ODP - NASDAQ

Good morning, and thank you for joining us for The ODP Corporation's Third Quarter 2022 Earnings Conference Call and Investor Day meeting. This is Tim Perrott. I'm here with Gerry Smith, our CEO; Anthony Scaglione, our Executive Vice President, and CFO; as well as several members of Gerry's executive team. We will begin our presentation this morning with an overview of our third quarter 2022 results and accomplishments. Gerry will provide an update on the business, focusing much of his commentary on our accomplishments in the quarter, including our operational performance and the progress we have made on all of our initiatives to drive shareholder value. After Gerry's commentary, Anthony will then review the company's financial results, including highlights of our divisional performance. Following this review, we will begin our Virtual Investor Day Meeting, highlighting our realigned four business unit structure, and their respective strategies, along with our capital allocation plans and long-term performance targets. This program will be followed by a live question-and-answer session with our management team that you will hear from at Investor Day, answering your questions, submitted via our online portal provided when you signed up to attend the Investor Day meeting. We encourage you to submit your questions during each section of the presentation, and get in the queue as early as possible to help ensure that we get to your questions in a timely manner. We will endeavor to address as many questions as possible during the Q&A session. Before we begin our program, I need to inform you that certain comments made on this call and in our presentation today may include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company's current expectations concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in the company's filings with the U.S. Securities and Exchange Commission. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings 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 Web site at investor.theodpcorp.com. Today's call and slide presentation is being simulcast on our Web site and will be archived there for at least one year. I will now turn the call over to Gerry Smith. Gerry?

Thank you, Tim. Good morning to everyone joining our call today. We appreciate you joining us this morning. We are really excited to be here with you today not only to discuss the results and accomplishments for the third quarter but also to host our 2022 Investor Day meeting, which will immediately follow this webcast. During our virtual Investor Day event mean members of my executive team will provide an in-depth review of our realigned business unit structure and respective growth strategies, and highlight our capital allocation plans, long-range targets, and our strategy to deliver sustainable shareholder value. Our entire management team, in fact, I would say our entire company is fired up about this event and the path we've set for the future. But before we get to this, I want to provide a brief review of our accomplishments and results for the third quarter. This quarter we will keep our commentary light given the Investor Day will provide much more detail on each business unit performance, and the changes we have made to our operating structure on a go-forward basis. As we highlight our performance, I'd like to mention that, beginning this quarter we are reporting results for each of our four business units. Anthony will provide more information on the moving parts later in the presentation. Now turning to our accomplishments for the third quarter, beginning on slide four, first and foremost, in our continued effort and commitment to driving shareholder value, we repurchased approximately $70 million of shares over the period post the conclusion of the tender offer, and happy to announce that today, our Board of Directors has approved a new $1 billion buyback authorization that we will address further at Investor Day. Also, we are encouraged by our performance throughout the year and we are reaffirming our guidance for full year 2022. Let me say it again. We are reaffirming guidance for 2022. Anthony will have more details on this later in the call. I'd also like to briefly highlight our new four BU operating structure as shown on Slide 5. I'm happy to report that we've completed the realignment of our operating structure that supports our new four business unit model. These four BUs will work seamlessly together to allow us to pursue new growth opportunities to improve asset utilization and to more fully reflect the power of our businesses and unlock shareholder value. Everything that we've done over the past few years has led us to this point in our journey. It is a culmination of a significant amount of work by our team, and it is a reflection of the power of the assets that we control. The flexibility of our platform and the growing demand from our customers, from the services, and products we provide. We will cover much more in our Investor Day presentation. However, I would like to briefly highlight these business units. First up is ODP Business Solutions. This is essentially our enterprise contract business from our prior BSD segment. This division serves, small, medium, and enterprise-level companies with both core business supplies as well as other categories including cleaning and breakroom, jan/san, tech, workspaces and copy and print services. We have built a very strong customer base and this business continues to exhibit strong growth and is clearly on the path to expand its margins back to and beyond pre-COVID levels. This is role of the portfolio to expand margins, drive growth, and cash flow. Next up is Office Depot, which for the first time is a true omni-channel consumer business as we have combined our retail store footprint with our e-commerce platform that was previously included in our BSD business segment. Office Depot continued to be a strong generator of cash flow for the business and now as an omni-channel business, we see continued stabilization going forward. Next is Veyer, which is our supply chain and logistics company that we have developed for more than three decades and has been previously embedded as a primary support cost function for our business. We have separated Veyer as its own operating segment leveraging its world-class capabilities to bring a strong value proposition to both internal and external customers. Veyer's capabilities include nationwide coverage, next delivery options, desktop delivery and can provide services such as just-in-time logistics as well as leverages proprietary tools like flow path analytics, provide greater insight to drive efficiencies across our network. These are all capabilities that only a few supply chain operators possess today. Veyer will serve its internal clients, ODP Business Solutions, and Office Depot, through established arm's length commercial agreements and continue to utilize excess capacity to serve external third parties with lessened truckload and backhaul services. Over time, Veyer will expand its capabilities to full logistics and 3PL services. We are very excited about Veyer's path, and we expect it will help us more fully utilize our assets and generate strong EBITDA contribution in the future. And finally, Varis; Varis is a transformative digitally native B2B procurement platform business that we've been creating over the last couple of years. Varis is focused on creating a more modern experience for B2B buyers and suppliers, Varis provides a unique experience for its customers, and help solve many of the pain points that exist in the market today. It allows buyers to reduce costs, control spend, improved compliance, automate payment options, and gain greater spend visibility. For suppliers it reduces customer acquisition costs, improves ability to predict and plan for demand, and expands channels to reach more customers. You'll hear much more about our progress at Varis during our Investor Day meeting including how this unique platform creates a different channel opportunity for growth, supports our B2B distribution business, increased a highly scalable digital platform for the future. So, overall, we're excited about how this new four BU structure unlocks our potential that allows us to provide greater transparency into the value of our businesses. Now turning to the third quarter performance highlights as shown on slide six, our team again rose to the challenge and delivered solid operating performance in the third quarter despite the continued industry-wide challenges related to inflation and supply chain constraints. Our revenue performance was in line with last year as return to the office trends helped drive stronger top-line performance at ODP Business Solutions, which was offset by lower revenue in our Office Depot business unit. Office Depot's revenues were lower related to fewer stores and service relative to last year, as well as lower comparable traffic trends as COVID conditions continue to recover and as we experienced softer demand during a highly competitive back-to-school season. Our low-cost model approach combined with our flexible pricing and distribution strategies, hope to drive solid operating results despite the continued challenging backdrop in the quarter. That said, operating income was lower than last year largely related to the revenue mix between ODP Business Solutions and Office Depot and as we hurdle the peak year of investment for Varis. As Varis continues to accelerate, we expect this impact to decelerate on a comparable basis. Also in the quarter, Veyer continue to provide strong support for its internal and external customers and Varis made solid progress toward launching platform on a wider scale. Additionally, we continue to be focused on enhancing shareholder value and bought back shares during the quarter buying back nearly 2 million shares during the quarter. So, overall, we are encouraged by our performance this year and we are reaffirming our full year guidance for 2022. Under our four BU structure, we remain well-positioned with a flexible business model and a low-cost approach as we close out the year. We're also excited about the $1 billion share repurchase plan that we put in place and from an operating perspective, I'm pleased to see the progress we are making at ODP Business Solutions, driving strong top-line results and significantly improving margins. With that, I will now turn the call over to Anthony Scaglione, our CFO for a more detailed review of our financial results.

Thank you, Gerry, and good morning, everyone. I'm happy to be here today to discuss our financial results for the third quarter of 2022 and excited about our Investor Day meeting that follows this presentation. Before I begin, I'd like to say how proud I am of our entire team, for remaining focused and continuing to drive solid results against a challenging industry backdrop and in light of all the work to prepare and realign our operations under our four BU strategy. I would like to recognize our team for all the hard work in getting us into a position to report our results under the four business unit structure. We truly have a world-class team and thank you again. For the quarter, our entire team rose to meet the continued macroeconomic challenges. While inflation remains at its highest level in over 40 years and supply chain challenges persist, we continue to deliver upon our low-cost model approach and utilize the strength of our various routes to market to help drive results. Now turning to the highlights of our financial results as shown on slide eight, consistent with previous quarters, we have provided our results on both a GAAP and adjusted basis. We generated total revenue of over $2 billion in the third quarter, flat with Q3 of last year. This was an impressive result as we had 75 fewer stores in service compared to the same period last year. Our top line results were driven by strong revenue growth at ODP Business Solutions as return-to-office trends continued to improve, offset by lower revenue at Office Depot, driven by fewer stores in service and lower traffic. We generated stronger sales at ODP Business Solutions in both core supplies and in our adjacency categories, offset by lower sales in omni-channel consumer business in certain categories delivered high demand during the pandemic last year as well as lower back-to-school volumes. GAAP operating income in the quarter was $84 million, down from $104 million last year. Lower operating income relative to last year is largely related to revenue mix between ODP Business Solutions and Office Depot along with higher year-on-year investment in Varis. We are incurring our peak year of gross expense related to Varis this year as we are nearing the full launch of this innovative platform. As Gerry stated earlier, as we fully launch the platform, we expect to rapidly grow and scale the business generating strong revenue growth with a defined path to cash flow breakeven. Included in operating income was $11 million of charges, consisting of $8 million in costs largely related to our realignment activities and facilitating our ability to stand up our B2C, B2B, and Veyer routes to market. The remaining $3 million is associated with non-cash asset impairment charges primarily related to the company's retail store locations. Excluding these and other items, our adjusted operating income for the quarter was $95 million compared to $122 million in Q3 of last year. This includes $28 million of unallocated and other expenses in the third quarter of 2022. Our adjusted EBITDA was $131 million for the quarter compared to $162 million in last year's third quarter. This includes adjusted depreciation and amortization expense of $32 million and $36 million in the third quarters of 2022 and 2021 respectively. Excluding the after-tax impact for the items mentioned earlier, adjusted net income for the third quarter was $73 million or $1.48 per diluted share compared to adjusted net income of $96 million or $1.76 per diluted share in the prior year period. Turning to cash flow, operating cash flow in the quarter was $163 million which included $22 million of restructuring and other spend. This result was up compared to operating cash flow of $121 million last year. The year-over-year change in operating cash flow, largely related to changes in working capital, including disciplined inventory management. A good example of this was our approach to building inventory in advance of the back-to-school season. As we analyze the market environment in inventory levels industry-wide, we expected this back-to-school season to be more competitive and more promotional in nature. Given this, we took a highly disciplined approach to our inventory build with levels that we expect it to be appropriate given this environment. And as you heard from Gerry, the market for back-to-school was in fact highly competitive and somewhat softer in terms of demand versus last year and our expectations. Capital expenditures in the quarter were $25 million compared to $19 million in the prior-year period, reflecting targeted growth investments in our digital transformation, supply chain, and e-commerce. Adjusting for cash charges associated with our realignment and restructuring plans in the quarter of approximately $22 million, adjusted free cash flow in the quarter was $160 million. Now turning to slide nine, before I begin my discussion of our business unit performance, I would like to highlight some of the segment reporting changes that we have implemented this quarter aligned with our four BU structure. Beginning this quarter, we're reporting on a four business unit segment structure. As shown these segments are ODP Business Solutions, our B2B distribution business, Office Depot our omni-channel consumer business, Veyer, our supply chain, and procurement business, and Varis our digital platform procurement business. One of the primary changes, I would highlight is our e-commerce business. OfficeDepot.com, which was previously reflected in our BSD segment, will now be reflected in our consumer business Office Depot. ODP Business Solutions is now a pure play B2B enterprise distribution business serving small, medium, and enterprise-level companies. ODP Business Solution includes a contract business of the former BSD division as well as its acquired regional distribution businesses or the Federation companies and Grand & Toy in Canada. And Veyer, which was previously had its operations embedded and allocated to both our retail and BSD segments is now its own segment as they continue to support the supply chain needs of our consumer and B2B business and pursue new third-party relationships to further optimize their assets and capabilities. We are excited about the path for Veyer generating EBITDA in the near term from utilizing excess capacity and positioning this business for long-term 3PL services in the future. The work we have done to report under our four BU structure was a heavy lift. And I would like again to thank our entire team for the hard work and rising up to meet this challenge. We are excited to share more during our Investor Day meeting in just a few minutes. Now turning to our business unit performance starting with ODP Business Solutions as shown on slide 10, ODP Business Solutions continues to deliver improving results as the return-to-office trends gain further traction generating revenue of just over $1 billion in Q3, up 9% in the quarter relative to Q3 of last year. Our core contract business, our federation companies, and our Grand & Toy business in Canada all delivered strong year-over-year growth. As a reminder, our federation companies are the regional tuck-in acquisitions we have executed upon over the past few years, expanding our distribution reach in previously underserved markets. You will hear more about this during our Investor Day presentation. From product and services standpoint, we saw stronger demand across the board for core supplies as well as for our adjacency categories including jan/san, cleaning and breakroom, workspaces, tech, and copy and print services. ODP Business Solutions operating performance continued to improve significantly over last year, generating an operating income of $48 million in the quarter, up 41% over last year. This represented a 100 basis point increase as a percentage of sales. Strong sales of core supplies and efficient operations and pricing discipline helped to mitigate inflationary pressures and positioned us to drive these strong results. I would add that the work we started at the beginning of the year utilizing our data-driven approach performing line-level reviews of customer contracts is helping us identify margin opportunities in this business, meeting customer demands in the most efficient way. Now turning to our consumer division results as shown on slide 11, our Office Depot Consumer Division again drove solid operating results in the third quarter, continuing to provide a strong value proposition to our home office, education, consumer, and small business customers. Reported revenue in the quarter was down 8% to $1.1 billion, driven partially by 75 fewer retail stores in service this year versus last year, related to planned store closures as well as lower store traffic. We closed 11 stores in the quarter, ending the quarter with approximately 1,000 stores in service. Lower sales for product categories previously in high demand during the pandemic contributed to lower year-over-year revenues. A good example of this is cleaning products as well as tech. Additionally demand in our back-to-school categories was slightly lower given the aforementioned more intense competitive environment this year. Partially offsetting lower demand and same-store sales traffic in the quarter was higher conversion rates and average order volumes, leading to strong increases in sales per shopper. We saw continued strong demand for our copy and print services as well as in mail and shipping services, offset by lower demand in core categories and cleaning. We are happy to report that our omni-channel presence on a same-store basis, continued to grow with strong BOPIS sales in the quarter. Supporting the success is our 20-minute pickup guarantee, which continues to drive strong customer satisfaction. From an operating perspective, we continued to deliver solid operating margin performance in the quarter despite the lower traffic and higher supply chain, and inflationary cost challenges. We generated operating income of $83 million in the quarter or 7% as a percentage of sales compared to $108 million last year. Lower operating income compared to last year was primarily driven by lower sales and higher costs and impacts related to inflation. Now turning to slide 12, I wanted to highlight financial results and provide insight into Veyer's operations. As we mentioned earlier, we have separated Veyer into its own business and reporting unit moving forward. Veyer specializes in B2B and consumer business service delivery, with core competencies and distribution, fulfillment, transportation global sourcing, and purchasing, which also includes our global sourcing operations in Asia. Veyer provide services primarily through its internal customers ODP Business Solutions and Office Depot, as well as to other external third parties, a business you will hear more about at Investor Day. We believe that as an independent business unit with an aligned go-to-market strategy and focus Veyer will be well-positioned to not only provide low-cost services to its internal customers but also more fully utilize its capacity to further pursue services for third parties. This is a great opportunity to generate organic EBITDA from our existing investments and over time, build upon its world-class capabilities to provide full 3PL services to third parties in the future. In terms of Veyer operating profit, Veyer provides product sourcing and supply chain services to its internal customers, ODP Business Solutions, and Office Depot through market-based commercial agreements, as well as external sales to third parties. Internal product sourcing sales or Veyer's procurement business is generated through a service fee to the cost of products we resource from third-party vendors, net of the impact of any vendor offsets and certain other adjustments. Internal sales of services represents Veyer supply chain and logistics support services, which include warehousing, shipping and handling, returns, and other services. These internal sales of services are done at a service fee over cost, upon our enterprise consolidation internal sales are eliminated. External sales represent supply chain services provided to third parties as well as product sales by our Asia sourcing operations to third parties. For the quarter Veyer drove sales of $1.5 billion predominantly supporting the purchasing and supply chain operations of ODP Business Solutions and Office Depot, included in this amount was $7 million in sales to external parties. Veyer's operating income for the third quarter was $9 million, up from $7 million last year, driven by growth in freight collection activities and mix. Through our vendor consolidation capabilities where Veyer picks up products directly from third-party vendors, we were able to reduce product costs and improve asset utilization and profitability. This is a business we see growing over time and one we will highlight for investors going forward given the unique nature for how this EBITDA flows to ODP as a contra-expense benefit. Now turning briefly to Varis on slide 13, you will hear much more about Varis at our Investor Day meeting that follows today's call, so I will be brief. Varis is our digitally native B2B procurement platform that is focused on transforming digital commerce between buying organizations and suppliers. Varis aims to provide a more modern and convenient experience connecting buyers and suppliers in a way that solves the pain points that exist today, saves money for its customers, and removes friction through a digital experience. Varis has been in development for the past two years, and it has made terrific progress. The platform is nearing its full market launch of this month and continues to add customers and suppliers to its network. Keeping in mind that the platform has not yet launched from a results perspective, Varis generated about $2 million in revenue in the quarter. This is primarily subscription-based revenue derived from existing customers that we acquired on the BuyerQuest platform. If you recall we purchased BuyerQuest in early 2021 to fast-forward the development of Varis's tech stack. On a go-forward basis, we expect that this will be the peak year of investment for Varis as we ready the platform for launch, turn on the revenue flywheel, and scale the business in the future quarters. Related to this preparation, Varis's operating loss was $17 million in the quarter. Prentis Wilson, President of Varis will provide a full review of Varis's capabilities and value proposition, during our upcoming meeting. Now briefly turning to our balance sheet on slide 14, our balance sheet continues to be a source of strength, ending the quarter with total liquidity of approximately $1.4 billion, consisting of $473 million in cash and cash equivalents and $934 million in availability under our asset-based lending facility. Total debt at the end of the quarter was approximately $191 million. From an overall capital allocation perspective, we have continued to take actions to enhance shareholder returns. First, in the quarter, after the waiting period post the tender offer and through the end of the quarter, we retired approximately 1.9 million shares for about $70 million. Adding this to our share repurchases last year, we have returned approximately $375 million to shareholders since the beginning of 2021. Additionally, and as you will hear more about in our Investor Day meeting our Board approved a new share repurchase plan a significant testament to the value we see in our business. Lastly, on slide 15, and as shown, we are reaffirming our full year guidance for the year. With that, I will turn the call back over to Tim.

Thank you, Anthony. In closing, I just want to remind our listeners that after a brief pause, we will begin our virtual Investor Day meeting. During this meeting, you will hear from Gerry Smith and members of his team highlighting our four business unit structure, and respective strategies along with our capital allocation plans and long-term targets. We will have a question-and-answer session after this meeting in which we encourage you to submit questions as early as possible and as the presentation progresses in order to allow us time to efficiently get through as many questions as possible. Thank you. And this concludes our review of the results for the third quarter of 2022. [Video Playing]

Hi, I'm Gerry Smith, CEO of The ODP Corporation. And I want to welcome you to the 2022 Investor Day meeting. I'm so excited to be here with you this morning to tell you about the newly realigned ODP Corporation and our strategy to unlock the power of our business to drive sustained value for our shareholders. The powerful opening video that you saw highlights the strong foundation that we've built over the past 35 years, as well as our evolutionary path as we unlock the power of our assets, expand our value proposition and create a more valuable business. Over the past few years, and since our last Investor Day over four years ago, we recognize that many of the elements of the market environment began to change, creating both opportunities as well as challenges. The pandemic change the way people work and interact. Business customers demand in a wider range of products and services and sought a more modern digital environment in which to operate. And providing reliable service to customers became tables fix, raising the bar for dependable supply chain operations. Recognizing these factors we've gone through a full strategic review of our own gaining valuable insight into unlocking the power of our assets, providing greater stability into our business, and identifying new avenues for growth. And all of this has led us to where we are today, a much stronger company with a newly realigned foundation with four distinct business units working together to unlock value. And as you will hear today, as a testament to our commitment to our shareholders we announced a $1 billion share repurchase plan through 2025 that when combined with our strong operational growth goals, we expect will lead to a near doubling of our earnings per share over the next three years. All this creates a very clear path to drive and return value to our shareholders. We're very excited to be here with you today to tell you about this framework and how we will drive shareholder value now and in the future. Now turning to our business today, ODP is a leading provider of business products and services, delivered through a unique set of assets and world-class capabilities. We have built a strong business with a rich and dynamic history that spans over three decades, creating value for our customers and helping businesses and consumers succeed, grow, and thrive. Our success was built upon a strong foundation that is enabled by our differentiated assets. These assets include over 22 million customers, including over 7.5 million business customers, a world-class supply chain reaching 19.5% of the population with next-day service, with global sourcing capabilities as well. Multiple routes to market with sales professionals, an award-winning e-commerce platform, and a strong retail store presence, and importantly a strong liquidity profile, with a consistent cash flow generation machine that allows us to return capital to shareholders and invest in our future. All of this, coupled with our low-cost business model, our operational excellence approach, and our 5C culture, have positioned us to deliver strong performance in the past, now, and into the future. And through this foundation, the ODP of today drives $8.5 billion in annual revenue, generates over $400 million in EBITDA. It has been a consistent and strong generator of free cash flow averaging between $200 million to $300 million annually over the past several years. All of this has positioned us to return significant amounts of cash to our shareholders, a key focus of our company. Taken together, we have leveraged these unique assets, to help us navigate the market-wide challenges; the industry has faced over the last several years. These challenges include everything from a global pandemic and supply chain disruptions, to the historic inflation as well as secular shifts in demand for our products. And because of this many B2B distributors, wholesalers, and retailers have struggled however, we are happy to say with our focus on operational excellence and using our competitive advantages and our assets, ODP has thrived delivering strong performance throughout these challenges. We did so by remaining true to our low-cost business model and staying focused on supporting our customers in any environment. We leveraged our supply chain assets and provide even more services at the request of several of our customers. We flex our operating model and utilize our routes to market providing support for professionals as they transition from the office to a hybrid work environment. We aided school through the unchartered waters of online and hybrid learning, we provided key support for hospitals and health care workers during a global pandemic and we continue to support small businesses as they face the very same global challenges we faced at a local level, and through it all, we remain committed to our low-cost business model and maintain a strong balance sheet, including net cash positive position. I believe this is a huge value for our company, especially when considering how many other companies took on leverage and are now exposed to higher interest rates and tighter financing conditions. We've learned a lot by successfully managing through these tough conditions and we are a stronger company today because of it. We remain shareholder focus. As I mentioned we are announcing today a commitment to allocate $1 billion return of capital to our shareholders through our share repurchase program through 2025. This increases our existing allocation and is supported by our strong balance sheet and operational excellence plan that is expected to generate significant cash flow over the next several years. You'll hear more on our share repurchase plan a little later today. Now turning to a key component of our success, our low-cost business model is one of the areas; I'm most proud of and remains a cornerstone of our operating strategy. This was derived from my background of 30 years in technology hardware, where managing unit costs were so important, where every penny counted. I spent years and years, driving operational excellence and a low-cost focus and we brought that focus into ODP and that helped us create a model that I believe is highly unique. This approach has led us to significantly lower our operating cost base, help us to move from a highly fixed-cost business to a more variable operating structure. This approach has served us well and helped ODP thrive through the economic cycles of the pandemic. We drove efficiencies throughout our business, finding new ways to better serve our customers and drive our operations. To highlight some of the actions supporting our low-cost model approach, we utilize a zero-based budgeting approach throughout our business acceleration program, driving efficiencies throughout our business. We optimize our store footprint and lease exposure through our maximized B2B initiatives. We focus on cash flow and COGS across our business as well, early on in 2017 and 2018, and kept us focused across the enterprise. In total, we eliminated over $500 million in operating costs over the last five years, a tremendous accomplishment for the company and a key element in changing our prior trajectory. We will not be in our strong EBITDA position today if there wasn't for our operational focus, our low-cost model, and driving these cost savings over the last five years, and we have built a culture committed to continuous improvement. We instilled this into the DNA of our company, where every employee treats the company's money as their own and we continuously look for operational cost improvements in the future as well. I personally believe you can never stop driving out cost in the business. As I've said before, I am proud of this accomplishment, taking over $0.5 billion of operating costs out of our business and keeping our low-cost model front and center. This is radically changed the prior trajectory of our business is on and has positioned us for a profitable future. We've executed well and delivered strong performance against challenging market conditions. We've exceeded expectations, delivered strong operating results, and generated consistent free cash flow against these conditions. And we're positioned to deliver solid results again this year. We're on track to deliver approximately $8.5 billion in revenue over $400 million in EBITDA with both strong free cash flow generation and growth in EPS in 2022 and we remain focused on managing our business, through the lens of creating long-term value for our shareholders. As I've said earlier, since the start of my tenure in early 2017, we returned approximately $750 million to shareholders primarily through share repurchases, and as a component of this, in the last two years we've accelerated that effort and returned approximately $450 million to shareholders. As I've said earlier, we remain focused on enhancing returns for our shareholders through a $1 billion share repurchase plan through 2025, and with our history of operational excellence, we will continue to take our disciplined approach to all areas of our realigned business. Through this period, we are balancing the return of capital to shareholders with a targeted investment in our business for continued growth in the future. These high-impact and high-return investments we're focused on a few areas. First, we made selective investments to enhance our supply chain capabilities, including just-in-time delivery algorithms and analytics software. Next, we made disciplined investments focusing on developing our digital platform capability Varis, allowing us to participate in a very large and growing business commerce marketplace. This is an important element to future-proof our business for the long term. You will hear more on this from Prentis Wilson, President of Varis later in the presentation. We're also continuing to make high-return investments in our federation strategy. This strategy is cost-effectively, allowing us to expand our distribution presence to high-value and underserved markets in the U.S. and generate strong ROI. We've also expanded our tech presence to improve the customer experience in our consumer business. This is generating strong returns and I'm so proud of the operational performance Kevin Moffitt, President of Office Depot has driven our net promoter score, raising this metric to a level that is truly world-class in retail. And over the last few years, we've taken several strategic actions to improve the trajectory of our business, learning many lessons along the way. These actions largely centered around reducing cost and providing greater flexibility in our business. First, through our zero-based budgeting approach contained in our Business Acceleration Program, we drove operational efficiencies across our business. We also drove cost out of our business by optimizing our store footprint and lowering our lease exposure through our maximize B2B plan. We executed our federation strategy, cost-effectively expanding our distribution presence in a market on our public company reorganization creating flexibility, and was the first step in aligning our assets to unlock value. Through implementing all these actions over the last few years, we learned a lot and this has reinforced sources and value for our business. We learned that continuing to maintain our commitment on our low-cost model is key for driving operational excellence, maintaining a strong balance sheet, and generating strong free cash flow. As I've stated many times before, the low-cost business model wins. A great example of this is the work that we've done in turning our retail business from a declining business with a very challenging future to a customer focus cash engine that we believe will be operating comp positive by 2025. We realize the full value of our unique asset base of our B2B business and our supply chain in the omni-channel presence all working in concert to create value. And through my prior experience of running large supply chain operations in the tech space, we realize we have a world-class supply chain asset that has unique capabilities and expansive reach that few supply chains have. And we are in the very early stages of unlocking that value, which we believe will unlock further value for ODP shareholders. And we realize the power of leveraging our decades-long B2B relationships and focus, building this unique asset positions us to drive greater value in the future. These lessons have led us to realign our business model and structure, positioning our company to drive greater shareholder value now and in the future. All of this has led us to a realigned operating model, designed to improve our operational position, pursue growth opportunities, and more fully reflect the power of our businesses. With our realigned structure, we have created four synergistic clearly defined business units, positioning ODP to drive greater shareholder value. First is ODP Business Solutions a leading B2B solutions provider focused on growth, driving our margin profile back to pre-pandemic levels and generating cash that will continue to benefit from the return-to-office trend. Second is Office Depot, which is now for the first time is truly an omni-channel consumer business with strong retail store footprint and an award-winning e-commerce platform. Office Depot is a key cash generation engine for ODP and with excellent leadership we generated strong consistent EBITDA while also improving the customer experience through strong NPS scores. Next up is Veyer, our world-class supply chain services, and sourcing provider focused on delivering best-in-class services to ODP's internal customers at a low cost, while partially leverage its existing capacity to private services to third-party customers. Today, Veyer's unique and valuable assets and capabilities have been unleashed. We've transformed Veyer from a cost center to its own focus business and profit center to capture full value of these unique assets today and helped drive a new narrative for our shareholders and value in this business in the future. And finally Varis, Varis is a transformative digitally native B2B procurement platform that we've been creating over the last couple of years, Varis is focused on creating a more modern experience for B2B buyers and suppliers. You hear much more about our progress at Varis and specifically how this creates an opportunity for hybrid growth and value, as well as provide ODP with the opportunity to future-proof and secure our digital future in a high-value market segment. Our four BU structure is supported by ODP and each business unit will help to unlock value, by enabling a greater stability and focus for our business while providing avenues for growth, which we expect will command higher multiples over time. Our re-aligned four business unit model positions ODP for success in several ways. Our business units work together, reinforce each other, take advantage of scale, and leverage the breadth of our ecosystem. For example, Business Solutions and Office Depot, both will benefit from the scaled supply chain, and procurement services offered through Veyer. Varis benefits from decades of procurement expertise and B2B relationships and the reach of ODP Business Solutions. And by unleashing the value of Veyer, we are transitioning from a cost center to a focused business unit and profit center that allows for greater utilization of our world-class supply chain assets and positions this business unit to pursue growth and drive additional EBITDA, all which enhances shareholder value over time. All of our business units will now have the ability to improve asset utilization, focused go-to-market strategies, and aligned incentives to drive customer value and growth. And all of this is supported by our corporate center that provides efficient shared services and optimized capital allocation and we'll continue to drive our 5C culture across our business. This structure has us in a better position to achieve our vision. Our vision moving forward is clear. To empower every business professional and consumer with the products and services they need to achieve more every day. In achieving our vision, we create value for shareholders. We create stability, growth, and new opportunities through our four BU model and by deploying a disciplined capital management strategy. We balanced targeted investments in our future, with capital returns to our investors. And this vision is only possible through our people. Our people are the center of all we do. We invest in our people, by attracting a great management and associate team through our culture and Associate Resource Groups. Our foundation is our outstanding 5C culture, which is customer, commitment, creativity, change, and caring. These 5Cs drive strong community support and focus on sustainability, diversity, and environmental improvements. Personally, I'm extremely proud of creating this 5C culture, when I joined the company. This is our foundation. I learned this from my history of two previous companies seen firsthand how important culture is and driving high-impact organizations with a sense of purpose. And as I carry these learnings and brought this into Office Depot, it's been fundamental to our DNA for driving our low-cost model and our customer focus. But it is fundamental to make sure we span across all the 5Cs because in doing so we become a stronger and more effective company. You'll hear much more about this from

Hello, I am

Hi, I am David Centrella, EVP, and President of ODP Business Solutions. With decades of experience, ODP Business Solutions is a trusted partner and an industry leader in providing customized workplace solutions in a wide variety of categories including paper, supplies, ink, and toner, jan/san, furniture, technology, print and promo, and even customer proprietary items. These categories collectively generate approximately $4 billion of revenue each year. We help companies thrive through our dedicated sales professionals and our award-winning e-commerce platform. We work closely with our customers to understand and solve their unique business requirements. Our business is evolving, because the world of business is evolving. We're adapting to meet shifting customer demands, stay ahead of competitors as we enter new markets, and take advantage of technological innovations that helps drive greater productivity and supports our low-cost operating model. [Video Playing] Our value proposition is to offer a highly customized efficient experience for our customers. We're one of the largest players in the office supplies space. We already have an impressive customer base and are particularly strong and relatively stable industries like education, healthcare, hospitality, and the public sector. We offer differentiated value. We have a dedicated sales team with a national footprint and a local focus. These account teams help improve work efficiency, and our solution consultants focused on helping our customers achieve their business goals, through powerful insights. We provide a highly customizable digital customer experience, including subscription services, and reporting and analytic tools. We also provide tailored spend reporting and purchasing controls to give clients visibility into their spend and manage multiple authorized buyers. We work with customers to provide curated assortments and personalized pricing to meet their needs, including increasingly important ESG requirements. All of this support is accompanied by specialized delivery options including next-day and desktop delivery, subscription services, and in-store pickup. We are continuing to grow our EDI in Varis integration options. These options make ordering products from ODP easier, while also making it more difficult for end users to go outside of our ecosystem to make purchases. Varis allows us to add more value for our customers. We can give them a great experience and expand their access to more buying options, and it allows us to keep them engaged and serve them more often. We offer solutions to service hybrid and remote work, providing solutions to work smarter from anywhere with products that support collaboration and a more flexible office model. All of this differentiates us from our competitors and build a relationship of trust and growth with our clients. We have three main strategic priorities: category growth, customer growth, and margin growth. For category growth, we are focused on maintaining our traditional supplies business supporting customers with their evolving needs, and supporting their workplaces, wherever those workplaces may be. We are gaining share in the highly attractive adjacency businesses and offering existing customers the opportunity to save money by consolidating vendors and leveraging our national distribution footprint. For customer growth, we are continuing to expand our customer base through targeted customer acquisition, utilizing our current capabilities to support corporate ESG programs and leveraging our existing strengths in the public sector. We are also continuing our highly successful federation strategy, by engaging in strategic M&A to acquire new SMB customers while also expanding in underserved markets. Our margin growth strategic priority is focused on expanding our EBITDA to greater than 5% by 2025 and returning to pre-pandemic levels. We will do so in part by following our low-cost business model, ensuring disciplined pricing practices, and reducing operating costs. The space we play in is large, with a total addressable market of over $130 billion. This includes $10 billion in traditional office supplies like paper and ink and toner that are the entry point to our customers' accounts, and $120 billion in adjacencies. Each of these markets, we offer top OEM brands and are also proud to offer our own high-quality private brand products. Our adjacencies include jan/san, workspace interiors, breakroom, technology, and print promo and apparel. We have deep experience in tech solutions and add value to our customers by supporting their purchases and integrating new products into their workplace. We have worked hard to expand our portfolio beyond the traditional office supply business to capture share and growing adjacency markets. Based on our current market share we see stable and high growth potential across our adjacencies. This is especially true for our jan/san business that's growing rapidly post COVID and in furniture where we currently have a strong foothold. We also have the capabilities in place to be competitive in tech and print promo and apparel. For our technology offering, we are more than just the tech products provider. We have over 30 years of experience, offering highly customized solutions in networking, storage, digital protection, and lifecycle management. For print, promo, and apparel we have a single source web platform ODP 362 to offer thousands of customized products for marketing, promotion, and team apparel. All of which can be provided through customizable company storefronts. Our adjacency experts, expand our share of wallet, while building customer loyalty. Here is one of our clients in their own words. [Video Playing] Return to office and return to classroom will be tailwind for our business in 2023. COVID has changed the way our clients do business. Some are back in the office, some are remote and some are hybrid. We've implemented numerous programs to serve our customers wherever they choose to do business. For work-from-home and hybrid clients, we offer employee purchase programs as well as delivery, subscription, and store pickup programs. And for work-from-office clients, we have teams dedicated to workplace planning and technology infrastructure support. The return-to-office trend is a tailwind for these teams that we expect to continue through 2023. Our public sector business is of high strategic importance. It's one of the largest and most consistent markets for traditional office supplies. This sector is also resilient during times of inflation and recession. Our relationships within the public sector are extremely strong and we are leveraging strategic partnerships to grow our adjacency sales with existing accounts and add net new public sector agencies to our portfolio. Our federation strategy is a disciplined and financially accretive approach to developing and growing in the highly profitable and highly competitive SMB market. Through this measured approach, we identify synergies with regional players that have a strong presence in secondary and tertiary markets, that are typically hard and expensive to penetrate, simultaneously we leverage our buying power and procurement expertise to realize strong return on invested capital of 15% to 20% with expanding margins over time. Our method of acquiring these regional dealers has provided us with a lower-cost SMB customer acquisition model. As environmental social and governance or ESG is becoming a higher priority and boardrooms around the world, ODP Business Solutions has become a valued partner in supporting our customers' individual goals and objectives. ESG is a core component of our corporate values and our business. We believe it's not only the right thing to do, it's also the smart thing to do. We help our customers with support on three key questions. How does your business intend to reduce its environmental footprint, how can your business support the community, how does your business create opportunities for economic prosperity? We can leverage our purchasing power, supply chain, and supplier relationships to get our customers where they want to be. For instance, Highmark products and ODP private brand is not just eco-conscious but also manufactured by people who are visually impaired. Highmark recently won the 2022 Safer Choice Partner of the Year Award from the EPA. We differentiate ourselves from competitors with a wide variety of tier one and two suppliers. This is particularly valuable for companies that are tracking their ESG goals. Tier one allows members to purchase directly from certified minority-owned businesses, tier two allows members to purchase directly from ODP Business Solutions and a percentage of diversity spend comes from diverse vendor products. We will grow our EBITDA margin to over 5% by 2025, back to pre-pandemic levels. Return to office will continue to be a tailwind for us, our business is being run differently now. Our price management, cost optimization, and leaner four business unit structure will grow our bottom line. As demand normalizes, we will leverage recovering top line revenues to invest in more cost optimization and sell our adjacencies to improve margin rate with existing clients. Our approach is about being measured and disciplined. As mentioned earlier, will expand into high-growth adjacencies, drive our disciplined pricing approach, and in this tactic is about ensuring our pricing discounts are commensurate with customer spend and that we effectively manage our contract terms and conditions. We will leverage our private brand. This tactic is about driving increased penetration in our private brand products, which is a win-win for our customers and ODP Business Solutions. In most cases, we can provide lower-priced options to our customers at increased margins for ODP Business Solutions. And that's the win-win. And lastly, through our low-cost business model approach, we will diligently be reviewing our internal processes and procedures. In addition, we'll benefit from various increasing supply chain scale, eliminating and reducing costs, so we can share these savings with our customers and investors and remain hypercompetitive. Considering everything I've just shared, here is our vision for the business in 2025. In order to reach our revenue and EBITDA targets, our key investment priorities are to expand markets, gained share in attractive adjacency categories, and continue executing on our successful federation strategy. Thank you for your time today. Now, I will turn it over to Kevin Moffitt to share more about our consumer business. [Video Playing]

Hi. I'm Kevin Moffitt, Executive Vice President and President of Office Depot. For over 35 years Office Depot has supported our customers' success, helping millions of people achieve their business and educational goals. Today, we are excited to launch the Office Depot business as an integrated omni-channel retailer, serving 22 million active customers through our network of one thousand stores, our Web site officedepot.com, our mobile apps, and our digital presence on online marketplaces, affiliate Web sites, and social media networks. The world has changed dramatically during the past few years as COVID-19 has changed people's perceptions and expectations of how and where they work, but even through these challenges, our team of over 15,000 retail associates have demonstrated a commitment to supporting our customers generating record-high customer satisfaction scores, and maintaining efficient profitable operations. Because of their dedication and focus our business has remained highly profitable, generating significant EBITDA, cash flow, and value for our shareholders. And now with small businesses reemerging, children returning fully to schools, and millions of professionals permanently adopting remote and hybrid work styles, we see many opportunities to improve our business in the future by combining the strengths of our stores and our e-commerce platform. Our goal is simple, to serve our small business, home office, and educational customers better than anyone else can, by providing a unique combination of value, convenience, and customer engagement. Our five key strategies for success are improving our tools to connect and personalize our customers' experience while investing in targeted digital marketing vehicles to drive qualified traffic to our stores and our Web site. Expanding our assortment to new adjacencies relevant to our core customer segments, including arts and crafts, home office organization and decor, and small business services; integrating our newly combined omni-channel assets, expanding our industry-leading in-store pickup program while improving our online and mobile conversion rate and average order size, optimizing our store footprint, and carefully managing expenses to remain highly profitable over the next three years, generating significant cash to fund key investments across the ODP Corporation portfolio; and finally, growing our core culture giving back to our local communities and supporting equal opportunities in education and entrepreneurship. These five strategies will drive us forward and they all began with our customers. [Video Playing] We operate in a highly competitive industry, more than ever, our customers demand solutions that save them time and money and with the often overwhelming number of choices available to them; they also seek support and guidance. That's why we strive to create strong long-term relationships with our customers. Over 80% of the time, our customers are greeted and engaged as soon as they enter our stores with questions designed to personalize the experience and help identify the best solutions suited to their individual needs. Very few of our competitors even attempt to provide the level of service found every day at our stores. Our focus on providing outstanding customer service has led to dramatic improvements in our Net Promoter Score. We recently achieved a new record score of over 72 NPS which is over 1,000 basis points higher than our scores, just a few years ago. As we look forward, we know that our customers' needs are shifting and it's critical that we shift with them. And while it's not easy predicting what the new normal will look like given the current economic disruptions, we're all facing, some patterns appear to be stabilizing. First, a significant number of former full-time office workers will continue to work remotely or in a hybrid model going forward. Office Depot is well-positioned to serve their needs through our convenient omni-channel network. At the same time, the number of small businesses is growing. By the end of 2022, there'll be 33 million small businesses in the United States, up 12% over the past five years. 99% of all businesses in the U.S. have 20 employees or less, the sweet spot for our omni-channel retail business. In the education space, two years of remote learning have created a significant learning gap, particularly in reading and math. And at the same time schools are experiencing an unprecedented staffing crisis helping teachers, students, and parents stay organized, productive, and healthy has never been more important. Across all three of our core customer segments, new challenges are creating new opportunities, opportunities that Office Depot is well-positioned to support. Today, we have over 15 million loyalty program members, including 6 million small businesses and 1 million teachers, a great foundation for future growth. Expanding that program and tailoring our value propositions to the specific needs of each customer segment is a key focus for us. Remaining competitive will require us to become even more agile and responsive to changing customer behaviors in the future. Selective investments in customer data management and automated digital marketing capabilities will allow us to present targeted messaging and personalized promotions. Combined, these efforts will help us increase brand preference while driving traffic customer acquisition, and lifetime value within our three core segments. Just as our customers' behaviors have shifted during the last three years, still have their needs for products and services and we see significant opportunities to innovate our assortment to better match our customers' demand in the future. Our business services capabilities are industry-leading with key strengths in copy and print, marketing services, shredding, and shipping. Every associate in our stores receives training certification in business services and every store has self-service and full-service options to support customers' individualized needs, supplemented by a network of advanced regional print centers capable of enterprise-level production. The business services category is a great and growing business for us, driving significant traffic into our stores, generating high margin rates, and remaining relatively protected from competitors. Looking forward, we see opportunities for further growth through adjacent services and partnerships to leverage our strong production capacity. For our small business and home office customers, we are a leader in workspace furniture, technology, and tech services. Our in-store assortment of office chairs and desks is unmatched including many exclusive brands and styles and complemented by thousands of additional choices available online. Every store offers furniture assembly, technology repair, and even in-home and in-office installation services. And we plan to build on these strengths by expanding our assortment into home office organization, storage, and decor. For our education customers, we see opportunities to leverage our strengths in core school supplies and expand further into arts and crafts, classroom decor, and student desks and chairs. As a newly integrated omni-channel retailer, we can leverage our digital platform to test and learn which specific SKUs will drive additional customer demand, with minimal financial risk or investment in inventory. Those SKUs that are successful can then be piloted in our stores at a district or regional level to minimize working capital exposure. Across all our products and services, our goal is to enable our customers to shop where, when, and how they choose and our diverse omni-channel capabilities provide many convenient options. Today our 20-minute store pickup promise is the fastest program of its kind and the only one backed up by a $20 guarantee. Our pickup promise is a significant competitive advantage for us. Store pickup sales have nearly doubled in the last few years and now make up a third of total online sales. We offer both curbside pickup and self-service pickup kiosks at all store And not only store pickup a convenient option for our customers, it also provides significant financial advantages to Office Depot, as distribution costs are lower for products fulfilled through our store footprint versus shipped to residential addresses. Every store also has the ability to ship products directly to our customers, which allows us to optimize where to source orders in the most economically efficient way, while carefully managing inventory levels at each location. Our stores also enable our customers to choose same-day delivery for thousands of items, supported by our partner network, including Instacart, Shipt, DoorDash and Uber. Same-day delivery sales are up significantly versus pre-pandemic norms. All of these capabilities are enabled through our e-commerce Web site, officedepot.com and mobile apps for iPhone and Android. We are planning significant improvements to our ecommerce shopping experience in the next year, all designed to increase conversion rate and average order size. We also plan to make it easier to find local stores and browse local inventory, driving more in-store traffic and increasing opportunities for deeper customer engagement with higher attachment rates. [Video Playing] We see each of our 1,000 stores as a local small business led by a General Manager, who we see as the CEO of their business and our primary connection point into their community. Their job is to grow their business by building a team that's passionate about serving our customers, while carefully managing costs to maximize profitability. Our focus on empowering our local store teams has led to outstanding results as our stores have generated both, record high customer satisfaction and record high profit margins over the past few years. As we look forward, we will continue to be very disciplined in optimizing our store footprint to generate maximum profit and cash flow. We carefully review each location's financial performance when making renewal, extension and closure decisions, assessing local sales transfer opportunities to maximize the health of the chain as a whole. As our customer assortment and omni-channel strategies help to stabilize sales over the next three years, we aim to create a sustainable fleet of highly cash-accretive store locations. We expect store count to be between 800 and 900 stores by the end of 2025, with each store generating an average of 3.5 million in sales and 300,000 EBITDA annually. In addition to managing our store footprint, we'll pursue a number of initiatives to maximize profitability and cash creation. First, we'll launch new tools to automate and optimize pricing and promotion from an omni-channel perspective. And as part of this effort, we plan to increase our sales mix into private brand products, which are significantly more profitable than national brand alternatives. Outside of pricing and assortment optimization, we will remain diligent around every cost line in our P&L, including property, labor, distribution costs and travel. Through all of these efforts, we expect our business to remain financially healthy and highly cash-accretive far into the future. At Office Depot, our culture is centered on achieving great results together as a unified and diverse team and making positive contributions to the communities we serve. As

Hi, I am John Gannfors, EVP and President of Veyer. Today, I'll introduce you to our new business unit and new brand Veyer, that's built upon nearly four decades of providing supply chain services to our customers. We have a very talented leadership team and workforce that specializes in B2B and B2C service delivery and a superior supply chain asset base, we developed over time that allows us to provide exceptional service and value to the customer we serve. [Video Playing] At the core of our asset base is our distribution network. With more than 100 facilities and 9 million square feet of distribution space, we have coverage in all the key markets we serve. Our workforce of approximately 4,000 team members ensures that we deliver nearly 80 million cartons per year at the highest quality standards. Logistics and transportation assets and partnerships complement our distribution network capability. We have a robust network of dedicated national and international carrier partnerships, supporting ocean, linehaul, LTL and national small parcel capacity. We have our own 600 vehicles in the very delivery fleet and a last mile delivery service that is second to none. Our local and global sourcing offices select, source and purchase billions of dollars of products each year, in office product categories, technology, furniture cleaning and breakroom including private brands, all of which we distribute for our customers throughout our network. These assets are supported by best-in-class technology that ensures the highest level of service reduces various operating costs and decreases working capital requirements for our customers. Two examples of our technical advantages include Veyer's proprietary cost visibility technology that enables insights into all handling costs by SKU type by channel and by customer ensuring we're always providing competitive costs and driving efficiencies. And our highly effective just-in-time algorithms that enable true flow through distribution of goods within our supply chain, which greatly reduces working capital requirements for retailers. With these unique capabilities and assets, we're well-positioned to compete and win in the third-party logistics market. With our network coverage, we can reach 98.5% of the US population in one day across multiple distribution points, whether they're retail stores, consumer homes as well as businesses, nationwide next-day delivery is a key differentiator for Veyer. We also serve some of the country's most sophisticated customers, delivering billions of dollars of goods to many of the country's largest businesses. They trust us to deliver their orders on time and to multiple locations with service to their loading docks to their front doors or to an employee's desktop as a trusted partner to these customers in many cases our drivers have secure badge access into their facilities and campuses. The existing scale from ODP is consumer and B2B businesses positions Veyer to deliver world-class capabilities at market-competitive prices. We have an end-to-end capability, allowing us to serve our customers across a broad set of from sourcing to distribution, to last mile delivery. This is truly a unique end-to-end capability. There are multiple opportunities across the spectrum of services, where we unlock value for Veyer and our customers. We have a decade's long track record of serving complex customers, a full suite of supply chain services and the capability to deliver next day to nearly the entire US population. Veyer is in a great position to compete and win in the 3PL market. With one of the larger distribution assets in the US, we have thoughtfully deployed our capability to ensure high quality service levels balanced with cost optimization, our distribution network ensures coverage in all major markets to allow us to provide B2B and B2C customers high quality service that's reliable and resilient. Our network is a key enabler to our value proposition. The strategic placement of Veyer's distribution, fulfillment and transportation assets, enables us to provide high service levels to a variety of customer types, distribution to retail stores, fulfillment of ecommerce orders and B2B customers. Our ability to pick, pack and ship everything from paper clips to apparel to case water and bulk furniture sets us apart from many of the traditional competitors in this space. And again we have decades of experience providing these services to Office Depot and ODP Business Solutions and now offer these services to new clients to expand our business. The third-party logistics market is a large, attractive and growing market size that more than $600 billion in the United States and growing at a 5% CAGR. We have a perfectly timed opportunity to leverage our asset base and unlock value for ODP and our customers by actively participating in this market. In fact, our capability matches nearly perfectly with the 3PL market segments, where there is customer demand for the services we provide and the capabilities we have today. We will monetize these assets to fully maximize the utilization of our current network and unlock its value. Our ability to offer comprehensive end-to-end distribution and fulfillment at scale along with best-in-class service levels meets a real market need desired by variety of customer types whether retailers e-commerce brands or consumer packaged goods manufacturers, they all need to support their customers and each have supply chain needs that we can fulfill with Veyer services. We are already getting feedback from our existing clients that are services standout in this market. This strong validation of our value proposition gives me confidence that we have a right to win in this marketplace. As supply chains faced challenges in 2021 customers came to us asking to access our network to solve their business critical needs, another indication of the demand and opportunity we have at Veyer. Let's hear from two of our valued customers Infinity Global and Flow hydration as they describe the services we provide for their businesses. [Video Playing] Our focus is to unlock the value of our supply chain assets with the strategy that builds upon the success we have with our current customers and the decades of experience we have providing supply chain services. We will continue to deliver exceptional service and competitive pricing to Office Depot and ODP Business Solutions to ensure they achieve their business objectives and remain highly competitive in the markets they serve. We accomplish this by driving a low cost business model with a focus on continuous improvement. In addition, we will continue to scale our business by monetizing our assets. We accomplished this through growth with new clients and continued modernization of key functionality to ensure we always provide great value to our customer. We have signed commercial agreements in place with Office Depot and ODP Business Solutions to ensure we provide them with competitive prices and best-in-class service levels they're accustomed to. Anthony will share a little more about what that looks like in his upcoming section. To ensure we offer a clear and compelling value proposition, we embrace ODP's low cost business model and continually focus on high utilization and lowering costs across the business. A great example of this is our Lean 6 Sigma team that drives training programs and hundreds of projects per year targeting operational improvements and increased productivity that lowers our cost to serve while encouraging a culture of continuous improve. At the same time, we remain focused on customer service and providing high quality and differentiated services. Our services range includes private brand product development and sourcing, distribution and fulfillment, including enhanced next-day desktop delivery, single bulk pallet and truckload services as well as returns processing and handling. We have demonstrated our capability to minimize retail inventory and working capital requirements with our robust field-proven algorithms and increased cost visibility with our proprietary cost visibility technology. All of which generates value for our business from our tiered services model. The value we bring to our new customers is clear. Veyer helps clients grow and scale their businesses by enabling them to transform their service levels and align their costs by leveraging our capabilities. With a world-class supply chain operating at scale, we ensure that customers have a partner they can trust, to deliver value with decades of experience and can provide benefits from the economics of a large operation to keep them competitive. The same capabilities and services that our internal customers rely upon for translates to our new customers. All customers generally prioritize similar criteria when selecting a partner. Do they have competitive costs, scale and service quality, and a trusted capable team? Veyer checks all those boxes. We also have exceptional national coverage capacity and reach and end-to-end services powered by leading technologies. All of which translates into the strong value proposition we have today. We have a reliable and resilient supply chain that will continue to ensure delivers the capabilities that enable us to better serve our customers. We have leading technology capability deployed in our operations. Modernized network design, planning, and allocation tools, transportation management and visibility tools as well as warehouse management systems are the backbone of our technology stack. We continue to execute to our modernization road map enhancing and adding new functionality and capabilities to better serve our customers to fully leverage our existing assets and to position Veyer to compete externally will remain a priority. Our focus is to maximize our current asset utilization and unlock value from the asset base we have today. As I've mentioned, at the core of our business model is our focus on continuous improvement, low cost, and delivering high quality service and support to our customers. Our path to unlock value begins by adding new customers that will take advantage of our scale and service capabilities. As we further monetize our assets and take full advantage of our capacity and capability, we create a flywheel effect. Our strategy delivers growth, which supports our modernization roadmap, which ultimately enhances our value proposition with functionality that our customers desire. With it we attract and retain more customers. This is a reinforcing cycle that we've already started to deploy and my team and I are excited about this model and the value will deliver to the business. In summary, our goal is continue to provide great service to our internal customers and to use our existing assets to drive third-party growth and we'll continue to modernize our capabilities to unlock the full value of Veyer. Veyer is an independent business unit will allow us to unleash our differentiated capabilities to pursue third-party growth. For 2025, we expect to deliver 90 million plus in total EBITDA. Of that amount, we're targeting 30 million plus in EBITDA contribution from external customers and we expect our profitability to be in line with that of other three PL. Now I'll turn it over to Prentis Wilson to share more about Varis, ODP's B2B digital procurement platform.

Hello, everybody. I'm Prentis Wilson, and I lead Varis. I'm excited to be here today to tell you about our journey and tell you about our business and what were the problems we're solving and the value that we're creating? Varis is a technology-based procurement platform. We're essentially rethinking the B2B procurement space for both buyers and suppliers. Our focus is on indirect procurement and we're simplifying the entire process really solving needs that we know are out there on both sides of the equation. [Video Playing] I've been in the B2B procurement space for north of 25 years now. I've been running procurement businesses, whether it's building transformational technology-based procurement platforms or running procurement organizations. I've had a lot of time in this space to really understand the needs of the customer, needs of the supplier and really the pain points in between. And I'm really excited about the opportunity in front of Varis, the approach we're taking, and the progress momentum we're making. And we've made significant progress to-date in terms of the technology, our platform, customer validation, and the feedback we're getting from both buyers and suppliers and I'm really excited about what's in front of us. Now, to build a platform like this, you have to have deep know-how and deep capability. I'm really, really excited about our team. If you're going to build a platform like ours, there is no better team in my mind on the planet to go do this. We have significant expertise and know-how and demonstrated results, building transformational B2B procurement technology. Now when we look at how we're architecting Varis, we're architecting it to uniquely solve these challenges. We've spent a lot of time with both buyers and suppliers understanding what their pain points are, understanding the difficulties, and this entire procurement ecosystem, and it's huge, when you look at the opportunity, indirect procurement alone in the US, according to Forrester is an $8 trillion market segment. In terms of all the services and goods that companies need to buy and procure to be able to operate. Now the technology that's available to these businesses, in some cases, doesn't meet the needs. Some of these companies still use paper or fax machines or emails to try to transact. A lot of the buyers attempt to secure customer agreements or drive contract compliance and it's almost impossible because on the buy side, the technology to adhere to those contracts or to be able to direct those purchases doesn't exist. Everybody needs a better way and that's what Varis is focused on solving. Now, what we do is, we bring together lots of different technologies. Essentially, there's a number of point solutions out there today that attempt to solve various parts of the problem, but nobody really integrates everything into one package that says complete solution. And that's what Varis is doing. So, we're bringing the consumer like super convenient buying experience that people demand and are used to in their personal lives, with a trusted network of suppliers and pre-negotiated or pre-established agreements, along with a world-class set of technology and procurement technology that's designed to serve the needs of both the buying community and the supplying community all in one convenient package. No one offers exactly what we offer and we hear that repeatedly from our customers that are giving us feedback and adopting our platform as well as the suppliers that use it, but it's really obvious when you actually see the technology lives. So, let's go into a demo, and actually hear from our customers that are using our technology. [Video Playing] So, it's great to hear from our customers who are using our technology and when you look at these customers, to-date, we've had a 100% customer retention since the acquisition of BuyerQuest and not only are those customers staying with us, but we see a 64% increase in spend under management. That's they are increasing their adoption 64% year-over-year since the acquisition, which shows strong value and strong capability that we're offering for them. And our platform scale super easily. So, we're now at north of 21,000 unique locations, including everything from manufacturing organizations to some of the largest, world's largest quick service restaurants. But don't just take it from our customers even some of the leading industry analysts in the field recognize our solution, Varis. When you look at both customer scores as well as the industry analyst scores, Varis is the value leader way up on the right in terms of our e-procurement capability. And we're really excited about this technology and we're excited about the capabilities we have and we're most excited about is the opportunity to take that technology and scale it down market to the mid-market and SMB space. And when you look at the business that we inherited or business that we inherited or that we acquired from BuyerQuest, lots of large enterprises using our technology on a subscription-base, generating annual recurring revenue, which is a great business. But we're really excited about the opportunity to take that technology and really bring it down-market to the mid-market in SMB space. And here we can go into solving clear customer problems and really bringing technology to Veyer in a world where, again, people are dealing with fax machines or emails, you have customers who spend $700,000 a year for example in certain categories, and they have contracts to drive that spend to specific suppliers, yet they have no technology to be able to do that. And both the suppliers lose out and the buyers lose out, when that's the case. While through our technology, this segment of customer now can get control of their purchases, and can direct their purchases to the suppliers that they want to engage in. One great example of how we're taking our technology and moving down market, is with our partnership with Microsoft. With Microsoft, we're partnering with the Dynamics 365 platform with their business-central customer base, and we're essentially taking Varis's procurement technology and embedding it into the business-central ERP suite, creating significant value for a targeted SMB segment, which increases the value for both us and Microsoft and creates clear value for the suppliers and buyers that use that platform. So as we take our technology to move down-market, we're accelerating that growth by really building on a subscription-base model that we acquired through BuyerQuest and adding on to it or expanding with the GMV-based model, and that GMV based model really helps us reduce the hurdle rate for these mid-market and SMB customers, enabling them to adopt our platform quicker, but it also helps us to monetize the value we're creating as we increase growth and drive value for the supplier community. So, Varis is making super-fast progress. If you think about it, I was announced at the beginning of 2021, we acquired BuyerQuest in conjunction with the demand that we saw from our customer base; we began building the team; we launched our technology; we developed a full-integration with Microsoft; and we've begun now getting referenceable customers, getting proof points, and getting real customer adoption and driving growth; all in a super-short amount of time. And as we look forward, our focus is on efficiently scaling the platform, continuing to build out capabilities. And as we look out into the far future, the way we've architected our platform enables us to add new capabilities that we can monetize in the future. Varis is a logical expansion of the ODP Corporation. ODP has super-strong assets in the B2B space and a long tenure with B2B customers. And if you think about the existing technologies, adding a procurement technology on top of the existing assets is a logical addition. Because, we can continue to expand the value that ODP can create, but we can also add value for the existing businesses. If you think about ODP Business Solutions, for example, there is a broad set of customers that ODP Business Solutions supports today that can get extreme value out of Varis. Varis's partnerships, where we can create value for ODP, driving growth for ODP Business Solutions and their existing customer base, and where ODP customers can continue to accelerate the growth of Varis, for example, we're working with a customer today who spends roughly $700,000 in a category. And they can't direct those purchases appropriately to ODP Business Solutions, even though they want to, and partly, because they lack that technology. Just by using Varis, ODP gets a significant increase in growth from an existing customer, and that customer gets the technology that they need to better manage their suppliers. Now, Varis technology business is a hyper-growth business anyway you look at it. If you look today, from 2022 looking forward, by 2025 we expect the business to grow to be north of $120 million in revenue. That's a hyper-growth. But even beyond that, if you look at the business will turn cash flow positive at the end of 2025, and that will exit 2025 with strong exit velocity and a lot of growth trajectory in front of us. As we look to the future, we're exploring alternative funding sources for Varis. And essentially the core platform for Varis is in place. We have clear growth trajectory in front of us. We have strong reference customers, and clear market fit with a compelling value proposition. But because of the size of the opportunity in front of us, we think there is significant value and are seeking alternative funding sources by partnering with Perella Weinberg to raise external capital. By doing so, it helps us accelerate the growth and capture additional growth opportunities in the future. This will externally validate Varis's value proposition and provide a valuation reference point for ODP shareholders. Now I'd like to hand things over to our EVP and CFO, Anthony Scaglione.

Hi. I'm Anthony Scaglione, Executive Vice President and Chief Financial Officer for the ODP Corporation. I'm super-excited to be here today to tell you more about our realigned foundation and our path to creating long-term sustainable value for shareholders. Before we go into the specifics, let me walk you through our new four segment operating and reporting structure. We've recast our financials from two reporting segments to four reporting segments, with the following key changes. We've moved our e-commerce business, officedepot.com, which previously was part of Business Solutions into Office Depot. Combining our Consumer E-commerce business and our Brick and Mortar Retail business positions Office Depot to become a true omni-channel provider, aligning its go-to-market strategies to address the needs of small businesses, education customers, and consumers. Moving our e-commerce business out of ODP Business Solutions has also positioned ODP Business Solutions to sharpen its focus on pursuing growth and driving margin through our B2B distribution platform, capturing the growing needs of enterprise level companies as well as small and medium-sized businesses. Next, we stood-up Veyer, our supply chain and logistics business. Previously, Veyer was a cost center allocated to our operating segments. By creating this new segment, we are transforming it from a cost center to a commercial profit center, to help further leverage existing assets and pursue external growth opportunities. And we have now aligned the assets and reporting for Varis into a new segment, which historically was reported as part of our corporate segment. While I recognize, there are lot of moving parts in the new reporting structure, and there is an increase in inter-company relationships, primarily among Veyer, ODP Business Solutions and Office Depot, let me walk you through some of the details supporting our new routes-to-market. First off, the work we undertook as part of our strategic evaluation process earlier this year, gave us a head start in creating more formal relationships between each of the entities. And I want to thank the entire transformation team for the significant lift. Today, there are formal commercial agreements in place for Office Depot and Business Solutions to procure goods as well as supply chain services from Veyer. These agreements contain arm's length market-based pricing and provisions, driving transparency to the true cost for these services. Veyer's revenue from Office Depot and ODP Business Solutions will be eliminated in our consolidated reporting to avoid double counting. However, as Veyer is now its own profit center, outside of the fees it collects for the services, it provides its captive customers; it will pursue growth opportunities with third parties a business you heard about from John. This will help drive EBITDA growth over time. Above and beyond the EBITDA generated from serving its internal customers this is an exciting opportunity for ODP, as we continue to maximize the value of our supply-chain assets this quarter we have completed the organizational realignment required to support the four BU structure. And all of our employees are truly energized by the possibilities to four BU model brings. By creating the four BU structure, we have further aligned our assets and go-to-market strategies and this will provide greater transparency into performance of each business unit, which should lead to further opportunities for value creation. This four BU model underlies our algorithm for shareholder value by optimizing the business for stability and EBITDA growth, while enabling transparency into performance and market-based comparability. We have three main building blocks for driving shareholder value. First, as you heard from Gerry, we will continue to embrace our low-cost business model across the enterprise. Our commitment to our low-cost model continues to be a core tenant of our business. Second, we will focus on strong EBITDA and cash flow conversion. We're driving stability in Office Depot and ODP Business Solutions with a focus on cash generation, including the continued optimization of our retail footprint and a laser focus on margin improvement and adjacency growth in Business Solutions. We're also strengthening our EBITDA growth by further utilizing our assets through Veyer to pursue and win new third-party customers along with doing more with existing customers. And through Varis, we're leveraging the strength of our B2B relationships and our procurement expertise to secure a digital future and enhance the long-term growth. Third, and this has been a key focus area for me when I joined ODP two years ago, a clear capital allocation plan that balances investments in the business with returning capital to shareholders. Now, let me tell you about our four business unit structure, and each BU role in our algorithm for shareholder value. Each of our business units have a unique role to play in our portfolio over the next three years. ODP Business Solutions offers the opportunity for EBITDA expansion and sales growth, as this division continues to benefit from back to work trends as we pursue growth in high-value adjacency categories. Our Omni-channel Retail business has been our cash engine and we will continue to rationalize our store footprint, execute on the plan that Kevin described earlier, and drive the business to get to flat, I'll say flat positive same-store sales by 2025. Standing up Veyer will allow us to be laser-focused on ensuring we stay vigilant and being the lowest cost provider for serving our internal customers, while driving plans for external EBITDA growth, and Varis, which is our digitally native strategy and path to driving a new avenue of growth over time. These synergistic business benefit from shared management whether that's shared buying power between Business Solutions and Office Depot combined procurement experience and technology expertise of ODP Business Solutions and Varis or the benefits derived from the structures refined focus. Over time, we expect to evolve even further. Today marks the beginning of a multi-year journey as we transition. Over time, we will more closely align incentives to multi-year objectives of each business unit and ODP Corporation. We will also move gradually towards BU level capital structures and hurdle rates, all the while keeping our focus on the low-cost strategy maximizing our business unit structure, our four BU structure will be supported by our enterprise capital allocation plan. Our disciplined capital allocation plan will prioritize the highest value opportunities across our business units. We expect to deploy approximately $1.4 billion of liquidity generated from both cash from operations and leverage over the next three years. We will balance our continued commitment to returning capital to shareholders with strategic and selective investments for the future. In terms of returning capital, we plan to buyback 1 billion worth of shares over three years. We're also planning for approximately $350 million in CapEx in the same period, a range that remains in line with CapEx levels over the past few years. Lastly, we will look to selective opportunities to continue to grow our federation strategy. And as we manage our business dynamically, we will look for additional opportunities to drive high-value projects across the business. Across our portfolio we plan to deploy capital in the highest value opportunities with 60% to 70% allocated to drive growth through growth CapEx and Federation M&A, and the balance deployed for operational CapEx maintenance projects. Within ODP Business Solutions that means selective investments in growing adjacencies and tuck-in M&A through our federation strategy. In Office Depot we'll continue to be selective with capital, prioritizing e-commerce capabilities to better serve our customers and drive growth. Veyer has focused on ways to lower costs for internal customers and better enable third-party growth by utilizing existing assets and through modernized technology which means we do not anticipate investing in capacity in the near-term. Varis scaling to lower operating costs and adding high-value monetizable functionality as Varis become self-sustaining CapEx will shift towards growing the other business units more aggressively. And as Prentis has mentioned, we aim to bring outside investment to help solidify Varis's value proposition and accelerate its exciting growth journey. Across the enterprise, the investments we will make will help maximize value for our shareholders, allow us to pursue future growth, while continuing to maintain a fortress balance sheet and liquidity profile. We are truly on an exciting journey. To put this journey into perspective let me first recap the last few years. We've seen declining revenue in 2019 to 2021, as we've dealt with closed stores and dealt with the challenges of the pandemic. Looking forward, we expect to inflect our revenue path and deliver flat to slightly positive revenue growth by 2025. We will do this by continuing to optimize our retail footprint with a plan for positive comps by 2025 building on Business Solutions momentum and by standing up Veyer and Varis to pursue new avenues of growth. Coupled that with our continued low-cost business model, we expect to expand EBITDA margin to more than 6% of revenue by 2025 with a continued focus on cash conversion, as a result, this plan will drive stability in our top line, help maximize growth in EBITDA. And when combined with our capital allocation plan, will drive strong EPS growth. Going forward, we believe we're prepared to be a stronger business and are well-equipped to tackle economic cycles. As you heard from Gerry earlier, we have a strong foundation and ecosystem that we can flex. We are well prepared and well-versed in navigating economic cycles. Some of this can be enabled through an acceleration of our ongoing low cost business model, assessing our store footprint and cost to serve, leveraging our ample liquidity available through our ABL and other assets and adapting our investment allocations. These levers give us confidence to navigate economic cycles. To track our performance, we will also provide guideposts along the way. You've heard the word transparency throughout the day. We want to make sure Investors have transparency into the performance of each business unit, the value each is delivering and the progress along our strategic journey. As such, beginning in fiscal '23, we will provide clear key performance indicators along this journey to help track and measure execution against our strategy. Here are some of the metrics we have aligned on across each business unit to help provide insight into ODP's progress and value proposition for shareholders. As we embark on the next three-year journey, it's important to highlight the milestones we will hit as we exit 2025. We will deliver a consumer business that will enable us to stabilize revenue and begin to show positive comps as we leverage the full benefit of an integrated omni-channel strategy. We will return ODP Business Solutions to pre-pandemic margins and cash flow while growing adjacencies. We have the right to win in many adjacency categories and I'm super excited about what Dave and his leadership team will deliver. We will have positioned Veyer as a true third-party supply chain and logistics Company with EBITDA contribution exceeding $30 million and the Varis flywheel will be well on its way with significant revenue growth and positive cash flow. Finally, having a conviction in the value of ODP, we would have returned $1 billion in shareholder capital I'm extremely excited about ODP's future and look forward to delivering on these commitments over the next few years. With that, I will hand it over to Gerry for closing remarks.

Our entire team is excited about our realigned structure and how this positions ODP to unlock the power of our business. And as you heard, it all starts with our disciplined capital allocation plan, which will prioritize the highest value opportunities across our four BUs and return capital to shareholders. And each of our business units has an important role to play in unlocking this value and providing greater transparency into a high value business segments. First, Office Depot, now a true omni-channel consumer business with an efficient retail footprint and an award-winning e-commerce platform is and will continue to be a strong free cash flow engine. And as you heard from Kevin, we've changed the trajectory of this business and have a clear path for the future. Next ODP Business Solutions with dedicated sales professionals and an expanding portfolio of products and services will be a driver of growth, margin expansion and cash flow generation, as it continues to benefit from the recovery of the pandemic and captures new avenues of growth. And through Veyer, our world-class logistics and supply chain business we will pursue new avenues for long-term growth and margin expansion. Veyer will leverage its existing capacity to better serve internal customers and generates growth in services to third-party customer we're excited to unleash Veyer's unique and valuable assets to ensure we realize our full value. And, finally, Varis our digital platform business that creates a modern and differentiated marketplace experience for buyers and suppliers, will drive hyper growth over the next several years. With the path to cash flow positive by 2025. Varis, which is launching this quarter after successful bookings and supplier growth with a team that has already built a $25 billion business helps to solidify our business for the long-term. And in order to further accelerate our growth objectives and validate our business model at Varis, we are evaluating potential strategic investors who may participate in the next phase of funding. We've engaged Perella Weinberg to help us identify these potential strategic investors, who can participate in the equity of Varis. This can help us create a separately value component with an ODP Corporation validating the progress and potential of Varis so far. By monetizing a portion of the equity in Varis, we will reduce ODP's future capital commitments, while providing ODP investors with a continued opportunity to participate in the tremendous upsides we see in the growth of this business. We expect to provide more on this in the coming quarters. In total, we believe our new structure will provide greater transparency into the performance of each business unit for investors to value appropriately. We are excited about this journey and the value we plan to deliver this adds up to a very compelling Investor story we will generate stable cash flows from our core cash engine. We will maximize the unique value of our assets. We are combining near-term stability and cash generation, while setting us up for long-term growth via Business Solutions Veyer and Varis and all this is wrapped up in the newly transparent four BU structure now lets investors measure and monitor the performance of our business units across the company. This transparent four BU structure will allow our investors to properly value our business and change our multiple today from the current distressed retailer for the entire Company to one value creation for the share buyback focus, the cash engine retail and the three expansion opportunities across ODP Business Solutions, Veyer and Varis supporting our strategy, we will be disciplined and transparent in our capital allocation prioritizing the highest value opportunities across BUs and the return of capital to our shareholders including plans for share buybacks of $1 billion, which we're very excited about. We hope you enjoyed today's presentation and are as excited about the ODP Corporation's future as we are. Now after a brief pause, we'll open up our panel speakers for Q&A. Thank you for attending today.

And welcome to the Q&A portion of our meeting today. I'm Tim Perrott, Head of Investor Relations for The ODP Corporation, and I'm here with Gerry Smith, our CEO and all the members of our team who you heard from today. Before we go into Q&A, I just wanted to toss it over to Gerry, see if you had any opening comments.

Thanks, Tim. We're super excited to be here with you today and thanks for joining our Investor Day. Want to take a few quick moments to reaffirm a few things. First of all, from a Q3 perspective and for the 2022 year, Anthony and I both reaffirm our guidance for the year. I wanted to redeliver that message that we're confident in our operating results, and we're going to continue to deliver this year. And from a Investor Day perspective, super excited about the $1 billion share repurchase plan and also the ability to almost nearly double our earnings per share. Additionally, I think, a really key point for all our investors is, we have an outstanding operating model, we call the low-cost business model. We have driven over $500 million of operating savings. That does not include the store closures by the way over the last five years and it's really repositioned us from an EBITDA perspective and put us in this position today that allows us to return capital to shareholders. And again, that's all from having a strong balance sheet. And we're super excited from a ability to unleash these four business units, I think that's so important from a transparency perspective and it gives us a great confidence that as an investor, you're going to be able to see the value of these four business units and that transparency across our cash engine of Office Depot across ODP business solutions for growth in earnings across unleashing our assets with Veyer and our future digital platform I think it gives us growth across all segments with Varis gives us a chance to expand multiples. So, thank you for being here today, we're excited, and Tim, let's dive into the questions.

Great. Thank you, Gerry, and thank you to all of our listeners today for submitting questions. We actually received a lot of questions as you might imagine and from a procedural standpoint. What we've done since many of the questions are either the same questions on the same topic as we've group these together by topic and we will address these as we go forward. So, with that, I'm going to start with you, Gerry. One of the key narratives that you've heard today that investors have heard today is our commitment to enhancing value for shareholders. And the question is -- first question is, given the market environment, given the potential for a recession. How confident are you that we will be able to deliver on our $1 billion share repurchase plan.

We're committed to share buyback, I think it's important to look back and say, what do we do through the pandemic, we have great operational execution, we have a low cost model. We have our 5C culture we've demonstrated, we can deliver results for all periods of time and we're committed to this and we expect we're going to maintain that aggressiveness in our share buyback program that you saw in Q3. And additionally, we also made it clear. We have no major acquisitions. Now, we're still going to invest in growth all this is in the plan. We can invest for growth, growth future but extremely committed to share buyback program going forward. Anthony, I'll let add some color as well.

Sure. Thanks, Gerry. So, first and foremost, I think you've heard from both, Gerry and I today about our commitment to returning capital and more importantly the value we see in ODP. We feel a disciplined buyback maintaining that consistency and stability is in the best interest of our long-term shareholders. Gerry, just mentioned, we will be aggressive in the short-term as we see there is opportunities to continue with the pace that we executed on in Q3 and we feel really confident with the plan over the next three years.

And Tim, the last thing I'll add is, we both think the stock is undervalued. Well, we do.

Yes. Great, thanks. Thanks so much. And I'll turn to another key part of the narrative today which is at ODP Business Solutions and returning back to 5% plus margins. And the question here and this is a very good question. I'm going to turn to, David, is why can't EBITDA margins get higher than 5%, and why can't you do it sooner?

Tim, I think I've gotten that question every single day since I took over my new role.

Gerry, did you submit that question?

I did it and I'm the guy that asked every day. I'll maybe even higher than 5% in the future. You never know.

That's true, all kidding aside, the 5% EBITDA as a floor. We fully expect to exceed that goal. Strong margins in this quarter proved that we can do it. We've done a lot of strategic actions. We've worked with our customers. We're addressing some of our unprofitable customers. We're looking at how we can leverage our fixed cost infrastructure, a little better. We're partnering with our customers to try to drive purchasing efficiencies. So, reducing small orders, or looking for opportunities to deploy our sales organization in a more optimized fashion. We have a great inside sales organization that can help us do that. We look at. You'll see some margin expansion through changes in our assortment mix, private brand penetration and then leveraging our federation strategy will also improve our overall margin mix. So, I want to be clear, the 5% a floor. But we do plan to get to 5% on a consistent basis, while also making margin investments our targeted customer acquisition and adjacency penetration.

Excellent. And David, I'm going to stay with you on this as well. Another question that came in a key part of our narrative and our strategy is executing upon our adjacency categories high value categories that we can bring to customers and the question is, can you tell us more about your adjacency strategy as well as any insights on specific customer traction.

Yes. That's a great question. So, first of all, we've already got a really solid adjacency business at almost $1.8 billion but the way we got that business was because we have a really strong core supply business. We have almost 30% market share in core supplies and that has given us the really strong relationships that are needed to get the credibility to go into some of these other categories. So, as I look at the adjacency space, we've got about 40% of our business now in adjacencies, but the TAM the total addressable market is over $120 billion. So, the growth opportunity there is really, really big. In fact, our furniture business today is over $500 million. Our cleaning and breakroom and facilities business is almost $800 million. Our technology business is almost $400 million and print, promo and apparel over $100 million. So, we've already got some credibility. We have great customer relationships in that space. We've got great vendor relationships in that space. We are deep into product categories and the best part of it is, our customers already by these categories, so we don't have to convince them to buy these categories, we just have to convince them to buy from us. And I think, we have a pretty compelling value proposition to do that. And so, I'm super excited about how much we can bring to the table for our customers and help them reduce the number of vendors that they have save them money and really create some growth opportunities for this company going forward, right.

Great. That's excellent. Thank you, David. I'm going to turn now to both Veyer and Varis, so I'm going to be sending this question to both, John and Prentis. Could you give some specific examples of transactions with external customers at Veyer and at Varis that generate incremental revenue? Maybe, John, you can go first and then Prentis.

Sure. I'd be glad to. I think, as you heard today on the testimonials that we have one great example with Infinity Global, where we provide distribution and fulfillment for their apparel brand, Le Tigre, and that's a great example of the type of customer we're looking for and the type of services we want to provide. You also heard from [Flow Hydration] [Ph] as well, where we provide distribution of their water products, so great opportunities for us and these are the type opportunities, we're going to go after.

Prentis?

Awesome. Yes. I'll give a couple of examples. So, it's important to point out every customer that we acquire through Varis drives incremental revenue for both, Varis and ODP. A couple of interesting examples though, looking at there was a customer who just went live over the last month. And so, when we look at them, they went live over the first four weeks, they ramped up to 80% of their locations that are spread across the geographical area, but importantly they're generating north of $2 million a year in terms of run rate and their purchases. And that revenue is going directly to the suppliers on our platform, including ODP and these are all now net new wins for the suppliers through Varis, so that generates revenue for Varis. It generates revenue for the suppliers on our platform and it's saving that customer money. Another interesting example is, we're working with the customer, an ODP customer and a lot of times we find these mid-market customers they lack the technology to really direct their purchases where they want them to be. And so, you have a customer who has a contract with ODP whose intention is to spend a certain amount of money, but they don't have the tools to go do that. And so, when that as that customer ramps on our platform, what happens is ODP Business Solutions now gets more revenue from an existing customer, because the customer now has the tools to transact those purchases whether they want, but also all the suppliers now in the Varis platform get incremental revenue and Varis gets revenue from those transactions. So, it's a complete win-win all the way around.

That's great. Thanks. Thanks so much to both John and Prentis. On a related question on both Veyer and Varis but maybe from a different perspective, and I'm going to direct this question to Anthony. The question is what would 2022 cash flow be if you stripped out Varis and Veyer?

Great question. So, Veyer if you think about Veyer's primary operations continues to support our internal business both ODP Business Solutions and Office Depot. It's in the early stages, as John just mentioned, launching the third-party business. And as you look at that business and the utilization of the assets that's cash flow positive today. As you look at 2022, from a operating standpoint for Varis, 2022 is our peak year of investment, as we mentioned, and cash flow to-date roughly has been equal to what we outlined at the beginning of year, cash flow to-date is around $40 million.

Great. Thank you so much.

I'll add a comment. All these investments, number one, Varis using existing capacity, we're not adding capacity in Veyer. We're leveraging that asset. So, it's not a huge investment. There are investments and modernizing. We would have did that as a cost center anyway. And from a Varis perspective, all this is built into our long-range plan. We have all this into account already. So, there're no incremental investments over and above. So, investors to understand $1 billion is secured and committed, and this is also committed, if we want to make sure, we continue to have other avenues for multiple expansion, value creation, and growth expansion as well.

Excellent follow-up, thank you so much, Gerry, I appreciate that. And this next question is going to go to John as well with Veyer. Getting a lot of questions regarding differentiation because I think we've seen a lot news from other companies that have supply chain assets and some form that are trying to leverage those in a different way. But the question is, could you explain what really differentiates Veyer's capabilities from those other integrated supply chains and other 3PLs that are out in the market today. Could you expand on that?

Absolutely. The short answer is the breadth of our offering. So, if you really look at the capabilities that we have, we're nearly perfectly matched with 3PL market and we have capabilities to provide product development, sourcing, distribution, fulfillment, last mile, returns processing and that's what truly makes us unique and differentiates us against other players in the market. We're really excited to be able to feature these capabilities to new customers at market competitive prices and leverage our large network, our next day delivery, and our end-to-end distribution and fulfillment capabilities. So, really excited about the opportunity and we are uniquely positioned for sure.

Excellent.

And Tim delivering the 98.5% of the zip codes next day, I've been in the supply chain for 25 years. This is a great asset and Anthony and I have both said multiple times. We think it's important to unlock the value of this asset, because most people don't recognize how valuable this asset is. Companies can't just go out and build this, right, 9 million square feet that would be hundreds of millions of dollars for people trying to do. We've got capacity, let's leverage it, let's turn this into value for our shareholders.

Exactly.

And I would just add, and John mentioned it, it's really the utilization of the assets that we have in place. It's optimizing that utilization and driving that incremental EBITDA. So, when you look at the conversion or the unit economics, it's highly accretive to the overall business and one of the areas that we're going to be leaning into.

Well said.

Yes, that's great, as well as delivery directly to the desktop too, which is a big advantage that not others have the capability to do. So, I'm going to turn now. We've got a few questions, which I think involves talent, and this is a -- I think, a great question, because we've been on an interesting journey over the last several years as we have come to this point in our strategy and the question is for

That's a great question and just so fundamental to our continued success. And I am proud of the fact that we have always been able to attract top talent across all of our business areas and parts of the organization and it hasn't been easy. Over the last stretch, but we've managed it really well and that's been a critical component and continuing to identify ways that we have individualized commitments to our associates in terms of their incentive programs et cetera directly aligned with the business performance. We've been able to continue to attract that talent into the organization is really exemplified in our 5C culture. You heard a lot about that for me, Gerry, and others earlier this morning and that is a fundamental draw both to new candidates and associates joining the organization as well as our existing associates. They live it and breathe it on a daily basis and new hire see that as well and that's a key attractor. So, we continue to plan for that on the journey and be able to operate effectively.

That's great. That's excellent. And I'm going to turn now to a topic that is really a key message from our narrative today. Specifically and I would say ingrained in our DNA is our low risk business model. So, I'm going to read this question directly and word for word. Gerry, can you elaborate on the specific strategies the ODP Corporation will use as it prioritizes a low cost operating model?

Yes, I think, you said it well, Tim. If you go back and this is one of the things that I'm most proud of in my tenure here and what this team here has delivered. I mean taking out $500 million in operating costs in the last five years think of the difference in the company, we hadn't done that, but we did that, it's part of our sort of 5C culture. We have a rigorous what I call BMS or business management system. I mean Dave,

Excellent. Yes, the low cost model wins.

Anthony, why don't you join a few comments?

Sure. So, I think the most relevant one is, when I first joined ODP little over two years ago. I sat with Gerry and he walk me through the

Yes, I mean, obviously the most visible part of our expense management process has been around optimizing our real estate footprint. And we've done I think an outstanding job of really making decisions as we've gone through that process to optimize cash flow, but what's not as visible are all of the detailed decisions that we make to manage the individual line items of our P&L as well. Every single line, distribution costs, as Dave talked about travel and expense, right, even things that seem small. When you look at the big picture, they add up over time and especially when you're thinking about a chain of 1,000 stores every little piece you can make every little change you can make and really drive tremendous value across the organization. One of the things we're most proud of is really focusing in on efficiency and operations and trying to maximize the amount of time that we have our associates focusing in on client engagement versus doing repetitive menial tasks. And so, we've done a lot of work on operational efficiency and I know John you've done some similar things in supply chain as well. You want to share that?

Yes, absolutely. I mean I think operating a large supply chain, you have to be focused on cost, right. And so, we fully embrace the low cost model. We drive a culture of continuous improvement. We have Lean Six Sigma teams that drive hundreds of projects to drive efficiencies out of the business. We also have proprietary just in time algorithms that allow us to minimize the working capital for retailers.

Much appreciated, John.

Right and we've done a really great job of managing labor and labor costs in a really challenging environment. And maybe

Yes, it's a great segue, and again such a point of pride in the organization around driving the low cost model going back to our zero-based budgeting initiatives and really a part of having it become that DNA was really around empowering our associates to pause and look and see what can we do differently asking for that feedback. The number of times we did round tables. Gerry and I and the rest of the team with associates asking where are we having waste, where are we needing to make efficiency changes, where do we have opportunity for automation and really unleashing that feedback from the organization was so critical. And especially in our supply chain and really that's been able to help stabilize the retention over the last few years. And as we get even more efficient in our operations, we've been able to help mitigate some of those labor market challenges across not only Kevin's business, John's business, but elsewhere in the organization, so, super passionate about this topic and very proud of this team and the entire organization.

Thanks,

Yes. Thanks, Gerry. So, when I took over the business, one of the first things I did was kind of look at the business from top to bottom. So, there were lots of opportunities to kind of rethink the top line and how well we're passing on cost increases. The things that you just kind of need to do the blocking and tackling, but there was also a lot of opportunities to kind of rethink how we're looking at it from an expense structure. One of the things I rolled out, I copied my friend Kevin over here was being the CEO of your business. So, every single person within the ODP Business Group knows that they have to be the CEO of their business. They need to think top to bottom. They need to think about every dollar they spend. Kevin mentioned travel and entertainment. We have to have every single person in our organization thinking every single dollar that they spend matters to the bottom line. So, we've got the whole organization aligned around it. We're working with John and the supply chain team really thinking about how can we optimize our customer deliveries? We're working with

Yes, I'd be happy to do that. Okay, if you think about how we've architected Varis and how we've built the platform. We built essentially a B2B grade commerce platform. This design sort of B2B first and the way we built it is we've built it such that it lowers the cost for our suppliers to be able to serve their customers and helps drive compliance and growth. And so, I gave you the example earlier around how we're driving incremental revenue, but just picking up on that, there's thousands and thousands of customers at ODP that can benefit from that model that drives incremental revenue, but also as ODP and frankly other suppliers who have fallen in this exact same playbook with us use our platform, it lowers our cost to serve. So, they're getting a commerce platform that they don't have to fund and grow, expand and invest in, they get the benefit from and then they get a benefit from the growth that comes out of it as well.

Excellent. Thanks to everybody for the commentary. And I'm going to turn the table over more on the consumer side for a minute. We have heard a lot yet from Kevin. But you did talk about our store rationalization and optimization. So, Kevin, being our cash generation part of our business strong cash flow. The question is regarding store footprint and transfer rate. Why aren't you completing your store footprint optimization earlier than 2025 and will the transfer rate kind of change for the remaining 100 to 200 stores and kind of what it's been traditionally so?

Right. Well, first, I want to say the Office Depot team is thrilled about our future and we're really excited and aligned on our number one business priority, which is to generate cash and EBITDA for the organization. We've really power investments across the ODP portfolio and create significant shareholder value. And I just want to take the opportunity to thank our retail associates who just have done an amazing job contributing to the financial health of our organization during the last three very, very challenging years. Dave talked about CEOs of their businesses, Gerry and I committed many years ago to really treating and empowering our local teams to run their businesses locally and it's generated incredible results. And as a result of that positivity, we've been able to exceed expectations and maintain operations and more locations than we originally planned. As an individual store comes up for renewal or extension or closure decision, we run a very thorough and disciplined process that we've been activating for years that looks at a number of data points, including sales, traffic, profitability, local stores in the market that are transfer targets for that store as well as lease terms and even some information about the market. So, the competitive market localized demographics. We take all of that information together and we're really trying to find the optimal way that we can generate the most value through that location, and the decision that we make around it. In all cases, that process and those decisions have led to an extremely profitable chain at this point. In fact, over 95% of our locations are EBITDA positive currently.

That's testimony you and the team and great leadership and organization.

Really, it's talks about that culture.

That's not how our people think probably externally but 95% of the story.

I think that would be surprising to many people and really does talk about the culture of accountability and client engagement that we've built. And the results are there to show it. So, we know, we've generated record high profitability margins and customer satisfaction over the last several years. And as we look forward and look to implement our new omni-channel strategy from an integrated perspective, as Gerry said, the first time in the company's history that we have an integrated omni-channel retail company really focused on connecting the dots between e-commerce and the stores. We're excited to even make a stronger more positive impact on results and have a healthier and more sustainable business for the future.

Excellent, great. Thanks. Thanks, Kevin. I appreciate that. I'm going to turn the question now over to Gerry. This question involves M&A and divestitures. We've gone through a lot of the past two years or three years of doing a strategic review of parts of our business, but our divestitures still a part of the ODP long-term plan?

First, Tim, we're excited by the four BU strategy. I want to answer this first. I think it's super important. We set up a structure where these are independent units, there's commercial agreements between Veyer and ODP and Office Depot. We have a corporate structure that looks over the top and make sure we're efficient capital allocation expenses. But we have transparency, we've never had transparency before and I think there is a multiple expansion opportunity I keep talking about that we're valued as a retailer, but there's all the other three units that have a lot of value as well. Now, number one thing we do here at Office Depot what I focus on as the CEOs, how do I maximize shareholder value. Not just in the short-term and the long-term and I think our $1 billion share repurchase plan today is testimony to that but we also do have FTE. They had a great slide that showed, we also have some investment from a growth and maintenance of our capital as well. And so, I think it's balanced we will never not look at that Tim, and we will always look at every opportunity is what's the way we maximize shareholder value. That's the filter we use before being structured, it gives us an opportunity tell our transparency for the first time to our shareholders. And they can help them have that evaluation as well. We're committed to driving shareholder value.

Right. And that's excellent. Always do the lens of creating the most value for shareholders as possible. That's great. And, Gerry, I'm going to stick with you, because, for the first time really unveiled our four BU structure today and they have a lot of in-depth look at the opportunities and our strategies, but here is a great question. What led to the four BU model in terms of what was the process, and going forward -- [Multiple Speakers]

Well, I think one of the most effective way for people for our leaders to be effective is to learn. And observe and we learned a ton. We learned so much from going through potential sale process potential separation all of this, we discussed it and our Board supported and Board asked great questions and have done a great job. We learned so much for that process, and we went back we captured those learnings and we think again why we think we're better together? Number one is, creating this low-cost operating model, but it's really an operating engine that just produces cash and value for the company. But I think the second piece we said and through some of this process, some of the partners we were having conversations with, they saw the value for the assets. We knew there was value there. Anthony and I, looked and said, Wow! How do we unlock those values even more? I think that's where opportunity is out there, and so we're excited about with that. And obviously you need future growth. We're going to continue to, I mean Dave has done a fantastic job. It's a four of a five point business I push him literally every day, I have a nickname for him, as a higher digit than five. And we want that growth as well. And our federation has done a tremendous job. I want to thank our federation leaders we operated differently than most companies. We want them to have those sales relationships with customers because, that's the asset, is the customer in that relationship and we have a ton of customers and those are valuable for us. And then, obviously -- and lastly, it's having an ability to, "Hey, let's not just be a short-term company, let's make sure we protect these investments for investors for a long period of time as well." We didn't lever up, we kept our balance sheet strong, and the investment Varis is that. We looked at all the assets of Veyer and Dave's business and said, "Hey, let's go build this B2B procurement platform." Prentis and his team built a $25 billion platform B2B successfully. I mean, there is a bunch of the team that did that here, they held those learnings. Back to the learning key, and we're going to go leverage that. So, super-excited with the four BU structure, and we're going to go out and talk to a lot of our investors here in the very near future, starting today and go on the road, but we're super happy with the transparency and the opportunity for growth. And most importantly, driving a multiple expansion, because right now we're a retail-focused multiple, we should be retail -- Kevin has done a brilliant job with his business. We have all -- these three other opportunities to create value, plus we had the share buyback that's going to drive value as well because nearly doubling earnings per share over the next three years is going to drive value as well. I won't be specific on a target, but the reality is, all these things together with our cash engine and our culture is going to deliver value for the business.

Excellent. Thank you, Gerry, I appreciate that and I'm going to stick with the four BU model topic for right now and maybe from a different perspective and in Anthony's presentation today. I think we heard moving over time from a single capital structure to a four BU capital structure. So, the question is just what does that transition entail?

Sure. So, first up, maybe I'll just echo Gerry's comments around the transparency. I think that's a really important element. And hopefully investors today, both new and existing investors see that we're much more than probably what we're known for. The ability to grow the adjacencies, the ability to grow our supply chain assets, just gives us a tremendous opportunity going forward. And when we look at our capital structure, clearly there is an opportunity in front of us to provide transparency to our investors. As we look at the assets through that lens, as we start to think about the stand-alone balance sheet, the stand-alone operating unit, it really gives us an opportunity to take a look at capital structure more holistically from an enterprise perspective, but also, more tactically and strategically from a Business Unit's perspective, so this is really going to drive in my opinion, the ability to be more strategic capital structure over time.

Great. Thank you. And part of that four BU structure is obviously one of our newest platforms is Prentis and Varis. So, I'm going to direct this question more towards, Gerry. And then others can jump in on and other commentary, but we heard about external funding possibilities for Varis to help fast forward the plan. The question is, why are you looking for external funding for Varis?

First thing I would say is I am super-excited by Varis and Prentis in the team. Prentis, I met and we had this vision lock what B2B technology procurement platform should look like. We both have extensive experience in this space. It's a unique asset. I mean, it is a unique asset addressing a huge market need. And so, we're super-excited about that. Now, what we need to do though is get validation because we're doing a tech platform start-up within a public company, which is unusual. But again, it provides a lot of value for growth, this was in the future and future proves the company as well. And again, you saw the sharing opportunities in leveraging these assets, again driving shareholder value. But we do think it validates the value proposition, it also gives us a value reference point as well. And I believe it becomes a win-win for shareholder because as we said in some of our statements that some of the future investment from a cash flow perspective will be shared by a partner. And we've just started the process. As I've said, we've got a great investment bank in Perella Weinberg and super happy with that team. And we'll continue to update and be transparent with our investors as we make progress here. I think it's a win-win for all, but Anthony, I know you have some color and comments as well.

Yes. I think now that Gerry, I think it provides an unlock of value, and it also provides a reference point for investors and it allows us to enter an ecosystem that could accelerate the platform. So, these are all the win-win attributes that make this partnership with Perella a win-win.

Excellent, excellent. And I'm going to stay on the topic of Varis for a minute, because we are getting a lot of questions on Varis's suppliers. So, I'm going to turn this question to Prentis and I'm going to read the question specifically. Why would suppliers want to sell Varis on the Varis platform. And how has early traction been, what have we seen?

Yes. That's a great question. I think it's really important to point out, when we started Varis from day one, we've made it really, really clear that suppliers are customers and buyers are customers. And we're going to create compelling value for both, and that's exactly what we're doing, it's super-interesting when you're building a commerce platform like ours, particularly when there is a bunch of the folks on the team that came from Amazon and you show up customers -- suppliers, it takes them a bit a minute to sort of understand exactly what we're doing and how we're doing it. But once they connect, the value is pretty clear. And I would sort of think about it this way, when we know how B2B transactions should be and we've architected the platform to support that. And we're fostering relationships between buyers and suppliers, durable ones. And that brings extreme value. And we're helping in particular these suppliers grow their business in a very difficult segment, when you look at the mid-market segment in particular, so we're driving a lot of growth. In fact, just last week we were meeting with supplier and we were engaged with them as we were sort of talking about and strategizing additional growth opportunities And we just look back over the last four months and we saw, we brought $10.5 million of incremental growth. Incremental revenue growth to that particular supplier and it didn't cost them anything to go after that. I mean it's a super-efficient and as an efficient platform for them to be able to grow. So, huge, huge wins. And when you look at the momentum to-date and progress, I couldn't be more thrilled with the momentum. In fact once suppliers understand the platform and how it works, we've seen super-strong growth. In fact, right now, when I look at the suppliers that we've acquired to-date, we've acquired enough suppliers and enough breadth the categories to hit our full revenue goals for next year. And so, now we're just adding on top of that and expanding that platform. So, and even when I look at the suppliers, they are super-interesting,. What we see is that, we see what we start to call a triple win, whereas suppliers start to engage. First, they want to understand and once they understand, then they are excited about the growth, then they see the growth. Now many of these suppliers are becoming customers, they're like, "Hey, we want to use this for ourselves. We want to use it to buy our supplies because we see how this thing works and we think we can benefit from it." And then they start to look at the idea of wait a minute, this thing super-efficient. Your commerce platform is better than ours for a certain segment of customers. And now, they're actually moving their customers from their own commerce solution in to Varis because they know that they can get more value there, so we couldn't be more thrilled about the value there.

Got it. Sure.

And Tim, just a couple of quick comments.

Sure.

Why that's successful, it's creating value for both buyers for the customers, as well as the suppliers. From a supplier perspective, the go-to-market, it's way less than expenses. It's hard to cover it, as Dave knows, small and medium business from a coverage model perspective and mid-market as well.

Yes.

And from a customer perspective, it's really hard. I mean, they're not enterprise level customers. It's expensive to go buy a, I won't name the name, but a subscription-based model that's hundreds of thousands of dollars a years. Ours is a GMV model, and I think that was a small subscription potentially, but that brings tremendous value for both buyers and sellers. The value prop has to work. I think it's a superior business model for this segment and we're super excited by the retention.

That's great. I think we heard from either the supplier/buyer today when they use the term lightning in a bottle, which I think [indiscernible]. No, so now that's excellent. I appreciate that. And I'm going to stick with Varis for a minute and this is for Prentis, so this is more of a tactical question but will Varis hold inventory and will that affect working capital.

Yes, look, we're a technology platform. Our focus right now is on facilitating transactions and establishing connections and relationships between buyers and suppliers and we're driving a focus on innovation in that particular area. We have no plans to own inventory or invest in inventory. We have world-class suppliers on our platform to do that and we'll let them continue to do so.

Great. Well, thank you. I appreciate that. And I'm going to turn now to Anthony. Some of the -- we put out in our Investor Day meeting today some longer range targets three-year targets, and what we're -- whoever going to drive the business and some of the questions that I'm getting on our web portals, about the confidence that we have in our three-year plan. What could cause our outlook to differ? And here is another one that goes along with that is what keeps you up at night.

I can go for a few minutes and what keeps me up at night, but seriously we have a lot of confidence as you saw in today's presentations we have multiple routes to market, we have powerful BU strategies across each of the portfolio. We have the low cost business model that is embedded in there and we have tools on our balance sheet as well to pull the levers. So, I think we could remain nimble in any environment.

Great, excellent. I'm going to stick with you for just another one. But this is on CapEx, could you provide additional clarity as it relates to CapEx and any of the tuck-in M&A?

Sure. So, first and foremost, no material M&A, I think that's going to be a key focus area. We'll continue to look at opportunities in Dave's business as it relates to the federation strategy that's been a proven strategy. And as Gerry mentioned and as Dave mentioned in his prepared remarks. It's a strategy that works. It's a lower cost, acquisition strategy and we see a lot of opportunities. We also see opportunities with the rest of the portfolio. If there's partnerships, joint ventures that can help us accelerate, accelerate will always consider that, but as we think about CapEx in general, we've been disciplined in the two years I've been here. And when I look back, we've been extremely disciplined in the CapEx, very transparent and where those CapEx dollars are going. And I think you're going to see that going forward as well. So, we've laid out a plan that's in line with our historical CapEx levels. And when you combine that with the generation of the cash flow and the confidence we have in our business model gives us confidence that with the CapEx investments and our capital allocation back to shareholders that we're going to achieve the three-year results.

Great, super. We are running tight on time. So, I'm going to try to hit these quickly. Kevin, this is a question for you, just given the industry trends. Why do you believe or why do you have confidence that you can hit your flat to positive same-store sales?

Yes, I mean we do work in a challenging and highly competitive industry, which is why the key to us maintaining sustaining our cash flows over time is to stabilize and ultimately grow have positive sales. Our entire organization is aligned to that. If you go into any of our stores, our associates know that our primary goal operationally is to grow sales at every location, every day. And all of our incentives in the retail business are aligned to that promoting that theme, including our very innovative all associate bonus program that we rolled out several years ago. We've seen the impact of those programs on sales per shopper and net promoter score and Gerry, as you know, timing is everything. We've talked about the 1400 basis points of growth in NPS over the last several years, but actually last week our retail scores achieved a new record high of 74.1 NPS. So, we really know that this is working. The strategy is working. If we can get customers to engage and come into our stores, if we can improve the demand and traffic patterns that we have through our omni-channel strategy that I talked about. We know we'll generate positive results and the strategies are really clear, we have to improve our connections with our customers to improve customer acquisition and retention. We have to expand and innovate our portfolio, so that we have more attractive products to those customers and we need to continually improve our omni-channel experience, our in-store pickup best-in-class in terms of speed and the guarantee that supports it. We're really proud of these programs. And as we look forward, we know it's never going to be easy. No day in retail as easy, but with our united team and our excitement for the future and a really clear and integrated omni-channel strategy, we know that our chances of success are very high.

Tim, I know we are time on time, but from the time Kevin took over this team, the retail business was heading in a glide path to the, to the ground. It's going to be completely turned around with -- I want to thank the entire B2C team, great leadership, great culture, see all the store, driving a low cost model Net Promoter Score from dramatic improvement. I mean, I used to hold the phone up walk in the store and test, how long will take for customer engagement. We had some cranky early conversations.

I would say some direct conversation, Gerry.

But now I mean a 74 Net Promoter Score is world-class, and I just want to thank the team because this is a huge competitive advantage for us. This engine in place it's a cash engine, but it's also -- we've never taken advantage of the omni-channel yet. I'm super excited and bullish on that opportunity that Kevin's going to lease over the three-year plan as well.

Thank you, Gerry.

Thank you Gerry and Kevin, I appreciate that. This question is going to go to.

Yes, great question, and I'm smiling, because as you heard over the last couple of hours, there is so much excitement around our four BU model inside the organization as well and it creates additional opportunity for our employees across all of the different business areas and there's a lot of momentum and excitement around that. And so, interestingly, our internal data shows that our turnover has stayed pretty steady despite some of the challenges that we talked about in terms of the super hot talent market et cetera, and especially important in being able to stabilize, like I mentioned earlier in John and Kevin's areas around that employment. We'll always continue to monitor it, but for now, we're confident that we'll continue to be able to maintain the excitement and the traction around retaining our associates through this four BU model.

Excellent, excellent. Well, I have one more question and then I was going to turn it to Gerry for closing thoughts, but I'm going to turn this one to John at Veyer. What technology are you investing in for supply chain?

Yes. So, we have a modernization roadmap. And what that is, it's really investing in our technology stack. What it's not is investing in more capacity. We're going to sell into that capacity. So, the modernization roadmap allows us to ensure we have a reliable capable supply chain. We have a lot of great partnerships in this space that provide planning and allocation, transportation management, warehouse management, network design tools and these are all leading companies leading technologies and will continue to enhance those capabilities, we'll continue to invest in those areas that allow us to differentiate and drive value to our customers and ensure we're cost competitive and we're really excited about that. And these are already baked into our three-year plan.

Oh, great. That's always great one. Well, with that I'm going to turn it over to Gerry for any closing thoughts.

Sure. And first of all, thank you for the people on the call today for joining us. I want to thank my team. I think, we have a world-class team here and world-class team is how you drive success as well and team. Thank you. We've delivered through challenging times before and I think that whether -- how deep the recession is, we don't know, but it doesn't matter. We're going to focus on operating our business. It's a testimony to our low cost model. Our operating excellence, I think the opportunity to go forward with the four BU structure is tremendous. You saw with the value of the transparency of the four pillars today. I'm recommitting again the $1 billion share repurchase, we expect to be aggressive as we were before and I think our actions will speak louder than words and that that's going to drive value for our shareholders, nearly doubling EPS across all of this is just executing to our long-range plan. We're going to have a lot -- we expect to have a lot of value creation and very importantly, we also believe there is -- and I've said a number of times, there's a huge opportunity for multiple expansion as well. And with that transparency, you've seen this value across each of the businesses. That's also an opportunity to create value, as well. So, thank you, everyone, for joining us today. We're excited that you are here and we look forward to delivering against our commitments and Anthony, I and Tim. Look forward to talking to meet our shareholders in the very near future as well. Thank you and have a great day.