Q1 2024 The ODP Corp Earnings Call

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Operator: Good morning, and welcome to the ODP Corporation's first quarter 2024 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, and Treasurer. Mr. Perrott, you may begin.

Speaker Change: Good morning, and welcome to the ODP Corporation first quarter 2024 earnings Conference call.

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 and Treasurer, Mr. Perhaps you may begin.

Timothy J. Perrott: Good morning, and thank you for joining us for the ODP Corporation's First Quarter 2024 Earnings Conference. This is Tim Perrott, and I'm here with Gerry Smith, our CEO, and Anthony Scaglione, our Executive Vice President and CFO.

Timothy J. Perrott: Good morning, and thank you for joining us for the ODP Corporation first quarter 2024 earnings Conference call.

Timothy J. Perrott: This is temporary and I'm here with Gerry Smith, our CEO and Anthony Scaglione Executive Vice President and CFO.

Timothy J. Perrott: During today's call, Gerry will provide an update on the business, focusing much of his commentary on our results and accomplishments for the first quarter of 2024, including our operational performance and the progress we are making on all of our initiatives to drive shareholder value. After Gerry's commentary, Anthony will then review the company's first quarter financial results, including highlights of our divisional performance. Following Anthony's comments, we will open up the line for your questions.

Gerry P. Smith: During today's call Gerry will provide an update on the business focusing much of his commentary on our results and accomplishments for the first quarter of 2024, including our operational performance and the progress we're making on all of our initiatives to drive shareholder value.

Diego Anthony Scaglione: After Jerry's commentary Anthony will then review the company's first quarter financial results, including highlights of our divisional performance. Following Anthonys comments, we will open up the line for your questions.

Timothy J. Perrott: 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 is contained in the company's filings with the U.S. Securities and Exchange Commission.

Speaker Change: 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 1095.

Speaker Change: 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.

Speaker Change: A detailed discussion of these risks and uncertainties are contained in the company's filings with the U S Securities and Exchange Commission.

Timothy J. Perrott: During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, presentation slides that accompany today's comments, and Reconciliations of the Non-Gap Financial Measures to the Most Directly Comparable Gap 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 Gerry Smith. Gerry?

Speaker Change: During the call we will use some non-GAAP financial measures as we describe business performance.

Speaker Change: The SEC filings as well as the 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 Dot The ODP Corp Dot com.

Speaker Change: 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 Gerry Smith Gerry.

Gerry P. Smith: Thank you, Tim, and good morning to everyone joining our call today. I'm happy to be here with you to discuss our results for the first quarter of 2024, as well as to provide insight into our progress with Project CORE, our business optimization initiative that is helping us enhance our position to continue to deliver shareholder value as we move forward. Before I cover our results, I wanted to highlight our continued commitment to operational excellence, which forms the cornerstone of our low-cost business model that is embedded in the DNA of all of our employees.

Gerry P. Smith: Thank you, Tim and good morning to everyone joining our call today I'm happy to be here with you to discuss our results for the first quarter of 2024 as.

Gerry P. Smith: As well as to provide insight into our progress with project core our business optimization initiative, that's helping us enhance our position to continue to deliver shareholder value as we move forward.

Gerry P. Smith: As shown on slide four, the powerful combination of our business unit structure and approach to operational excellence helps us to continue to drive efficiencies in our business, creating greater flexibility while navigating challenging macroeconomic conditions. Extending this approach, we launched Project CORE, an enterprise-wide initiative we announced in March.

Gerry P. Smith: Four I cover our results I wanted to highlight our continued commitment to operational excellence, which forms a cornerstone of our low cost business model that is embedded in the DNA of all of our employees.

Gerry P. Smith: As shown on slide four the powerful combination of our business unit structure and approach to operational excellence helps us to continue to drive efficiencies in our business, creating greater flexibility, while navigating challenging macroeconomic conditions.

Gerry P. Smith: Extending this approach we launched project core an enterprise wide initiative, we announced in March.

Gerry P. Smith: With the work we have done to date, and aligned with our low cost mindset, I'm pleased to announce we are accelerating project core initiatives in 2024, giving us greater confidence in reaching our goals for the year and improving our position as we move forward. Now, turning to our results for the quarter, as shown on slide 5. Overall, our start to the year was slower than we anticipated. The continued choppy macroeconomic conditions, along with a more restrictive business spending environment and reduced consumer activity, created top-line headwinds in the quarter.

Gerry P. Smith: With the work we've done to date and aligned with our low cost mindset I am pleased to announce we are accelerating project core initiatives in 2020 for giving us greater confidence in reaching our goals for the year and improving our position as we move forward.

Gerry P. Smith: Now turning to our results for the quarter as shown on slide five.

Gerry P. Smith: Overall, our start to the year was slower than we anticipated.

Gerry P. Smith: The continued choppy macroeconomic conditions, along with a more restrictive business spending environment and reduced consumer activity, great topline headwinds in the quarter.

Gerry P. Smith: In our B2B business, spending budgets among our enterprise customers continue to be constrained, and the impacts of well-publicized reductions in force, along with continued delays in onboarding recent customer wins, have impacted top-line results. However, we remain encouraged by the pace of new business winds and our strong customer base, and my team and I are initiating specific plans to convert our strong pipeline to revenue while simultaneously building greater traction with existing accounts.

Gerry P. Smith: And our BBB business spending budgets, among our enterprise customers continue to be constrained.

Gerry P. Smith: Impacts of well publicized reductions in force along with continued delays in Onboarding of recent customer wins impacted topline results.

Gerry P. Smith: However, we remain encouraged by the pace of new business wins, and our strong customer base and my team and I are initiating specific plans to convert our strong pipeline to revenue, while simultaneously building greater traction with existing accounts.

Gerry P. Smith: More on this in a few minutes. In our supply chain business, we continue to be encouraged by VERA's strong performance, expanding market presence, and continued traction with new third-party customers. In our B2C channel, consumer traffic and demand were lower in the period, impacted by weaker macro conditions and further affected by challenging winter weather conditions during key weeks in the quarter, along with the year-over-year impact of store closures.

Gerry P. Smith: More on this in a few minutes.

Gerry P. Smith: And our supply chain business, we continue to be encouraged by very strong performance expanding market presence and continued traction with new third party customers.

Gerry P. Smith: And our BDC channel consumer traffic and demand were lower in the period impacted by weaker macro conditions and further affected by challenging winter weather conditions during key weeks in the quarter, along with a year over year impact of store closures, and finally, <unk>, which we continue to see market opportunities, but have now positioned the business for a sale.

Gerry P. Smith: And finally, Veris, which we continue to see market opportunities for but have now positioned the business for a sale, which I will discuss shortly. While overall top-line performance in the quarter was disappointing, our team's focus on operational excellence and accelerating our initiatives through Project CORE have us in position to beat, and in some cases exceed, our revised operational guidance for the year. Next, with our strong balance sheet and liquidity position, we continue to execute on our shareholder-focused capital allocation plan, both investing in our business and accelerating the pace of our share repurchase program in the quarter.

Gerry P. Smith: Which I will discuss shortly.

Gerry P. Smith: While overall top line performance in the quarter was disappointing our team's focus on operational excellence and accelerating our initiatives through project core have us in position to meet and in some cases exceed our revised operational guidance for the year.

Gerry P. Smith: Next with our strong balance sheet and liquidity position, we continue to execute on our shareholder focused capital allocation plan, both investing in our business and accelerating the pace of our share repurchase in the quarter.

Gerry P. Smith: Our balance sheet and liquidity continue to be sources of strength, and we are working towards renewing our facility with the support of our bank group, and we look forward to providing an update shortly. With our strong balance sheet, our capital allocation continues to be a pillar of our earnings algorithm, and I am pleased to report that we have continued to repurchase shares during the quarter, increasing the pace under our new authorization program we announced in March. In the quarter and through today, we've repurchased approximately $90 million of stock, including nearly $75 million under the recently announced authorization.

Gerry P. Smith: Our balance sheet and liquidity continue to be sources of strength and we are working towards renewing our facility with the support of our bank group and we look forward to providing an update shortly.

Gerry P. Smith: With our strong balance sheet, our capital allocation continues to be a pillar of our earnings algorithm.

Gerry P. Smith: I'm pleased to report that we have continued to repurchase shares during the quarter, increasing the pace under our new authorization program, we announced in March.

Gerry P. Smith: In the quarter and through today, we've repurchased approximately $90 million of stock, including nearly $75 million under the recently announced authorization. We expect to continue executing aggressively in the near term under this plan.

Gerry P. Smith: We expect to continue executing aggressively in the near term under this plan, and overall, since our Investor Day meeting in November 2022, we've returned over $540 million to shareholders through stock repurchase. Highlighting our Management Board's commitment to our capital allocation strategy, Next, we made tremendous progress under Project CORE, further streamlining our operations and sharpening our CORE focus. This initiative is enterprise-wide and also includes cost reduction actions at Veris, where we have completed our evaluation of strategic options, as we discussed in March.

Gerry P. Smith: And overall since our Investor Day meeting in November 2022, we've returned over $540 million to shareholders through stock repurchases, highlighting our management and board's commitment to our capital allocation strategy.

Gerry P. Smith: Next we made tremendous progress under project core further streamlining our operations and sharpening our core focus.

Gerry P. Smith: This initiative is enterprise wide and also includes cost reduction actions at various which we have completed our evaluation of strategic options as we discussed in March.

Gerry P. Smith: Overall, I'm happy to say that we made strong progress on our Project CORE initiatives in the first quarter, remaining focused on continuous improvement across the business to drive EBITDA and free cash flow growth into the future. With our plans to accelerate Project CORE, we now expect to achieve an annualized run rate savings of at least $100 million when fully implemented, further improving our position in the second half of the year and significantly as we move into 2025 and beyond. These savings are being achieved through cost-efficiency measures across the entire enterprise, including our organizational structure, supply chain, and cost of goods sold savings through further efficiency. Next up is Veris.

Gerry P. Smith: Overall I'm happy to say that we have made strong progress on our project core initiatives in the first quarter.

Gerry P. Smith: We remain focused on continuous improvement across the business to drive EBITDA and free cash flow growth into the future.

Gerry P. Smith: With our plans to accelerate project core we now expect to achieve an annualized run rate savings of at least $100 million once fully implemented further improving our position in the second half of the year and significantly as we move into 2025 and beyond.

Gerry P. Smith: These savings are being achieved through cost efficiency measures across the entire enterprise, including our organizational structure supply chain and cost of goods sold savings through further efficiencies.

Gerry P. Smith: Next up is <unk> as I mentioned in our previous call our management team and board have been evaluating strategic options for this business.

Gerry P. Smith: As I mentioned in our previous call, our management team and board have been evaluating strategic options for this business. Our Board of Directors has approved a plan to pursue a sale of this business unit. As we work on our plans to ex... Veris will be designated held for sale, and we have reduced the go forward cash spend by nearly a third on an annualized run rate basis until we sell the business.

Gerry P. Smith: Our board of directors have approved a plan to pursue a sale of this business unit.

Gerry P. Smith: We work on our plans to execute various will be designated as held for sale and we have reduced the gulfport cash spend by nearly a third on an annualized run rate basis until we sell the business.

Gerry P. Smith: Our reduced spend was directed at areas to further drive efficiencies without compromising our value proposition to existing and new customers. Anthony will provide more details on the in-year cash savings and adjusted earnings later in the call.

Gerry P. Smith: Our reduced spend was directed to areas to further drive efficiencies without compromising our value proposition to existing and new customers.

Gerry P. Smith: Anthony will provide more details on the in your cash savings and adjusted earnings later on the call.

Gerry P. Smith: Next, I'd like to comment on our guidance for 2024. In light of our slower top-line start to the year, we now expect a trend toward the lower end of our previously issued revenue guidance range of negative 5 to negative 2 percent. That said, and when considering our accelerated pace of Project CORE and decisions regarding Veris, we are increasing our guidance for Adjusted Operating Income, Adjusted EBITDA, and Adjusted EPS for the year. Anthony will provide more specific details later in the call.

Diego Anthony Scaglione: Next I'd like to comment on our guidance for 2024.

Diego Anthony Scaglione: In light of our slower top line start to the year, we now expect to trend towards the lower end of our previously issued revenue guidance range of negative five to negative 2%.

Gerry P. Smith: That said and when considering our accelerated pace of project core and decisions regarding Paris, we are increasing our guidance for adjusted operating income adjusted EBITDA and adjusted EPS for the year.

Gerry P. Smith: Anthony will provide more specific details later in the call.

Gerry P. Smith: Now on slide 6, I would like to discuss the performance in our business units, starting with our B2B business ODP Business Solutions. ODP Business Solutions, our B2B distribution business that serves large enterprises, as well as medium and small businesses, had a slow start to the year. Macroeconomic conditions and enterprise-level budget constraints, along with continued onboarding delays of certain customers, added pressure on the top. Sales were lower across most major product categories, led by technology and furniture.

Gerry P. Smith: Now on slide six I'd like to discuss the performance in our business units, starting with our BTB business ODP business solutions.

Gerry P. Smith: ODP business solutions, our <unk> distribution business that serves large enterprises as well as medium and small businesses had a slow start to the year Matt.

Gerry P. Smith: Macroeconomic conditions and enterprise level budget constraints.

Gerry P. Smith: Along with continued onboarding delays of certain customers added pressure on the topline.

Gerry P. Smith: Sales were lower across most major product categories led by technology and furniture.

Gerry P. Smith: Adjacency category sales, which include cleaning and break room, furniture, technology, and copy and print, were approximately 43% of total B2B sales. While disappointed with the slower than anticipated start to the year, the pace of average daily purchases remained consistent to the pace we saw late last year, exceeding fiscal 2023, showing the top line stabilizing as we progress during the quarter. From an operating perspective, despite the flow-through impact of lower sales, our team remained focused on driving our low-cost model, resulting in even margins of nearly 4% in the quarter.

Gerry P. Smith: Adjacency category sales, which include cleaning and break room furniture technology in copy and print were approximately 43% of total <unk> sales.

Gerry P. Smith: While disappointed with the slower than anticipated start to the year. The pace of average daily purchases remained consistent to the pace. We saw late last year exiting fiscal 2023, showing the top line stabilizing as we progressed during the quarter from an operating perspective, despite the flow through impact of lower sales. Our team remained focused on driving our <unk>.

Gerry P. Smith: Low cost model.

Gerry P. Smith: Results in an EBITDA margin of nearly 4% in the quarter.

Gerry P. Smith: Despite the challenging top line, we remain in a strong market position encouraged by our continued traction in new business wins and by our strong pipeline. Of course, a strong pipeline is only meaningful if it turns into revenue, and the initiatives that we are putting into place have our team focused on conversion. We remain competitively strong with a customer-first approach, including a net promoter score of 75% in the quarter, an indicator of high customer satisfaction. In addition, with our strong balance sheet and our ability to work creatively with customers. I remain confident in the long-term prospects of our B2B distribution business and our ability to secure shares.

Gerry P. Smith: Despite the challenging top line, we remain in a strong market position encouraged by our continued traction in new business wins and by our strong pipeline.

Gerry P. Smith: Of course, a strong pipeline is only meaningful if it turns into revenue and the initiatives that we're putting into place that our team focus on conversion.

Gerry P. Smith: We remain competitively strong with a customer first approach, including a net promoter score of 75% exiting the quarter and indicator of high customer satisfaction and.

Gerry P. Smith: In addition, with our strong balance sheet and our ability to work creatively with customers I remain confident in the long term prospects of our BTB distribution business and our ability to grab share.

Gerry P. Smith: We're not standing still, and my team and I are taking specific actions focused on gaining better traction on the top line through implementing targeted actions with existing and prospective customers. I've initiated weekly customer reviews with our team, and we've created incentives to drive both sales to existing customers and capture new wins. Similar to the contract profitability reviews we executed in fiscal 2022, that led to margin improvements, we expect this process will lead to improved sales over time.

Gerry P. Smith: We're not standing still and my team and I are taking specific actions focused on gaining better traction on the topline through implementing targeted actions with existing and prospective customers.

Gerry P. Smith: Even initiate weekly customer reviews, with our team and we've create incentives to drive both sales to existing customers and capture new wins.

Gerry P. Smith: Similar to the contract profitability reviews, we executed in fiscal 2022 that led to margin improvements. We expect this process will lead to improved sales over time.

Gerry P. Smith: These initiatives place us in a position to address the near-term challenges, and I remain excited about our long-term prospects and our strong commitment to driving value for our customers and shareholders. Next up is Office Depot, our omni-channel consumer business that provides a strong value proposition to small business, education, and home office customers. Q1 was also a challenging quarter for Office Depot. The macro environment continues to impact the level of consumer activity, both in our business and in the retail industry as a whole, as market data shows that overall discretionary retail sales were down significantly in the first few months of the year.

Gerry P. Smith: These initiatives place us in a position to address the near term challenges.

Gerry P. Smith: And I remain excited about our long term prospects and our strong commitment to driving value for our customers and shareholders.

Gerry P. Smith: Next up is office depot, our Omnichannel consumer business that provides a strong value proposition to small business education and home office customers.

Gerry P. Smith: Q1 was also a challenging quarter for office depot, the macro environment continued to impact the level of consumer activity, both in our business and the retail industry as a whole as market data shows the overall discretionary retail sales were down significantly in the first few months of the year.

Gerry P. Smith: For our B2C business, the revenue decline was driven by a combination of fewer stores in service compared to last year, and lower in-store and online traffic and demand. Much of the weaker demand was driven by the slower economy and higher inflation moderating the pace of consumer spending and impacting overall demand both in-store and online.

Gerry P. Smith: For our BDC business. The revenue decline was driven by a combination of fewer stores in service compared to last year and from lower in store and online traffic and demand.

Gerry P. Smith: Much of the weaker demand was driven by the slower economy and higher inflation moderating the pace of consumer spending.

Gerry P. Smith: Overall demand both in store and online.

Gerry P. Smith: Adding to that challenge at the start of the year, severe weather conditions forced the closure of hundreds of our stores during the critical back-to-business season, impacting the pace of core supply sales. At the same time, the expected recovery in our technology and furniture categories failed to materialize, both of which have been underperforming over the past. That said, with the acceleration of AI and increasing need for computing power, we expect growth from the anticipated AI PC refresh in the back half of the year, which would help sales in Office 2.

Gerry P. Smith: Adding to that challenge at the start of the year severe weather conditions forced the closure of hundreds of our stores during the critical back to business season impacting the pace of core supply sales.

Gerry P. Smith: At the same time, the expected recovery in our technology and furniture categories failed to materialize, both which had been underperforming over the past year.

Gerry P. Smith: That said with the acceleration of AI, an increasing need for computing power, we expect growth from the anticipate AI PC refresh in the back half of the year, which would help sales and office depot.

Gerry P. Smith: Also, we continue to offer great value and depth with our in-store and online furniture offerings, including many private label premium offers. From an operating standpoint, we remain focused on cash generation, carefully managing our expense structure, and working to maximize margins despite the top-line challenges. We drove EBITDA margins of just under 7% for the division in the quarter.

Gerry P. Smith: So we continue to offer great value depth with our in store and online furniture offerings, including many private label premium offerings.

Gerry P. Smith: From an operating standpoint, we remained focused on cash generation carefully managing our expense structure and working to maximize margins. Despite the top line challenges.

Gerry P. Smith: We drove EBIT margins of just under 7% for the division in the quarter.

Gerry P. Smith: While it was a challenging start to the year, we remain excited about the initiatives we have in place to help drive sales and greater stability. These include our Education 365 initiative, which involves both our B2B and our omni-channel business, and it is an integrated year-round approach to improve our reach and better serve our education customers, including teachers, students, parents, and school staff. We are already seeing good reception and a positive reaction from school districts on our ability to do more with them every single day, versus only during the peak back-to-school season, and we'll continue to develop innovative programs to help accelerate growth.

Gerry P. Smith: While it was a challenging start to the year. We remain excited about the initiatives we have in place to help drive sales and greater stability.

Gerry P. Smith: These include our education, $3 65 initiative, which involves both our <unk> and our Omnichannel businesses and it is an integrated year round approach to improve our reach and better serve our education customers, including teachers students parents and school systems.

Gerry P. Smith: We are already seeing good reception and a positive reaction from school districts on our ability to do more with them every single day versus only during the peak back to school season and.

Gerry P. Smith: And we're continuing to develop innovative programs to help accelerate growth for.

Gerry P. Smith: For example, we will launch a back-to-school supply list generator, allowing parents to quickly download and access their children's school supply lists created by their specific, We'll also launch our classroom wish list capability, allowing teachers to create a customized wish list of any of the 100,000 plus items available on OfficeDepot.com, making it easy for parents to support their classroom by purchasing items from the list, purchases through both of these programs are eligible for our 5% back-to-school programs, which provides 5% of eligible sales directly back to their child's school to purchase critical supplies for the school year.

Gerry P. Smith: For example, we will launch a back to school supply lists generator, allowing parents to quickly download access their children's school supply lists created by their specific teacher will also launch our classroom wishlist capability, allowing teachers to create a customized wishlist of any of the 100000 plus items available on office depot Dot com.

Gerry P. Smith: <unk> make it easy for parents to support their classroom by purchasing items from the list.

Gerry P. Smith: Purchases through both of these programs are eligible for a 5% back to school programs, which provides 5% of eligible sales directly back to their child's school to purchase critical supplies for the school year.

Gerry P. Smith: Lastly, our Adopt-a-School program will continue this year, in which every one of our approximately 900 stores is paired with a local school in need of support. In 2023, we raised $6 million through this program. We're also remaining committed to expanding our value proposition, including our expansion to new product categories and services, including expanding our TSA sign-up service and passport photo service. Additionally, our Celebrations and Dorm Room Product Categories are beginning to receive positive recognition as a greater number of customers realize that OD does it.

Gerry P. Smith: Lastly, our adopt our school program will continue this year in which every one of our approximately 900 stores is paired with a local school in need of support in 2023, we raised $6 million through this program.

Gerry P. Smith: We're also remaining committed to expanding our value proposition, including our expansion into new product categories and services, including expanding our TSA sign up service and passport photo services.

Gerry P. Smith: Additionally, our celebrations and dorm room product category expansion is beginning to receive positive recognition as a greater number of customer realize that or does it the themes of our new marketing outreach campaign.

Gerry P. Smith: The themes of our new marketing outreach campaign. Overall, we remain encouraged by the potential of all of these efforts and their expected positive impacts on sales in the future. Now, turning to our continued progress and momentum at FAIR.

Gerry P. Smith: Overall, we remain encouraged by the potential of all of these efforts and our expected positive impacts of sales in the future.

Gerry P. Smith: Now turning to our continued progress and momentum there.

Gerry P. Smith: There, our world-class supply chain services and logistics provider continues strong performance momentum into 2024. As I pointed out in previous calls, our progress with external third-party customers... is one of the key areas of focus to assess bear success and value creation. Bear continues to make strong progress, efficiently providing service to its internal customers while continuing to grow its business with our third-party customers. In the quarter, VERA continued to add new external customers to its portfolio of business, providing services for some of the nation's most renowned brands and continuing to drive revenue and EBITDA growth from third-party customers.

Gerry P. Smith: There are world class supply chain services, and logistics provider continued strong performance and momentum into 2024.

Gerry P. Smith: As I pointed out on previous calls our progress with external third party customers is one of the key areas of focus to assess their success and value creation.

Gerry P. Smith: There continues to make strong progress efficiently providing service to its internal customers, while continuing to grow its business with our third party customers.

Gerry P. Smith: In the quarter, we're continuing to add new external customers to its portfolio of business, providing services for some of the nation's most renowned brands and continuing to drive revenue and EBITDA growth from third party customers. In fact third party revenue from external customers. It was up about 29% over last year's first quarter and very.

Gerry P. Smith: In fact, third-party revenue from external customers is up about 29% over last year's first quarter. And, very importantly, EBITDA from third-party customers increased nearly 40% year over year. Vera also continues to make progress on building its go-to-market service capabilities and executing on its modernization roadmap as it builds additional functionality in the information systems that run the business. Vera has been deploying a Gardner Magic Quadrant-level tech stack by partnering with world-class tech companies along with internal development to help position us to improve service levels, manage our business, and provide the flexibility necessary to deliver services to external third parties more effectively.

Gerry P. Smith: Partly EBITDA from third party customers increased nearly 40% year over year.

Gerry P. Smith: We're also continuing to make progress on building its go to market service capabilities and executing on its modernization roadmap.

Gerry P. Smith: As they build additional functionality in the information systems that run the business.

Gerry P. Smith: There has been deploying a gartner magic quadrant level Tech stack by partnering with World Class Tech companies, along with internal development to help position us to improve service levels manage our business and provide the flexibility necessary to deliver services to external third parties more effectively.

Gerry P. Smith: While the market remains competitive and is not immune from the effects of a weaker economy, we are very encouraged by the very strong progress in how this positions ODP to drive profitable growth in this higher multiple business. Now, turning to Veris.

Gerry P. Smith: While the market remains competitive is not immune from the effects of a weaker economy. We are very encouraged by the very strong progress and how this positions otp to drive profitable growth in this higher multiple business.

Gerry P. Smith: Now turning to the virus.

Gerry P. Smith: While Veris continues to be strategically positioned to capture more of the procurement and supply chain ecosystem, its revenue ramp has been slower than we originally anticipated at this point in its journey. As part of Project CORE, we reduced the cash burn by over a third on a go-forward basis, and our board has approved a plan to pursue a sale of this business, a process that we've already initiated. As we pursue the sale, we will continue to maintain our strong service levels to our current customers and suppliers, supporting the platform through the sales process.

Gerry P. Smith: While <unk> continues to be strategically positioned to capture more of the procurement and supply chain ecosystem is revenue ramp has been slower than we originally anticipated at this point his journey.

Gerry P. Smith: As part of project core we've reduced our cash burn by over a third on a go forward basis and our board has approved a plan to pursue a sale of this business a process that we've already initiated as we pursue this sale. We will continue to maintain our strong service levels to our current customers and suppliers supported.

Gerry P. Smith: <unk> through the sales process.

Gerry P. Smith: Now turning to insights into our accelerated plan for Project CORE and our key areas of focus as we move into the balance of the year. While we are disappointed with our start to the year and continue to face headwinds, we remain enthusiastic about opportunities ahead and the strength of our foundation that is being enhanced by Project CORE. As I mentioned earlier, we are accelerating our efforts under this plan with a focus on capturing greater efficiencies in our business and improving how we serve customers.

Gerry P. Smith: Now turning to insights into our accelerated plan for project core in our key areas of focus as we move into the balance of the year.

Gerry P. Smith: While we are disappointed with our start to the year and continued to face headwinds.

Gerry P. Smith: We remain enthusiastic about opportunities ahead, and the strength of our foundation that has been enhanced by project core.

Gerry P. Smith: As I mentioned earlier, we are accelerating our efforts under this plan with a focus on capturing greater efficiencies in our business and improving how we serve customers.

Gerry P. Smith: We expect this initiative to have a significant benefit in the second half of the year and place us in a much stronger position as we head into 2025 and beyond. We expect to capture greater cost efficiency savings this year, which will position us with the ability to generate over 100 million dollars in run rate savings on an annual basis when fully implemented, moving us to the top quartile in many of our cost buckets on a go-forward basis, which will allow us to effectively compete in the long term.

Gerry P. Smith: We expect this initiative to have a significant benefit in the second half of the year and place us in a much stronger position as we head into 2025 and beyond.

Gerry P. Smith: We expect to capture greater cost efficiency savings this year, which will position us with the ability to generate over $100 million and run rate savings on an annual basis, when fully implemented moving us to the top quartile of many of our cost buckets on a go forward basis, which will allow us to effectively compete in the long term.

Gerry P. Smith: <unk>.

Gerry P. Smith: Our entire team remains focused on driving our business and our low-cost model to the benefit of our shareholders and customers alike. We are taking initiatives to improve the sales trajectory this year and for the future, including improving the new customer onboarding process and performing customer-specific reviews to gain greater sales traction at ODP Business Solutions, in our stores and online. We're expanding our value proposition, adding convenient services to help drive additional traffic.

Gerry P. Smith: Our entire team remains focused on driving our business and our low cost model to the benefit of our shareholders and customers alike.

Gerry P. Smith: We are taking initiatives to improve the sales trajectory this year and for the future, including improving the new customer onboarding process and performing customer specific reviews to gain greater sales traction at ODP business solutions and.

Gerry P. Smith: In our stores and online, we're expanding our value proposition, adding convenience services to help drive additional traffic.

Gerry P. Smith: At VEHR, we will continue to grow our third-party top-line EBITDA. Additionally, we will remain focused on executing our capital allocation plan and continue our accelerated pace of share repurchase under our new authorization. Our team will also diligently pursue the sale of Veris while maintaining the appropriate service levels for its customers. While challenges exist, we continue to focus on the key levers of our business. I expect that our foundation will only continue to improve with our operational... Additional low-cost model initiatives and capital allocations. We will continue our path of driving significant shareholder value and an even greater run rate savings going forward. With that, I'll turn the call over to our CFO, Anthony Scaglione.

Gerry P. Smith: And there we will continue to grow our third party topline EBITDA. Additionally, we will remain focused on executing our capital allocation plan and continued our accelerated pace of share repurchase under our new authorization.

Gerry P. Smith: Our team will also diligently pursue the sale of arris, while maintaining the appropriate service levels for its customers.

Gerry P. Smith: While challenges exist, we continue to focus on the key levers of our business.

Gerry P. Smith: That our foundation will only continue to improve.

Gerry P. Smith: With our operational excellence additional low cost model initiatives and capital allocation, we will continue our path of driving a significant shareholder value and an even greater run rate savings going forward.

Gerry P. Smith: With that I'll turn the call over to our CFO Anthony Scaglione.

Diego Anthony Scaglione: Thank you, Gerry, and good morning to everyone on the call. I'm happy to be here today to discuss our financial results for the first quarter of 2024. As I begin, I'd like to say thank you to our entire team for remaining focused on driving initiatives under Project CORE and remaining focused on our low-cost business model. Despite our slower start to the year, I am confident in our team's ability to drive our business and deliver efficiencies through Project CORE, positioning us to reach our goals for the year and beyond.

Diego Anthony Scaglione: Thank you Jerry and good morning to everyone on the call I'm happy to be here today to discuss our financial results for the first quarter of 2024.

Diego Anthony Scaglione: As I begin I'd like to say, thank you to our entire team for remaining focused on driving initiatives under project core and remaining focused on our low cost business model.

Diego Anthony Scaglione: Despite our slower start to the year I'm confident in our team's ability to drive our business and deliver efficiencies through project core positioning us to reach our goals for the year and beyond.

Diego Anthony Scaglione: Turning to the specifics of our first quarter results, as shown on slide 12, we generated total revenue of $1.9 billion in the quarter, which was down about 11% compared to last year's first quarter. This was primarily driven by lower sales in Office Depot, including 56 fewer stores in service compared to last year, and reduced transactions, as well as lower sales in ODP Business Solutions. GAAP operating income in the quarter was $18 million, which included $33 million of charges, of which $27 million related to net merger and restructuring expenses primarily related to Project CORE activities. Excluding these charges, our adjusted operating income for the first quarter was $51 million, compared to $99 million in last year's first quarter. Unallocated corporate expenses were $24 million.

Diego Anthony Scaglione: Turning to the specifics of our first quarter results as shown on slide 12, we generated total revenue of $1 9 billion in the quarter, which was down about 11% compared to last year's first quarter.

Diego Anthony Scaglione: Adjusted EBITDA was $82 million in the quarter, compared to $131 million in last year's first quarter. This includes depreciation and amortization expense of $29 million and $30 million in the first quarters of 2024 and 2023, respectively. Excluding the after-tax impact from the items mentioned earlier, adjusted net income for the first quarter was $40 million, or $1.05 per diluted share, compared to adjusted net income of $75 million, or $1.78 per diluted share, in the prior year period.

Diego Anthony Scaglione: This was primarily driven by lower sales in office depot, including 56 fewer stores in service compared to last year and reduce transactions as well as lower sales and ODP business solutions.

Diego Anthony Scaglione: GAAP operating income in the quarter was $18 million, which includes $33 million of charges of which $27 million related to net merger and restructuring expenses primarily related to project core activities.

Diego Anthony Scaglione: Excluding these charges our adjusted operating income for the first quarter was $51 million compared to $99 million in last year's first quarter.

Diego Anthony Scaglione: Unallocated corporate expenses were $24 million adjusted EBITDA was $82 million in the quarter compared to $131 million in last year's first quarter. This includes depreciation and amortization expense of $29 million and $30 million in the first quarters of 2024 and 2023, respectively.

Diego Anthony Scaglione: Excluding the after tax impact from the items mentioned earlier adjusted net income for the first quarter was $40 million or $1 <unk> per diluted share compared to adjusted net income of $75 million or $1 78 per diluted share in the prior year period.

Diego Anthony Scaglione: Turning to cash flow, operating cash flow was $38 million, down primarily due to the flow-through impact of lower sales and timing related to working capital. Capital expenditures in the quarter were $35 million versus $27 million in the prior year period, and adjusted free cash flow in the quarter was $7 million.

Diego Anthony Scaglione: Turning to cash flow operating cash flow was $38 million down primarily due to the flow through impact of lower sales and timing related to working capital.

Diego Anthony Scaglione: Capital expenditures in the quarter were $35 million versus $27 million in the prior year period adjust.

Diego Anthony Scaglione: Adjusted free cash flow in the quarter was $7 million, while we recognize we had a slow start to the year. Our teams remain keenly focused as we have proven in the past on managing the variables of cash flows to reach our goals for the year.

Diego Anthony Scaglione: While we recognize we've had a slow start to the year, our teams remain keenly focused, as we have proven in the past, on managing the variables of cash flows to reach our goals for the year. Now, turning to our results in our B2B distribution division on slide 13. As Gerry mentioned, ODC Business Solutions had a challenging start to the year as macroeconomic conditions, more cautious enterprise spending, and the ongoing onboarding delays impacted top-line results in the quarter. Revenue was $900 million in the first quarter, which was down about 8% compared to last year.

Diego Anthony Scaglione: Now turning to our results and our <unk> distribution division on slide 13.

Diego Anthony Scaglione: As Jerry mentioned ODP business solutions had a challenging start to the year as macroeconomic conditions more cautious enterprise spending and the ongoing onboarding delays impacting top line results in the quarter.

Diego Anthony Scaglione: Revenue was $900 million in the first quarter, which was down about 8% compared to last year.

Diego Anthony Scaglione: Contributing to the weaker top line was lower sales of technology products, a factor that many other companies are experiencing industry-wide, as well as supplies and lower sales of larger ticket items in our furniture category, which all contributed to the softer top line. While we expect to see some near-term top-line challenges due to continued enterprise softness, we remain encouraged by the net new business we are winning and taking share. We also expect some of the tech sales to rebound in the second half as product life cycles, including Windows Refresh, and companies begin to invest more aggressively in AI-enabled technologies, which should help fuel PC sales.

Diego Anthony Scaglione: Contributing to the weaker topline was lower sales of technology products, a factor that many other companies are experiencing industry wide as well as supplies and lower sales of larger ticket items in our furniture category, which all contributed to the softer top line.

Diego Anthony Scaglione: While we expect to see some near term top line challenges due to continued enterprise softness we remain encouraged by the net new business. We are winning taking share. We also expect some of the tech sales to rebound in the second half as product life cycles, including Windows refresh and companies are beginning to invest more aggressively in AI enabled technologies, which should help.

Diego Anthony Scaglione: Fuel PC sales breaking.

Diego Anthony Scaglione: Breaking down our sales data further, our adjacency product categories as a percentage of total revenue at KPI for ODP business solutions were 43% in the quarter, slightly lower but consistent with recent trends. From an operating perspective, the flow-through effect of lower revenues resulted in an operating income of $30 million in the quarter compared to $39 million in the prior year period. EBITDA margins were approximately 4% in the quarter, down about 50 basis points year over year.

Diego Anthony Scaglione: Breaking down our sales data further our adjacency product categories as a percentage of total revenue a kpis for ODP business solutions was 43% in the quarter slightly lower but consistent with recent trends.

Diego Anthony Scaglione: From an operating perspective, the flow through effect of lower revenues resulted in an operating income of $30 million in the quarter compared to $39 million in the prior year period.

Diego Anthony Scaglione: EBITDA margins were approximately 4% in the quarter down about 50 basis points of year over year.

Diego Anthony Scaglione: While we are disappointed with the slower than anticipated start of the year, ODV Business Solutions remains in a position of competitive strength with a compelling customer offering and a highly capable sales team. Looking at our top-line performance over the past few months, the pace of average daily purchases has remained consistent with what we experienced exiting 2023, which indicates the top line is stabilizing in the quarter. And with the initiatives we have implemented, including our account-by-account reviews and incentives, we expect the pace of sales trends to improve over time.

Diego Anthony Scaglione: While we are disappointed with the slower than anticipated start of the year OTV business solutions remains in a position of competitive strength with a compelling customer offering and a highly capable sales force.

Diego Anthony Scaglione: Looking at our topline performance over the past few months the pace of average daily purchases has remained consistent to what we experienced exiting 2023, which indicates a topline that stabilizing in the quarter and with the initiatives, we have implemented including our account by account reviews and incentives we expect the pace of sales trends to improve over time.

Diego Anthony Scaglione: We are also encouraged by the strength of our balance sheet and ability to work with our customers across multiple dimensions to drive a value proposition that few in the industry can meet, giving us confidence in our foundation and our ability to drive improved results in the second half of the year and beyond. Now, turning to our results in our Consumer Division, Office Depot, as shown on slide 14. In the first quarter, Office Depot's top line continued to be challenged as the slowing economy and persistent, although beginning to moderate, inflation impacted the pace of consumer spending.

Diego Anthony Scaglione: We are also encouraged by the strength of our balance sheet and ability to work with our customers across multiple dimensions to drive the value proposition that few in the industry can meet giving us confidence in our foundation and our ability to drive improved results in the second half of the year and beyond.

Diego Anthony Scaglione: Now turning to our results in our consumer Division Office depot as shown on slide 14.

Diego Anthony Scaglione: In the first quarter office depot topline continues to be challenged as the slowing economy and persistent although beginning to moderate inflation impacted the pace of consumer spending this was compounded by fewer stores and service and discrete severe weather impacting sales during the busy back to business season.

Diego Anthony Scaglione: This was compounded by fewer stores in service and discrete severe weather impacting sales during the busy back-to-business season. Reported revenue for the quarter stood at $900 million, a 14 percent decline, driven by 56 fewer retail stores in service versus last year, as well as lower traffic and transactions in both our retail and e-commerce channels. Demand was lower across most categories, including technology and furniture.

Diego Anthony Scaglione: Reported revenue for the quarter stood at $900 million, a 14% decline driven by 56 fewer retail stores in service versus last year.

Diego Anthony Scaglione: As well as lower traffic and transactions in both our retail and e-commerce channels.

Diego Anthony Scaglione: Demand was lower across most categories, including technology and furniture on a comparable basis sales were down roughly 10% as lower retail and online traffic and transactions outweighed higher conversion.

Diego Anthony Scaglione: On a comparable basis, sales were down roughly 10 percent, as lower retail and online traffic and transactions outweighed higher conversions. From an operating perspective, operating income was $50 million in the quarter, or 5% of sales, down compared to last year's first quarter as our team worked to offset the top-line decline. Moving forward, we are continuing to optimize the store footprint and driving our business through expanding our value proposition, focusing on strong customer satisfaction, and driving operational excellence throughout the organization. We are seeing early signs of traction in our new categories of products and services. Our NPS scores remain at 70 or above, among the highest in the industry.

Diego Anthony Scaglione: From an operating perspective operating income was $50 million in the quarter or 5% of sales.

Diego Anthony Scaglione: Compared to last year's first quarter as our team worked to offset the top line decline.

Diego Anthony Scaglione: Moving forward, we are continuing to optimize our store footprint and driving our business through expanding our value proposition focusing on strong customer satisfaction and driving operational excellence throughout the organization.

Diego Anthony Scaglione: We are seeing early signs of traction in our new categories of products and services. Our NPS scores remain at 70 or above among the highest in the industry and our one ODP approach to our education customers through education, and 365 is improving our position moving forward.

Diego Anthony Scaglione: And our one ODP approach to our education customers through Education 365 is improving our position moving forward. Our Education 365 initiative creates a more consistent approach to serving educational customers, including schools, teachers, parents, and students year-round. In addition, we recently launched our newest ad campaign, Odie Does It, intended to drive further awareness of the host of services and categories we provide that may not be known to many small businesses and consumers. It's an exciting campaign, and we hope everyone takes the opportunity to view it online.

Diego Anthony Scaglione: Our education and 365 initiatives creates a more consistent approach to serving educational customers, including schools teachers parents and students year round.

Diego Anthony Scaglione: In addition, we recently launched our newest AD campaign or does it intended to drive further awareness and a host of services and categories. We provide that may not be known to many small businesses and consumers. It's an exciting campaign and we hope everyone takes the opportunity to view it online.

Diego Anthony Scaglione: In all, we are focused on expanding our value proposition and driving the components of our business that we can control, and we believe we are well positioned to continue to drive this cash engine going forward. Now, turning to VAERS performance, as shown on slide 15. There, our impressive supply chain services and logistics provider continued to drive its momentum and delivered impressive results in the quarter. Not only do they efficiently serve their internal customers, ODP Business Solutions, and Office Depot, but they also continue to drive revenue and EBDA growth from external third-party customers.

Diego Anthony Scaglione: And all we're focused on expanding our value proposition and driving the components of our business that we can control and we believe we are well positioned to continue to drive this cash engine going forward.

Diego Anthony Scaglione: Now turning to <unk> performance as shown on slide 15.

Diego Anthony Scaglione: There are impressive supply chain services and logistics provider continues to drive its momentum and delivered impressive results in the quarter.

Diego Anthony Scaglione: Not only did they are efficiently serve its internal customers ODP business solutions and office depot. They also continued to drive revenue and EBITDA growth from external third party customers.

Diego Anthony Scaglione: On a consolidated basis, VEIR drove sales of $1.2 billion, predominantly supporting the purchasing and supply chain operations of ODB Business Solutions and Office Depot, which are effectively eliminated upon consolidation. In addition to supporting its internal customers, Bayer continued to make progress with external third-party customers, continuing to attract new external logos and providing service for some of the nation's most renowned brands. In the quarter, we launched many social media campaigns, getting the word out further about this business and the value proposition it can provide customers across our national network, including our global sourcing capabilities. For Q1, Thayer grew third-party revenue by 29%, resulting in sales of $9 million.

Diego Anthony Scaglione: On a consolidated basis, they're drove sales of $1 2 billion predominantly supporting the purchasing and supply chain operations of ODP business solutions and office depot, which are effectively eliminated upon consolidation.

Diego Anthony Scaglione: In addition to supporting its internal customers, they're continuing to make progress with external third party customers continuing to attract new external logos and providing service for some of the nation's most renowned brands.

Diego Anthony Scaglione: In the quarter, we launched many social media campaigns getting the word out further about this business and the value proposition that can provide customers across our national network, including our global sourcing capability.

Diego Anthony Scaglione: For Q1, there grew third party revenue by 29%, resulting in sales of $9 million from a bottom line perspective. They are drove a 40% increase in EBITDA from third party customers driving third party EBITDA of $3 million. We are really excited about their continued progress and it's evident that there is compelling value prop.

Diego Anthony Scaglione: From a bottom-line perspective, Thayer drove a 40% increase in EBITDA from third-party customers, driving third-party EBITDA of $3 million. We are really excited about VEIR's continued progress, and it's evident that VEIR's compelling value proposition is resonating with our expanded set of customers and how this higher multiple business positions ODP to drive profitable growth in the future. Now turning briefly to Veris on slide 16.

Diego Anthony Scaglione: Opposition is resonating with our expanded set of customers and how this higher multiple business positions ODP to drive profitable growth in the future.

Diego Anthony Scaglione: Now turning briefly to various on slide 16.

Diego Anthony Scaglione: During the quarter, Veris generated approximately $2 million in revenue, flat with last year, primarily derived from subscriptions from existing customers. Theirs generated an operating loss of $14 million, an improvement over last year. And, as Gerry mentioned, our Board of Directors approved a plan to pursue a sale of Veris, an initiative we have already begun. We are actively working with interested parties and are aggressively pursuing a path to sale. Given the approval to sell this business, from an accounting perspective, Veris will be treated as held for sale and part of discontinued operations, and its results will be reclassified out of continuing operations starting in Q2 and for all historical periods presented.

Diego Anthony Scaglione: During the quarter various generated approximately $2 million in revenue flat with last year, primarily derived from subscriptions from existing customers. There has generated an operating loss of $14 million an improvement over last year.

Diego Anthony Scaglione: And as Gerry mentioned, our board of directors approved a plan to pursue a sale of virus and initiative, we have already begun.

Diego Anthony Scaglione: We are actively working with interested parties and are aggressively pursuing a path to sale.

Diego Anthony Scaglione: Given the approval to sell this business from an accounting perspective, various will be treated as held for sale and part of discontinued operations and its results will be reclassified out of continuing operations starting in Q2 and for all historical periods presented.

Diego Anthony Scaglione: Also, from a cash perspective, VAERS has been realigning its cost structure, including OPEX and CAPEX. From a cost to operate, we have reduced the cash burden of theirs from approximately $65 million, which was incurred in fiscal 2023 to about a $45 million full-year annual cost for fiscal 2024. We have balanced the cost actions to allow us to maintain the integrity of the platform and continue to provide excellent service to Veris' customers in advance of the sale.

Diego Anthony Scaglione: So from a cash perspective, there has been realigning their cost structure, including Opex and Capex.

Diego Anthony Scaglione: From a cost to operate we have reduced the cash burden of various from approximately $65 million, which was incurred in fiscal 2023 to about a 45 million full year annual cost for fiscal 2024, we have balanced the cost actions to allow us to maintain the integrity of the platform and continue to provide excellent service to <unk>.

Diego Anthony Scaglione: <unk> customers in advance of the sale.

Diego Anthony Scaglione: Now briefly turning to our balance sheet highlights, as shown on slide 17. Our balance sheet and liquidity position remain strong, ending the quarter with total liquidity of nearly $1 billion, consisting of $282 million in cash and cash equivalents and $689 million in availability under our asset-based lending facility. Total debt at the end of the quarter was approximately $125 million.

Diego Anthony Scaglione: Now briefly turning to our balance sheet highlights as shown on slide 17.

Diego Anthony Scaglione: Our balance sheet and liquidity position remains strong ending the quarter with total liquidity of nearly $1 billion, consisting of $282 million in cash and cash equivalents and $689 million in availability under our asset based lending facility totaled.

Diego Anthony Scaglione: Total debt at the end of the quarter was approximately $125 million.

Diego Anthony Scaglione: In January, we paid down our $53 million balance on our final term loan facility, reducing interest costs, and we have launched a renewal of our ABL, which we look forward to announcing in the very near future. As previously mentioned, we've continued to buy back shares at an accelerated pace, repurchasing approximately $90 million of our shares since the beginning of the year, including over $70 million since the initiation of our new authorization. In total, we have repurchased nearly 11.5 million shares for approximately $540 million since our investor day in late 2022.

Diego Anthony Scaglione: In January we paid down our $53 million balance on our final term loan facility, reducing interest costs and we have launched a renewal of our ABL, which we look forward to announcing in the very near future.

Diego Anthony Scaglione: As previously mentioned, we've continued to buy back shares at an accelerated pace repurchasing approximately $90 million of our shares since the beginning of the year, including over $70 million since the initiation of our new authorization in total we have repurchased nearly $11 5 million shares for approximately $540 million.

Diego Anthony Scaglione: Our Investor day in late 2022.

Diego Anthony Scaglione: Moving on to slide 18, which highlights our updated guidance for 2024. Despite our slow start to the year, we remain confident in our operational excellence approach and enthusiastic about the opportunities in our business to drive long-term value while remaining focused on prudently deploying capital to the benefit of shareholders. As Gerry mentioned, we have accelerated our initiatives under Project CORE and now expect to generate run rate savings of over $100 million when fully implemented, including about $50 million in the year capturing both organizational and other initiatives and excluding Veris.

Diego Anthony Scaglione: Now moving on to slide 18 that highlights our updated guidance for 2024.

Diego Anthony Scaglione: Despite our slow start to the year, we remain confident in our operational excellence approach and enthusiastic about the opportunities in our business to drive long term value, while remaining focused on prudently deploying capital to the benefit of shareholders.

Diego Anthony Scaglione: As Jerry mentioned, we have accelerated our initiatives under project core and now expect to generate run rate savings of over $100 million when fully implemented including about $50 million in year, capturing both organizational and other initiatives and excluding virus.

Diego Anthony Scaglione: We also now expect to incur restructuring costs in the range of $40 to $50 million, excluding Zaris, primarily related to severance and project costs as we execute our Given the timing of actions, we did not have material savings from Project CORE and Q1, although we did execute the first wave of organizational realignment, incurring $25 million in costs related to this initiative in the quarter.

Diego Anthony Scaglione: We also now expect to incur restructuring costs in the range of $40 million to $50 million. Excluding there is primarily related to severance and project costs as we execute our plan.

Diego Anthony Scaglione: Given the timing of actions, we did not have a material savings from project core in Q1, although we did execute the first wave of organizational realignment incurring $25 million in costs related to this initiative in the quarter. The positive impact of project core will begin to be recognized in Q2 and throughout the balance of the year with most of the run rate.

Diego Anthony Scaglione: Savings in place as we exit 2024.

Diego Anthony Scaglione: The positive impact of Project CORE will begin to be recognized in Q2 and throughout the balance of the year, with most of the run rate savings in place as we exit 2024. As we move forward, while macroeconomic and general business conditions pose challenges in the quarter and we expect these conditions to persist in the near term, our team's continued focus on driving our low-cost model, enhanced by our acceleration of Project Core and the Verisale process, has positioned us to update our operational guidance for 2024.

Diego Anthony Scaglione: As we move forward, while macroeconomic and general business conditions pose challenges in the quarter and we expect these conditions to persist in the near term our team's continued focus on driving our low cost model enhanced by our acceleration of project core and that their sale process have positioned us to update our operational guidance for 2024.

Diego Anthony Scaglione: We are updating our 2024 guidance as follows. First, with our slower top-line start of the year, we're expecting revenues to trend toward the lower end of our current guidance range of between negative 5% to negative 2% year over year. We are increasing our adjusted EBITA guidance to a range of $430 million to $450 million, up from a range of $410 million to $430 million. Additionally, we are increasing our adjusted operating income to a range of $320 to $340 million, up from a range of $280 to $300 million.

Diego Anthony Scaglione: We are updating our 2024 guidance as follows first with our slower topline start over the year, we are expecting revenues to trend towards the lower end of our current guidance range of between negative five to negative 2% year over year.

Diego Anthony Scaglione: We are increasing our adjusted EBITDA guidance to a range of $430 million to $450 million up from a range of 410 million to $430 million.

Diego Anthony Scaglione: We are increasing our adjusted operating income to a range of $320 million to $340 million up from a range of $280 to $300 million.

Diego Anthony Scaglione: We are also increasing our adjusted earnings per share to a range of $6.30 to $6.60 per share, up from a range of $5.60 to $5.80 per share. And finally, we are reaffirming our adjusted free cash flow guidance of generating greater than $200 million for the year. Our guidance for continuing operations assumes some nearer-term top-line challenges but an overall stabilization of macroeconomic and business conditions. These assumptions include improving omni-channel trends at Office Depot.

Diego Anthony Scaglione: We are also increasing our adjusted earnings per share to a range of $6 30 to $6 60 per share up from a range of $5 60 to $5 80 per share and.

Diego Anthony Scaglione: And finally, we are reaffirming our adjusted free cash flow guidance of generating greater than $200 million for the year.

Diego Anthony Scaglione: Our guidance for continuing operations assumes some nearer term topline challenges, but an overall stabilization of macro economic and business conditions. These assumptions include improving omnichannel trends at office depot.

Diego Anthony Scaglione: Accelerated new win onboarding and overall growth at ODP Business Solutions in the second half of the year, continued momentum and expansion at Bayer, and higher interest expense associated with projected ABL borrowings, along with a more normalized tax rate for the balance of the year for EPS. While our guidance assumes incremental improvement in the overall macroeconomic environment throughout 2024, we remain cautious about the state of the U.S. economy, primarily workforce employment and consumer spending, as well as international trade policies and agreements that could further impact the level of consumer and business comfort.

Diego Anthony Scaglione: The accelerated new wins, Onboarding and overall growth at ODP business solutions in the second half of the year Kantar.

Diego Anthony Scaglione: Continued momentum and expansion that Bayer and higher interest expense associated with projected ABL borrowings along with a more normalized tax rate for the balance of the year for EPS purposes.

Diego Anthony Scaglione: While our guidance assumes incremental improvement in the overall macroeconomic environment throughout 2024, we remain cautious on the state of the U S economy, primarily workforce employment and the consumer as well as international trade policies and agreements that could further impact the level of consumer and business confidence.

Diego Anthony Scaglione: In summary, notwithstanding our slower start to the year, we remain encouraged by our strong foundation, the flexibility of our business model, and our ability to continue to drive operational excellence accelerated by Project CORE. Combined with our focused and disciplined capital allocation approach, we believe this algorithm creates a very compelling value proposition for all shareholders. With that, operator, we will now take questions. Thank you, ladies and gentlemen.

Diego Anthony Scaglione: In summary, notwithstanding our slower start to the year, we remain encouraged by our strong foundation the flexibility of our business model and our ability to continue to drive operational excellence accelerated by project core combined with our focused and disciplined capital allocation approach. We believe that this algorithm creates a very compelling value proposition.

Diego Anthony Scaglione: For all shareholders.

Speaker Change: With that operator, we will now take questions.

Operator: Thank you, ladies and gentlemen. If you have a question or comment at this time, please press star 11 on your telephone. If your question isn't answered and you wish to move yourself from the queue, please press star 11 again. We will pause for a moment while we compile our Q&A list. Our first question comes from Greg Burns on Sidoti. Your line is open.

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone if your question been answered and wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile our Q&A roster.

Speaker Change: Our first question comes from Greg Burns with Sidoti Your line is open.

Gregory John Burns: Morning. I guess Project CORE originally had some cost savings for VARIS baked into it. Now, with the increase you're pointing to this quarter, I just want to make sure that that is separate from VARIS, and the projected savings there are incremental to that $100 million. And when you look at the increased operational forecast, particularly from maybe like an earnings perspective, and how much of that is being driven by Veris versus maybe Project Core.

Speaker Change: Morning.

Gregory John Burns: Could you just project core originally had some cost savings for various baked.

Gregory John Burns: Baked into it.

Gregory John Burns: Now with the increase youre pointing to this quarter I just wanted to make sure that that is separate from various embarrassed zinc.

Gregory John Burns: Projected savings are incremental to that.

Gregory John Burns: That $100 million and when you look at the increase.

Gregory John Burns: Operational forecast, particularly from maybe like an earnings perspective.

Gregory John Burns: How much of that is being driven by.

Speaker Change: Alright, various versus maybe project core thank you.

Operator: Thank you.

Gerry P. Smith: Yeah, maybe I'll start. Good to hear from you.

Speaker Change: Yes, maybe I'll start Greg good to hear from him good question.

Speaker Change: It is a complicated guide with a lot of moving parts. If you dissect the guide the higher expected.

Speaker Change: Core savings are providing us with the capacity to both invest in our core operations to help ignite some of the top line and address some of the near term pressure from a softer topline that we saw in Q1.

Diego Anthony Scaglione: Good question. You know, it is a complicated guide with a lot of moving parts. If you dissect the guide, the higher expected core savings are providing us with the capacity to both invest in our core operations to help ignite some of the top line and address some of the nearer term pressure from a softer top line that we saw in Q1. As you think about it from a VERIS perspective, as we communicated in our prepared remarks, we've already taken action to reduce the cash burden. So from a pure core perspective, excluding VERIS, we're anticipating approximately $50 million of run rate savings in the year and $100 million exiting 2024, with most of that coming through organizational realignment.

Speaker Change: As you think about it from a various perspective, we've communicated and in our prepared remarks, we've already taken actions to reduce the cash burden.

Speaker Change: So from a pure core perspective, excluding Derek Ware.

Speaker Change: Anticipating approximately $50 million of run rate savings in year one.

Speaker Change: The $100 million exiting 2024, with most of that coming through organizational realignment.

Gerry P. Smith: Let me jump on that, Greg, because one of the things we said in our last call is that we committed to our first – the first reduction. Anthony and I both said we're going to go after it and get more, and we did.

Speaker Change: Let me jump on that Greg one of the things we said in our last call we committed to her first.

Speaker Change: The first reduction and we Anthony both said, we're going to go after and get more and we did so and emphasize it's we're set up with a great balance sheet were set up with $100 million and run rate improvements next year.

Gerry P. Smith: So I want to emphasize it's – we're set up with a great balance sheet. We're set up with 100 million in run rate improvements next year. We're set up with the ability to increase our guidance this year. And so that's excluding Veris, and obviously there's Veris goodness as it's held for sale.

Speaker Change: Set up with the ability to.

Speaker Change: <unk> increased our guidance this year.

Speaker Change: So that's excluding Paris, and obviously there is various goodness as held for sale, but the reality is we sit.

Gerry P. Smith: But the reality is we said what we said we would do. We went out and got more costs. And candidly, we have line of sight into more costs, and we're going to continue to look at other ways to optimize the business that are non-labor oriented.

Speaker Change: We did what we said we're going to do it we went out and got more cost and candidly we have line of sight into more cost and we're going to continue to look at other ways to optimize the business that are non labor oriented.

Speaker Change: As we have good line of sight, we have a number of initiatives going on across the company. So we're confident that our low cost model of our operational excellence and the initiatives to drive sales are going to help us hit the year and it's going to help us, especially into 2025 from a run rate perspective, and we won't be the last person standing in this industry. We think we have the best balance.

Gerry P. Smith: We have a number of initiatives going on across the company, so we're confident that our low-cost model, our operational excellence, and the initiatives we're having to drive sales are going to help us hit our targets this year. And it's going to help us especially into 2025 from a run rate perspective. And we want to be the last person standing in this industry. We think we have the best balance sheet. We think we have the best cost position. And we have an outstanding net promoter score, and we have the right go-to-market routes.

Speaker Change: <unk>, we think we have the best cost position that we have.

Speaker Change: We have outstanding net promoter score and we are right right go to market routes and Greg just one more clarity on various so that it's clear.

Diego Anthony Scaglione: And Greg, just one more clarification point on Veris so that it's clear. Last year, Veris was approximately mid-40s from an EBITDA burden perspective. With the actions that we've taken as part of the project core, the original project core, it's roughly about $10 million of savings from an EBITDA perspective. But now that we're positioning it as available for SORA Health for sale, the full impact is coming out of continuing operations. So hopefully, that will help the bridge.

Speaker Change: Last year various was approximately mid $40 from an EBITDA burden perspective.

Speaker Change: The actions that we've taken as part of the project original project core.

Speaker Change: Roughly about $10 million of savings from an EBIT perspective, now that we're positioning it as available for sale or held for sale.

Speaker Change: <unk> impact is coming out of continuing operations. So hopefully that helps the bridge.

Gerry P. Smith: And then, you mentioned some challenges in onboarding customers. Is that... something on your end, on the customer's end, like what is causing the delays in getting some of these larger enterprise customers onboarded? It's been a combination.

Speaker Change: Okay perfect. Thanks, and then.

Speaker Change: You mentioned some challenges in onboarding customers does that.

Speaker Change: Something on your end on the on the customers and like what is causing the delays in getting some of these larger enterprise customers on boarded.

Gerry P. Smith: It's been a combination of both. Some of the customers have some cybersecurity concerns. We're invested in, I'll say, top-in-class technology that very few people in our space will have. And some of these customers, it gives them more confidence. And we handle a number of the biggest banks in the world already, and we think our cybersecurity is excellent. This will make it even better.

Speaker Change: It's been a combination of both some of the customers have some cyber security concerns were invested into.

Speaker Change: I'll say top in class technology that very few people in our space will have and some of these customers that gives them more confidence.

Speaker Change: We handle a number the biggest banks the world already and we think our cyber security is excellent. This will make it even better and just from an onboarding perspective.

Gerry P. Smith: And just from an onboarding perspective, there are a number of people who've seen some softness. But the reality is, we have a great pipeline. We're closing that pipeline.

Speaker Change: Number of people, who have seen some softness but the reality is having a great pipeline, we're converting that pipeline I really want to stress the initiatives. We're doing weekly if youll reviews, Anthony unite we did that a couple of years ago on cost that had tremendous improvement a lot of confidence in Dave Centrella and his team and we're going to go out and be aggressive and win share.

Gerry P. Smith: I really want to stress the initiative of doing weekly deal reviews. Anthony and I did that a couple of years ago on cost, and we saw tremendous improvement. We have a lot of confidence in Dave Centrello and his team. And we're going to go out and be aggressive and win-share. And so we're going to get really aggressive on that. And we're going to turn the business into a growth trajectory over a period of time.

Speaker Change: So we can get super aggressive on that and we are going to turn the business into it.

Speaker Change: Our growth trajectory over a period of time, and we think because of our <unk>.

Gerry P. Smith: And we think because of our improved cost position, because of our high net promoter score, because of our additional best-in-class cybersecurity type of capabilities, we're going to be in a position to gain share and be the last person standing in the space. All right. Thanks.

Speaker Change: <unk> cost position because of our our heightened motor score because at our.

Speaker Change: Additional best in class cyber security type of capabilities, we're going to be in a position to gain share and be a last versus standard in the space.

Speaker Change: Alright, thank you.

Operator: One moment for our next question. Our next question comes from Michael Lasser with UBS. Your line is open.

Speaker Change: Enrollment for our next question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Michael Lasser with UBS. Your line is open.

Michael Lasser: Good morning. Thank you so much for taking my question. Is there any evidence that the cost reductions that you are taking could be having a negative impact on your market share, such that that's amplifying some of the top line pressures that you've been experiencing?

Michael Lasser: Good morning. Thank you so much for taking my question is there any evidence that the cost reductions that you're taking could be having a negative impact on your market share.

Michael Lasser: Amplifying some of the top line pressures that you've been experiencing.

Gerry P. Smith: Michael, the answer is absolutely not. I mean, we have very clear evidence that it does not.

Michael Lasser: Michael the answer is absolutely not.

Michael Lasser: We have very clear evidence that it does not it's putting this is actually in a better position to win share over time.

Gerry P. Smith: It's putting us in a better position to win share over time and to gain traction. We spent a lot of time auditing and looking at the cost process we did take out to make sure there were no compliance issues, to make sure we had coverage from a sales perspective. And I just want to emphasize our Net Promoter Score still continues to be very high. That's world class, 75% and over 70% in retail as well.

Michael Lasser: Gain traction we spent a lot of time auditing and looking at.

Michael Lasser: Cost process, we did take out to make sure Theres no compliance issues to make sure we have coverage from a sales perspective.

Michael Lasser: I want to emphasize our net promoter scores still continues to be very high that's world class 75%.

Gerry P. Smith: That is outstanding Net Promoter Customer Experience and Customer Service. And that's a great judge for us going forward, watching that carefully. But candidly, I'm excited that we committed to and delivered what we said we would do last quarter of getting more costs. We're going to be in a position, with the balance sheet we have and the cost position we have, to be even more aggressive going forward. And actually, I'm excited with our ability to also return capital to our shareholders as well.

Michael Lasser: Over 70 in retail as well.

Speaker Change: This is outstanding there.

Michael Lasser: Customer experience and customer service and that's a great judge first going forward, we're watching that carefully but candidly I'm excited that we committed and delivered what we said we would do last quarter of getting more cost we're going to be in a position with the balance sheet, we have and the cost position, we have to be even more aggressive going forward and actually.

Speaker Change: I am excited with the ability to also return capital to our shareholders as well and I would just add Michael we're investing in our sales account. So we have an acquisition hunters both in business solutions in there as part of the initiatives. So to Jerry's point, we see opportunities going forward with the investments that we're making.

Diego Anthony Scaglione: And I'll just add, Michael, we're investing in our sales account, so we have acquisition hunters both in business solutions and there as part of the initiative, so to Gerry's point, we see opportunities going forward with the investments that we're making.

Michael Lasser: In my follow-up question, what has been the internal conversation about slowing some of the cost cuts or preserving capital in light of what seems to be an increasingly pressured macro environment such that you would be better positioned if you preserved your resources on the other side of it coming out of it? And as part of that, why are you not taking up your free cash flow outlook for the year despite increasing your EBITDA outlook for the year? Thank you very much.

Michael Lasser: In my follow up question is what has been the internal conversation.

Michael Lasser: About slowing some of the cost cuts or preserving capital in light of what seems to be an increasingly pressured macro environment.

Michael Lasser: That you would be better positioned if you preserve your resources on the other side of it coming out of it and as part of that why are you not taking up your free cash flow outlook for the year, despite increasing your EBIT.

Gerry P. Smith: Yeah, well, I'll start, then I'll have Anthony close by. But a great question. And the board and myself and Anthony and the team are having a lot of conversations about the balance between capital allocation, and we've committed to have that stronger, stronger going forward with our repurchase program. But to your point, we do have some ability to reinvest back in growth. And we're spending a lot of time as a board now and at our July meeting and subsequent meetings, really discussing additional adjacencies, additional businesses we can invest in, while maintaining the balance of making sure we're aggressive in our shareholder allocation as well.

Speaker Change: Outlook for the year. Thank you very much.

Speaker Change: I'll start then I'll have Anthony to close.

Speaker Change: Great question.

Speaker Change: Our board and myself and Anthony and team are having a lot of conversations about the balance between capital allocation and we've committed to have that stronger stronger going forward with our repurchase program, but to your point, we do have some ability to reinvest back in growth and we're spending a lot of time as the board now.

Speaker Change: In our July meeting.

Speaker Change: Subsequent meetings really discussing additionally, adjacencies additional businesses, we can invest to Paul maintaining the balance.

Speaker Change: Making sure were aggressive in our shareholder allocation as well and so this from an internal perspective, what I've said is we're.

Gerry P. Smith: And so this, from an internal perspective, what I've said is that our low cost model helps us drive growth. And that gives us the ability to have a growth fund to invest back in the business, which is exactly what we're going to do here in the next 24 and 25. But again, we are committed to our share repurchase program. We believe we can continue at an accelerated pace since we started in February, but we're going to balance that with growth as well as, you know, we're going to make smart investments across the business over a period of time. Anthony? Yeah.

Speaker Change: <unk> cost model helps us drive growth and that gives us the ability to have a growth funded to invest back in the business, which is exactly what we're going to do here in the next in 'twenty four 'twenty five but again, we are committed to our share repurchase program. We believe we can continue at an accelerated pace of since we started in February.

Speaker Change: We're going to balance that with growth as well as what we're going to make smart investments across the business over a period of time, Anthony yes, and on the cash flow overall, we're just being conservative as it relates to working capital trends you're looking at the outlook. It's just more of a timing issue Michael I think we've exhibited a pretty high discipline around EBIT at the cash flow.

Diego Anthony Scaglione: Yeah, and on cash flow overall, you know, we're just being conservative as it relates to working capital trends, you know, looking at the outlook. It's just more of a timing issue, Michael. I think we've exhibited pretty high discipline around EBITDA, the cash flow conversion. We expect that to continue, but we're just being conservative as it relates to some timing elements in working capital.

Speaker Change: <unk>, we expect that to continue but we're just being conservative as it relates to some timing elements in working capital.

Michael Lasser: Thank you very much and good luck. Thanks, Michael.

Speaker Change: Thank you very much and good luck.

Operator: Michael. One moment for our next question. [inaudible] Our next question comes from Joe Gomes with Noble Capital. Your line is open.

Speaker Change: Thanks, Michael.

Speaker Change: One moment for our next question.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Joe Gomes with Noble capital. Your line is open.

Joseph Anthony Gomes: Good morning.

Joseph Anthony Gomes: Good morning, good morning.

Joseph Anthony Gomes: On.

Joseph Anthony Gomes: Yes.

Joseph Anthony Gomes: <unk>.

Joseph Anthony Gomes: In any sense, I know it's early days, of timing, number one. Number two, in retaining top executives there, are you having to do anything in order to keep top executives at the unit while it's being sold?

Joseph Anthony Gomes: Any sense I know, it's early days of timing.

Joseph Anthony Gomes: We're one number two.

Joseph Anthony Gomes:

Joseph Anthony Gomes: And retaining top executives there you're having to do anything in.

Joseph Anthony Gomes: Order to keep top executives.

Joseph Anthony Gomes:

Joseph Anthony Gomes: The unit, while it's being sold.

Gerry P. Smith: So, Prentice and his team, the leadership team, are committed to continuing to support customers and support the business as we go through the sale process. We're actively engaged with a number of investors, and we're going to continue to maintain support for our customers and the team. And so, you know, I wanted to be really clear publicly that to our customers on Veris that we're here to support them, and we're going to continue to support the executive team as well as our customers going forward through the sale process.

Joseph Anthony Gomes: So Chris and his team.

Joseph Anthony Gomes: Leadership team are committed to continuing to support customers support the business as we go through the sale process. There we're actively engaged with a number of investors.

Joseph Anthony Gomes: We're going to continue to maintain the support for our customers and the team and so.

Joseph Anthony Gomes: Wanted to be really clear publicly that to our customers on various that we're here to support them and we're going to continue to support the executive team as well is as our customers going forward through the sale process.

Joseph Anthony Gomes: Okay, and you talked about some of the challenged product lines. I was wondering if there's anything you can point out in terms of maybe there's some strengths of positive signs in various product categories?

Joseph Anthony Gomes: Okay.

Joseph Anthony Gomes: <unk>.

Joseph Anthony Gomes: You're talking about some of the challenged product line I was wondering is there any thing you can point out.

Joseph Anthony Gomes: In terms of maybe there's some strengths of positive signs.

Joseph Anthony Gomes: In various product categories.

Gerry P. Smith: Well, I think we're seeing strength on a month-to-month basis from across some of the businesses. January was a tough month, especially for retail, which has gotten stronger every month since the beginning of the year. It was a tough January. Weather had an impact. You know, people don't like to go to retail stores when it's five degrees outside.

Joseph Anthony Gomes: Well I think we're seeing strength from a month to month basis from a across some of the businesses January was.

Joseph Anthony Gomes: Especially retail has gotten stronger every month since the beginning of the year. It was a tough January whether it wasn't impact people don't like to go to retail stores. When it's five degrees outside and so we did see a pretty impactful allowed the storms, but the reality is it's gotten better every month, which is encouraging for us we've seen average daily sales across our <unk>.

Gerry P. Smith: And so we did see a pretty significant impact from a lot of the storms, but the reality is it's gotten better every month, which is encouraging for us. We've seen average daily sales across our ODP Business Solution business stay consistent and start to grow as well. And so we're confident that it's not going to get worse. We're confident it's going to get better. And we like the initiatives of what we're doing because of our cost position to be aggressive.

Joseph Anthony Gomes: ODP business solution business.

Joseph Anthony Gomes: Stay consistent and start to grow as well and so we're confident that it's not going to get worse, we're confident is getting better and.

Joseph Anthony Gomes: Like the initiatives of what we're doing from a because of our cost position.

Gerry P. Smith: I do think there is a, you know, I come from the tech industry. I think there's a tech refresh coming in the second half of the year, especially with AI-enabled PCs. And we're excited for that. We're starting to see some glimpses of a little bit of a tech refresh right now. But I think in the back half of the year, not just us, but the entire tech industry has a much better chance with AI-enabled PCs to have a huge refresh cycle going forward, especially late 24, early 25. Well, we're well positioned to benefit from that as well. Anthony, anything else? Yeah, I think we've seen some strength in.

Joseph Anthony Gomes: Do you get aggressive I do think there is a.

Joseph Anthony Gomes: I come from the Tech industry, I think Theres, a tech refresh coming into the back half of the year, especially with AI enabled Pcs.

Joseph Anthony Gomes: We're excited for that and we're starting to see some glimpses of little bit of a tech refresh right now, but I think in the back half of the year, we think not just us.

Joseph Anthony Gomes: <unk> industry.

Joseph Anthony Gomes: Much better chance with AI enabled Pcs to have a huge refresh cycle going forward, especially late 'twenty for early 'twenty five well.

Joseph Anthony Gomes: Well positioned to do it.

Speaker Change: Benefit from that as well Anthony.

Diego Anthony Scaglione: I think we've seen some strength in remaining strength in copy and print, which has been a pretty consistent performer. We are introducing, and have introduced new categories, so I'd really encourage you to take a look at our ad campaign. It really showcases some of the products and categories we're not known for, and I think that could be an opportunity for us down the road to initiate and grow sales.

Speaker Change: I think we've seen some strength in remaining strength in copy and print that Ben.

Speaker Change: Pretty consistent performer.

Speaker Change: We are introducing or have introduced new categories. So I really encourage you to take a look at our AD campaign. It really showcases some of the products and categories, we're not known for.

Speaker Change: And I think that could be an opportunity for us down the road to initiate and grow sales.

Speaker Change: Okay.

Joseph Anthony Gomes: Okay, great. Thanks for taking the calls. Questions?

Speaker Change: Okay, great. Thanks for taking the call questions.

Operator: I'm sorry.

Gerry P. Smith: Thank you, guys. This concludes the Q&A session for today. I will now turn the call back over to ODP Corporation CEO, Gerry Smith, for any closing remarks.

Speaker Change: Thank you guys.

Speaker Change: Concludes our Q&A session for today I will now turn the call back over to ODP Corporation CEO Gerry Smith for any closing remarks.

Gerry P. Smith: Yeah, thank you everyone for joining the call today. We appreciate it greatly. We believe we have a very strong foundation. You can look at our balance sheet. We're in an outstanding position from a balance sheet perspective. With the project core issues we talked about, having the 100 million in future run rate is a huge value from a low-cost business model perspective and a huge value for us in the ability to go off and hit our guidance for 2024.

Gerry P. Smith: Yes. Thank you everyone for joining the call today. We appreciate it greatly we believe we have a very strong foundation and look at our balance sheet. We're in an outstanding position from a balance sheet perspective, with the project core issues, we talked about having the $100 million in future run rate is a huge value from our low cost business model perspective.

Speaker Change: Value for us and the ability to go off.

Speaker Change: And our guidance for 2024.

Gerry P. Smith: I want to reemphasize that and have an outstanding 2025 type of platform to build growth and build value for the shareholders. Again, we look forward to future calls. We're going to continue to focus on driving growth in the business. As I said, we have blinded sight into additional costs, and we're going to continue to go after that and put ourselves in a position to be able to be the last person standing in this industry. Thanks, everyone, and have a great day!

Speaker Change: Want to reemphasize that.

Speaker Change: Outstanding 2025 type of platform to build growth and build value for the shareholders. So again, we look forward to future calls we're going to continue to focus on driving growth in the business and as I said, we have line of sight into the additional cost we're going to continue to go after that and put ourselves in a position to be able to be the last person standing in this industry. Thanks, everyone.

Speaker Change: Have a great day.

Operator: Thank you for your participation. This does conclude today's call. You may now disconnect.

Speaker Change: Thank you for your participation. This does conclude today's call you may now disconnect.

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