODP Corp (ODP) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, The ODP Corp's (ODP, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for The ODP Corp (ODP, Financial) in one year is $50.32, suggesting a upside of 269.19% from the current price of $13.63. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the The ODP Corp (ODP) Summary page.
ODP Key Business Developments
Release Date: February 26, 2025
- Total Revenue: $1.6 billion for Q4, down 10% year-over-year.
- GAAP Operating Income: $20 million for Q4, compared to $52 million in the prior year.
- Adjusted Operating Income: $32 million for Q4, down from $57 million in the previous year.
- Adjusted EBITDA: $58 million for Q4, compared to $83 million in the prior year.
- Adjusted Net Income: $20 million or $0.66 per diluted share for Q4, compared to $43 million or $1.13 per diluted share in the prior year.
- Operating Cash Flow: $34 million for Q4, down from $71 million in the prior year.
- Capital Expenditures: $25 million for Q4, flat year-over-year.
- Adjusted Free Cash Flow: Negative $57 million for Q4, compared to positive $48 million in the prior year.
- Full-Year Revenue: $7 billion, down from $7.8 billion in the prior year.
- Full-Year Adjusted Operating Income: $173 million, down from $351 million in the prior year.
- Full-Year Adjusted Net Income: $114 million or $3.30 per share, compared to $263 million or $6.61 per share in the prior year.
- Full-Year Operating Cash Flow: $159 million, down from $360 million in the prior year.
- ODP Business Solutions Revenue: $827 million for Q4, down 9% year-over-year.
- Office Depot Revenue: $784 million for Q4, down 13% year-over-year.
- Same-Store Sales: Down 8% for Office Depot.
- Veyer Third-Party Revenue: $20 million for Q4, up 150% year-over-year.
- Total Liquidity: $644 million, including $166 million in cash and $478 million in available credit.
- Total Debt: $279 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The ODP Corp (ODP, Financial) is making significant progress in its B2B transformation, expanding beyond traditional office supplies into new, large, and growing industry segments.
- The company secured a landmark agreement with a leading hospitality management company, marking a pivotal step into the $16 billion hospitality supply industry.
- ODP's supply chain and distribution operations are recognized for their strength and reliability, providing a competitive advantage in new markets.
- The company launched its 'Optimized for Growth' restructuring plan to accelerate revenue growth in B2B and reduce reliance on retail.
- ODP's balance sheet remains solid with total liquidity of $644 million, positioning it well for future investments and growth opportunities.
Negative Points
- Total revenue for the fourth quarter was down about 10% compared to the previous year, primarily due to lower sales in the retail business and reduced consumer traffic.
- GAAP operating income decreased significantly from $52 million in the prior year to $20 million in the fourth quarter of 2024.
- The company faced headwinds in its B2B channel, including high inflation, constrained corporate spending budgets, and strong competition.
- ODP's consumer division, Office Depot, experienced a 13% decline in revenue due to fewer stores and lower traffic and transactions.
- Adjusted free cash flow was negative in the quarter, reflecting investments in working capital and new business segments.
