Office Depot, Inc. (NASDAQ:ODP) Q1 2019 Earnings Conference Call Transcript

May 08, 2019 • 09:00 am ET

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Office Depot, Inc. (NASDAQ:ODP) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Office Depot's First Quarter 2019 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 Office Depot, today's call is being recorded. I would like to introduce Tim Perrott, Vice President, Investor Relations. Mr. Perrott, you may now begin.

Executive
Tim Perrott

Good morning and thank you for joining us for Office Depot's first quarter 2019 earnings conference call. This is Tim Perrott and I'm here with Gerry Smith, our CEO; and Joe Lower, our Executive Vice President and CFO. On today's call Gerry will provide an update on the business including highlights of some of the noteworthy achievements for the quarter and progress towards our transformation, including steps we are taking to improve our operating performance. Joe will then review the Company's financial results for Q1, including our divisional performance as well as additional details of our business acceleration program and updated guidance for 2019. Following Joe's comments, Gerry will have some closing remarks and then we will open up the line for your questions.

Before we begin, I need to inform you that certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current expectations concerning future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially.

A detailed discussion of these factors and uncertainties is contained in the Company's filings with the US Securities and Exchange Commission. During the call we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, presentation slides that accompanies 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.officedepot.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 Office Depot's CEO, Gerry Smith.

Executive
Gerry P. Smith

Thank you, Tim, and good morning to everyone on the call today. It's a pleasure to be with you discuss our performance for the first quarter of 2019. We released our first quarter results earlier this morning which were consistent with the pre-announcement we issued on April 4th. As highlighted on slide 4, our performance in the first quarter of 2019 clearly did not meet expectations. Consolidated revenue was down 2% and operating margins were lower than we anticipated. The primary driver of our underperformance in the quarter was related to the poor result at CompuCom which fell short of expectations primarily due to lower project-related revenue with existing accounts.

Separately, rising production costs for paper and paper-related products also had a negative impact on margins in our BSD division. We have initiated action plans to address both of