Good morning and welcome to the ODP Corporation's Fourth Quarter and Full Year 2022 Earnings Conference Call. I would like to introduce Tim Perrott, Vice President, Investor Relations and Treasurer, Mr. Perrott, you may now begin..

Good morning and thank you for joining us for the ODP Corporation's Fourth Quarter 2022 Earnings Conference Call. This is Tim Perrott and I'm here with Gerry Smith, our CEO and Anthony Scaglione, our Executive Vice President and CFO.

During today's call, Gerry will provide an update on the business focusing much of his commentary on our accomplishments for 2022 including our operational performance and the progress we're making on all of our initiatives to drive shareholder value.

After Gerry's commentary Anthony will then review the company's fourth quarter and full year financial results including highlights of our divisional performance following Anthony's comments we will open up the line for your questions.

Before we begin, I would like to inform you that certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements reflect the company's current expectations concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in the company's filings with the U.S. Securities and Exchange Commission.

Also 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 non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investor.theodpcorp.com. Today's call and slide presentation is being simulcast on our website and will be archived there for at least one year.

I will now turn the call over to Gerry Smith, Gerry?.

Thank you, Tim, and good morning for everyone joining our call today. Thanks for joining us this morning and we hope that all of our stakeholders and their families continue to remain safe and healthy. I'm so excited to be here with you today to discuss our results and accomplishments for 2022 as well as our strong finish in the fourth quarter.

Our performance reflects our team's continued operational and financial focus I guess increasingly challenging macroeconomic backdrop.

As I begin, I'd like to recognize our entire team for remaining focused and driving these strong results, while addressing all the strategic initiatives we faced throughout the year, including the launch of our new 4 business unit structure. This required tremendous effort.

I couldn't be more proud of all of our team members who go out every day and demonstrate what makes our company so remarkable. Our success this year is a true testament to all of our teams across our businesses as we continue to demonstrate operational excellence, which allows us to hit the commitments we made at our Investor Day meeting.

It is no secret that throughout the year. The entire market experienced challenges related to the macroeconomic environment burden with high inflation supply chain challenges and the onset of slower GDP growth and consumer spend.

As shown on Slide 4, inflation rose to a 40-year high increase in input cost in our business impacting supply chain conditions by ocean freight constraints in higher transportation costs with diesel fuel prices up an average of roughly 50% versus last year.

This was a challenge, not only for ODP, but for companies in almost all industries and many of these challenges, we continue to face today and expect to face in the year ahead.

While 2022 presented these challenges, I am so proud of our team for once again rising up to address them head on, we utilized our supply chain operations diverse routes to market, pricing flexibility and balance sheet flexibility to help drive our low cost business model and offset many of the hurdles we faced.

Overall, we successfully navigated through a very complicated year delivering full year results consistent with our guidance despite this difficult backdrop.

A key component of our success, for remaining true to the core tenants that drive our business helping us reach our goals for the year and establishing a foundation for the future and setting us up to execute upon our 3 horizon strategy, which I will discuss in more detail in a few minutes.

Perhaps most important of our core tenants is our continued focus on our low cost business model and operational excellence. Our low cost business model focus is one of the areas. I'm most proud of and remains a cornerstone of our operating strategy.

I learned this approach after 30 years in tech hardware where managing unit cost was so important and every penny counted.

After spending years driving operational excellence and a low-cost mindset we embedded this focus in this fabric ODP and that's helped us to significantly lower our operating cost base hoping us to move from a highly fixed cost business to a more variable operating structure.

And as I shared on Investor Day over the past 5 years, we have eliminated over $500 million in operating costs, helping us thrive through challenging economic cycles and finding new and better ways to serve our customers and we're not stopping there.

We're continuing to look for more and better ways to efficiently operate our business, including the use of automation, machine learning and AI tools to help us lower the cost to serve and improve our customer service.

In 2023, we will also continue to develop our analytic capabilities in Veyer leveraging the investments we made in our proprietary technology which is flow path providing greater insight into the economics of our supply chain to further improve efficiency and we will also leverage the investment that we've made in our digital platform business Varis positioning this business for future growth and allowing for even more efficient means in which to serve customers.

And of course, we expect to continue to execute upon our $1 billion share repurchase program. All these actions support our low-cost business model focus and enhance returns for shareholders and we will continue to drive our operational excellence and low cost model, which is part of our 5C Culture and a competitive differentiator.

And it's not just what we accomplish it's, also how we reached our goals as shown on Slide 5. At the center of our approach is our winning 5C Culture.

The 5C stand for customer, commitment, creativity, change and caring, these are not just words on paper, but rather our 5C Culture is our North Star and the engine of how we work and live in our communities every day.

I'm very proud of culture, we have created and the foundation, it provides as we support our community, attract new talent and continue to execute upon strategic priorities.

I think a true testament to our 5C Culture is a strong team we have built over the past few years, attracting the best and brightest talent across a broad range of industries including technology, business commerce, supply chain and finance.

I can't express enough gratitude to our team and living up to our 5C Culture, serving customers and supporting our communities. We've continued to set the highest standards for corporate responsibility investing in and giving back to our communities throughout the year.

For example, we doubled the impact of Elevate Together a signature initiative in the second year of operation, helping to reduce historic barriers to bringing racial equity to small business owners and entrepreneurs.

Through our Start Proud initiative, we continued our strong support of teachers and students with our program supporting low income elementary schools across the nation providing fully filled backpacks still of supplies, gift cards and awards for teachers.

For the fifth straight year, we adopted 35 of the most economically distressed elementary schools across the U.S., providing 18,000 fully stock backpacks over $350,000 and Office Depot gift cards and teachers supplies. Nearly 1,000 of our associates assemble and distribute these resources as school-based events.

Our award winning Depot difference program continues to provide strong support of our national partnership with the Boys and Girls Clubs of America.

And this year our Depot difference team partnered with a newly established ODP Business Solutions team are working with school districts and relief agencies to provide support to the region devastated by Hurricane Ian.

I am so proud to be the leader of the company with such a strong commitment to our communities, the environment and a culture that truly makes a difference. Now, before we get into the specifics of our major accomplishments in 2022.

I'd like to spend a few moments discussing the way we're thinking about our business and driving long-term value through what I call our 3 horizons strategy.

This is shown on Slide 6, over the past several years, we've been transforming our business to lower our cost, position our assets with the right routes to market and innovate to create a more valuable company.

The core tenets I mentioned earlier, served as guideposts to establish the new ODP Corporation reposition and recognizing the power of the assets in our control. And all that work and effort culminated in our realigned 4 business unit structure that we highlighted during our Investor Day meeting.

Our new operating structure is creating opportunities for our businesses to create value as we execute upon this strategy. This strategy puts into perspective how we will drive our business units in order to lock the underlying fundamentals of our business, build, long-term sustainable growth, expand our multiple and maximize shareholder value.

And with our 4 business unit model, we are in an excellent position to drive our business unleash greater value. Let me highlight this approach our first horizon focused on continuing to drive Office Depot strong performance excellent customer service and net promoter scores and most importantly, continue to drive strong EBITDA and cash conversion.

Office Depot is a cash generation engine and this horizon continues that focus is getting the most out of this engine.

As we laid out at Investor Day, we will continue to optimize and nurture this business at a new product assortments aligned with customer needs while continue to provide excellent service to the targeted customers base, including small businesses, education and home office customers and we measure our service with NPS or net promoter scores and our team has delivered outstanding results.

Next, our second horizon is focused on continue to drive ODP Business Solutions our B2B distribution business delivering growth, margin expansion and cash flow.

This is a higher multiple B2B distribution business with a solid runway ahead for profitable growth as you see in our release this morning, we're moving well along the path we set our Business Solutions team is executing upon this horizon continued to gain traction with customers and driving profitable growth.

We will continue to execute its core strategy of expanding its customer base, expanding the products and services it offers to customers and kids units focus on margin expansion aligned with our long-term targets. We believe that as we execute our plan.

The market will begin to recognize the value of this higher multiple business and this will be reflected in ODP's overall value. Our third horizon is building value pursuing higher long term growth opportunities through Veyer, our supply chain and procurement business and in Varis our innovative B2B digital platform business.

Both these businesses represent significant long-term growth and multiple expansion opportunities for ODP. There is a world-class supply chain business with valuable assets and capabilities that include next day service to nearly 99% of U.S.

zip codes a large private fleet over 9 million square feet of distribution center space and through our global sourcing office strong international procurement expertise. We stood up there this year, moving them from a cost center focus to now a key business unit driving its own focus go-to-market strategy and serving customers.

There is focused on continuing to provide excellent service and being a low cost provider supporting the success of its 2 internal customers ODP Business Solutions and Office Depot, while also using existing capacity to serve external third-party customers.

Varis already serving several third-party customers, including some of our vendor partners as well as way to reach long-term goals, we said during Investor Day, which included generating at least $30 million in EBITDA for third-party customers utilizing existing capacity. And lastly, Varis is a key high growth component to this long term horizon.

Varis represents perhaps the largest addressable market opportunity for ODP through providing a modern consumer like digital B2B procurement platform experience that contractually connects procurement organizations with suppliers and vice versa.

This is a high multiple growth opportunity with a very large target market and a scalable business model that also improves the efficiency in which we serve our customers. Over the last 2 years, we've made significant progress.

We have built a world-class team led by Prentis Wilson that has embarked on developing and refining the tech stack and capabilities and as we announced during our Investor Day meeting, we launched the network more broadly this past November.

It is still early days however we are adding new customers and suppliers to the platform and continuing to refine its capabilities. We're excited about the path that Varis is on and the multiple opportunities to pursue growth that it represents and we accomplished all of this while maintaining CapEx investment levels within historical ranges.

So overall, our 3 horizon strategy will help us continue to drive our near term cash flow engines, while allowing us to continue to pursue both mid and long-term growth and higher multiple businesses, which we believe will create significant value for our shareholders.

This is all anchored on our low-cost business model focus to EBITDA and EPS growth while prudently managing our balance sheet and deploying capital to the benefit of our shareholders and of course, continuing to live our 5C culture. Lastly, we will continue to demonstrate our operational excellence which is fundamental to our success.

Now turning to the highlights of our major accomplishments for 2022 as shown on Slide 7, first, we drove solid operating performance for the year and delivered results consistent with our guidance. We drove these strong results despite the industry wide challenges mentioned earlier.

Revenue was up year-over-year and our operational excellence and low cost model approach combined with flexible pricing and distribution strategies hope to drive solid operating results and cash flow against a more challenging backdrop to the year. Our year-on-year growth included the positive impact of the 53rd week being present this year.

This adjustment happens every 4 or 5 years for companies who report on a 4-4-5 calendar. Anthony will provide more color on the impact to our 2022 results and comparisons for 2023 later on in his remarks.

Next we address the strategic initiatives that were before us earlier in the year and we completed the realignment to our operating structure that supports the launch of our realigned 4 business unit model.

This structure more fully reflect the power of our businesses and unlock shareholder value and we feel this is a catalyst for expand our multiple over time as each business unit demonstrates our individual growth and earnings power, which we felt was not previously reflected in the combined ODP multiple.

And as a component of our new structure, we stood up there. Our supply chain and logistics business and Varis our B2B digital platform business.

As I mentioned earlier, these new businesses represent attractive new long-term growth opportunities for ODP and last, but certainly not least, we expanded our commitment to enhancing shareholder value by announcing our $1 billion share repurchase program. Let me spend a few moments on our activity under this effort.

As we announced during our Investor Day meeting our Board of Directors approved a $1 billion share repurchase program, we are excited about what this means for our stakeholders and how this program is supported by our strong balance sheet and operational excellence plan is expected to generate significant cash flow over the next several years.

We have been aggressively executing under this plan. During the quarter repurchase a significant, number of shares since we launched it in early November. In addition to the shares we repurchased earlier in the year.

In total for 2022, we have repurchased about 6.4 million shares for about $266 million with the majority purchased under the new authorization we've also continued our repurchases into the New Year. As we move throughout the balance of the year, we will continue to be disciplined in our approach to overall capital deployment.

As we consider evolving market conditions and opportunities within our business, but expect with support from our Board to continue repurchasing throughout the year.

On Slide 9, our overall performance in 2022 reflects the positive attributes of our team's commitment to operational excellence and the value of past investments we made in our infrastructure and the flexibility of our business model.

As I mentioned, the industry backdrop and macroeconomic environment proved to be increasingly challenging throughout the year.

Because of the investments we previously made in our supply chain infrastructure, the flexibility of our distribution network and pricing scenarios, as well as our low cost model approach ODP has been able to navigate better than most companies through these challenges.

We've addressed the challenging supply chain environment by leveraging our large presence in Asia through our global sourcing office. As well as the investments we have made in our private fleet and the flexibility of our distribution network, which includes our long-term relationships with our distribution partners and suppliers.

We also utilized pricing flexibility to help mitigate some of the inflationary increases, allowing us to pass through certain price increases to help alleviate cost pressures. Our revenue results were driven by strong performance at ODP Business Solutions as more businesses return to the office post COVID.

This was somewhat offset by lower revenue Office Depot related to both a reduction in store footprint and lower e-commerce traffic as individual consumers have been less active compared to last year.

In all, our value proposition continues to resonate with customers and when combined with our low cost business model approach, we drove close to $300 million and adjusted operating income in the year and solid EBITDA results.

Now turning to highlights of our divisional performance on Slide 10, starting with ODP Business Solutions, ODP Business Solutions delivered strong results throughout 2022.

Over the past several years, we built a strong customer base with over 140,000 enterprise customers, including about 60% of the Fortune 100, this business exhibited strong growth and is clearly on the path to expand its margins back to and beyond pre-COVID levels, a long term KPI that we identified during our Investor Day meeting.

Revenue growth was strong in the year up 11% as continued back to office trends continued to gain traction as we drove our market based pricing model and maintain high revenue retention levels. Back to office trends have been a nice tailwind for the business with external tracking reports now estimated at 50% of workers are back in the office.

This has helped us offset some of the effects from the well-publicized corporate layoffs. We've seen in the news over the past year. Our adjacency categories continue to grow and comprise 44% of total ODP Business Solutions sales.

A standout among our adjacency categories is our Jan/San cleaning and breakroom category, which to-date has grown to about $700 million per year in revenue, which has taken on an independent basis makes us 1 of the larger Jan/San supply businesses in the U.S.

We also drove margins higher and nearly doubled our operating income relative to last year capturing higher top-line growth and utilizing our disciplined approach to operational excellence and continued focus on customer profitability reviews.

Moving forward, we are well on the path to reach our long-term goals expanding margins and continued focus on maintaining our leadership position in the traditional business supplies categories while growing our adjacency categories, continuing our success in the federation and focusing on customer growth in the areas we have the right to win.

Next on Slide 11, Office Depot continues to be a strong cash generation engine for ODP again drove solid margin performance and cash flow in the year as our team executed upon our low cost model approach and delivered a value proposition that continued to resonate with our customers.

I'm extremely proud of our team for continue to derive a positive shopping experience, leading to continued strong net promoter scores above 70% among the best in any industry. Revenues were lower versus last year partially driven by fewer stores and service.

As a result of planned store closures as well as lower traffic trends in store and online post COVID which were partially offset by stronger sales per shopper and stronger omnichannel sales supported by 20-minute pickup guarantee.

From a product perspective as some of the effects of COVID received during the year, we saw an increase in demand for traditional copy and print services, paper, school and breakroom supplies. This was offset by lower sales of cleaning and PPE products supplies and technology products all categories and higher demand during the pandemic.

As it relates to tech, Kevin and the team are keenly focused on the product assortment and sales flow through given some of the more acute challenges affecting technology categories overall.

Moving forward, given the weaker macroeconomic environment, we will continue to monitor any changes in consumer activity, which we noted weakening in the back half of last year. We will also continue to optimize our store footprint and fine tune our product set to address the evolving needs of our customers.

On Slide 12, we highlight there, a key growth engine for our future and a component of our third horizon. There is our world class supply chain services and sourcing provider with core competencies and distribution fulfilment, transportation global sourcing and purchasing, which also includes our global sourcing operations in Asia.

As mentioned earlier, we separated own business and reporting unit moving forward. Varis is focused on delivering best-in-class service to ODP's internal customers at a low cost while leveraging its existing capacity to provide services to third-party customers.

We stood up there as its own business unit in the back half of last year as its own focus profit center to capture the full value of its unique assets and helped drive a new narrative for our shareholders and value in this business.

Veyer is making progress not only serving our internal customers with efficient and low cost services benefiting both internal and external customers, but also growing influence with third-party customers and building the pipeline of future business.

While external revenue was steady for the year internal revenue was lower related to less demand in our consumer business. That said, we believe that Veyer has come out again strong is on the path that we set during our Investor Day meeting to reach at least $30 million in EBITDA from external sources by 2025.

Veyer represents a great opportunity to generate organic EBITDA from our existing infrastructure and the investments we're making to be more efficient and over time will build upon its world class capabilities to provide full 3PL services supply chain and procurement services to third-parties in the future.

Turning to Slide 13, Varis continued to make solid progress throughout the quarter and the year. As we announced during our Investor Day meeting, it is still early days as we launch the platform during the fourth quarter and continuing to refine its capabilities, work with our partners and add new customers and suppliers to the platform.

We are running hard attracting new customers driving volume through the platform adding new bookings and converting revenue. While Varis didn't incur considerable expenses during the year as we prepared for launch. As we mentioned during our Investor Day meeting, we expect that 2022 was the peak year of investment.

We're also continuing to evaluate future funding alternatives to help us accelerate our plans for growth and scale the business. 2022 was a transformative year for ODP. Our team accomplished so much driving strong results meeting our commitments and establish our foundation for the future.

As we move forward in 2023, we remain cautiously optimistic about the year ahead as we continue to navigate the increasingly challenging macroeconomic environment and its effect across all industries.

That said, we remain in a position of strength with a, strong balance sheet diverse routes to market and continued low cost business model and mindset and our operational excellence, we have demonstrated. We will continue to be disciplined focusing on operational excellence and driving our low cost business model focus across all of our businesses.

We will be relentlessly focused on cash generation and navigating through what we expect will be another challenging year for the macroeconomic environment. We will focus on unleashing the power of our core business unit model and driving value and multiple expansion for our 3 horizon strategy.

We will continue to drive our cash generation machine Office Depot and work to improve traffic trends, expand our adjacencies to capture new opportunities. At ODP Business Solutions, we will focus on continuing to grow our top-line remain disciplined in expanding our margins along the path we said on Investor Day.

Varis focused on continuing to provide excellent service levels, remain a low cost provider for our internal customers are pursuing new third-party business using existing capacity. And Varis is all about adding bookings converting bookings to revenue and working to drive scale in the platform. And finally, we will continue to live our 5C culture.

With that, I'll turn the call over to Anthony Scaglione, our CFO..

we are expecting to generate sales in the range of $8 billion to $8.4 billion, which includes the impact of closed stores, annualized and expected. We're expecting to deliver adjusted EBITDA between $400 million to $430 million and adjusted operating income between $270 million to $300 million.

We are aiming to drive adjusted earnings per share between $4.50, to $5.10 per share. This range will include the effect of our activity under our share repurchase program. We plan to generate adjusted free cash flow between $200 million to $230 million and CapEx between $100 million and $120 million.

A few comments about the assumptions in this guidance, first, as we stated earlier, we have been experiencing some weakness in consumer activity in the second half of last year and our guidance assumes that this carries forward into 2023, but stays relatively stable throughout the year.

We expect that the current macroeconomic conditions stay relatively constant with the end of 2022. The guidance also assumes continued activity under our share buyback authorization a similar pace of store closures at Office Depot and a continued top line and margin improvement at ODP Business Solutions.

We are also assuming a stable supply and procurement environment out there and revenue growth and lower OpEx burden at Varis. As we stated during our Investor Meeting, we expect that 2022 was the peak year of investment for Varis as they prepared and launched the platform.

Our 2023 guidance assume that revenues will begin to grow on the platform and we expect that CapEx investment for Varis will be approximately in the range of $20 million to $30 million and OpEx in the range of $50 million to $60 million. In summary, we've executed extremely well across our strategic initiatives and drove strong results in 2022.

We have strategically realigned the business have a capital return plan that balances investments with returns to shareholders and an organization that is fully aligned and excited about the years ahead. And with that, operator, I will turn it over for questions..

This is Tim Perrott with ODP. We actually have an analyst. They could not join us today on the call, so he has submitted some virtual question. So I'm going to go ahead and ask those virtual questions. So the first question and this is from Michael Lasser of UBS.

You provided strong guidance for 2023 which does assume a relatively stable macro environment. Just how sensitive is the business - say the employment goes from 3.5% to 5%.

Just what is the 00:56:59?.

Let me jump in. I'll let Anthony add some color as well. First of all, I think we have diverse routes to market. That's the power of the 4BU model. I think that's going to help us. You saw the strength and ODP Business Solutions in 2022. We see that continuing into 2023. I think that our low cost model.

Our operational excellence, our balance sheet strength is going to help us well. And I think we hit our commitments, we had last year in -- tough economic conditions. I think we can do the same thing as we move forward in 2023 as well.

Anthony?.

Yes, I would just add, I think if you look back to the prior Great Recession 2008, 2009. We have a much healthier and stronger operating environment as well as the store network. So as we think about the impact, obviously we're always going to look at that impact.

We're going to manage the balance accordingly, but I think we're going to show that we continue to be resilient..

Great, the next question is, if the macro environment gets significantly worse, how does this impact plans for the share buyback?.

But first I want to thank Board for their commitment to the $1 billion buyback and the Board is still committed to the $1 billion buyback through 2025. We've got as Anthony said, we've got a really strong balance sheet that really helps.

We demonstrated our operational excellence in Q4 when we bought a lot of shares back in -- tough economic conditions and we'll continue to drive our operational excellence, I think it separates us quarter over quarter, we demonstrated this excellence that really helps us generate cash huge, huge cash flow in Q4 and we're going to focus on doing that again this year.

And have the ability because we think returning capital to our shareholders is important. Obviously, if conditions got really crazy or some type of even stronger.

We have the ability to throttle up and down, but the reality is we are committed, as a Board and the company to return capital to our shareholders across that $1 billion plan by the end of 2025..

Great, the next question is regarding guidance and that is just how much of the guidance in '23 is coming from Veyer and Varis?.

Let me take that one Gerry. So, as we outlined in our prepared remarks, we expect growth in both Veyer and Varis on a year-over-year basis.

Overall for Veyer outside of the commercial agreements, which is obviously the factored into the ODP Business Solutions and Office Depot results, we expect Veyer to contribute approximately $10 million in external EBITDA roughly $0.10 on an adjusted basis.

And just to remind investors that the third-party business is really going to come through from an EBITDA standpoint by backhaul and online haul, but the growth that we have and we're trending higher than our $30 million target that we set for 2025 which is off to a great start.

With respect to Varis, we also provided guidance in the range both OpEx and CapEx and this is going to be lower on a year-over-year basis, so good progress on the Varis platform and more to come..

Great, super.

The next question is for regarding ODP Business Solution's great results in 2022, how much of this is from organic versus any acquisitions?.

I'll take that one, and first, none of us inorganic all of that was organic. I also want to thank Dave and the team for almost double in operating income may - across the entire team all the routes to market as well.

And I think that's testimony to over 50% of people are back in the office, but we spent a lot of time this is operational excellence again. We've done through account-by-account early last year that had a huge result. Anthony and I and Dave, we're involved in that.

And I think that sets up for a really strong 2022 and that momentum will continue in '23, but again, Dave, Tom, Steve, Brian, Chris, Kim. Thank you for a great year and the whole team. It's really making a difference. I'm super optimistic in '23..

Great.

And the last question is regarding Office Depot just generally, it seems that traffic trends have been overall lower do you expect this to continue into 2023 and what is the outlook for store close this year?.

I'll start and I'll let Anthony finish, from an overall perspective, as we said at Investor Day we believe category expansion is a huge key to that and we're actually doing a lot of deep dives across all our categories right now. We want to bring into categories to the business.

Also want to highlight hey, we have a 20-minute guarantee out there from a BOPIS online pickup and store that no one else has. And so, we think there's going to be a lot of advantage omnichannel.

I think Kevin's team has done a remarkable job - but I think almost world-class mid to high 70s from a low to mid-70, excuse me, from a net promoter score perspective and that's going to make a difference over time. Customers are going to remember that experience.

They're going to want to come back into the stores across all those pieces, it's important, Anthony, you talk about footprint..

Yes, I echo Gerry's comments, really-really proud of what the retail team and the omnichannel I should say has been able to accomplish over the last couple of years. And with the product assortment with our outlook with a stronger network, we expect a slightly slower pace of store closures.

Again, this is going to be dependent on a number of factors, but we expect a year-over-year slightly slower pace of store closures..

Great, super. I think we're up against the hour. So I'll just ask Gerry any final comments..

Thanks, Tim for coordinating, Michael, thanks for the questions you submitted. And for our investors, thank you. I'm super proud of our team for a tremendous 2022. We delivered our commitment, which is part of our 5C culture on Investor Day we said we're going to hit our commitments, we deliver that. Our low cost model contributed that.

Our operational excellence distributed that. Our 4 business unit strategy and very importantly, our share buyback is very important from a shareholder perspective and really driving its value.

Our #1 focus is driving shareholder value, we think we're well positioned 2023 to do that and I do want to mention again the NASDAQ tomorrow, we send an invitation out, but really -- I encourage everyone to come and attend our Varis Investor Days there.

You have Prentis and Daniel and the team there to talk about Varis, I'll be there with Anthony as well. We're really excited to talk about the potential value creation of Varis for ODP shareholders in the future. Thank you again everyone. We'll see a bunch of you tomorrow and look forward to talking again in the next quarter..

Operator, that's all we have. We can end the call..

Thank you for your participation, this concludes today's call. You may now disconnect..