The ODP Corporation (ODP), known for its Office Depot (NASDAQ:ODP) and ODP Business Solutions brands, has reported robust financial outcomes for the Fourth Quarter and Full Year of 2023. CEO Gerry Smith highlighted the company's strong operating performance, which surpassed the adjusted operating income and adjusted EBITDA guidance.
ODP also saw a 27% increase in adjusted earnings per share (EPS) year-over-year and exceeded free cash flow expectations. The company's return to shareholders was significant, with nearly $300 million repurchased in shares. Despite a macroeconomic backdrop that has pressured sales, ODP's strategic initiatives, including Project CORE and the successful expansion of Veyer, its supply chain and logistics provider, signal a strong foundation for future growth.
Key Takeaways
- ODP Corporation exceeded its financial guidance with strong operating performance and a notable increase in adjusted EPS.
- The company's share repurchase program returned nearly $300 million to shareholders in 2023.
- Veyer, ODP's supply chain and logistics arm, saw impressive growth with a 25% increase in third-party customer revenue and a doubling of EBITDA from these customers.
- New initiatives like Education 365 and a $1 billion share repurchase authorization have been launched to drive growth and shareholder returns.
- The company has decided against separating its B2C business at this time due to potential dis-synergies and costs.
- ODP expects a revenue decline of 2% to 5% in 2024 but projects adjusted EBITDA between $410 million and $430 million and adjusted EPS between $5.60 and $5.80.
Company Outlook
- ODP anticipates a decline in 2024 revenues by 2% to 5% but expects to maintain a strong adjusted EBITDA and adjusted EPS.
- Project Core initiatives are projected to contribute to in-year benefits, with a stable macroeconomic environment assumed.
- The company plans to continue its share repurchase program aggressively, backed by strong operating cash flow and a solid balance sheet.
Bearish Highlights
- Total revenue for Q4 was down 9% year-over-year, and the full-year revenue also saw a 6% decrease.
- The return to office trend for large enterprise accounts has stalled, impacting revenue growth prospects.
Bullish Highlights
- ODP Business Solutions and Veyer are expected to show growth, with a strong backlog in business solutions hinting at improved sales trends.
- The company has won new contracts with manufacturers and customers that are projected to add value over the next three to four years.
Misses
- ODP Business Solutions experienced a 4% revenue decline in Q4, attributed to macroeconomic factors and lower sales of technology products and furniture.
Q&A Highlights
- The company remains open to selling the consumer business if it increases shareholder value.
- ODP's pipeline for potential acquisitions in the Federation business is robust, with a disciplined approach to criteria.
- Education 365 initiative is showing promising progress in Q1 after its Q4 launch.
In conclusion, ODP Corporation's earnings call reflected a company adapting to challenging market conditions with strategic initiatives and a focus on operational efficiency. The launch of Project CORE and the company's commitment to returning value to shareholders through share repurchases and dividends signal confidence in their business model and future growth prospects.
InvestingPro Insights
The ODP Corporation's (ODP) recent financial performance has garnered attention, and InvestingPro data provides additional insights into the company's market position and future prospects. With a market capitalization of $2.07 billion and a P/E ratio of 16.14, ODP is trading at a valuation that reflects investor confidence, supported by a P/E ratio based on the last twelve months as of Q4 2023 at a lower 10.19, which may indicate an attractive entry point for value investors.
InvestingPro Tips indicate that management at ODP has been actively buying back shares, demonstrating their belief in the company's intrinsic value and future performance. This aligns with the company's reported return to shareholders, with nearly $300 million repurchased in shares. Additionally, ODP has seen a significant return over the last three months, with a price total return of 22.81%, underscoring the positive investor sentiment surrounding the company's recent strategic initiatives and operational efficiency.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights into the company's shareholder yield and analysts' revised earnings estimates for the upcoming period. These tips can provide a more nuanced understanding of ODP's financial health and market expectations.
Interested readers can find more detailed analysis and tips on ODP by visiting https://www.investing.com/pro/ODP. For those looking to access the full suite of InvestingPro Tips, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 11 additional InvestingPro Tips listed for ODP, offering a comprehensive view of the company's financial landscape and investment potential.
Full transcript - Office Depot (ODP) Q4 2023:
Operator: Good morning, and welcome to the ODP Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] At the request of The ODP Corporation, today's call is being recorded. I would now like to introduce Tim Perrott, Vice President, Investor Relations and Treasurer. Mr. Perrott, you may begin.
Timothy Perrott: Good morning, and thank you for joining us for the ODP Corporation's Fourth Quarter and Full Year 2023 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 2023 and 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 need to inform you that certain comments made on this call include forward-looking statements. which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company's current expectations concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties are contained in the company's filings with the U.S. Securities and Exchange Commission. During this 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 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'll now turn over the call to Gerry Smith. Gerry?
Gerry Smith: Thank you, Tim, and good morning to everyone joining our call today. I'm excited to be here with you to discuss the results and accomplishments for 2023 as well as to provide insight into Project CORE our new business optimization initiative to continue to drive the low-cost model and our strategy to drive shareholder value as we move forward. First, before I discuss our accomplishments for the year, I want to thank all of you for the kind words and support during my medical leave. I'm glad to be back, and I'm more energized than ever to lead our business and execute our plans to drive shareholder value. I would like to thank our Chairman, Joe Vassalluzzo, for all of his efforts in helping us finish the year strong and providing leadership while I was out. Thank you, Joe. Also, I would like to thank my senior leadership team as well as the entire team at ODP for remaining focused and committed to driving operational excellence and shareholder value. I'm very fortunate to have such a strong team, a strong 5C culture with world-class capabilities that continue to deliver every day. Now I would like to highlight our accomplishments for 2023. 2023 was a remarkable year for ODP. As we remain true to our 5G culture and driving operational excellence across our business. During the year [Technical Difficulty] we successfully implemented and reported under our new four business unit structure, driving our B2B and B2C operations. We remain committed in our dedication to operational excellence and our unwavering focus to enhancing shareholder returns. Despite the ongoing challenges posed by a difficult macroeconomic environment, our first year operating on the new structure yielded impressive results with strong EBITDA and earnings per share performance. These results underscore the resilience of our low-cost business model and the execution of our capital allocation strategy. Furthermore, our unwavering commitment to our operational excellence enabled us to exceed our guidance for free cash flow, supporting our capital allocation plans, including returning nearly $300 million to shareholders through our share repurchase program in 2023. I couldn't be proud of our team despite the obstacles presented by a tough macroeconomic environment, including high inflation and interest rates, supply chain volatility and a slowdown in consumer and business activity we really stepped up and delivered exceptional performance. Our results and achievements for the year truly exemplify our team's unwavering dedication to our low-cost business model and prudent approach to capital allocation, all aimed at creating maximum long-term value for our shareholders. It is a testament to our hard work and commitment. Now turning to the specifics of our major accomplishments in 2023, as shown on Slide 5. First, we drove strong operating performance, achieving our revised guidance for the year. Despite a weaker top line impacted by the industry-wide macro economic challenges and fewer stores in service, our team delivered adjusted operating income and adjusted EBITDA results that were in line with our guidance and consistent with the prior year. We leveraged our multiple routes to market, global supply chain and logistics presence flexible service infrastructure and kept our customers' needs at the forefront of everything we do. Combining this performance with our disciplined capital allocation strategy, we drove an impressive 27% increase in adjusted earnings per share year-over-year. Our strong performance in the year reflects our steadfast commitment to operational excellence and disciplined capital allocation the two primary elements of our shareholder value creation formula. Underpinning this impressive operational performance, we made excellent progress across our business units. We expanded margins in our new business pipeline at ODP Business Solutions, we drove strong external EBITDA growth at Veyer exceeding our goals. We expanded our product and service offerings on Office Depot and we continue to work with customers at Paris, while also launching a strategic review of that business in Q4. Enterprise-wide, the progress we are making continues to enhance the foundation of our company and positions us to drive long-term profitable growth and strong free cash flow conversion. Next, with our strong balance sheet and liquidity position, we continue to execute on our shareholder-focused capital allocation plan, repurchasing a significant number of shares during the year. Supported by strong free cash flow generation, that exceeded our guidance. We returned nearly $300 million to shareholders through our shareholder repurchase program during 2023. Since we initiated our $1 billion share repurchase authorization about 16 months ago in November of 2022, we bought back about $470 million of our stock or roughly 10 million shares as of the present date. This is a tremendous accomplishment and reflects our management and Board's commitment to our capital allocation strategy. Lastly, as a key accomplishment in 2023, we begin operations and reported results under our new four business unit structure. This was the culmination of years of effort and analysis. This was our first year of operation under our new structure, driving distinct B2B and B2C businesses as well as starting Veyer, our supply chain and logistics business that has a nationwide coverage in global sourcing presence. Our new structure helps to unlock ODP's potential, leveraging multiple routes to market and providing greater transparency and visibility into the valuable components of our business. And we've learned a lot during our first year of operating under our new structure, some of which has led us to Project Core, our business optimization program designed to drive further efficiencies in our business to enhance our core focus. I'll provide more on the elements of Project Core later in my discussion. Now moving on to highlights of our business unit performance, starting with ODP Business Solutions. ODP Business Solutions, our B2B distribution business, which, as a reminder, serves large enterprises, including over 50% of the Fortune 100 as well as medium and small business delivered strong bottom line operating results in the year. Business Solutions expanded its margins and generate a meaningful increase in operating income despite a slightly softer top line that was influenced by macroeconomic factors that cause more cautious enterprise spending as well as a flattening of return to office trends. Notwithstanding the more restrained level of business spending, we continue to win new accounts and believe our revenue backlog opportunity is positioned to outpace other market participants, resulting in share gains. Additionally, as we mentioned on our last call, we are still working on the final stages of on-boarding some of our more recent large enterprise wins that have taken longer to implement, but we expect to have them up and running in the first half of this year. Also of note, our federation companies, our regional tuck-in M&A entities continue to be resilient, and we've been successful growing this business, which now generates well over $600 million in revenue on an annual basis. This market continues to be highly fragmented and our disciplined M&A approach gives us a tremendous runway to keep growing our platform strategically over time. Our adjacency category penetration remained at 44% of the total division revenues. Adjacency categories include cleaning and breakroom products as well as furniture, technology products and copy and print services. As a notable KPI for ODP Business Solutions, our adjacency category penetration may fluctuate from quarter-to-quarter, but our long-term objective is to consistently grow these categories both on an absolute dollar and percentage basis as we expand our value proposition and continue to leverage our strengths in core categories. ODP business remains competitively strong with its customer-first approach including a Net Promoter Score rating above 70%, retaining and winning new business with a continued 98% renewal win rate helping drive net new business wins. While we see continued near-term top line challenges in the first half, I couldn't be more excited about our long-term prospects and our strong commitment to driving value for our customers across both core and adjacency categories. Next up is Office Depot, our omni-channel consumer business, which includes a profitable retail footprint and award-winning e-commerce platform, providing a strong value proposition to small business, education and home office customers. This division continued to provide a positive shopping experience for its customers throughout the year, maintaining strong NPS exceeding 70% among the best in the industry. Office Depot drove strong operating income and free cash flow results despite the continued challenging macroeconomic environment impacting the top line. The revenue decline was driven by a combination of fewer stores and services compared to last year related both to planned store closures as well as from lower in-store and online traffic and demand. Much of the weaker demand was driven by the slowing economy and higher inflation moderating the pace of consumer spending and impacting overall demand, both in-store and online. Stronger sales of copy and print services were more than offset by lower tech and workspaces sales as well as lower sales in other core categories. When eliminated the favorable impact of sales from the 53rd week included in last year's results, comparable store sales were down approximately 5% for the year as lower retail and online traffic outweighed higher conversion. From an operating standpoint, margins were flat with last year as the team worked to offset some of the top line challenges. We remain disciplined with pricing scenarios and our gross margins went up as we work to maximize the profitability of every interaction. Moving forward, we expect to continue optimizing our store footprint as we work to achieve flat comps over the next couple of years. We're also putting in place several initiatives to drive sales, including launching our Education 365 initiative. This initiative, which includes both our B2B and our omni-channel business, is an integrated year-round approach to improve our reach and better serve our education customers, including teachers, students, parents and school systems. We are already seeing some good reception from local districts here in Florida on our ability to do more with them every single day versus only during the peak back-to-school season. We're also remaining committed to expanding our offerings to all customers, including our expansion into new categories and continue to roll out our in-demand TSA sign-up service to more stores throughout the year, which we expect will help drive additional store traffic during the year and beyond. We remain encouraged by the potential these efforts have on the future. And finally, over the past two months and under our Board's direction, we revalued the merits of fully separating our B2C business as a way to increase shareholder value. As part of this process, we retained a top three strategic consulting firm as well as the support of an investment bank to review the merits of a separation. While we believe there is a significant value creation in our unique routes to market, at the present time, we do not see a full separation of our B2C business as a material avenue for additional shareholder value creation, given certain dissynergies and costs associated with the separation. Now turning to our progress at Veyer. As a reminder, Veyer is our world-class supply chain services and logistics provider with core competencies in distribution, fulfillment, transportation and global sourcing and purchasing. Their assets and capabilities include 8 million square feet of infrastructure through our nationwide network of distribution centers, cross dock and other facilities throughout the United States and Canada, a global sourcing presence in Asia a large private fleet of vehicles and next day business through delivery to 90.5% of the U.S. population. They serve the needs of their primary internal customers, Office Depot and ODP business solutions equally as well as for other third parties through our procurement and supply chain expertise. As I pointed out in previous calls, a key area of focus to assess Veyer success and value creation is by looking at our progress in external third-party customers. In its first year of operating as a stand-alone business, Veyer is making tremendous progress has exceeded expectations, efficiently providing service to its internal customers, while continuing rapidly growing its business with third-party customers. Throughout the year and quarter, Veyer continued to add new external customer logos to its slated business, providing service for some of the nation's most renowned brands, which continue to drive revenue EBITDA growth for third-party customers. In fact, third-party revenue from external customers was up 25% over last year. Most importantly, we exceeded our EBITDA goals as EBITDA from third-party customers more than doubled up 120% versus last year. There also made tremendous progress on its modernization road map through the year as they build additional capabilities in information systems that run the business. Veyer is partnering with world-class tech companies in deploying a Gartner (NYSE:IT) Magic Quadrant level tech stack that positions us to manage our business, improve service levels and provide the flexibility necessary to deliver services to external third parties more effectively. As one example, Veyer successfully developed and is deploying an in-house flow path technology that we call Veyer kinetic, that provides critical cost intelligence to optimize our operations and service levels for our customers. Veyer also deploy new warehouse management systems that support our operations and automate tasks improving our ability to provide services to third-party customers. We are very encouraged by Veyer strong progress and how this positions ODP to drive profitable growth in this higher multiple business. Now turning to Varis on Slide 9. Varis, our digitally native B2P procurement platform launched about a year ago, continues to enhance its platform with new features and functionality and continue to deliver value to its customer. While Varis revenue ramp has been slower than we originally anticipated at this point in its journey, we remain encouraged by the value proposition it provides to both customers and suppliers. While Varis continues to be strategically positioned to capture more of the procurement and supply chain ecosystem, we have begun to process through Project Core to evaluate the business further, including its run rate costs. Now moving on to Project Core. As we continue to evolve, it consistent with our low-cost model approach, today, we announced an initiative called Project Core, our business optimization program. We are launching this initiative after gaining insights from our first year of operations under our new four business unit structure. Project Core is a comprehensive initiative aimed at further streamlining our operations, sharpening our focus on our core business while increasing shareholder returns through a new $1 billion share repurchase authorization. This broad-based plan includes cost efficiency actions across the entire enterprise and optimized our organizational structure to support the future growth of the business. This initiative also includes cost reduction actions at Varis, as we further work through the strategic options from that business. I would add that we expect to provide a full update of our Varis review, including cost actions by our first quarter earnings call in early May of this year. We are excited about our continued evolution of what Project Core will deliver to the company and its shareholders as we focus on continuous improvement across the business to drive EBITDA and free cash flow growth, while delivering value to shareholders through additional share repurchases. We anticipate this comprehensive plan will generate annualized savings in the range of $50 million to $60 million when fully implemented. These savings will be achieved through cost efficiency measures across the entire enterprise, including organizational supply chain and COGS efficiencies as well as further realignment of incentive plans to drive additional operating performance. In connection with Project Core, we're excited to announce that our Board of Directors approved a new fresh $1 billion share repurchase authorization valid over the next three years. This new authorization replaces the previous one which had approximately $530 million left on the authorization. We are excited about enhancing our share repurchase program and the expected increased pace of the share buybacks in the near term. With that, I will turn the call over to Anthony Scaglione for a more detailed review of our financial results.
Anthony Scaglione: Thank you, Gerry, and good morning to everyone on the call. I'm happy to be here today to discuss our financial results for the fourth quarter and full year 2023. As I begin, I'd like to echo Gerry's comments and say thank you to our entire team for remaining focused and continuing to drive our low-cost business model during our first year operating under our new four business unit structure. I would also like to thank Chairman, Vassalluzzo, for providing stewardship during our fourth quarter. Our accomplishments this year is a clear demonstration of the total enterprises commitment to operational excellence and the flexibility of our business unit structure. Now as I turn to the highlights of our financial results, as shown on Slide 12, I would like to point out that our prior year results include the positive impact related to the 53rd week that occurred for us in 2022. As with many companies with a retail component, every four to five years, there is an extra week accounted for in the year, causing some distortions to year-over-year comparisons. We highlighted this in our 2022 year-end results. And as I cover off on our performance for 2023, I will highlight this impact when comparing our results to the prior year. Also, consistent with previous quarters, we have provided our results on both a GAAP and adjusted basis. Turning to the specifics of our fourth quarter results, as shown on Slide 12. We generated total revenue of $1.8 billion in the quarter. When eliminating the favorable impact of approximately $130 million related to the 53rd week included in last year's results, consolidated revenue was down approximately 9% on a year-over-year basis. This was primarily driven by lower sales in Office Depot, including 64 fewer stores in service compared to last year. GAAP operating results included $74 million of charges, primarily related to $68 million noncash goodwill impairment in our Varis business unit, resulting in a GAAP operating loss of $31 million in the fourth quarter. Excluding the noncash charges, our adjusted operating income for the fourth quarter was $43 million, this compares to $58 million in last year's fourth quarter, which included approximately $20 million favorable impact related to the 53rd week. When eliminating the favorable impact for a more meaningful comparison, adjusted operating income in the quarter was up about 13% year-over-year. Unallocated corporate expenses were $23 million in Q4 and adjusted EBITDA was $73 million in the quarter compared to $89 million in last year's fourth quarter. This includes depreciation and amortization expense of $28 million and $31 million in the fourth quarter of 2023 and 2022, respectively. Excluding the after-tax impact from the items mentioned earlier, adjusted net income for the fourth quarter was $35 million or $0.92 per diluted share compared to adjusted net income of $40 million or $0.85 per diluted share in the prior year period. Turning to cash flow. Our team continued its cash flow focus in the quarter, managing inventory levels and other working capital items, resulting in operating cash flow of $70 million. Capital expenditures in the quarter were $29 million versus $31 million in the prior year, and adjusted free cash flow in the quarter was $43 million. Turning to Slide 13. I've highlighted some key performance measures for the full year of 2023. We delivered impressive results in the year against the continued demanding macroeconomic backdrop, meeting or exceeding our revised guidance ranges for the year. Total company sales for the year totaled more than $7.8 billion while eliminating the favorable impact of roughly $130 million related to the 53rd week included in our prior year's results, total revenue was down approximately 6% year-over-year. Lower revenue in the year was primarily due to a reduction in sales in Office Depot, driven by planned store closures as well as lower traffic in store and online. As reflected on our full year GAAP basis, we recorded operating income of $201 million, which included $89 million of charges, primarily due to the $68 million noncash charge related to goodwill at Varis that I mentioned earlier. This compares to operating income of $243 million in the prior year, which included approximately $20 million favorable impact related to the 53rd week, which was included in last year's results. Full year adjusted operating income was $290 million, down slightly compared to adjusted operating income of $296 million last year, and adjusted EBITDA was $417 million for the year. These were very impressive operating results given the continued challenging macro conditions and softer top line. Excluding the after-tax impact from the items mentioned earlier, 2023 adjusted net income from continuing operations was $223 million or $5.60 per share, up compared to $216 million or $4.40 per share in the prior year. This represents a 27% increase in adjusted EPS year-over-year. It's worth noting that our EPS performance in the year benefited from a lower full year effective tax rate, driven by the benefit of tax planning and certain tax credits, which I will discuss further in guidance. Finally, regarding cash flow for the year. Cash provided by operating activities was $331 million, a significant increase compared to $237 million last year. We invested CapEx of $105 million in 2023, largely targeted at fixed asset improvements and maintenance, our digital transformation, B2B platform and e-commerce capabilities. In total, we generated adjusted free cash flow of $235 million in 2023, exceeding our guidance for the year. Now I'd like to cover our business unit performance, starting with our ODP Business Solutions division on Slide 14. ODP Business Solutions continue to drive strong operating results in the fourth quarter and full year, improving its margin profile and generating significant increases in operating income. Revenue was approximately $900 million in the fourth quarter, which was down about 4% compared to last year after eliminating the $58 million favorable impact to sales related to the 53rd week included in last year's results. Sales performance in the quarter was influenced by macro factors causing a more cautious enterprise spending as well as flatter return to office trends, resulting in lower sales across most categories compared to Q4 last year. Additionally, lower sales of technology products, a factor that many other companies are experiencing industry-wide as well as lower large ticket sales in our furniture category contributed to the softer top line. On an annual basis, while reported sales were down slightly after eliminating the impact of the 53rd week as well as the impact of large onetime PP order that we highlighted in our first quarter results last year, sales were generally flat year-over-year. While we continue to see some near-term top line challenges due to continued tech softness and the enterprise spend overall, we continue to win net new business, taking share and expect some of the tech sales to rebound in the second half as product life cycles refresh, which could be boosted with the updated release of Windows. Breaking down our sales further our adjacency product categories as a percentage of total revenue, a KPI for ODP Business Solutions remained at 44% in the quarter. This percentage may vary from quarter-to-quarter, but our long-term objective is to consistently grow this on both a dollar and percentage basis as we expand our value proposition and continue to leverage our strength in core categories. Also, our Federation companies continued to perform well throughout the year, driving both positive sales comps and healthy margins. From an operating perspective and consistent with our stated goals, ODP Business Solutions continue to drive increases in operating income and margins during the year. Operating income was $34 million in the quarter, which represented a 6% increase over the same period last year when eliminating the $5 million favorable impact to operating income related to the 53rd week included in our Q4 2022 results. For the year, operating income was $174 million, up 24% compared to last year and up 28% compared to last year when eliminating the impact of the 53rd week. As a percentage of sales, operating margins were up about 100 basis points over last year's results. This margin improvement is a significant accomplishment given the macro challenges and places us on a path to generate growth and continued margin improvement over time, a goal we set out during our Investor Day. ODP Business Solutions remains in a position of competitive strength with a compelling customer offer and a highly capable sales force. Moving forward, we are confident that ODP Business Solutions foundation remains strong and we are competitively well positioned to continue to drive results in the future. Now turning our results to Office Depot as shown on Slide 15. 2023 was our first full year operating Office Depot as a cohesive omnichannel business, combining its retail store and online presence. In the year, Office Depot generated $3.9 billion in sales, $230 million in operating income and generated significant cash flow. They also made significant progress bringing their strategy for success to life as they continue to refine their operating approach and invest in new tools, many of which were implemented in the back half. This is to better position them for sales throughput and more efficiently operate their business. They accomplished this while continuing to provide exceptional service and a compelling value proposition to small business, education and home office customers. This is demonstrated by consistent NPS score above 70% among the highest in any consumer business. In the quarter and year, top line sales results were challenged as the slowing economy and high inflation moderated the pace of small business and consumer spending. Reported revenue for the quarter stood at $900 million and when eliminating the favorable impact of the 53rd week of approximately $70 million to sales included in last year's results, revenue declined 13%. Same-store sales were down about 5% over the same period last year when eliminating the positive impact to the 53rd week. Lower sales were partially driven by 64 fewer retail outlets and services associated with planned store closures as well as lower demand relative to last year in certain product categories as a greater percentage of customers continue to return to the office, which resulted in lower online sales as well. We closed 22 retail stores in the quarter and had 916 stores at quarter end. From a product perspective, strong sales of copy and print service were more than offset by lower sales year-over-year in supplies, technology, furniture and PPE, while conversion rates were stronger in the quarter, the reduced sales of higher ticket items impacted average order volumes and thus resulted in lower sales per shopper. From an operating perspective, margins were 5%, flat with the same period last year as the teams work to offset some of the top line challenges. We remain disciplined with pricing as we work to maximize the profitability of every interaction. We continue to see good results in copy and print, a highly profitable part of the business with sales up in the quarter. That said, operating income was $43 million in the quarter compared to $57 million in the same period in 2022. Last year's results included a favorable impact of approximately $15 million related to the 53rd week. When eliminating this impact, operating income was essentially flat relative to last year. a considerable achievement considering the challenging macro environment and softer top line. Moving forward, we are continuing to execute upon our strategy, optimizing our store footprint and working to achieve flat comps. We are continuing to be disciplined in managing pricing, promotion and expenses to appropriately balance profitability and sales performance. As Gerry mentioned, we launched our Education 365 initiative creating a more consistent approach to serving education customers, including schools, teachers, parents and students year-round. We are also evolving our customer value proposition, offering an expanded product assortment as well as services such as PSA enrollment through our relationship with Telos. These initiatives, when fully implemented, should be added traffic drivers to our stores. In all, we're focused on driving the components of our business that we can control and believe we are well positioned to continue to drive this cash engine going forward. Now turning to Veyer's performance as shown on Slide 16. Veyer, our supply chain service and logistics provider drove impressive results and made significant progress during the first year of operating as its own business unit. Not only did Veyer efficiently serve its internal customers, ODP Business Solutions and Office Depot, they also exceeded expectations with third-party customers, adding nationally branded logos and more than doubling EBITDA from third-party customers. On a consolidated basis, Veyer drove sales of $1.2 billion, predominantly supporting the purchasing and supply chain operations of ODP Business Solutions and Office Depot, which are eliminated upon consolidation. As I mentioned on previous calls, through our intercompany agreement as Veyer drives greater efficiency for its internal customers. Most of this benefit is captured through ODP Business Solutions and Office Depot, benefiting the entire enterprise rather than being reflected only in Veyer's results. Therefore, as Veyer continues to optimize its network and drive the low-cost model. Veyer will provide value to its internal customers and position itself to deliver a strong value proposition for new third-party customers. And as a key area of focus to assess its value creation, Veyer continue to make strong progress with external third-party customers. In the quarter and year, Veyer added new external customer logos to its slate of business providing service for some of the nation's most renowned brands. For the year, Veyer grew third-party revenue by 25%, resulting in sales of $35 million. From a bottom line perspective, Veyer surpass expectations, more than doubling EBITDA from third-party customers, driving third-party EBITDA of approximately $11 million, a 120% increase over last year. Our strategic decision to stand up this business unit moving it from a historical cost center to a valued profit center for its internal and external customers was the right move and it's becoming evident that Veyer's compelling value proposition is resonating with our expanded set of customers. We remain very excited about Veyer's progress, including its progress on its tech stack modernization and the development of Veyer Kinetics and how this higher multiple business positions ODP to drive profitable growth in the future. Now turning briefly to Varis on Slide 17. Varis, our digitally native B2B procurement platform continues to work to deliver a strong value proposition to its customers. During the quarter, Varis generated approximately $2 million in revenue, flat with last year, primarily derived from subscriptions from existing customers. Operating loss was $15 million, an improvement over the prior year period. For the full year 2023, Varis generated $8 million in revenue and operating loss of $63 million. As Gerry mentioned, we are continuing to pursue efficiency measures at Varis as part of Project Core. Our business optimization initiatives and are working to complete and report our full strategic review of the business by our first quarter 2024 earnings reporting date. Now briefly turning to our balance sheet highlights, as shown on Slide 18. Our balance sheet and liquidity position continues to be a source of strength. We ended the quarter with a total liquidity of $1.1 billion, consisting of $392 million in cash and cash equivalents and $696 million in availability under our asset-based lending facility. Total debt at the end of the quarter was $174 million. I would also note that subsequent to the quarter end, in January, we paid down $53 million balance on our Farlow, term loan facility, reducing interest costs. We are also launching a renewal of our ABL this year and look forward to providing an update on that status later this year. As previously mentioned, we've continued to buy back shares under our $1 billion share buyback authorization, repurchasing 672,000 shares for $32 million in the quarter. In total, we have repurchased approximately 10 million shares for roughly $470 million since the program began in late 2022, which includes the amounts repurchased in the first two months of this year. We are also excited about increasing our share buyback plan through our new $1 billion 3-year share repurchase authorization recently approved by our Board. This new plan replaces our previous plan, which had a remaining authorization of approximately $530 million. We expect to begin executing upon this plan immediately, increasing our recent pace on a quarterly basis. Our plan is supported by our operating cash flow and balance sheet while staying within the overall targeted leverage goals we set during our Investor Day in 2022. Now moving on to Slide 19 that highlights our updated guidance for 2024. We're enthusiastic about the opportunities in our business to drive long-term value while remaining focused on prudently deploying capital to the benefit of shareholders. As we move forward into 2024, we remain cautious regarding the macroeconomic environment and expect that challenges posed last year will persist near term in the new year. That said, our team will continue to focus on operational excellence serving our customers and driving our low-cost model through Project Core. Our guidance for the year ahead is as follows: first, we are expecting to drive an improvement in year-over-year sales trends and expect revenues to decline between 2% and 5% for the year relative to 2023. Some of the revenue drivers in our assumptions include ODP Business Solutions growing plus or minus the rate of GDP. Veyer continuing its revenue and EBITDA growth path with external third parties with external EBITDA expected to grow 50% as we continue to invest in sales capabilities to keep the growth CAGR significantly above market in the upcoming years. Consistent trends at Varis, offset by reduced sales at Office Depot as we continue to rationalize the portfolio but improve the deceleration trend compared to prior year. Next, we're expecting to deliver adjusted EBITDA in the range between $410 million to $430 million and adjusted operating income between $280 million to $300 million. We are aiming to drive adjusted earnings per share between $5.60 to $5.80 per share. This range will include the effect of our activity under our share repurchase program as well as the impact of higher net interest expense and a higher tax rate expected in 2024. Related to the tax rate, we are projecting a normalized rate of approximately 25% to 27% on adjusted operating income versus the effective rate of around 23% in fiscal '23. This included certain benefits captured in the year. While we are continuing to work on tax items, including the work opportunity tax credit and the R&D credit, the benefit of these programs has not been fully captured in our expected tax rate for fiscal 2024. As the year progresses, we will provide additional insights into the expected full year effective tax rate. Finally, we also expect to generate adjusted free cash flow greater than $200 million as we continue to invest in areas of our inventory for new products and manage our overall working capital as we have demonstrated in the past. A few additional comments regarding assumptions behind guidance. First, our guidance assumes that the macroeconomic environment we experienced in the second half of 2023 carries forward into 2024, but stays relatively stable throughout the year. Second, we are assuming a stable supply and procurement environment under Veyer with improvements in certain areas from an inflationary perspective. Third, our guidance also assumes capturing in-year benefits from our recently announced Project Core initiatives. As Gerry outlined earlier, Project Core is an enterprise-wide optimization initiative aimed at further streamlining our operations, sharpening our focus on our core business and driving cost efficiencies across the entire enterprise. This includes all routes to market and all support functions. As outlined, we expect to achieve $50 million to $60 million in yearly run rate savings when fully implemented. And as part of this plan, our guidance assumes approximately $30 million of in-year savings in 2024 with anticipated cost to implement of around $20 million to $30 million, which we expect to incur predominantly in fiscal '24. Lastly, our guidance assumes continued execution of our share buyback program under our new $1 billion authorization that our Board recently approved. We remain committed to driving capital returns. And given the strength of our balance sheet and expected operations, we feel confident in achieving this while continuing to invest in the business for growth. In summary, we've executed extremely well, delivering strong operating results against a challenging environment in 2023. We continue to be focused on our shareholder value creation formula of driving EBITDA and strong free cash flow while executing upon our capital allocation strategy. We're excited about the opportunities ahead to continue to create shareholder value. And again, I want to thank the entire team for staying committed to delivering these results. As we look forward into executing on Project Core and continuing to drive value to our customers across all routes to market. With that, operator, we will now take questions.
Operator: [Operator Instructions] Our first question comes from the line of Jeff Lick with B. Riley. Your line is open.
Jeffrey Lick: Congrats on a great Q4 and 2023. Gerry, great to have you back.
Gerry Smith: Thank you, Jeff.
Jeffrey Lick: I'm going to miss Chairman, Joe is presence on these calls. He really added to it. So shoutout to Chairman, Joe. So I was just kind of a multipart question here, but they're all around the same theme of cash flow. I was wondering if you could just maybe provide a bit more detail on Project Core, specifically, what type of buckets the $50 million to $60 million come from? And then how does that intertwine with the Varis situation and as it relates to Varis, what signposts and benchmarks and time frames are going to drive the ultimate Varis decision process? And then Anthony, then as we get into the buyback, last year, you bought back $295 million, so call it, roughly $300 million. Would you expect the buyback to be similar or greater than $300 million? And then what metrics are you using to kind of determine when and how much you buy?
Gerry Smith: Jeff, I'll take the start of that and a more strategic piece and then I'll -- Anthony will chime in as well. So a great question. From a Project Core perspective, I want to remind our investor base, this is the third time we've done this. We do it well before we need to do it. We've been proactive and got ahead of the curve every single time. And so -- and the $50 million to $60 million that we're talking about, that's the committed target. The other two times we committed, we actually overachieved it pretty dramatically. And I will just tell you from our culture, our low-cost model, operating excellence, our backgrounds, both by Anthony and other leadership. We come from industries that you drive cost on a consistent basis. And we're going to push real hard from an overall perspective to overachieve that. And so I'm not going to give you either any of the people on the call a committed number. The number run rate-wise, we're committing is 50% to 60%. But we think that there's a lot of opportunity. That's going to be across all aspects of the business. So we're optimized, whether it's COGS, whether it's headcount, whether it's business transformation or stop doing stuff, we shouldn't be doing from a process perspective. We're looking at every single aspect of the business again. I think the four business unit structure after having a year of running, we've learned a lot. But as I came back and had a chance to look at it and spoke with Anthony, spoke with Chairman, Joe and the Board and the leadership team, we've all assessed. We think there's a significant opportunity to go get ourselves in even a better cost position is the way I like to position it. And then we're going to use that to drive free cash flow, drive share buyback as well as and continue to make sure we're a low-cost model wins. I always say that. I think that's important. And from -- I'll let Anthony answer share buyback. I will say from a Varis perspective, we started the review process with the Board in Q4. We will have a full disclosure. We're in the middle of that. So we're not going to give a lot of details right now. But Varis is part of the cost Project Core cost reduction process. I want to make that super clear, as well as every other part of the company. But we'll have a full disclosure on May 8 from where we landed from Varis and the plan going forward. I'm going to flip it over to Anthony from specifics of the share buyback and buckets, et cetera. But Jeff, great to be back. Look forward to spending some time with you.
Anthony Scaglione: Great question. So from a buyback perspective, I think we've demonstrated we've remained committed and disciplined as we look at deploying the capital from a buyback standpoint. Clearly, looking at the macro situation, looking at our cash flows, our balance sheet, managing the overall pace along with where we look from a leverage standpoint. But just based on the math, we will be increasing the pace and taking into consideration opportunistically the cash flows as well as the returns we're looking at from investments we make into the business.
Jeffrey Lick: Great. And then I'm just kind of curious, do you -- do you ever look at like kind of where the stock trades at in terms of EBIT multiple of EBITDA? Is there a level that you kind of view, hey, this is more attractive versus maybe not as attractive?
Anthony Scaglione: Yes. We clearly put the program in the last couple of quarters. We put a program under the 10b5, and we provide parameters around that execution, which takes into consideration a number of factors, including share price as well as liquidity and timing. So all those things are factored and I think you've seen that we've demonstrated a pretty good outcome as it relates to the execution.
Gerry Smith: Jeff, we still believe with your target, we think we're undervalued. So we think we're undervalued right now, we're going to continue to buy shares back and love your target.
Jeffrey Lick: Plans on track?
Gerry Smith: Right.
Jeffrey Lick: So great. Thank you very much, and I'll let someone else ask some questions. Best of luck.
Operator: Our next question comes from the line of Michael Lasser with UBS.
Michael Lasser: What led to the decision that it doesn't make strategic or financial sense to separate ODP business solutions from the Office Depot business. Can you provide more of the financial framework around that conclusion?
Gerry Smith: Yes. and Michael, I'll talk about the process we went through, and then I'll let Anthony dive into specifics, but -- what we did is our number one job as a leadership team and as a Board is to enhance shareholder value. So we're always looking at ways to do that, whether that's share buyback, whether that's growth, whether that's separation. And we will evaluate that. And so responding to -- from an investor feedback perspective, we went out and actually hired a top three consulting firm in the world. And I'll use actually the team that did the separation work before, which gives us a lot of credibility and a lot of experience and background as well as one of the top investment banks in the world. And they both came back with the answer of no separation doesn't make sense for value wise at this time. because of fact of dis-synergies across the business and a number of other onetime costs of going off and doing that. I'll let Anthony get into a lot of detail, but it was pretty clear and both separate studies were done both came to the same conclusion. And again, I think it's a good testimony to our Board of governance going through that process. It really using quality people to do it and coming up with an answer of what's the best way to maximize shareholder value. The answer as of today is keep it together, drive the four business unit strategy and continue to low-cost model, buy back shares, drive cash flow, drive EBITDA. Anthony?
Anthony Scaglione: Yes, Michael, I think Gerry mentioned all the key areas. The only thing I would add to that is, clearly, with the four business unit structure, we're providing that transparency. And we feel like as we continue to execute under the four business infrastructure, the multiple appreciation that we think we have with certain parts of the business that may be disassociated with a retail multiple, we'll continue to provide that clarity. But to Gerry's point, I think the Board and the management team have exhibited our ability to look at this from time to time, but at this time, staying together is the best course of action.
Michael Lasser: Does that also influence your perspective on a potential sale of that business? -- the consumer business?
Anthony Scaglione: Yes. We've -- obviously, we've gone through that process as well over the last couple of years. Clearly, we've always exhibited an openness to look at the best value for the business at this time, it was a separation, should a sale process ever present itself. I think we've exhibited our ability to react to that and determine whether that's in the best interest of shareholders as well.
Gerry Smith: And we always have the lens of shareholder value in every single opportunity or transaction that we look at across the business. What's the -- what's the best way to maximize shareholder value.
Michael Lasser: Okay. Two more questions. Number one, your expectation that your top line trends are going to get better throughout the year seems to be driven in part by the expectation that technology trends will improve. The common argument might be that there's been a very strong backdrop for the labor market. So it's hard to see that we get much better from here outside of an improvement in technology, what else would drive an improvement to the top line in the back half of the year?
Gerry Smith: Yes, Mike, I'll take the first part of that. I mean ODP Business Solutions has one of the strongest backlog we've had in the history of ODP business solutions. So as that backlog starts to convert, we view that as more of a second half type of opportunity as that starts Dave's business. They're doing a great job of getting out there from a 98% win rate and a ton of net new business, which we know is share taking. It does take time for those larger accounts to transition. As those start to rack in, in Q1 and Q2, we see some strength there. And the technology refresh we're talking about is from a PC perspective. If you look at the number of the PC manufacturers, I also said on an external Board that's a semiconductor Board that everyone is looking at back half of 2024 from a recovery perspective, that might not happen, but the reality is that's where a lot of data from a tech space perspective. So big windows refresh come in, we think we can take advantage of that, both from a consumer as well as Office Depot ODP business solutions perspective.
Anthony Scaglione: Yes. And I would also just add, Michael, as you think about the process we've been undertaking with the store rationalization, we're clearly continuing to make progress as it relates to what the ultimate store count is going to look like over the next couple of years, which means the stores that are in the system are the better performing stores -- so as you think about the walk, to Gerry's point, you're going to have some growth coming out of ODP Business Solutions, you're going to offset that by the wraparound effect of closed stores, the wraparound effect of activity for additional stores and then the variability is going to come from the same-store sales comp, which we expect to improve slightly compared to this year.
Gerry Smith: So strong backlog, strong renewal auto net new business from ODP business solution plus the refresh in tech are the reasons why we think we're going to change that direction.
Michael Lasser: My last question is ODP Corp. has taken out a significant amount of cost from the structure in the last several years. Where is -- outside of closing stores, where is there opportunity? What buckets exist tick to further streamline the cost structure, especially in a way that doesn't have some negative impact on the company's top line results.
Gerry Smith: Yes. I'm smiling at that one because everyone here knows that I always say the low-cost model wins. It's a number of areas you always look at. I mean, there's COGS opportunities across the business. I've ran large procurement organizations for many years of my life. You always go out learn from Michael [indiscernible], I mean I would always ask, okay, great, you've got the savings. What are you going to get tomorrow? So the reality is every day, we're going to attack COGS this year as well as our indirect cost. We're going to look at obviously implementing AI and some of the productivity across different parts of the organization. And we're going to look at old structure. So every single organization is going to get looked at. But I want to remind everyone on the call, over the last 7 years, we've taken out not counting store closures. I'm looking to add them over $600 million to $700 million of operating cost, SG&A, not counting store closures. That's a separate bucket. Look at our EBITDA today, that says we've done a very good job of finding costs. But guys, I've done this for 25, 30 years in tech hardware. You had to do it every single year. Anthony did it for is a little bit younger than me, 20 years in a low margin, high value business as well. We both know how to do this, and you're always looking at ways to find how do you run the business better, how do you run a business more efficiently how do you automate how do you transform? How do you take unnecessary steps out of the business? We assessed it, we think there's opportunity, and we're going to go get it, and we're going to go or achieve that, and it's going to position us to be in a better low-cost position than we are today, just as we've done in the past.
Anthony Scaglione: Yes. And I think to Gerry's point, it's integrated in our DNA, Michael. So for us, it's part of the way we do our business. We're constantly looking at ways to be more efficient, be it from an order design standpoint, to looking at new routes to market to driving efficiencies in our supply chain. So we feel highly confident that this is continuing to be right in line with our expectations and it's not going to necessarily tilt the steering in a different direction.
Operator: Our next question comes from the line of Greg Burns with Sidoti.
Gregory Burns: With the timing of the savings on Project Core could you just give us, I guess, a time line of when you expect to start to see some of those savings? Is it back half loaded? Is it prorated throughout the year? How should we think about that?
Anthony Scaglione: It should start, Greg, in Q2, and then continue out throughout the year. So our guide of roughly $30 million in a year is going to build as we continue to execute on the program. But the run rate exiting '24 should give us that 50% to 60%, but it will build starting roughly in Q2.
Gregory Burns: Okay. Great. And when you look at Varis with what your expectations were for adoption of revenue growth maybe a year ago versus Veyer that business is that now? What would you say has been the primary, I guess, bottleneck in terms of driving adoption in the market.
Gerry Smith: Well, I think it's -- I think the team has worked hard. They've built a good platform. It's just -- it's taken longer than we expected from a revenue ramp perspective. They had some good last four or five months, month-over-month, has really good growth. But that being said, it's not at the pace that we expected, and we're doing a strategic review of the business. We'll have a full readout come May 8 of the future direction of the business.
Gregory Burns: Okay. And then I guess, is the strategic review simply like a cost optimization play? Or is there other other things on the table?
Gerry Smith: No, we're looking at all the alternatives for the Varis business. Not just cost optimization, all alternatives for the Varis business. p.
Gregory Burns: Okay. Great. And then with Veyer, what is the revenue mix there predominantly? And what's the outlook or time line on maybe expanding the penetration of services that, that business is providing to third-party customers.
Gerry Smith: I'll start and I'll let Anthony give the detail. I mean first -- it's the first year of that business. I want to thank and Gannfors, and his entire team for standing that business up. We're super happy with the progress. I mean, 120% external EBITDA growth for the business is outstanding. It's still small. But we have a new -- Craig Lis joined us externally, we're excited with Craig's background and experience. We're super bullish across a number of areas, whether it's backhaul, whether it's traditional 3PL services. We now have licensing to ship from a from our global sourcing office to the U.S. from a license perspective. So all aspects of the supply chain, we can go off and monetize. And so there's numbers of areas and as we use our warehouse management system and update systems, our ability to respective markets can come online with even more capabilities. So all the additional factors of services across 3PL we can over the next couple of years, we're turning on. So the potential is very high. John won a ton of logos this year of a number of different manufacturers as well as customers, and we're turning on. And we'll have a Veyer day, probably Investor Day later in the year, and we'll go through a lot of detail on that. But I am super excited with that business and the opportunity to be within the confines of our capital plan, that is very important. I want to everyone to hear that. All the Veyer expansions is already within the confines of our capital plan. There's no incremental investment here. But we see that over the next three or four years being a big contributor to the value of the company. Anthony?
Anthony Scaglione: Yes. And I would just say, Greg, as you decompose the revenue mix, the majority of the revenue today is coming from historically our GSO procurement operations. where we're seeing the highest growth is clearly on the third-party logistics side as it relates to managed services and some of the other services we're providing from a 3PL perspective. So that's where we are seeing the highest velocity from a growth standpoint, but the majority of revenue today continues to come from the GSO. The other thing I would just mention is, and we articulated this at Investor Day and throughout the year, there is a component of EBITDA that is contra-revenue or contract spend. doesn't show up as revenue. So that's why we identify the EBITDA contribution as a key driver as we continue to leverage all routes of the markets within that business.
Operator: Our next question comes from the line of Joe Gomes with NOBLE Capital.
Unidentified Analyst: This is Josh filling in for Joe Gomes. So I just want to congratulate on a quarter and a good year. And I kind of want to start off just, first of all, just heading towards the business solutions, I know I saw this revenue was down 4% on a comp basis. Can you just kind of breakout how much of that was just related to the PPE technology and just overall, just the weakness in the economy.
Anthony Scaglione: Yes. So Tech with the A big driver of that from a year-over-year perspective, it was down close to double digits to what we saw in 2022. Remember, everything has to be adjusted for that 53rd week. I think it's important to make sure that that's part of the -- and hopefully, you have the bridge from a 53rd week perspective. When we look at the software, it's a combination of tech being down as well as what we're seeing reduced consumption from our large enterprise, and that was really a back half as some of the return to office is stalled, as Gerry mentioned in his prepared remarks. From a new win perspective, we feel confident that we are taking share. The starts are taking a little longer to ramp, but these are large enterprise accounts. So we feel excited about those accounts coming online and contributing this year, but it is taking a little bit longer for those to come online and generate the revenue that we see as part of the pipeline.
Gerry Smith: Is basically flat. If we take the 53rd week right? Approximately A little bit below flat, but that's right.
Joseph Gomes: The question. And yes, I just wanted to kind of just -- you talked a little bit about Federation, but is there really any update just on any potential new acquisitions there?
Anthony Scaglione: Yes, we have a very robust pipeline. I think one of the things that I give a lot of credit to the team Dave and Brian who run both ODP Business Solutions and Federation discipline. And I think that's the key, right? We're buying very good Federation companies as they come into the fold. Culture is very important, synergies as it relates to the opportunities from a supply chain standpoint, very important, but we remain disciplined. So we have a very healthy and robust pipeline, but there's a lot of criteria and a lot of areas that we look at from a hurdle standpoint, to ensure that we are acquiring the best of the best as it relates to Federation and continue the trajectory that you've seen over the last couple of years.
Joseph Gomes: Yes, perfect. And then just the last one, if I may. I know you guys talked a little bit just about the Education 365. Can you provide any more color as to that? And are we still on track just for the Q1 launch?
Anthony Scaglione: Yes. We started it actually late last year. And I think that what we learned through our back-to-school in 2023 was we can be relevant all year round. We don't look at it as just a once-a-year back-to-school push. Obviously, back-to-school is going to be critically important like it is every year. But we have relationships at the district. We have relationship with the teachers. We have relationship with the students. We can be selling each and every day all year round and the combination of our ODP business solutions and our retail team at Office Depot, combining the approach so that we are addressing it from school district all the way down the student. We see opportunities, and we've launched it in Q4, and we're starting to see some of that progress in Q1, and we'll continue to update along the year.
Gerry Smith: All right. Well, thank you, team. Thank you investors for calling in. We want to thank everyone for joining the call. We're excited with our -- again, thank you from our team and our delivery of our results in 2023. We're excited to continue to get ourselves and execute the low-cost model with Project Core, and we're excited with our $1 billion our new share buyback position because we believe our low-cost model as well as our capital allocation plan is the key to maximizing shareholder value, and we'll continue to find ways to grow our business as well. So thank you, and everyone, have a great day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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