The ODP Corporation

Good morning and welcome to the ODP Corporation's third quarter 2023 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 Perrault, Vice President, Investor Relations and Treasurer. Mr. Perrault, you may begin.

Good morning, and thank you for joining us for the ODP Corporation's third quarter 2023 earnings conference call. This is Tim Peratt, and I'm here with Joe Vasaluzzo, our chairman of the board, who has assumed the responsibilities of our CEO, Jerry Smith, who is on medical leave. Also with us is Anthony Scaglione, our executive vice president and CFO. During today's call, Joe will provide opening comments and highlights of our accomplishments for the third quarter of 2023. After Joe's commentary, Anthony will then review the details of the company's third quarter results, including highlights of our divisional performance. Following Anthony's comments, we will open up the line for questions. 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 the earnings 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 available on our website, 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 Joe Vassaluso. Joe?

Thank you, Tim, and good morning, everyone. I would like to welcome all our analysts and investors who have joined our call today. I'm Joe Vasaluzzo, Chairman of the Board of the ODP Corporation. As Tim mentioned, and as we announced back in September, I have assumed the authority and responsibilities for our CEO, Jerry Smith, until he returned from his medical leave. Jerry is continuing to recover at his home, and we expect that Jerry will remain on leave for several more weeks. We all wish him well and a speedy recovery. Please note that we will not be providing additional comments on Jerry's health during the Q&A portion of our call. Before I highlight our progress for the quarter, I want to provide a few observations after stepping into the role and being more actively involved in the day-to-day operations of ODP. First, I am extremely impressed with the capabilities and bench strength of our team. Not only at the leadership level, but throughout all levels of the organization and across our business units, we have assembled a tremendous team, a team that is committed to driving operational excellence. And the term operational excellence is not just a catchy phrase at ODP. It is a mindset and culture that permeates throughout our company and is embedded in the DNA of every employee. In the weeks since I assumed Jerry's responsibilities, I have experienced firsthand our team's strong 5C culture. and maniacal focused on driving a low cost model, both of which serves us well as evidenced by our continuing strong operating income performance in the quarter and throughout the year. Next, I would like to emphasize the value we are creating through our four business unit structure and our team's unwavering focus on executing upon our three horizon strategy. You can find a visual representation of this on slide four of our presentation. The introduction of our four business unit structure a year ago has fundamentally transformed our business, positioning ODP to pursue new and exciting opportunities. This enhanced foundation aligns our go-to market strategies, improves our asset utilization, further leverages the benefits of scale and provides our investors greater visibility into the value of the assets we control. Together with our capital allocation priorities, these elements empower us to pursue the long-term full potential of ODP, driving value for all stakeholders. A prime example of this can be witnessed in the remarkable transformation of our supply chain assets, which are now organized under VAER. Once an internal cost center within ODP, VAER is now emerging into a thriving logistics and supply chain company, not only supporting our internal customers, but also serving some of the most renowned brands in the United States. In only its first year, VAER has established a clear path ahead for profitable growth and value creation. And under our four business unit structure, our team is unlocking the value of ODP through executing upon what we call our Three Horizons Strategy. This strategy puts into perspective how we will drive our business units to unlock the underlying fundamentals, pursue long-term sustainable growth, and maximize shareholder value. It consists of our first horizon, where we are driving strong EBITDA and cash conversion at Office Depot, leveraging their core competency of providing excellent customer experience, as indicated by our industry-leading net promoter scores and expanded product and service offering. Our second horizon focuses on delivering long-term growth, margin expansion, and cash flow from ODP Business Solutions, our B2B distribution business. ODP Business Solutions possesses tremendous scale and reach with a large and growing customer base and broad assortment of products and services. As you read in the press release this morning, while growth has been challenged in the near term, We continue to make solid progress and are moving along well along the margin expansion path we sent. And in our third horizon, we are building value and positioning ODP to pursue higher long-term opportunities through VAER and VAERIS. So overall, our three horizon strategies enables us to drive short, medium, and longer-term performance which we believe will help us grow earnings, expand our multiple, and create significant value for our shareholders. Before I turn it over to Anthony for a more detailed review of our results, I would like to highlight a few of our accomplishments in the quarter, as shown on slide five. Our team delivered another quarter of strong operating and earnings per share results. reflecting on our steadfast commitment to operational excellence and disciplined capital allocation, the two primary elements of our shareholder value creation formula. We expanded margins at ODP Business Solutions, added new product testing and category expansion at Office Depot, secured new third-party customers at Veyr, while remaining on track to more than doubling third-party EBITDA this year, and enhanced our platform and customer engagement at Veris. Despite facing challenges related to a broader macro economy and a softer than anticipated back to school season, our low cost business model, combined with our team's exceptional execution, enabled us to deliver impressive performance, resulting in strong operating and earnings per share results. And finally, With our strong balance sheet and liquidity, we continue to execute on our shareholder-focused capital allocation plan, repurchasing a significant number of shares during the quarter that, when combined with our strong operating results, contributed to a notable year-over-year increase in adjusted earnings per share for the third quarter and once again revised upward EPS guidance for the full year. In summary, as we approach the end of this year and set our sights on 2024, we will continue to be mindful of the macro environment and the potential headwinds to our business, remaining disciplined in our approach. And as I mentioned earlier, I am extremely impressed by the accomplishments of our team and our unwavering commitment to maintaining operational excellence as we progress forward. With that, I will now turn it over to Anthony Scaglione for a more detailed review of our third quarter performance.