ODP - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Office Depot's First Quarter 2018 Earnings Conference Call. [Operator Instructions]. At the request of Office Depot, today's call is being recorded. I would like to introduce Richard Leland, Vice President, Investor Relations and Treasurer. Mr. begin. now may you Leland,

Richard Leland

CFO. our Good morning, quarter divisional Rich an our us. then is President for and provide Gerry an update including company's thank review and I'm you highlights the quarterly on and noteworthy Vice Leland, Executive Smith, Lower, joining today's here call, for performance our as towards Joe outlook financial will This our and On achievements some with CEO; business, progress on transformation. including as the update well the during results, of and XXXX. Joe Gerry will

Following Joe's Gerry have line the and some closing discussion, we'll open then will your questions. for comments,

and statements, I future Before XXXX. the events the certain inform Exchange could and with are to a company's made the which results subject is safe cause these need to concerning U.S. harbor that Securities of the provisions forward-looking statements Securities forward-looking you and filings Commission. current differ of in are A contained to of Act we expectations detailed uncertainties uncertainties actual Litigation Reform of subject on factors discussion begin, the that comments reflect company's to Private These materially. include this and factors number call

of During business archived presentation Smith. release, slides one Office call now our the website measures performance. the non-GAAP financial well slide comparable Depot's call, the describe our measures there the we'll financial be comments GAAP measures financial on most is earnings investor.officedepot.com. presentation press over CEO, all being website Today's at directly that will reconciliations least turn simulcast use as Gerry year. The at and for as we and the on available some to I'll are non-GAAP today's and as call SEC the filings accompany

Gerry Smith

evidence on the very with the pleased deliver this morning everyone us to good report Thank are phone to the and you to we we starting seeing business the that journey on Rich, Office are you, here a progress be and to transform in with Depot. of tangible positive our morning momentum today. I'm on and

one and our great our As demonstrate. making the of progress to operations, first core know, of our key strengthen we're quarter is as strategy you results pillars

is mindset by Our focusing demand across the the every base customers on reaching and on winning new day customer generation, organization. growing

I'd with these for Office we gain to as reposition first traction, build you expect prior momentum the fundamentally Beginning continue were $X.X continue highlights. As versus we the of to Depot up additional throughout our billion financial quarter some share first year. the X% like to to sales Slide X, strong future. and the initiatives on in year Total quarter

us that base major me Office major OfficeMax Depot a for of acquisition one is transaction. X% year. haven't a of XXXX. Let versus is role milestone The This and a we again. seen and accomplishment, and very back the in CompuCom since we company, say last that acquired played Up this the as part customer combination that of in

referenced positive I XXXX. occurred a as division significant quarter, BSD the that sales earlier efforts generation also has since reported the demand is the However, this time which had first this impact,

that time has the again. BSD grown XXXX. say me It's Let first since

to and in continue a customer now as again are extremely trend the are declines increased also are where than committed proud organization future. the in less We I'm positive Myself encouraged and the the base retail, the we past. this that in the and experienced saw across team trends company. we've growing

omni-channel addition creating strengthening also business company. In operations, on the our powerful to core focused strategy is growth a services

throughout acquisition we the and subscription retail services of was both offerings our in have further transformation the BSD step in our first strategic enhanced and and CompuCom, year. The

highlights in transformation this reporting first continuing report quarter now of As earnings of GAAP with of share the a share financial total will I'm operating XX% share. that result, and pleased and underway. in per to exceeds business. revenue that service and diluted $XX offerings was is enhanced minutes. XXXX, provide it what was nearly total the very service operations just additional some a our product income the few of quarter $X.XX I to across first breakout the quarter a a started per revenue. is in we in This double revenue service details have from our million, company

share. operations was Our continuing with income operating $X.XX per per from share of adjusted $XX million earnings adjusted diluted

income transformation we're that operating our other headwinds, first was expectations quarter. exceed our I'm While due down the investments able to pleased and to year-over-year adjusted very for

were to importantly, flow well able free $XXX also first the our and very expectations. in of generate cash ahead of million we Lastly, quarter,

I and free work and have strengthen year, As Last Joe in to hard capital these our increase are flow. minutes, I'm working quarter, the cash the Rich the the of the focus on more this very of team and discussed management, offset was our working discuss intense management, the starting fruits have driven to see efforts. and will investments teams we to capital a business. few growth largely by than of investments for our these every making the proud which importance in of we're put

as quarter on few confidence adjusted elements full in the of our a pivot key reflect our and now increasing continued in strategic we and I of will in flow outlook momentum. to a income highlights strategy company. are our and cash the As elaborate additional operating of that support free this a we making year our are sales, forecast, the result QX strong performance our

Turning X. to Slide

and And was in we're divisions the total a represents our just can across sales. BXB-focused I of base is with the that and represent establishes shift core of how respect these retain is customer focus flow, the changes from first now businesses importantly, two as CompuCom BSD together, We while experience essentially nearly of offerings very now our by earnings The the of underway redefining the which sales attract our the are business retail strengthening and say similar. again. sales. customers. we're increased high-value a these on XX% flat This that stable. in paramount to the that customer the and period. the it are largest an business company. the find total base cash businesses transformational BSD was division two when build excited the starts XX% company, CompuCom want few quarter, It BXB large the While and percentage upon. customers, Most in grew we

products piece The successful along I'm This as we've quarter. we in have several had regional the major beyond of making office and supply are small milestone we has business process, breakroom, customers strategy steady us, way selling this of to now earlier, past, cleaning said geographies janitorial since additional was where is the that improvements our I success and for the minimal a As OfficeMax is made our first that clearly seeing and of in within we finally the brought the business. this as We're growth very and important in quarters, moved back acquisitions over adjacency and past this been migration pleased presence. disruptions companies BSD well, which completed customer XXXX. time especially in resources including the

customer with Depot as been growing a base across momentum tracking services the The combined base. we see SalesForce.com teams number customer these continued opportunities opportunities two well initiatives both the opportunities have in opportunities referrals trained, and hundreds growth CompuCom customer as we're forward, CompuCom. as cross-selling are in of fully seeing go Office of Looking new customer sales product as tech The database. office ways, the and in well now

base. have and on mentioned captured and structure on place of specifically we've balance cross-selling driving the services business, us I wins of trends investing in continue across service spend. initiating the orders traditionally being existing months business. their consecutive only ramping growth call, quarter. very an many accounts quarter in this a despite is CompuCom as businesses. in focused they're we that quarter positive year. IT ownership, As our first over the And CompuCom year-over-year to already opportunities our well several benefiting continue in we're expect seasonally from incentive to their is the additional represents new are customers the other with seeing projects, of third within Several positioned back customer few large last After slow also QX revenue a

year that we're announced expect from retail pleased this the continued track We into benefits estimated synergies additional the to stores, we transaction. report we services to tech cost I'm deliver of and the when on the very rollout

about about enterprise. year in for demand the have of across these Beyond selling initiatives opportunities with remainder well both we stabilized, have that, as seeing we're next, generation the pleased stability, positioned groups. the us that align we'll divisions two trends the that I'm efforts and beyond. Overall, for optimistic prospects I'm very the across combined their talk and the This growth additional

a Turning Slide X. demand It a targeting higher we're appear. marketing businesses. began beginning where is of mentality towards online, customer organization, more the small- digital customer to more efficiently focus importance we're with and we highlight starting the growth as QX customers, business and trends acquisition. generation shift favorable well that see to towards XXXX effectively want they're a is the ROI and and digital and strategy, I to their medium-sized especially specifically improved we trends on some new customer-first key. of as to are media focused The the the making in throughout in With shift first shopping driving realized delivered very We broadcast traffic engage journey. and

an in and the were in to first new established business capabilities And center that say up grew recently tools, doubled enrollments versus and across acquisition We've again. are me of people of as Let the for rate this to loyalty during in efforts of acquisition. X%, customer continuing traffic XX% capturing function the driving business critical customers new online efficiency. acquisition new analytics streamline quarter, also and traction. the These Realized company QX customer XXXX. in QX are gain we growth improvements excellence

higher not are a from a rate higher were more customers relevant moving more generate but low and digits in ROI response customers, was our with double targeted vehicles, As overall to first result, By being to quarter. there driving up lower able costs. more we only ROI through website, in as our efforts conversion are online we the

We include retention, high-value our while subscription and will a mix optimizing marketing. reach including our of all in to services businesses and message also focus expand continue our media customer to

included remember, If and in we our you the business. of subscription customer our across started during call at focus ink end launch offering a that This subscription-based toner indicated have to stores. of a February, I the our earnings activate new

considering accomplishment we functionality We are began continuing total And year. this to the operating make strong now this just of in incredible beginning area. XXX,XXX, progress the exceed subscriptions at an

We service are make categories streams and revenue strategy. reoccurring to more create part convenient even And our key offering adding for sticky, are additional of a customers. to functionality this an a our

we our can help our channels. proven believe as the by They Finally, agency. are more across marketing WPP recently new our marketing generation cohesive industry firm and well in relevant, campaigns regarded we and that providing announced accelerate demand efforts compelling

award-winning of of looking be services, company Slide store an XX% in retail over are even technology performed other services build our $XXX an the that translate services and services Approximately of Office annual the our services variety The to we will the XXXX. billion On future of greater position become and tech would generated earlier division. in to into most of $X.X revenue this platform mentioned sticky more is CompuCom other important and continue rollout don't increasing revenue are and across What the basis, By divisions. underpinned now in footprint revenue the the Turning array represents revenue. I Depot nearly the by quarter in of are is was annualized relationships X. us for offerings to business and from higher-margin sales. the in half total a people is that related reoccurring, in as million, broader realize our the that with than the network half customers, of preferred we engagement to to that services BSD all ultimately sizes.

offerings part simplicity, have print of additional to that enable marketing, services them we offer we business. we time, run to a into expanding for categorized these to be add their customers and grow services revenue. to Over platform to see this business of are our a administrative workplace services total our suite While expect comprehensive larger even and all percentage technology, of and they and

with of holistic a that using platform channel that when of and of are, to experience, a leverages engage or offering. where one-time sales them. shopping need customers customers at it; websites, range a process common with this a needs. delivering the our I meet with to our recently street in that or our with number a is providing subscription engage to delivers of during the third, services customers and to our take they We've how these businesses with first, our choose MicroCorp where and introduced power We that an information firmly to us. strategy the and, new their stores, them and office; partnership or customer comprehensive Our small- to medium-sized capabilities enable retail approach need on could our is feet our the them stores a to force a second, we meeting mirror do behavior believe needs platform chain includes true including even under ongoing by businesses own. when on products conveniently the This and for wherever regardless either are them want to and dedicated omni-channel they supply purchase and they provide larger interact consistent online, also the make realize of additional provide searching customer

long-term and way will to services results. strategy details Joe associates more to value. Lower, Joe? both benefits We as new team omni-channel turn who Depot management create CFO, customers energized our Our the I power by and a see tremendous over the of Office are shareholders provide call our can now this for and for our the on platform. business financial

Joseph Lower

an on from comments today I'm with happy Thank to mind XXXX everyone. total for only, of you you, operations performance the in results a results and on operations. not adjusted be this basis. include to to last primarily both My in provided year company from Also, the for keep Gerry, of continuing Depot the division quarter here our CompuCom basis have and morning, first our we address GAAP continuing financials prior basis good quarter, that our as part Similar quarter the discuss will the period. results. was the business adjusted Office first

cost services going visibility provides into mentioned earlier, forward continue Gerry platform. products financial report sold. both and sales we of hope disclosure enhanced goods business As and have between for our as We insight and our to the progress to we this grow and breakdown services the greater expand our business

turn us to Let Slide X.

measures XXXX. Here in the for to positive the billion the driven Solutions compared for increase experienced addition performance we last the as some same sales period $X.XX totaled company was of by highlighted have $X.XX year. quarter growth the sales first first of Total key CompuCom's in quarter The X% results well billion for quarter in first as of our XXXX Division. Business

company's total XX% contributes the of With service-related now sales. over net the revenue total CompuCom, addition of to

seeing percentage larger our We our sales grow mix of of larger business a are going and portion very this and focused forward. become total on

income quarter operating in compared GAAP $XXX to decreased the million prior million $XX First year. to

quarter, of the During operating expenses costs to restructuring $XX integration, incurred related other company the million acquisition-related merger activities. and the

was the these our from and sustainable negative XXXX $XXX to items, higher in $XX adjusted streams. other primarily the sales marketing, generation first develop quarter the in flow-through operating enterprise as operating Excluding in income The Division revenue adjusted investments demand the and improve income to in period. impact was and lower year decline million across the advertising we growth-related Retail compared more prior million of due

million to in quarter margins. and of a plans. to impact these the XXXX perceive have XXXX. and associated first in of $X $X change the out a appreciate, point in This recognition to accounting benefit first to related As XXXX generation negative presentation due revenue years in also related of the want starting impact the on quarter expense investments both of pension standards short-term that million negative expense the defined you include I resulted can often in of the the

throughout impacts well. this We to year as expect realized be similar

impact $X.XX $XX share continuing year. items earlier, $X.XX Excluding after-tax income million or compared adjusted $XX the million the share in per per first net from was or prior the operations quarter from to mentioned

cash of cash prior first The operating increase of and Operating quarter million of in to year $XXX year-over-year costs primarily strong very million This due for million. was approximately capital in as the merger acquisition compensation a costs, was flow Finally, of million $XXX improved included for $XX million well continued in and activities in continuing $X quarter lower reductions OfficeMax $XX improvements, during as XXXX, performance the was vendor working expenses. restructuring over $XX payouts. the was integrated-related and flow reported by provided increase terms significant operations from cash the million payment period. largely incentive the outflows inventory quarter, and

which to $X.X for as in the primarily sales year. and a sales quarterly approximately the improvement the Business our increase initiatives and, the channel. to Let's highlights Division, and year sales of in new our the an mentioned from growth. Reported earlier, Solutions to inorganically, our in now customers, adjacency BSD. were compared turn or the BSD sales is billion, categories, Gerry driven positive by improvement performance both contract X% division of BSD organically e-commerce acquisition basis was sequential Slide XXX This over quarter growth of prior of prior returns The points XX,

quarter continues the due $XX operating new adjacencies lower more sales quarter. and against furniture compared were in expanding increased reported year-over-year with to and the OfficeMax volumes XXXX from the of our was product legacy performance focused on our to categories. division gain first in versus prior double of cleaning was Office category traditional our by the mid-single-digit primarily as sales conversion million the year, customer our at period. this and gains the migrations year supplies These in the to BSD category, completed BSD efforts costs which Looking The these technology slight associated in traction. digits business $XX prior breakroom Depot income million system, decline to platform The in

the marketing higher part to performance. strategy, year increased earlier SG&A These the company's initiatives. the the overshadowed success the cost division lowering online generation year-over-year the demand to of higher quarter which of mentioned focused contributed in addition, through reduction investments as prior favorably investments realized In sales compared positive

XX. for Slide in lower Division which compared to months, the the XX The negative year to decreased Turning $XX and to sales adoption versus in occurred sales by transactions to partly $X.X recognition driven impact Reported prior due million, billion and Retail last the order first decline in was quarter the planned the a X% from Comparable year within the approximately $X.X closures, were values. fewer period. billion XXXX. store new revenue standard primarily the average resulting sales revenue of of period, in prior

and negative prior and year-over-year more This Retail in driven sales, and and investments, Comparable over payroll make was to digits remained our category, to year the compared flat The by in the which with furniture as Looking including at income lower sales reported other supplies offset double store the and Division and products technology, efforts year, and expenses cleaning quarter reductions. impact XXXX increased category. cost breakroom our flow-through from the these in copy year $XX our more operating marketing our to of customers. win million the business print decline by first than Sales categories. $XXX period. lower retail performance in of accessible the advertising higher with product traditional prior closures of million declined prior continues more primarily

store to the stores, closed the total X,XXX During of count quarter we XXXX, bringing two stores in Retail Division. first our

the of previously closure strategy. announced, retaining footprint program retail our As store we omni-channel a have critical part as slowed remains our

division. We Slide the performance the at the Looking XX. of CompuCom highlight

this results the in year reported Depot in CompuCom Office period. business mentioned not of of prior as was include earlier, I financials for XXXX the only, first As the part quarter

Office year-over-year adjusted quarter XXXX first quarter rate year to restructuring continued to The roughly into momentum the of flat only. sales perspective first historical of business, the However, results account the historical within the this were sales again. the treatment Reported XXXX The Year the presented more purposes unaudited, prior to into greater take SMB sales reporting million, or for we align acquisition closely in of performance growth order and made for medium-sized business realized costs volumes results Depot's strong reference historical with division format. the in and QX experienced to CompuCom for provide New adjustments have business, period. the high with from small- market, into the $XXX the

initiatives, and in SMB largely for technicians consecutive expenses the initiatives first a This of policies. as As acquisition amortization operating orders. $X the earlier, investments The historical income the was targeted slightly growth down this administrative in offset and of division as of from year-over-year cost-reduction general Gerry third mentioned the quarter to expense efficiencies. first quarter market related to reported growth million an quarter XXXX. selling, by accounting result adjusted the included administrative support was of and results lower CompuCom incremental well service XXXX, to and of the performance of increase in alignment QX including depreciation as

and facility. $XXX at was with the liquidity debt of Total We million billion, approximately of the under notes. of $XXX the million lending ended to balance flow $X.X in consisting sheet XXXX availability operations $X in cash the debt and to of Slide Turning the related the of first highlights XX. nonrecourse cash billion, end excluding timber of on $XXX our continuing quarter asset-based total million about approximately quarter

activities by provided cash was of operations quarter $XXX operating For the first million. continuing of XXXX,

increase investments million were $X approximately flow in costs quarter costs. merger for of earlier, strengthen expenditures, cash and included as $XX primarily $XX million to expenditures $XX improvements. of integration-related continued operations commitment capital well due In in As future in year-over-year corporate highlighted our to Capital continue during reflected and million capital core million quarter. of free the the outflows continuing the XXXX. working we The to costs, was robust the our restructuring flow acquisition quarter growth. million I cash in Operating generated invest as from OfficeMax in and first $XXX

the shareholders XX XXXX, per share the $X.XXX during for March total. to $XX addition, a cash on In approximately million of company quarterly of first paid quarter dividend in

We February, of schedule. also in our Australia million consistent repaid announced and successfully late last to our $XX sale week previously closed company our on of call sale loan in the sale the with businesses quarter, Zealand. outstanding Furthermore, of business as provide incremental the New completed will repayment term of approximately the both million continuing our with last on The $XXX business cash we of in operations.

company now us. transactions With the plan, growth and can transformational completed divestiture international on fully focus two in opportunities the now these our sharpen of finalized, front the has

at the XX, we Looking key updated Slide for on company's year outlook XXXX. provide the financial measures full

increasing exceeded favorable our discussed year the the full increasing achieved, of outlook XXXX is we by is Adjusted the $XX cash follows. million. sales quarter income be $XX.X $XXX approximately to the is by $XX And to results be billion. free by $XXX approximately flow for to this The now be Due $XXX outlook increasing to As expectations. million for throughout operating year million first results million. approximately morning, its million company have increasing is as

feel we strong our time. momentum outlook this the With and full performance initiatives, we it's seeing to raise QX appropriate growth key at with year the are our

believe journey, we the we are taking are the for to this position necessary long-term transformational on teams focused growth. sustainable and actions company Our

our want be Office York City. Depot Finally, Oriental live the I remind investor.officedepot.com. New Mandarin Relations webcast at Investor at week to will the A Hotel be on Day also XXXX Investor on we will hosting you, website May next available in XX

this leadership very of meet to the that, you demand, turn are ways strategy, in-depth We are cash about closing the to are generating look higher back opportunity team for look the the With excited for over providing with his We event, hope forward more having there. deploying our Gerry into generating. Gerry? I'll many and a see to we you. operations comments. call and we to I our significant improving Gerry's

Gerry Smith

in of number strategy and at performance an your together extremely across to my New year our we our with to of that I'm call get realizing and are subscription Investor I'm XXXX divisions expectations the our increasing the the operator, have BSD strategy, the of future strategy free leadership time and in and questions. turn we encouraged customers; the and long-term team and driving with our for cash are the and aggressive our that in stability the seeing now much and we important quarter, strong generation. we growth; believe we service pleased generation significant that improvements Overall, and benefiting outlook the employing recognize improvements channels, place. we transition first more week by Joe. look of City. including CompuCom capital traffic enterprise, all York at continue of driving Thanks, the offerings; active is I the online spending are are demand the in and the Office business the positive growth We Depot, continued trends of we initiatives upcoming flow in is progress rest next working on long-term Day making I take forward back to over when will can right

Operator

Instructions]. [Operator

of the question line will come from first Fassler. Matt Our

Matthew Fassler

primarily questions BSD. to My relate

this First acquisitions some to BSD about acquired of were you - How significant all, BSD can driving the core revenues you numbers. the quarter? mentioned talk

Gerry Smith

some speed actually business. They're to that geographies levels X% can retentive the because very as well. customer there's up - extremely believe we're Important, things, that we as our spaces core we before, that perspective acquisitions up a important, of pivoting and some of a contribution and they're Matt. small start of in we it's It's overall buy day-to-day happy a a relationships sticky selling Obviously, to to just combination just seen having market do we've the from is for speed it's second, approach other It's in doing in some to services cash also especially here. lot a that I acquisitions not say we think of on online us I'll I a density the lot want very acquisitions, a we've that these the these don't and with e-commerce strategy to build in. touch of on customer a some Well, BSD of done have combination the for a to business growth. very, lot versus in. make contract and basis like the roll but progress the business. we the of work is selling core highest of services a of And effective a well. relationship products, and that says

contribution, And I'm as And make does the really X it that we've BSD improvement that to led across whole X but continue forward I'm now. going and very quarters. it's well. combination to we'll performance pleased for confident the do team done sequential going this have last great substantial very said we've it this, we're to And piece. to a do we've So of that that a seen - it

Matthew Fassler

acquired about talk much came from To the businesses can how you BSD? follow of the up on growth the numbers, in

Joseph Lower

out the specifically breaking not acquisitions. we're Matt,

really we As are is contributor a it's strongest contributor. The - from of initiatives e-commerce mentioned, Gerry modest coming they the have.

Matthew Fassler

what in core it you about Can in organic growth what the did XQ XQ? did rate talk versus

Joseph Lower

contributed it providing not a was year-over-year. but down I core pieces, slightly. we've the we're not it acquisitions e-commerce the a and We're The down kind - not to contributed positive of slightly. of for net sure slightly the I'm was slightly, - breaking it down X% mean,

Gerry Smith

CompuCom be And it's It's smaller business. smaller down in couple is our overall job. to some we growing, but to for the this. e-commerce you successful of tremendous - we we the obviously, it's And But some want add our I'll made our not have marketplaces, - it's then improvement. We've and replicate everything acquisitions color. of And the you team doing - a slightly. a piece, seen strategy. very can XX% it's then of think continue

long term. going we're valuable strategy to onto very think we and core be So something, the strengthening us is of for our

Matthew Fassler

or on has business against, then but a bids, I that of - CompuCom. finding for a some And bit private and given of to really think number competitive your is that new kind given enterprise, competitions Staples obviously obviously more example, to restrained? you've more changes perhaps A what changes pending is focusing the related go for now be that obviously. up about - of space, Amazon doing in some you needs smaller understand. as you're out front, realized piece you of a bit are narrower I field a wholesale now got, that, perhaps a wins, this BSD

Gerry Smith

Well, I day. obviously, we think, compete every

don't I we well. what like - job comment do try have to We is do our here on sure make but we competitors, to

cost we the right sure supply right making chain. breadth, right have the it's obviously, So position, the product

seeing going these didn't Steve of have as as a that see the top chain rate a think in we're supply we're the more, in I'm it's you chain. team as execution we XX momentum. love is markets very win but the tremendous of the key fact But Our combination We'll We'd the on e-commerce that love supply as, our - I we again, that the that New we density strategy, in York. of business. pleased to to and the and next found well well week expand continue And we're BSD some before. with success

of very, at. very we're we're So positive where

Operator

next Our the of Michael comes Lasser. question from line

Atul Maheswari

Company Maheswari Atul in name Michael is This filling UBS. is for Lasser,

on have BSD So question I also your a division.

up and digits; cleaning growing digits. So you single double furniture low highlighted breakroom,

were So grew that outside these quarter? two of there other any categories this

Gerry Smith

the of commented largest really the on two, I kind we here. mean, are two largest that Those

is assume that of growth two. the those should out majority from you categories the of the coming So

Atul Maheswari

please ahead. And yes, - go how big

Joseph Lower

we're are in important the ability to as those Austin, omni-channel because have reality to that putting We're can do office. approach capabilities to approach more we're very we well for virtual sell the can sellers flagship design store your taking, - in our furniture. And more BSD using you and our that

and our both store of brought fantastic for some at We've as a in - our SKUs as breakroom capabilities to breakroom, assortment We us. teams. We've in have that well job deliver and cleaning and with our in Wayne's BSD supply and brought a experience, leader years cleaning as done great we've expertise. and brought well online the expanded within chain as added

think of so pulled. And different I many it's combination a levers we've

Mark team to the and a merchandising Perrotti his and done continue I the job so think - have we're great furniture And in going side.

sell we've for to of categories. products Investor sell of our on to to services number said And active think which just that sell think of base, a is we're products, a seeing this sell is breakroom, We've type workplace got other going services. areas So the lot we're again, pieces down to next we services that also growth. think these there's is as narrow asset do double and it. base piece And BSD We're and large of go the not not progress. done detail do a too. but and vision we're We ignoring of we'll furniture, at customer Again, going we're their tremendous to going driving a tech leverage we're but customer other strength, The number and week other well. making we Day, to And and we cleaning huge again. there's active is into company down. We've can the that products it a it. going categories to

Atul Maheswari

follow-up. And and of and a BSD? if is big may ask a furniture total as cleaning percentage I How the breakroom

Gerry Smith

not to disclose going you listening - Knowing to to would that I the encourage Day. on it's our we're obviously come probably competitors But phone, that. are Investor

business partners We lot to company. lot paper. We sell toner. a sell and information. things sell breakroom. - We our great And cleaning sell of plus a it We ink is for key business product sell and services as furniture. and We're We of us. other and You'll see well. services, but key a a category consumers

Atul Maheswari

Okay.

few than less So growing accelerate did the declined you've, division, of we times of sequential and cleaning were some that that past but for previous assume Or the the online, they the mentioned than because a couple improvement your more quarters? breakroom, the that, categories, categories, and like of the there furniture the some these which should also quarters? declined, was core course, in improvement of

Gerry Smith

amplify I our We're They'd analog to which in at that want I we've I really is traffic. haven't what using We're have excellence, generation demand marketing come job. team her moving and dramatic in, we're the investing marketing in our emphasize, piece, activities. that touched I on we - marketing touched done and piece in marketing. and we're think center And improvements from and all call driving DeVard Jerri an and that my on digital had analog, looking looking our mediums. a vehicles ROI analytic at an tremendous we're of are

so And start at starts it of the the funnel. really

the tremendous traffic. So our our that in with together growth marketing, Those, to have improving we're and leading BSD. a job merchandising That is of improvement channels, end team seeing her great tremendous our Janet done, done assortment coupled by driving and improvements of generation execution products. demand who've the with a in you're

all - it combination last we're well. together. categories core, improvements that And all And and historically. it's the confident the year. our generation as have pieces they drives our helping that for on Demand our saw strengthening I pieces channels And we continue of brought fantastic customer are coming generation. the from sellers the our great will positive, strategy, where And over three coming these is been successful. focused we're see all up, cash strategy's you that am we're all great year, the and - our numbers all were which a be working. this So merchandising, of And generation, of center we've driving, together. we'll now supply We've these chain,

Operator

Instructions]. [Operator

line Our Suzuki. next question will come from the Elizabeth of

Elizabeth Suzuki

of Lynch. It's America Merrill Bank

in you corporate that are year margin compared to is that how what just compared to down category kind category, a furniture the you're in the Because And doubling the So that average? on you of gross seeing mentioned ago? category. margin

So for implications gross margin. just what the curious I'm would be

Gerry Smith

discuss Again, for say we're I cannot we a important we perspective. because think going we're to comfortable where - and competitive us. growth we found just will an this - with to we're category continue at, from

think, finding the great But the A United largest merchandising we team of in business us. a done for of are know seller that. job lot We the chairs don't people products again, of has States. great

of highlight that We demand see breakroom you'll we're the focus a the we at to fact Because relationship But exclusives. that and relationship, we it. going products great we're key to partnerships been go have margins. I adjacencies. put to give disclose and It's lot for again We that's some us a our make generation, - online traffic think suppliers sure going on execute we getting growing that online, other our across to obviously, this generation. been want to order growing have new then it's going - store. our to in cleaning again, has to in back of continue customers. not and key. there's to channels And And execute using that demand furniture, categories. the - our some to up lot that using really, mean, Investor with vehicle the the Day, think driver services a I pick of But we want growing and have

Joseph Lower

that these confidence us desire grow our add assume should you this only I'd done that But categories profitably. be is, to reflects for the can

Gerry Smith

brought wouldn't we think our Or didn't do guidance up we that. can have if we

Elizabeth Suzuki

increased little talk just the growth your versus what can think competitive office Okay, company being services, being great. technology at advantage you That the you smart answers is? And focus forefront the potential on just the market about of looks the of my and given what question. now like the and profile, bit a

Gerry Smith

at it's with our stores, our I job. excited Jan starting think Well, Moffitt, roll of the and smart out and Stone have home, lot I growth our Kevin And actually with a and good office CompuCom some building if opportunity. a retail is stores to as we're smart offerings done a were look retail We're think smart office But moved well think team completely office. you just team that huge a our world-class in online. into leading. we Dan partners his as and smart

go. could and this capability a building demonstrating did to They're where than side most technology and faster, the really any builds. build able So CompuCom historical pilot, team cheaper the Dan's the as with

Things sensor For an done from device example, it's perspective. of all Internet

You tech from have done Everything's a cetera. switches, no et light perspective.

future Now us, where in of that demonstration saving time. green can in to making is because the costs, go more think saving important a it effective we is people energy,

huge Depot we CompuCom market the It a go automatically pivot saves it's walk as on small this but on a right key the well into see forward. demonstrated category. customer's it. screen. company a it's You of is We conference for presentation time. going to us broader be focus And think I for going room, as improved up - Office a can the to We're think we've industry emphasis growth goes very as, now, your traditional our

We have a it. building that shows

And so we've merchandised it.

to effectively? I'm do sell our so teams more furniture how to on and our focused teams furniture, sell And our How selling retail see it merchant technology not and we VR use all BSD to more you're use effectively. Because our teams but going AR, just do and products categories. not are and growth this we've it a we And These a by can demonstrated, we just these supply new sell company think true categories. have that not we're excited - real anymore, we demonstrates that building an awesome. office services And and why. that to we're product service company

Elizabeth Suzuki

week. you I'll All see next Great. right.

Gerry Smith

to it. forward look I Excellent.

Operator

[Operator Instructions].

Gerry Smith

Any other questions?

Operator

back will for remarks. for today. over now to session Gerry Q&A That closing conclude call turn any the Smith will I the

Gerry Smith

look Day. team. thank the We've you. the I seeing joining great New I York with Thank to have to on all especially call, next great everyone, I forward day. week Investor thank quarter. the to I progress want a want this everyone for a our my on conference you on look morning. had And in call next you again quarterly to and forward updating team

Operator

participation. your This for you the call. concludes Thank

may You disconnect. now

The ODP Corporation (ODP) 9 May 182018 Q1 Earnings call transcript