The ODP Corporation

Good morning and welcome to the ODP Corporation's fourth quarter and full year 2020 Enhanced Earnings Conference call. All lines will be on a listen-only mode for today's call, after which instructions will be given in order to ask a question. At the request of the ODP Corporation, today's call is being recorded. I would like to introduce Tim Perrott, Vice President, Investor Relations. Mr. Perrott, you may now begin.

Good morning, and thank you for joining us for the ODP Corporation's Enhanced Earnings Conference Call. This is Tim Peratt, and I'm here with Jerry Smith, our CEO, and Anthony Scaglione, our Executive Vice President and CFO. Also joining us today is David Bleich, our Executive Vice President and Chief Legal and Administrative Officer. As most of you know, given recent events, we have decided to push back our previously planned Investor Day to a date later in the year. That said, today we will cover both a review of our performance in the fourth quarter and full year 2020, and provide more insight into our strategy moving forward in 2021 and beyond. We will begin today's call with David Bleich, who will provide commentary regarding the public proposal made by USR, an entity controlled by Sycamore Partners, the owner of Staples, to acquire the ODP Corporation. After David's commentary, Jerry will provide a review of our accomplishments in 2020, as well as our focus for 2021, including our progress on our B2B pivot and digital transformation. Anthony will then cover our financial results for the fourth quarter and 2020, including insight to our maximized B2B retail optimization initiative. We will then move to Q&A. Before we begin, I need to inform you that certain comments made on this call include forward-looking statements. which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company's current expectations concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in the company's filings with the U.S. Securities and Exchange Commission. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as our earnings press release, presentation slides that accompany today's comments, and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investor.theodpcorp.com. Today's call and slide presentation is being simulcast on our website and will be archived there for at least one year. I will now turn the call over to ODP's Chief Legal and Administrative Officer, David Bleich.

David? Thank you, Tim. Before we turn to our performance for the most recent quarter, we will begin today with a summary of where we stand with regard to the public proposal made by Sycamore Partners, the owner of Staples, to acquire the ODP Corporation. On January 11, a Sycamore Partners subsidiary, USR Parent, which I will refer to as Sycamore, issued a press release publishing the contents of a letter it had sent to the board of the ODP Corporation proposing to acquire 100% of the issued and outstanding stock of the company for $40 per share in cash. Sycamore's proposal contemplated divestiture of our B2B business unit to a hypothetical third party buyer that is yet to be identified. Our board carefully reviewed the Sycamore proposal in consultation with our financial and legal advisors. The Board concluded that there is a more compelling path forward to create significant value for ODP and its shareholders without introducing the material regulatory risk inherent in Sycamore's proposal. The Board set forth that path in a letter to Sycamore dated January 19, 2021, which we published in a press release on the same date. Specifically, we stated that we are open to combining our retail and consumer-facing e-commerce operations with Staples under the right set of circumstances, and on mutually acceptable terms. We believe a joint venture that combines only the retail and consumer-facing operations of both Office Depot, OfficeMax, and Staples would be a viable path to both maximize the synergies and efficiencies for both companies, while equally sharing the risk and benefits between our companies, and would also help the combined business maintain competitiveness against nontraditional retailers and optimize ongoing choices for consumers. In our letter, we also noted the significant regulatory risk inherent in Sycamore's proposal, particularly in light of the prior failed merger attempt between the companies that regulatory authorities and the federal court blocked in 2016. In that regard, we recently received a civil investigative demand from the U.S. Federal Trade Commission, which is conducting an investigation of Sycamore's proposal. The CID makes clear that the FTC is not only reviewing the proposal's potential impact on competition with respect to the B2B businesses, regardless of any proposed divestiture, but is also conducting a thorough and broad review extending to every aspect of our businesses across every distribution channel. In our letter to Sycamore, we also called on Sycamore to expressly address the financial impact of the regulatory risk by committing to bear it through a customary hell or high water provision. A hell or high water provision is a customary clause incorporated into a purchase or merger agreement that generally requires the buyer to take all necessary actions, including required divestitures, to close the transaction and secure approval from competition authorities, as well as litigate any antitrust challenges. We have received no substantive response from Sycamore to our January 19 letter, but instead have been informed that Sycamore does not want to engage in substantive discussions until the regulatory process is completed. In the meantime, we continue building on our B2B strategy and other growth initiatives, which include our recent acquisition of BuyerQuest and other matters that Jerry and Anthony will discuss a little later. With respect to CompuCom, as previously disclosed, we have initiated the sales process, which is well underway. We do not intend to provide any update on this process until such time as it is completed. We hope this was a helpful recap of the current situation. You will understand that we will not be able to go further into our discussion than the information I have just provided, and so we would ask that your questions during the Q&A part of the call focus on the other matters discussed on today's call by Jerry and Anthony. On a separate matter, given these developments and other related matters in Q4, the company did not repurchase any shares in Q4 under its existing share repurchase authorization. And now I will turn the call over to our Chief Executive Officer, Jerry Smith.