UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01. Regulation FD Disclosure.
On November 2, 2022, The ODP Corporation (the “Company”) is holding its Virtual Investor Day Conference and addressing its strategic priorities for the future and its financial outlook through 2025. A copy of the press release and slides prepared for the purposes of the Virtual Investor Day Conference are furnished as Exhibits 99.1 and 99.2 hereto and are incorporated in this Item 7.01 by reference. A link to the conference call will be available on the Company’s investor day website at: https://odpinvestorday.com.
The information furnished in Item 7.01 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit 99.1 | Press Release of The ODP Corporation, dated November 2, 2022. | |
| Exhibit 99.2 | Virtual Investor Day Conference Presentation | |
| Exhibit 104 | Cover Page Interactive Data File—the cover page XBRL tags are embedded within the Inline XBRL document. | |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE ODP CORPORATION | ||||||
| Date: November 2, 2022 | /s/ SARAH E. HLAVINKA | |||||
| Name: | Sarah E. Hlavinka | |||||
| Title: | EVP, Chief Legal Officer and Corporate Secretary | |||||
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Exhibit 99.1
CONTACTS:
| Tim Perrott | Danny Jovic | |
| Investor Relations | Media Relations | |
| 561-438-4629 | 561-438-1594 | |
| Tim.Perrott@officedepot.com | Danny.Jovic@officedepot.com |
The ODP Corporation Details Path to Unlocking Earnings Potential with Newly Realigned Business Units, Announces 2025 Financial Targets
Commitment to Drive Shareholder Value Includes $1 Billion Share Repurchase Plan Through 2025
Provides Long-Term Targets with Stable Revenue, Margin Expansion, and a Plan to Significantly Increase EPS by 2025
Realigned Structure Creates Solid Foundation for Steady Growth and Greater Transparency on the Value and Performance of Each Business Unit: ODP Business Solutions, Office Depot, Veyer, and Varis
Boca Raton, Fla., November 2, 2022 – The ODP Corporation (NASDAQ:ODP), a leading provider of products and services through an integrated business-to-business (B2B) distribution platform and omnichannel presence, today is hosting a virtual investor meeting: Unlocking Our Potential, to highlight its newly realigned business unit structure and capital allocation plan, outline its strategy to unlock the power of its assets, and showcase its path to drive sustained value for shareholders.
“Over the past two years, we’ve worked to complete our transformation into four distinct, synergistic business units that positions us to better meet customers’ needs, drive a more stable foundation to pursue growth, and expand our margins,” said Gerry Smith, chief executive officer of The ODP Corporation. “This realigned framework builds on our track record of delivering strong operating results and generating consistent free cash flow, even in times of challenging market conditions.”
Smith continued, “Our efforts have led us to where we are today: a much stronger company with a strong balance sheet, a low-cost business model, and a newly realigned operating foundation designed to improve our ability to pursue profitable growth opportunities and more fully reflect the power of our businesses. As a key component of our commitment to returning value to shareholders, we announced a $1 billion share repurchase plan through 2025.”
The ODP Corporation’s third quarter 2022 earnings presentation and virtual investor day event, including live Q&A, will take place beginning at 9 a.m. ET today. This event can be accessed at https://odpinvestorday.com.
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Financial Outlook Through 2025(1)
On a consolidated basis, the realigned operating structure is forecasted to result in steady revenue growth, while increasing Adjusted EBITDA and significantly increasing Adjusted EPS – representing a meaningful financial transformation.
Specifically, over the next three years, the Company is forecasting:
| • | Revenue: Revenue increasing from approximately $8.45-8.60 billion in 2022 to $8.5-8.7 billion in 2025, representing a CAGR of approximately 1%. |
| • | Adjusted EBITDA Margin: Adjusted EBITDA Margin expansion by 2025 of 100 bps, greater than 6%. |
| • | Adjusted EPS: Adjusted earnings per share increasing from approximately $4.10-4.50 in 2022 to approximately $7.00-8.00 in 2025, representing a CAGR of approximately 15-25%. |
ODP will highlight how the realigned four business unit structure enables the Company to prioritize high value opportunities across its operations and return capital to shareholders, while also providing greater transparency into the performance of each unit to allow investors to value them appropriately.
Smith concluded, “This adds up to a very compelling investor story. We will generate stable cash flows from our core operations, maximize the unique value of all our assets, and when combined with our commitment to returning capital to shareholders via our $1 billion authorization, lead to significant EPS growth. Today marks the start of the reimagined ODP, Unlocking Our Potential.”
(1) The Company’s outlook through 2025 included in this release includes non-GAAP measures, such as adjusted EBITDA and adjusted EPS. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to merger integration expenses, restructuring charges, 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.
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, a B2B digital procurement solution, online presence and a network of Office Depot and OfficeMax retail stores. Through its operating companies Office Depot, LLC; ODP Business Solutions, LLC; Veyer, LLC; and Varis, 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, Inc. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of Veyer, LLC. Varis is a trademark of Varis, 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.
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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, the potential impacts on our business due to the unknown severity and duration of the COVID-19 pandemic, 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 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 its strategic shift to maintain all of its businesses under common ownership; 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 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, including on the demand for its and our customers’ products and services, on trade and transport restrictions and generally on our ability to effectively manage the impacts of the COVID-19 pandemic on our business operations. 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.
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Exhibit 99.2 Unlocking our potential 1
Safe Harbor Statement The Private Securities Litigation Reform Act of 1995, as amended, (the “Act”) provides protection from liability in private lawsuits for “forward-looking” statements made by public companies under certain circumstances, provided that the public company discloses with specificity the risk factors that may impact its future results. The Company wants to take advantage of the “safe harbor” provisions of the Act. Certain statements made during this presentation are forward-looking statements under the Act. Except for historical financial and business performance information, statements made during this presentation should be considered forward-looking as referred to in the Act. Much of the information that looks towards future performance of the Company is based on various factors and important assumptions about future events that may or may not actually come true, including the impacts on our business due to the unknown severity and duration of the COVID-19 pandemic including its impact on our supply chain, labor shortages and inflationary pressures and the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including its strategic shift to maintain all of its businesses under common ownership. As a result, operations and financial results in the future could differ materially and substantially from those discussed in the forward-looking statements made during this presentation. Certain risks and uncertainties are detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission (“SEC”). You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. The Company’s SEC filings are available at no charge at www.sec.gov and at the Company’s website at investor.theodpcorp.com. During portions of today’s presentation, the Company may refer to results which are non-GAAP financial measures, including EPS, EBITDA and free cash flow which have been adjusted. A reconciliation of GAAP to non-GAAP financial measures is available on the Company’s website at investor.theodpcorp.com. These measures exclude charges or credits not indicative of core operations and the tax effects of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. The Company’s outlook through 2025 included in this presentation includes non-GAAP measures, such as adjusted EBITDA and adjusted EPS. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to merger integration expenses, restructuring charges, 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. 2
TODAY’S AGENDA Gerry Smith Overview of ODP Zoe Maloney Culture, Community, Sustainability David Centrella ODP Business Solutions Kevin Moffitt Office Depot Veyer John Gannfors Prentis Wilson Varis Anthony Scaglione Financial Review and Targets Gerry Smith Closing 3
Overview of ODP Gerry Smith Chief Executive Officer, The ODP Corporation D R A F T Office Depot® is a trademark of The Office Club, Inc. OfficeMax® is a trademark of OMX, Inc. ©2022 Office Depot, LLC. All rights reserved. This information is confidential; it is not to be relied on by any 3rd party without prior written consent. 4
The ODP Corporation is a leading provider of business products and services with differentiated assets and capabilities 7.5M business customers ~$8.5B+ 15,000+ store Global sourcing associates 2022F Sales from 14 countries 22M total customers Multiple routes to market Digital platforms ~$400M+ ✓ 25%+ eComm fulfilled through BOPIS✓ 140k enterprise customers 2022F Adj. EBITDA ✓ Emerging tech-enabled B2B platform ✓ ~1,000 retail stores ✓ 80% ODP Business Solutions orders ✓ Award-winning eCommerce through digital channel ~$200M+ Unique supply 98.5% Expanding Strong chain assets 2022F Adj. FCF portfolio of US with next- balance sheet Expansive network with day delivery products and (Cash and liquidity) differentiated capabilities services 5
Executing through a challenging environment and well-positioned for the future Industry Challenges Competitive Advantages Inflationary Low-cost business environment model Flexible operating and Evolution of hybrid cost structure work environment Supply chain and High-quality supply procurement challenges chain services Multiple routes COVID to market disruptions Shifting demand Strong balance patterns sheet 6
Over the next 3 years, we expect to repurchase ~$1B of shares Announcing ODP’s new share repurchase plan 7
Our low-cost business model is central to our success More than $500M+ cost Optimized our asset base Lowered our cost base reductions 2017-2022 Drove efficiencies Built culture dedicated to throughout our business continuous improvement 8
Strong returns to shareholders We have delivered strong results Returned $750M+ to shareholders since 2017 Returned $400M+ to shareholders since 2021 Delivered strong Generated consistent Enhanced operating results free cash flow returns 9
Balanced returning capital with disciplined investments in our business Technical development Federation acquisitions Technology Supply chain technology and scaling to improve retail enhancements in software and enhanced salesforce of our Varis B2B associate productivity as well as just-in-time capabilities in our B2B delivery algorithms digital platform distribution business 10
Our actions have positioned ODP for success Lessons that underpin our strategy Recent actions drive value Business acceleration program Continuing to drive Turning Retail into low-cost business model a cash engine Optimizing store footprint Executing Federation strategy Corporate entity re-organization Realizing full value Leveraging deep B2B Strategic evaluation process of assets with relationships flexible structure 11
Our synergistic four business unit (4-BU) model Digital procurement B2B Distribution Omnichannel Retail 3rd Party Logistics technology platform Expand margins, Drive incremental Expand client base Generate stable grow in adjacencies, income by leveraging and accelerate growth cash flows cash flow current asset base Provide efficient Establish goals Allocate shared services and incentives capital efficiently 12
4-BU model unlocks full value Scale buying & supply chain Improved asset utilization Focused go-to-market strategies to drive growth Pooled, efficient shared services Efficient capital allocation Aligned BU incentives 13
Our Vision Empower every business, professional, and consumer with the products and services they need to achieve more every day Deliver stability, growth, and value creation to shareholders 14 14
Our foundation CULTURE Customer • Commitment • Change Caring • Creativity Associate resource groups 15
Strong cash flow generation + Operational execution + Growth opportunities = Enhanced shareholder value Disciplined capital allocation Growth Strong cash flow Operational opportunities generation execution Shareholder value Creates transparency and opportunity for multiple expansion 16
Algorithm for shareholder value 2022-2025 +15-25% Continue to CAGR Provide clear, defined 1 capital allocation plan 2017-2021 Embed low-cost business 2 model across BUs Generate strong adjusted 3 EBITDA and cash flow Accelerate conversion adjusted EPS growth 17 17
A compelling investment Disciplined capital allocation to balance return of capital to shareholders with investment Maximizing value of our assets across B2B relationships and supply chain Balancing near-term opportunities and long-term growth across portfolio of BUs Providing transparency across 4-BUs to ensure shareholder visibility into BU performance and peer multiples Stable cash flow from long-standing customer relationships and established routes to market 18 18
Today’s presenters Zoё Maloney David Centrella Gerry Smith Chief Executive Officer, EVP and Chief Human Resources EVP of The ODP Corporation and The ODP Corporation Officer, The ODP Corporation President of ODP Business Solutions Kevin Moffitt John Gannfors Prentis Wilson D. Anthony Scaglione EVP of The ODP Corporation and EVP of The ODP Corporation and President of Varis EVP and Chief Financial Officer, The ODP Corporation President of Office Depot President of Veyer 19
Culture, Community, and Sustainability Zoё Maloney EVP and Chief Human Resources Officer, The ODP Corporation D R A F T Office Depot® is a trademark of The Office Club, Inc. OfficeMax® is a trademark of OMX, Inc. ©2022 Office Depot, LLC. All rights reserved. This information is confidential; it is not to be relied on by any 3rd party without prior written consent. 20
Our 5C Culture Customer Commitment drives everything Build trust in our team, power Align on key priorities, we do the customer experience, ensure accountability, and and drive results make informed decisions Our 5C 5C CULTURE Culture Creativity Change Challenge the norm, exhibit Demonstrate agility, explore courage, and innovate new possibilities, and seek to learn and grow Caring Collaborate, build connections, and embody a sense of purpose 21
We continually invest in our most important asset—our people Provide real-time coaching Create strategic formal trainings Empower our employees Capitalize on unique opportunities Conduct targeted training on critical Reward and recognize for real-time and ongoing skills to thrive in the current achievement as they grow their development business environment careers with The ODP Corporation 22
We are committed to promoting Diversity, Equity, & Inclusion We’re always improving our DEI work, introducing major new programs over the past five years We have been recognized as DEI leaders Grew our Joined the selection of National Diversity diverse suppliers Council Expanded Associate Resource Groups 23
We work toward ambitious sustainability initiatives in both our workplace and marketplace Our workplace = Mandatory training on Our ESG story effectively sustainability best practices communicated to customers How2Recycle labels added to Data provided to customers on 100% of private label products cost, emissions, and plastic by 2025 savings 24
Empowering education Championing entrepreneurship Every day, we make a difference through our focus on community impact Strengthening communities 25
David Centrella EVP of The ODP Corp and President of ODP Business Solutions • 2 6 26 26
ODP Business Solutions is a leading provider of workplace products and technology solutions serve serve serve ~$4B 140k+ 24 >98% >60% 1,200+ revenue B2B of the 25 largest revenue of Fortune 100 professional customers school districts retention as customers sales associates in the US 27
We empower our clients Dedicated sales team with national footprint, to grow their businesses local focus Customized digital Low-cost, high-quality customer experience products including private brand Differentiated value Tailored spend reporting We offer a depth and Specialized delivery and controls breadth of capabilities options including and solutions desktop delivery and customized to our store pick-up clients’ needs Curated assortment and personalized pricing Capabilities to support clients’ in-person and hybrid work models EDI and procurement integration including Varis 28
Maintain strength in traditional office supplies Three business Category strategic Drive greater adoption across current Growth 1 accounts to win adjacencies – e.g., Janitorial & priorities Sanitation (Jan/San) Grow in public sector where we have a proven right- to-win and strategic partnerships Continue Federation Acquisition Strategy with M&A Customer in new markets and expanded assortments Growth 2 Leverage ESG requirement trends to drive competitive advantage and deeper relationships with focus on Enterprise clients Expand our margin in end markets Margin Commit to low-cost business model Growth 3 Increase penetration of private label products 29
CATEGORY GROWTH We maintain a strong position in our core categories 1 (paper, ink, toner, supplies, etc.) ~$10B ~30% TAM Share 30 30
CATEGORY GROWTH Strength in core while driving growth in adjacencies… 1 ODP MARKET CATEGORY OUR MARKET SHARE TOP BRANDS OPPORTUNITY Jan/San Furniture Large and growing <10% Breakroom Technology Large and stable <2% Print, Promo & Apparel 41%* of revenue comes from adjacencies beyond traditional office supplies 31 31 *FY2021
CATEGORY GROWTH 1 End markets are robust, and we will further benefit from return to office We offer flexibility tailwinds to meet customers Demand projected to wherever they work increase as customers return to offices & schools Our agile processes allow us to help our clients maintain operational continuity regardless of work setting for their employees 32
CUSTOMER GROWTH Targeted customer 2 acquisition with a focus PUBLIC SECTOR on public sector business ~$6B addressable market across government and education Today, we have ~15% market share ~$1B 10K+ ~40% We have strategic partnerships driving strong competitive In revenue Active K-12 Purchases are customers beyond office position supplies 33 33
CUSTOMER GROWTH Continue our disciplined Federation strategy 2 to enter underpenetrated markets & categories Our Federation strategy has been highly accretive Rationale N O R T H R EG I O N Allows us to enter new Trio Supply Company Business Essentials Office.Supply.com markets more 1 efficiently W E S T C O AS T R E G I O N Further leverages our Complete Office supply chain and 2 procurement assets Premium S O U T H E AS T Incorporated R E G I O N Regency Business Provides attractive Solutions revenue and growth COS Business Products 3 opportunity Perimeter Office Products America’s Office Source Sandia Admiral Office Supply Express S O U T H W E S T R E G I O N OE Office Essentials Garvey’s Office Products C EN T R AL R EG I O N 34
CUSTOMER GROWTH Leverage ESG requirements 2 as differentiator across sectors Live ESG as part of our own 5C culture Leverage ESG requirement to drive competitive advantage and deeper relationships Opportunity to differentiate with product assortment, supplier agreements, and delivery consolidation 35 35
MARGIN GROWTH Grow EBITDA margins to >5% by 3 2025, exceeding pre-COVID levels OUR APPROACH • Maintain strength in traditional office supplies, while expanding to high Continuous improvement >5% growth adjacencies and 5% back-to-office • Employ disciplined pricing and sales strategies tailwinds • Expand margin to be commensurate with end markets • Increase penetration of private label products • Continue expansion of our Federation strategy • Drive low-cost operating model 2019 2020 2021 2022 2023 2024 2025 Source: ODP Corp Historical Information and Financial Projections 36 36
$4.4-4.6B Revenue ODP Business Solutions 2025 >5% EBITDA margins 37 37
Kevin Moffitt EVP of The ODP Corporation and President of Office Depot • 3 8 38 38
• 3 9 39 39
We see many opportunities to improve our business by combining our core assets Nationally Known Retail Brands Large-Scale Store Footprint Office Depot & OfficeMax brands ~1,000 retail stores in convenient that appeal to and drive loyalty with locations across 43 states, PR & our target customer segments US Virgin Islands Client-Focused Team Strong Customer Base OMNI RETAIL 15k+ associates, generating 70+ 22M+ small business and consumer store NPS, providing 24/7 phone, customers, including 15M loyalty chat and social support. members, generating over 300M Committed to our 5C Culture and Omnichannel interactions per year achieving outstanding results 20 Innovative Omnichannel Capabilities Broad Services Portfolio MINUTE High volume eCommerce website and Business Service Centers in all PICKUP PROMISE mobile apps, robust digital marketing stores for copy, print, shipping & programs, industry-leading 20 Minute shredding, regional print facilities, Pickup Promise, Same Day Delivery, and technology services, and innovative Ship from Store co-working in seven states 40
Engage with our high value Innovate our assortment customer segments of products and services Our five Increase brand awareness, traffic, customer Expand our solutions portfolio based on the acquisition, and life-time value through specific needs of our three priority segments. key expanded marketing and loyalty programs Expand Private Brands, including both lower tailored to our three priority customer cost alternatives to national brands and strategies segments: Small Business, Home Office, and exclusive, higher-quality products. Integrate Education. products and services from local small for success businesses to support entrepreneurship and innovation. 1 2 Deliver strong cash flow Live our culture and positively Lead in Omnichannel and EBITDA impact the communities we serve Improve and seamlessly integrate the physical Maximize cash generation by both reducing Enable our 5C Culture across the entire and digital customer experiences, promoting costs and ultimately growing sales. Leverage organization. Work as a unified team to convenience, partnership, and discovery. cash to both invest in the business and increase diversity in all functional areas Update KPIs and team member incentives to maximize shareholder value. and at all levels. Advocate for education, encourage Omnichannel behaviors. Expand the entrepreneurship, and personal success capabilities of our eCommerce, mobile, and in every community we serve. in-store technologies. Leverage stores as primary fulfillment points. 3 4 5 41 41
Outstanding customer service is 1 leading to improvements in Net Promoter Score Commitment to our customers has led to major wins 72.5 Grew customer satisfaction level despite COVID 69.1 challenges 65.6 Focus on associate training resulted in highest NPS scores in ODP history Effectively responded to changing customer needs 59.1 through BOPIS acceleration Jan 2022 Current July 2020 Jan 2019 42 42
We are focused on delivering value to our core customers 1 Home Office Education Small Business Entrepreneurs and office managers, Remote/hybrid/on-the-go Teachers, parents, and students, shopping primarily for work professionals, shopping primarily shopping primarily for school for home Active Active customers customers 7.5M 15M 43 43 in 2021 in 2021
We are innovating across our assortment 2 to better serve our core customers SMB services including Home office accessories Arts & crafts mail & ship 44
BOPIS (Buy online, pickup 3 Our capabilities provide convenient in store) is growing options for our customers and highly profitable B O P I S S A L E S ( $ M ) ~$300M BOPIS projected Sustained jump in BOPIS demand sales rest of year vs. prior to pandemic BOPIS lowers distribution costs and drives incremental trips ~$150M* BOPIS sales 20-minute guarantee— through September Lead the industry in order turnaround time MINUTE PICKUP 20 2019 2022 PROMISE * Same store BOPIS sales – excludes stores closed between 2019 – 2022 45 and contribution form ODP Business Solutions order pick-up
4 Our strategy is focused on cash generation and Prioritize low-cost Optimize our retail Drive greater profitability business model store footprint profitability through growth and expense promoting BOPIS and management private brand sales 46 46
Our culture is centered on achieving great results and 5 making positive contributions in our communities 47
$3.8- Revenue 4.0B Office Depot 2025 EBITDA ~7% margin 48 48
• 4 9 49 49
John Gannfors EVP of The ODP Corporation and President of Veyer 50
World class assets and capabilities built over 35 years Lepsze zdjęcie Distribution network Logistics & Global sourcing Advanced coverage transportation capacity capability technology 80M+ cartons delivered annually 600 vehicles in Veyer delivery fleet International sourcing offices Leading tech solutions 9M+ sq. ft. of infrastructure Enhanced last mile delivery Buying power of $7B+ across Proprietary analytics and services categories modeling technology driving 100 facilities – DCs, cross docks, efficiencies and creating and direct import centers Robust International and National competitive advantage carrier partnerships 4,000+ team members 51
Advanced network Next-day specializing in B2B and B2C delivery to 98.5% service delivery, at scale of US population Strong value proposition Servicing many of the world’s Delivery to more to drive largest companies, with best- than 60% of in-class service levels growth in Fortune 100 3PL market From procurement to End-to-end fulfillment, Veyer can solve supply chain customers’ largest logistics services offering challenges Three decades operating at scale make us uniquely able to deliver across a $600B+ market, unlocking value of experience and assets 52
Efficient and effective supply chain network Veyer facilities Form an extensive network Across all major population demand centers Serving hundreds of stores And reaching 98.5% of US population next-day 53 53
Why Veyer? Why now? Participate in large Fully leverage Capitalize on Build on existing and growing our asset base strong demand momentum with market and unlock value for our unique third-party capabilities customers and services 54
2022-2025 Focus 2 Drive growth with new clients and services through continued 1 modernization Provide high quality service at competitive prices to internal customers through low- cost business model 55
1 Value proposition Low-cost model High-quality service to internal customers 56
2 Value proposition National scale Differentiated to external capabilities customers 57
Modernizing capabilities and maximizing utilization Continue modernization to …while maintaining existing drive new revenue supply chain assets to opportunities … maximize utilization 58
Unlocking the value of Veyer 1 2 Add new customers Leverage and monetize scale assets Low-Cost Model 4 3 Enhance value prop Modernize and continuously improve capabilities 59
Veyer $30M+ 2025 External customer In the near-term, driving capacity EBITDA utilization in linehaul, backhaul, and freight consolidation $90M+ Total enterprise Arms-length, market-based commercial EBITDA Over time, growing new logos in 3PL and agreements with ODP Business distribution business Solutions and Office Depot 60
Prentis Wilson President of Varis 61 61
Transforming the complete procurement ecosystem for buying Transform B2B commerce through digital platform organizations and the suppliers who serve them. Solve pain points for buyers and suppliers Deliver value for buyers and suppliers 62
Experienced business and product team Manuela Ajayi Prentis Wilson Daniel Smith chief product officer president chief customer officer Terry Leeper Anne Rung Stephanie Weeks chief technology officer public sector design Executive Office of POTUS 63
Uniquely solves challenges for buyers and suppliers Supplier challenges Buyer needs High customer acquisition costs Plan for continuity of critical supplies Unpredictable customer spending $8T Improve contract compliance Channels don’t drive and spend visibility indirect spend revenue or retention Identify and realize cost savings across categories 64 64
How Varis creates a trusted multi-sided platform Marketplace Network One-stop consumer- Vetted and trusted like shop with many business-grade buyers and suppliers suppliers Workflow SaaS tools for buyers and suppliers 65
Varis has an industry leading e-procurement solution with a strong base of customers E-Procurement industry map Solutions leader Value leader 100% Customer retention since BuyerQuest acquisition 64%+ Annual growth in spend under management since March 2020 >21k Unique locations using Varis Emergent contender Customer leader Customer score The center of the axes represents the average SolutionMap scores (not 0,0) which vary with each release. Source: SpendMatters 66 Analyst score
Varis is expanding to the underserved small, medium, and mid-market customer segment Mid-market Full potential Varis Clear value: target market (GMV model) ✅ Consumer-like user experience ✅ Enterprise-grade controls ✅ Enterprise-volume pricing ✅ Vetted B2B grade suppliers Varis’ enterprise Small and customer base medium today (subscription model) 67
Varis is accelerating growth through a mix of subscription and GMV revenue-share models Transaction Transaction volume volume Pricing model benefits buyers and suppliers: ✅ Flexible cost structure ✅ Aligns with value creation Varis revenue Varis revenue GMV revenue-share influenced by several factors including: • Customer • Categories • Complexity • … and others Example customer in Example customer subscription model in GMV revenue-share model 68
Roadmap to deliver shareholder value quickly while building long-term scale Expand offerings and capabilities New opportunities for buyers, suppliers and more in areas like inventory, logistics, payments, and advertising. Expand value Expansion of payments capabilities, improved Massive scalability catalog management, Launched that decreases costs Becoming Varis expanded contract Varis platform Focus on rapid deployment Prentis Wilson joined, and management and more. Signed key buyers and of marketplaces and the Varis leadership team suppliers. Began ramping suppliers was formed. Varis acquires customer onboarding BuyerQuest software and team. 2022 2021 2023 2024 Beyond 69
Varis is a logical expansion for The ODP Corporation Procurement technology is a logical extension of the business solutions The ODP Corporation has created for our customers and shareholders. ODP Business Solutions’ strong B2B relationships accelerate growth for Varis, and Varis drives increased value and growth for ODP Business Solutions. Future-proofing revenue streams: as a digital-first platform, Varis expands avenues for growth and value creation. 70
Aspiration: path for long-term value creation Continues to drive high growth Drives hypergrowth 2025 $120M+ in 2022-25 in revenue >130% revenue CAGR Turns cashflow positive in 2025 2022 Year 71 Revenue
We are exploring alternative funding structures Core platform investments are complete Partnering with Perella Weinberg to raise external capital for the next phase of Varis Growth is accelerating with reference customers and a compelling value proposition 72
Financial Review and Targets D. Anthony Scaglione EVP and Chief Financial Officer, The ODP Corporation D R A F T Office Depot® is a trademark of The Office Club, Inc. OfficeMax® is a trademark of OMX, Inc. ©2022 Office Depot, LLC. All rights reserved. This information is confidential; it is not to be relied on by any 3rd party without prior written consent. 73
Illustrative re-mapped 4-BU structure Division-specific and recast financials are illustrative, unaudited and rounded Business Solutions 2021 FY ODP Retail Corporate/Other Division Revenue $4.6B $3.8B $30M $8.5B Adj. EBITDA $140M $350M ($25M) $465M Margin 3.0% 9.2% - 5.5% Corporate and 2021 FY ODP inter-company Illustrative eliminations Recast Revenue $3.6B $4.8B $5.6B $5M ($5.6B) $8.5B Adj. EBITDA $75M $375M $70M ($25M) ($30M) $465M Margin 2.1% 7.8% 1.3% N/A - 5.5% 74
Our algorithm for shareholder value Low-cost Embed low-cost business model across 1 model our BUs EBITDA and cash Strong EBITDA and cash flow conversion 2 flow conversion Efficient capital Provide clear, defined capital allocation 3 allocation plan 75
Each of our 4 business units has a dedicated role in the portfolio Low-cost business EBITDA and EPS Responsible capital model growth allocation Digital procurement B2B Distribution Omnichannel Retail 3rd Party Logistics technology platform Expand margins, Drive incremental Expand client base Generate stable grow in adjacencies, income by leveraging and accelerate growth cash flows cash flow current asset base 76
Evolution 2022 2023 Beyond of our 4-BU Today Future state model over 2-BU reporting 4-BU reporting structure structure time Begin transition Long-term to match incentives to incentives tied new 4-BU structure to prior model Explore BU-level One capital capital structures structure 77
Disciplined capital allocation plan ~$1.4B 2023-2025 3-year liquidity (~$1B in cash from operations & ~$0.4B from leverage) Strong FCF generation and balance street 78 78
We will invest in highest ROI opportunities CAPEX / Investment plan highlights • Continuing our • Maintaining with • Scaling through • Lowering operating disciplined Federation CAPEX to preserve costs to serve Business targeted automation strategy to enter stable FCF generation to lower operating Solutions and Office underpenetrated Depot costs • Investing in select markets & categories technological • Adding capabilities to • Adding monetizable • Expanding assortment tools to optimize functionality that enable external in adjacent categories margins and connect customer growth in addresses B2B industry to customers pain points high value supply chain services 79
Consolidated results 2019-2021 2022 2022-2025 2025 Revenue (6%) CAGR ~$8.45-8.60B ~1% CAGR $8.5-8.7B Adj. EBITDA % (20) BPS ~5% +100 BPS >6% Adj. EPS 2% CAGR ~$4.10-4.50 ~15-25% CAGR ~$7.00-8.00 Note: Revenue and EBITDA are post intercompany eliminations; data excludes CompuCom figures 80
ODP has tools at its disposal to navigate through economic cycles 1 2 3 Accelerate ongoing low- Strong balance sheet Flexible capital cost business model to support additional allocation initiatives liquidity 81 81
Investors can track our progress with metrics for each business unit Total adjacency Same store External customer Gross % of revenue sales comp EBITDA contribution merchandising volume (GMV on revenue share) Online penetration We will continue to review and evolve relevant metrics to track performance 82
Summary Shareholder value ODP delivers shareholder value via FCF FCF generation generation with Disciplined capital disciplined allocation strategy capital allocation Revenue stability Low-cost business model Growth through new product and service categories 83
Closing remarks Gerry Smith Chief Executive Officer, The ODP Corporation D R A F T Office Depot® is a trademark of The Office Club, Inc. OfficeMax® is a trademark of OMX, Inc. ©2022 Office Depot, LLC. All rights reserved. This information is confidential; it is not to be relied on by any 3rd party without prior written consent. 84
INDUSTRY BUSINESS UNIT PORTFOLIO ROLE CLASSIFICATION Generate stable Omnichannel Retail cash flows Expand margins, grow in B2B Distribution Unlocking adjacencies, cash flow value from Drive incremental rd 3 Party Logistics our 4-BU income by leveraging current asset base model Digital Procurement Expand client base and Technology Platform accelerate growth 85 85
A compelling investment Over the next 3 years, we expect to repurchase Disciplined capital allocation to balance ~$1B of shares return of capital to shareholders with investment Maximizing value of our assets across B2B relationships and supply chain +15-25% CAGR Balancing near-term opportunities and long-term growth across portfolio of BUs Providing transparency across 4-BUs to ensure shareholder visibility into BU performance and peer multiples 2022-2025 2017-2021 Stable cash flow from long-standing customer relationships and established routes to market Accelerate EPS Growth 86 86
Unlocking our potential 87 87
Supplementary information 88 88
Appendix 89
I N T E R N A L E X T E R N A L Veyer EBITDA ambition $90M 2025 EBITDA $30M $60M 2025 EBITDA 2025 EBITDA Provide high quality Drive growth with service at competitive external customers prices to internal through differentiated customers, Office Depot / capabilities Office Max and ODP and national scale Business Solutions 90
Volume I N T E R N A L Veyer provides end-to-end supply chain services from sourcing to fulfillment and distribution for Office Depot / OfficeMax and ODP Business Solutions Veyer charges for Revenue end-to-end Two rate cards: sourcing & supply chain supply chain Commercial Agreements (CAs) with internal customers set market-based rate cards for services via Veyer services two market-based Margin commensurate with rate cards value added Profit Veyer profits in line with value created by assets and capabilities Low-cost provider at best Strategic service levels Incentive structure keeps Veyer focused on focus low cost at best service levels 91
Transportation services Sourcing and supply chain Linehaul and Freight E X T E R N A L services backhaul consolidation Service • Monetizing capacity • Inbound freight services • End-to-end supply description on current routes for existing vendors, chain services from offsetting portion of sourcing to distribution Veyer offers product cost and fulfillment 3 key services Representative • Global CPG brand • Cleaning supplies brand Customers • Global grocery chain • Pen manufacturer Unit • High EBITDA • Mid-to-high EBITDA • In line with other 3PLs – economics passthrough due to generation through cost Moderate-to-low low incremental reduction for services EBITDA conversion costs provided (explained on from complex services next page) Growth path • Source incremental • Expand coverage of • Continue modernization demand through existing vendors to roadmap to unlock brokers to increase increase use of existing growth use of existing assets assets Timing • Near-term growth • Near-term growth with • Ramping in 2024-2025 with existing existing capabilities through modernization capabilities efforts 92
E X T E R N A L Illustrative Freight consolidation economics Freight consolidation for existing Veyer does not recognize freight vendors generates EBITDA; consolidation as revenue, but rather targeting $10-15M EBITDA in 2025 through contra expense against product costs. EBITDA contributed would require ~$65-85M of revenue for a typical 3PL 93
2025 Path to ~$30M external EBITDA Key investments in 2022-25 • ERP enhancements • Inventory separation and visibility rd • Processes needed to support 3 -party at scale • Self-funded investments in salesforce 94
Appendix 95 95
Varis connects buyers and suppliers Spend control Acquisition channel Cost savings Customer relationships Predictable supply Predictable demand Consumer-like buying Integrated catalogs Accounts payable automation Payments processing Reporting Procurement tools 96 Suppliers Buyers
Key takeaways about Varis We’re creating a transformative, We have a clear roadmap focused on customer-centric B2B digital efficient scaling to decrease costs procurement platform and rapid growth We are growing and scaling in a massive, We are expanding models to a GMV- underserved market based revenue-share that will increase monetization, leading to our We have momentum - technology and goal of $120M+ revenue in 2025 customer partnerships well underway; strong internal and external validation We are pursuing outside investment to help fund the business and We have an experienced leadership accelerate growth team who have successfully disrupted B2B e-commerce before 97