On April 26, office-supplies provider Office Depot (NYSE:ODP) released first-quarter earnings for the period ended March 31.

  • Revenue increased 7.3% on strong sales in the North American and international divisions, which increased 3% and 21%, respectively.
  • Despite a reduction in the gross margin, the net margin increased and the company reduced share count by 6%, leading to a 30.2% increase in EPS. Now that's leverage!
  • The company is planning to open 150 new stores this year in North America and 200 stores next year.
  • The stock has a three-star rating in Motley Fool CAPS.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$4,093.6

$3,815.7

7.3%

Net Profit

$155.8

$129.5

20.3%

EPS

$0.56

$0.43

30.2%

Diluted Shares

280.1

298.3

(6.1%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

31.1%

31.5%

(0.4)

Operating Margin**

5.5%

5.0%

0.5

Net Margin

3.8%

3.4%

0.4

*Expressed in percentage points.
 **Excludes amortization of deferred gain on sale.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$194.2

$550.1

(64.7%)

Accounts Rec.

$1,506.6

$1,300.6

15.8%

Inventory

$1,582.4

$1,297.4

22.0%

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$1,682.7

$1,386.5

21.4%

Long-Term Debt

$568.1

$572.1

(0.7%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$231.0

$267.8

(13.7%)

Capital Expenditures*

$79.1

$57.9

36.6

Free Cash Flow

$151.9

$209.9

(27.6%)

*Includes gain on asset disposal.

Free cash flow is a Fool's best friend.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.