First Quarter 2024 Continuing Operations
Highlights(1):
- Net revenue of $542.5 million, an increase of 4.2% from $520.8
million
- Comparable store sales growth of 1.4% and Adjusted Comparable
Store Sales Growth of 0.4%
- Total Company Net income of $11.7 million
- Adjusted Operating Income of $35.8 million
- Diluted EPS of $0.16 and Adjusted Diluted EPS of $0.30
First Quarter 2024 Total Company Highlights(1):
- Net revenue of $560.9 million, a decrease of (0.3)% from $562.4
million
- Comparable store sales growth of 2.1% and Adjusted Comparable
Store Sales Growth of (0.1)%
- Adjusted Operating Income of $35.0 million
- Diluted EPS of $0.15 and Adjusted Diluted EPS of $0.32
Company reaffirms fiscal 2024 outlook and increases
whitespace opportunity to at least 2,500 stores
(1) On February 23, 2024, the Company completed the termination
of the Walmart Management and Services Agreement and discontinued
the former Legacy reportable segment. “Total Company” results
include operations from the Company's former Legacy reportable
segment as discontinued operations, while results on a continuing
basis do not. Unless otherwise noted, results above correspond to
the heading under which they appear.
National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision”
or the “Company”) today reported its financial results for the
first quarter ended March 30, 2024.
“We delivered first quarter results in line with our
expectations, reflecting a sequential improvement in the second
half of the period. While weather and a slower start to the tax
refund season at the beginning of the quarter adversely impacted
sales, our teams remained focused on the areas of our business that
we can control and continued to make progress on our strategic
initiatives. We built upon the actions we put in place to improve
doctor recruitment and retention, and we furthered our rollout of
remote technology and electronic health records in our stores.
Thanks to our team’s dedication and agility, we delivered increased
revenues and profitability on a continuing basis despite operating
in what remains a challenging macroeconomic environment. We are
committed to continuing to build our foundation for growth to drive
shareholder value,” said Reade Fahs, National Vision’s CEO.
During the first quarter of fiscal 2024, the Company ceased
providing management services to Walmart stores. These services,
which historically comprised the Company's former Legacy reportable
segment, met the accounting requirements for presentation as
discontinued operations. Accordingly, the condensed consolidated
financial statements reflect the results of the former Legacy
segment as a discontinued operation for all periods presented.
Unless otherwise noted, amounts and disclosures below relate to the
Company’s continuing operations.
This release includes certain Non-GAAP Financial Measures that
are not recognized under generally accepted accounting principles
(“GAAP”). Please see “Non-GAAP Financial Measures” and
“Reconciliation of Non-GAAP to GAAP Financial Measures” below for
more information.
First Quarter 2024 Continuing Operations Summary
- Net revenue increased 4.2% to $542.5 million compared to the
first quarter of 2023 and was primarily driven by growth from new
store sales, higher revenue from the Company’s AC Lens business and
the effect of unearned revenue compared with the prior-year period.
Net revenue includes a 0.5% impact from the timing of unearned
revenue in the current-year period compared with the prior-year
period.
- Comparable store sales growth was 1.4% and Adjusted Comparable
Store Sales Growth was 0.4%, primarily due to higher average
ticket, partially offset by a decrease in customer
transactions.
- The Company opened 14 new stores, and converted 20 Eyeglass
World stores to America's Best stores, and ended the period with
1,201 stores. Overall, store count grew 6.5% from April 1, 2023 to
March 30, 2024.
- Costs applicable to revenue increased 5.6% to $248.7 million
compared to the first quarter of 2023. As a percentage of net
revenue, compared to the first quarter of 2023, costs applicable to
revenue increased 60 basis points to 45.8%, mainly due to lower
eyeglass mix and an increase in optometrist-related costs, as well
as other mix and margin effects. These costs were partially offset
by increased exam revenue.
- Selling, general and administrative expenses (SG&A)
increased 5.2% to $245.4 million compared with the first quarter of
2023. Adjusted SG&A increased 2.4% to $234.8 million compared
with the first quarter of 2023. As a percentage of net revenue,
SG&A increased 40 basis points to 45.2% compared with the first
quarter of 2023, mainly due to litigation settlement and legal and
professional expenses as well as other operating expenses,
partially offset by decreases in performance-based incentive and
stock-based compensation. As a percentage of net revenue, Adjusted
SG&A decreased 70 basis points compared with the first quarter
of 2023, driven by decreases in performance-based incentive
compensation, partially offset by other operating expenses.
- Depreciation and amortization expense of $23.6 million
increased 4.0% from the prior-year period, primarily due to new
store openings and investments in remote medicine technology.
- Income from continuing operations, net of tax decreased to
$12.2 million compared to $16.0 million in the first quarter of
2023. Income from continuing operations, net of tax margin
decreased to 2.3% compared to 3.1% in the first quarter of
2023.
- Diluted earnings per share (EPS) decreased to $0.16 compared to
$0.20 in the first quarter of 2023. Adjusted Diluted EPS increased
to $0.30 compared to $0.27 in the first quarter of 2023. The net
change in margin on unearned revenue benefited both Diluted EPS and
Adjusted Diluted EPS by $0.02.
- Adjusted Operating Income increased 5.5% to $35.8 million
compared with the first quarter of 2023. Adjusted Operating Margin
increased 10 basis points to 6.6% compared with the first quarter
of 2023. The net change in margin on unearned revenue benefited net
income by $1.8 million and Adjusted Operating Income by $2.4
million.
Balance Sheet and Cash Flow Highlights as of March 30,
2024
- National Vision’s cash balance was $150.0 million as of March
30, 2024. The Company had no borrowings under its $300.0 million
first lien revolving credit facility (“Revolving Loans”), exclusive
of letters of credit of $6.4 million.
- Total debt was $458.9 million as of March 30, 2024, consisting
of outstanding first lien term loans, 2.50% convertible senior
notes due on May 15, 2025 (“2025 Notes”) and finance lease
obligations, net of unamortized discounts.
- Cash flows from operating activities for the first quarter of
2024 were $24.0 million compared to $74.1 million for the first
quarter of 2023.
- Capital expenditures for the first quarter of 2024 totaled
$20.0 million compared to $27.7 million for the first quarter of
2023.
Termination of Walmart MSA
As previously announced on July 26, 2023, the Company’s
Management and Services Agreement with Walmart Inc. (“Walmart MSA”)
terminated as of February 23, 2024. This included supplying and
operating Vision Centers in 225 Walmart stores, providing contact
lens distribution and related services to Walmart and its
affiliate, Sam's Club, and arranging for the provision of
optometric services at certain Walmart locations in California. The
Company has commenced the process of winding down its AC Lens
operations, including the closing of its Ohio distribution center,
and expects the AC Lens operations to be included in discontinued
operations in the second quarter of 2024.
Increases Whitespace Opportunity
Based on independent research, the Company is raising its
whitespace opportunity for its America’s Best brand by 350 stores,
for a new total of at least 1,650 locations. The analysis assumes
maintaining the whitespace opportunity for Eyeglass World of at
least 850 locations. In total, the Company now believes its
whitespace opportunity to be at least 2,500 stores.
Fiscal 2024 Outlook
National Vision's fiscal 2024 outlook reflects current expected
or estimated impacts related to macroeconomic factors, including
inflation, geopolitical instability and risks of recession, as well
as constraints on exam capacity; however, the ultimate impact of
these factors on the Company’s financial outlook remains uncertain
with dynamic market conditions and the outlook shown below assumes
no material deterioration to the Company’s current business
operations as a result of such factors or as a result of the
termination of the Walmart MSA.
The Company is reaffirming outlook for the 52 weeks ending
December 28, 2024:
Total Company Fiscal 2024
Outlook
New Stores
65 - 70
Adjusted Comparable Store Sales
Growth1
2.0% - 4.0%
Net Revenue
$1.965 - $2.005 billion
Adjusted Operating Income
$61 - $76 million
Adjusted Diluted EPS2
$0.50 - $0.65
Depreciation and Amortization3
$95 - $100 million
Interest4
$7 - $9 million
Tax Rate5
26% to 28%
Capital Expenditures
$110 - $115 million
1 Refer to the Reconciliation of Adjusted Comparable Stores
Sales Growth to Total Comparable Store Sales Growth.
2 Assumes approximately 79 million shares, and does not include
9.7 million shares attributable to the 2025 Notes as the Company
anticipates them to be anti-dilutive to earnings per share for
fiscal year 2024.
3 Includes amortization of acquisition intangibles of
approximately $1.6 million, which is excluded in the definition of
Adjusted Operating Income.
4 Before the impact of gains or losses on change in fair value
of derivatives and charges related to debt discounts and deferred
financing costs.
5 Excluding the impact of vesting of restricted stock units and
stock option exercises.
The fiscal 2024 outlook information provided above includes
Adjusted Operating Income and Adjusted Diluted EPS guidance, which
are non-GAAP financial measures management uses in measuring
performance. The Company is not able to reconcile these
forward-looking non-GAAP measures to comparable GAAP measures
without unreasonable efforts because it is not possible to predict
with a reasonable degree of certainty the actual impact of certain
items and unanticipated events, including taxes and non-recurring
items, which would be included in GAAP results. The impact of such
items and unanticipated events could be potentially
significant.
The fiscal 2024 outlook is forward-looking, subject to
significant business, economic, regulatory and competitive
uncertainties and contingencies, many of which are beyond the
control of the Company and its management, and based upon
assumptions with respect to future decisions, which are subject to
change. Actual results may vary and those variations may be
material. As such, the Company’s results may not fall within the
ranges contained in its fiscal 2024 outlook. The Company uses these
forward-looking measures internally to assess and benchmark its
results and strategic plans. See “Forward-Looking Statements”
below.
Conference Call Details
The Company will host a conference call to discuss the first
quarter 2024 financial results and fiscal-year 2024 guidance today,
May 8, 2024, at 8:30 a.m. Eastern Time. To pre-register for the
conference call and obtain a dial-in number and passcode please
refer to the “Investors” section of the Company’s website at
www.nationalvision.com/investors. A live audio webcast of the
conference call will be available on the “Investors” section of the
Company’s website at www.nationalvision.com/investors, where
presentation materials will be posted prior to the conference call.
A replay of the audio webcast will also be archived on the
“Investors” section of the Company’s website.
About National Vision Holdings, Inc.
National Vision Holdings, Inc. (NASDAQ: EYE) is one of the
largest optical retail companies in the United States with more
than 1,200 stores in 38 states and Puerto Rico. With a mission of
helping people by making quality eye care and eyewear more
affordable and accessible, the company operates four retail brands:
America’s Best Contacts & Eyeglasses, Eyeglass World, and Vista
Opticals inside select Fred Meyer stores and on select military
bases, and e-commerce websites, offering a variety of products and
services for customers’ eye care needs. For more information,
please visit www.nationalvision.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934. These statements include, but are not limited
to, statements contained under “Fiscal 2024 Outlook,” as well as
other statements related to our current beliefs and expectations
regarding the performance of our industry, the Company’s strategic
direction, market position, prospects including remote medicine and
optometrist recruiting and retention initiatives, and future
results. You can identify these forward-looking statements by the
use of words such as “outlook,” “guidance,” “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “could,”
“seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,”
“anticipates” or the negative version of these words or other
comparable words. Caution should be taken not to place undue
reliance on any forward-looking statement as such statements speak
only as of the date when made. We undertake no obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments or otherwise,
except as required by law.
Forward-looking statements are not guarantees and are subject to
various risks and uncertainties, which may cause actual results to
differ materially from those implied in forward-looking statements.
Such factors include, but are not limited to, the termination of
our partnership with Walmart, including the transition period and
other wind down activities, will have an impact on our business,
revenues, profitability and cash flows, which impact could be
material; market volatility, an overall decline in the health of
the economy and other factors impacting consumer spending,
including inflation, uncertainty in financial markets, recessionary
conditions, escalated interest rates, the timing and issuance of
tax refunds, governmental instability, war and natural disasters,
may affect consumer purchases, which could reduce demand for our
products and materially harm our sales, profitability and financial
condition; failure to recruit and retain vision care professionals
for in-store roles or to provide remote care offerings could
adversely affect our business, financial condition and results of
operations; the optical retail industry is highly competitive, and
if we do not compete successfully, our business may be adversely
impacted; if we fail to open and operate new stores in a timely and
cost-effective manner or fail to successfully enter new markets,
our financial performance could be materially and adversely
affected; if the performance of our Host brands declines or we are
unable to maintain or extend our operating relationships with our
Host partners, our business, profitability and cash flows may be
adversely affected and we may be required to incur impairment
charges; we are a low-cost provider and our business model relies
on the low-cost of inputs and factors such as wage rate increases,
inflation, cost increases, increases in the price of raw materials
and energy prices could have a material adverse effect on our
business, financial condition and results of operations; we require
significant capital to fund our expanding business, including
updating our Enterprise Resource Planning (“ERP”), and other
technological, systems and capabilities; our growth strategy could
strain our existing resources and cause the performance of our
existing stores to suffer; our success depends upon our marketing,
advertising and promotional efforts and if we are unable to
implement them successfully or efficiently, or if our competitors
are more effective than we are, we may experience a material
adverse effect on our business, financial condition and results of
operations; we are subject to risks associated with leasing
substantial amounts of space, including future increases in
occupancy costs; certain technological advances, greater
availability of, or increased consumer preferences for, vision
correction alternatives to prescription eyeglasses or contact
lenses, or future drug development for the correction of
vision-related problems may reduce the demand for our products and
adversely impact our business and profitability; if we fail to
retain our existing senior management team or attract qualified new
personnel such failure could have a material adverse effect on our
business, financial condition and results of operations; our
profitability and cash flows may be negatively affected if we are
not successful in managing our inventory balances and inventory
shrinkage; our operating results and inventory levels fluctuate on
a seasonal basis; our e-commerce and omni-channel business faces
distinct risks, and our failure to successfully manage those risks
could have a negative impact on our profitability; we depend on our
distribution centers and/or optical laboratories; we may incur
losses arising from our investments in technological innovators in
the optical retail industry, including artificial intelligence,
which would negatively affect our financial results; ESG issues,
including those related to climate change, could have a material
adverse effect on our business, financial condition and results of
operations; changing climate and weather patterns leading to severe
weather and disasters may cause significant business interruptions
and expenditures; future operational success depends on our ability
to develop, maintain and extend relationships with managed vision
care companies, vision insurance providers and other third-party
payors; we face risks associated with vendors from whom our
products are sourced and are dependent on a limited number of
suppliers; we rely heavily on our information technology systems,
as well as those of our vendors, for our business to effectively
operate and to safeguard confidential information; any significant
failure, inadequacy, interruption or security breach could
adversely affect our business, financial condition and operations;
we rely on third-party coverage and reimbursement, including
government programs, for an increasing portion of our revenues, the
future reduction of which could adversely affect our results of
operations; we are subject to extensive state, local and federal
vision care and healthcare laws and regulations and failure to
adhere to such laws and regulations would adversely affect our
business; we are subject to managed vision care laws and
regulations; we are subject to rapidly changing and increasingly
stringent laws, regulations, contractual obligations, and industry
standards relating to privacy, data security and data protection
which could subject us to liabilities that adversely affect our
business, operations and financial performance; we could be
adversely affected by product liability, product recall or personal
injury issues; failure to comply with laws, regulations and
enforcement activities or changes in statutory, regulatory,
accounting and other legal requirements could potentially impact
our operating and financial results; adverse judgments or
settlements resulting from legal proceedings relating to our
business operations could materially adversely affect our business,
financial condition and results of operations; we may not be able
to adequately protect our intellectual property, which could harm
the value of our brand and adversely affect our business; we have a
significant amount of indebtedness which could adversely affect our
business and financial position, including limiting our business
flexibility and preventing us from meeting our debt obligations; a
change in interest rates may adversely affect our business; our
credit agreement contains restrictions that limit our flexibility
in operating our business; conversion of the 2025 Notes could
dilute the ownership interest of existing stockholders or may
otherwise depress the price of our common stock; and risks related
to owning our common stock, including our ability to comply with
requirements to design and implement and maintain effective
internal controls. Additional information about these and other
factors that could cause National Vision’s results to differ
materially from those described in the forward-looking statements
can be found in filings by National Vision with the Securities and
Exchange Commission (“SEC”), including our latest Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are
accessible on the SEC’s website at www.sec.gov. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this release and in our filings with the SEC.
Non-GAAP Financial Measures
To supplement the Company’s financial information presented in
accordance with GAAP and aid understanding of the Company’s
business performance, the Company uses certain non-GAAP financial
measures, namely “EBITDA,” “Adjusted Operating Income,” “Adjusted
Operating Margin,” “Adjusted EBITDA,” “Adjusted EBITDA Margin,”
“Adjusted Diluted EPS,” “Adjusted Comparable Stores Sales Growth,”
“Adjusted SG&A,” “Adjusted SG&A Percent of Net Revenue,”
and “Total Company Net Revenue.” We believe EBITDA, Adjusted
Operating Income, Adjusted Operating Margin, Adjusted EBITDA,
Adjusted EBITDA Margin, Adjusted Diluted EPS, Adjusted SG&A,
Adjusted SG&A Percent of Net Revenue and Total Company Net
Revenue assist investors and analysts in comparing our operating
performance across reporting periods on a consistent basis by
excluding items that we do not believe are indicative of our core
operating performance. Management believes these non-GAAP financial
measures are useful to investors in highlighting trends in our
operating performance, while other measures can differ
significantly depending on long-term strategic decisions regarding
capital structure, the tax jurisdictions in which we operate and
capital investments. Management uses these non-GAAP financial
measures to supplement GAAP measures of performance in the
evaluation of the effectiveness of our business strategies, to make
budgeting decisions, to establish discretionary annual incentive
compensation and to compare our performance against that of other
peer companies using similar measures. Management supplements GAAP
results with non-GAAP financial measures to provide a more complete
understanding of the factors and trends affecting the business than
GAAP results alone.
To supplement the Company’s comparable store sales growth
presented in accordance with GAAP, the Company provides “Adjusted
Comparable Store Sales Growth,” which is a non-GAAP financial
measure we believe is useful because it provides timely and
accurate information relating to the two core metrics of retail
sales: number of transactions and value of transactions. Management
uses Adjusted Comparable Store Sales Growth as the basis for key
operating decisions, such as allocation of advertising to
particular markets and implementation of special marketing
programs. Accordingly, we believe that Adjusted Comparable Store
Sales Growth provides timely and accurate information relating to
the operational health and overall performance of each brand. We
also believe that, for the same reasons, investors find our
calculation of Adjusted Comparable Store Sales Growth to be
meaningful.
EBITDA: We define EBITDA as net income, plus interest
expense (income), net, income tax provision (benefit), and
depreciation and amortization. When presenting EBITDA from
continuing operations, we use the same definition as EBITDA and
also exclude income (loss) from discontinued operations, net of
tax.
Adjusted Operating Income: We define Adjusted Operating
Income as net income, plus interest expense (income), net and
income tax provision (benefit), further adjusted to exclude
stock-based compensation expense, loss on extinguishment of debt,
asset impairment, litigation settlement, secondary offering
expenses, management realignment expenses, long-term incentive plan
expenses, amortization of acquisition intangibles, Enterprise
Resource Planning (“ERP”) implementation expenses and certain other
expenses. When presenting Adjusted Operating Income from continuing
operations, we use the same definition for Adjusted Operating
Income, and also exclude income (loss) from discontinued
operations, net of tax. We define Adjusted Operating Income from
discontinued operations as income (loss) from discontinued
operations, net of tax, plus income tax provision (benefit),
further adjusted to exclude stock-based compensation expense, asset
impairment, amortization of acquisition intangibles, and certain
other expenses.
Adjusted Operating Margin: We define Adjusted Operating
Margin as Adjusted Operating Income as a percentage of Total
Company Net Revenue when presenting total company Adjusted
Operating Margin, total net revenue when presenting Adjusted
Operating Margin from continuing operations, or total net revenue
from discontinued operations when presenting Adjusted Operating
Margin from discontinued operations
Adjusted EBITDA: We define Adjusted EBITDA as net income,
plus interest expense (income), net, income tax provision (benefit)
and depreciation and amortization, further adjusted to exclude
stock-based compensation expense, loss on extinguishment of debt,
asset impairment, litigation settlement, secondary offering
expenses, management realignment expenses, long-term incentive plan
expenses, ERP implementation expenses and certain other expenses.
When presenting Adjusted EBITDA from continuing operations, we use
the same definition for Adjusted EBITDA, and also exclude income
(loss) from discontinued operations, net of tax.
Adjusted EBITDA Margin: We define Adjusted EBITDA Margin
as Adjusted EBITDA as a percentage of Total Company Net Revenue
when presenting total company Adjusted EBITDA, or total net revenue
when presenting Adjusted EBITDA from continuing operations.
Adjusted Diluted EPS: We define Adjusted Diluted EPS as
diluted earnings per share, adjusted for the per share impact of
stock-based compensation expense, loss on extinguishment of debt,
asset impairment, litigation settlement, secondary offering
expenses, management realignment expenses, long-term incentive plan
expenses, amortization of acquisition intangibles, amortization of
debt discounts and deferred financing costs of our term loan
borrowings, amortization of the conversion feature and deferred
financing costs related to our 2025 Notes when not required under
U.S. GAAP to be added back for diluted earnings per share,
derivative fair value adjustments, ERP implementation expenses,
certain other expenses, and tax expense (benefit) from stock-based
compensation, less the tax effect of these adjustments. When
presenting Adjusted Diluted EPS from continuing operations, we use
the same definition for Adjusted Diluted EPS, and also exclude
diluted earnings per share from discontinued operations.
We define Adjusted Diluted EPS from discontinued operations as
diluted earnings per share from discontinued operations adjusted
for the per share impact of stock-based compensation expense, asset
impairment, amortization of acquisition intangibles, certain other
expenses, and tax expense (benefit) from stock-based compensation,
less the tax effect of these adjustments.
Adjusted SG&A: We define Adjusted SG&A as
SG&A plus SG&A from discontinued operations adjusted to
exclude stock-based compensation expense, litigation settlement,
secondary offering expenses, management realignment expenses,
long-term incentive plan expense, ERP implementation expenses, and
certain other expenses. When presenting Adjusted SG&A from
continuing operations, we use the same definition for Adjusted
SG&A, as applicable for continuing operations, and also exclude
SG&A from discontinued operations.
Adjusted SG&A Percent of Net Revenue: We define
Adjusted SG&A Percent of Net Revenue as Adjusted SG&A as a
percentage of Total Company Net Revenue when presenting total
company Adjusted SG&A Percent of Net Revenue, or total net
revenue when presenting Adjusted SG&A Percent of Net Revenue
from continuing operations.
Total Company Net Revenue: We define Total Company Net
Revenue as total net revenue plus total net revenue from
discontinued operations.
Adjusted Comparable Store Sales Growth: We measure
Adjusted Comparable Store Sales Growth as the increase or decrease
in sales recorded by the comparable store base in any reporting
period, compared to sales recorded by the comparable store base in
the prior reporting period, which we calculate as follows: (i)
sales are recorded on a cash basis (i.e. when the order is placed
and paid for or submitted to a managed care payor, compared to when
the order is delivered), utilizing cash basis point of sale
information from stores; (ii) stores are added to the calculation
during the 13th full fiscal month following the store’s opening;
(iii) closed stores are removed from the calculation for time
periods that are not comparable; (iv) sales from partial months of
operation are excluded when stores do not open or close on the
first day of the month; and (v) when applicable, we adjust for the
effect of the 53rd week. Quarterly, year-to-date and annual
adjusted comparable store sales are aggregated using only sales
from all whole months of operation included in both the current
reporting period and the prior reporting period. When a partial
month is excluded from the calculation, the corresponding month in
the subsequent period is also excluded from the calculation. There
may be variations in the way in which some of our competitors and
other retailers calculate comparable store sales. As a result, our
adjusted comparable store sales may not be comparable to similar
data made available by other retailers.
EBITDA, Adjusted Operating Income, Adjusted Operating Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Diluted EPS,
Adjusted SG&A, Adjusted SG&A Percent of Net Revenue, Total
Company Net Revenue and Adjusted Comparable Store Sales Growth are
not recognized terms under U.S. GAAP and should not be considered
as an alternative to net income or the ratio of net income to net
revenue as a measure of financial performance, SG&A, the ratio
of SG&A to net revenue as a measure of financial performance,
cash flows provided by operating activities as a measure of
liquidity, comparable store sales growth as a measure of operating
performance, or any other performance measure derived in accordance
with U.S. GAAP. Additionally, these measures are not intended to be
a measure of free cash flow available for management’s
discretionary use as they do not consider certain cash requirements
such as interest payments, tax payments and debt service
requirements. The presentations of these measures have limitations
as analytical tools and should not be considered in isolation, or
as a substitute for analysis of our results as reported under U.S.
GAAP. Because not all companies use identical calculations, the
presentations of these measures may not be comparable to other
similarly titled measures of other companies and can differ
significantly from company to company.
Please see “Reconciliation of Non-GAAP to GAAP Financial
Measures” below for reconciliations of non-GAAP financial measures
used in this release to their most directly comparable GAAP
financial measures.
National Vision Holdings, Inc.
and Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
In Thousands, Except Par Value
As of March 30, 2024
As of December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
150,050
$
149,896
Accounts receivable, net
74,273
86,854
Inventories
118,564
119,908
Prepaid expenses and other current
assets
36,025
40,012
Total current assets
378,912
396,670
Noncurrent assets:
Property and equipment, net
357,390
360,772
Goodwill
717,544
717,544
Trademarks and trade names
240,547
240,547
Other intangible assets, net
19,779
20,173
Right of use assets
410,709
406,275
Other assets
30,487
28,336
Noncurrent assets of discontinued
operations
—
2,194
Total noncurrent assets
1,776,456
1,775,841
Total assets
$
2,155,368
$
2,172,511
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
60,797
$
67,556
Other payables and accrued expenses
108,139
123,288
Unearned revenue
45,604
48,117
Deferred revenue
63,846
62,867
Current maturities of long-term debt and
finance lease obligations
10,329
10,480
Current operating lease obligations
86,291
85,090
Current liabilities of discontinued
operations
—
302
Total current liabilities
375,006
397,700
Noncurrent liabilities:
Long-term debt and finance lease
obligations, less current portion and debt discount
448,617
450,771
Noncurrent operating lease obligations
380,090
376,814
Deferred revenue
22,005
21,459
Other liabilities
8,399
8,465
Deferred income taxes, net
79,932
87,884
Total non-current liabilities
939,043
945,393
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 200,000
shares authorized; 85,194 and 84,831 shares issued as of March 30,
2024 and December 30, 2023, respectively; 78,558 and 78,311 shares
outstanding as of March 30, 2024 and December 30, 2023,
respectively
852
848
Additional paid-in capital
791,710
788,967
Accumulated other comprehensive loss
(229
)
(419
)
Retained earnings
266,301
254,616
Treasury stock, at cost; 6,636 and 6,520
shares as of March 30, 2024 and December 30, 2023, respectively
(217,315
)
(214,594
)
Total stockholders’ equity
841,319
829,418
Total liabilities and stockholders’
equity
$
2,155,368
$
2,172,511
National Vision Holdings, Inc.
and Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended
In Thousands, Except Earnings Per
Share
March 30, 2024
April 1, 2023
Revenue:
Net product sales
$
447,812
$
436,114
Net sales of services and plans
94,711
84,683
Total net revenue
542,523
520,797
Costs applicable to revenue (exclusive
of depreciation and amortization):
Products
166,324
160,334
Services and plans
82,342
75,075
Total costs applicable to revenue
248,666
235,409
Operating expenses:
Selling, general and administrative
expenses
245,366
233,331
Depreciation and amortization
23,637
22,734
Asset impairment
456
354
Other expense (income), net
(12
)
(117
)
Total operating expenses
269,447
256,302
Income from operations
24,410
29,086
Interest expense, net
4,256
4,867
Earnings from continuing operations before
income taxes
20,154
24,219
Income tax provision
7,915
8,246
Income from continuing operations, net of
tax
12,239
15,973
Income (loss) from discontinued
operations, net of tax
(554
)
2,297
Net income
$
11,685
$
18,270
Basic earnings per share:
Continuing operations
$
0.16
$
0.20
Discontinued operations
$
(0.01
)
$
0.03
Total
$
0.15
$
0.23
Diluted earnings per share:
Continuing operations
$
0.16
$
0.20
Discontinued operations
$
(0.01
)
$
0.02
Total
$
0.15
$
0.22
Weighted average shares
outstanding:
Basic
78,384
78,721
Diluted
78,826
92,136
Comprehensive income:
Net income
$
11,685
$
18,270
Unrealized gain on hedge instruments
254
253
Tax provision of unrealized gain on hedge
instruments
64
65
Comprehensive income
$
11,875
$
18,458
Note: Diluted EPS related to the 2025 Notes is calculated using
the if-converted method. The 2025 Notes were anti-dilutive for the
three months ended March 30, 2024 and excluded from the computation
of the weighted average shares for diluted EPS. The 2025 Notes were
dilutive for the three months ended April 1, 2023. The Company
added back $2.4 million in interest expense (after tax) related to
the 2025 Notes and assumed conversion of the 2025 Notes at the
beginning of the period.
National Vision Holdings, Inc.
and Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended
In Thousands
March 30, 2024
April 1, 2023
Cash flows from operating
activities:
Net income
$
11,685
$
18,270
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
24,181
24,813
Amortization of debt discount and deferred
financing costs
629
792
Amortization of cloud computing
implementation costs
1,132
588
Asset impairment
456
387
Deferred income tax expense (benefit)
(7,952
)
(6,377
)
Stock-based compensation expense
2,465
4,315
Losses (gains) on change in fair value of
derivatives
(190
)
776
Inventory adjustments
1,350
944
Other
(303
)
799
Changes in operating assets and
liabilities:
Accounts receivable
12,287
(416
)
Inventories
(6
)
(1,310
)
Operating lease right of use assets and
lease liabilities
(705
)
1,103
Other assets
1,401
2,997
Accounts payable
(6,759
)
9,348
Deferred and unearned revenue
(988
)
5,498
Other liabilities
(14,696
)
11,537
Net cash provided by operating
activities
23,987
74,064
Cash flows from investing
activities:
Purchase of property and equipment
(20,014
)
(27,721
)
Other
1,805
106
Net cash used for investing activities
(18,209
)
(27,615
)
Cash flows from financing
activities:
Repayments on long-term debt
(1,875
)
—
Proceeds from issuance of common stock
320
493
Purchase of treasury stock
(2,721
)
(27,609
)
Payments on finance lease obligations
(897
)
(1,546
)
Net cash used for financing activities
(5,173
)
(28,662
)
Net change in cash, cash equivalents and
restricted cash
605
17,787
Cash, cash equivalents and restricted
cash, beginning of year
151,027
230,624
Cash, cash equivalents and restricted
cash, end of period
$
151,632
$
248,411
Supplemental cash flow disclosure
information:
Cash paid for interest
$
245
$
459
Cash paid for taxes
$
113
$
106
Capital expenditures accrued at the end of
the period
$
5,662
$
7,634
National Vision Holdings, Inc.
and Subsidiaries
Reconciliation of Non-GAAP to
GAAP Financial Measures (Unaudited)
Reconciliation of Adjusted Operating
Income from Continuing Operations to Net Income
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Total net revenue
$
542,523
$
520,797
Net income
11,685
18,270
Income (loss) from discontinued
operations, net of tax
(554
)
2,297
Income from continuing operations, net
of tax
12,239
15,973
Interest expense, net
4,256
4,867
Income tax provision
7,915
8,246
Stock-based compensation expense (a)
2,435
4,087
Asset impairment (b)
456
354
Litigation settlement (c)
4,450
—
Amortization of acquisition intangibles
(d)
381
381
ERP implementation expenses (g)
516
—
Other (h)
3,117
(17
)
Adjusted Operating Income from
continuing operations
$
35,765
$
33,891
Net income margin
2.2
%
3.5
%
Adjusted Operating Margin from
continuing operations
6.6
%
6.5
%
Note: Percentages reflect line item as a
percentage of total net revenue, adjusted for rounding.
Reconciliation of Adjusted Operating
Income from Discontinued Operations to Income (Loss) from
Discontinued Operations, Net of Tax
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Total net revenue from discontinued
operations
$
18,384
$
41,572
Income (loss) from discontinued
operations, net of tax
(554
)
2,297
Income tax provision (benefit)
(2,255
)
1,929
Stock-based compensation expense (a)
30
228
Asset impairment (b)
—
33
Amortization of acquisition intangibles
(d)
99
1,491
Other (l)
1,893
4
Adjusted Operating Income from
discontinued operations
$
(787
)
$
5,982
Income (loss) from discontinued
operations, net of tax margin
(3.0
)%
5.5
%
Adjusted Operating Margin from
discontinued operations
(4.3
)%
14.4
%
Note: Percentages reflect line item as a
percentage of total net revenue from discontinued operations,
adjusted for rounding.
Reconciliation of Adjusted Operating
Income to Net Income
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Net income
$
11,685
$
18,270
Interest expense, net
4,256
4,867
Income tax provision
5,660
10,175
Stock-based compensation expense (a)
2,465
4,315
Asset impairment (b)
456
387
Litigation settlement (c)
4,450
—
Amortization of acquisition intangibles
(d)
480
1,872
ERP Implementation expenses (g)
516
—
Other (k)
5,010
(13
)
Adjusted Operating Income
$
34,978
$
39,873
Net income margin
2.2
%
3.5
%
Adjusted Operating Margin
6.2
%
7.1
%
Note: Percentages reflect line item as a
percentage of total net revenue for net income margin and Total
Company Net Revenue for Adjusted Operating Margin, adjusted for
rounding.
Reconciliation of EBITDA from
Continuing Operations and Adjusted EBITDA from Continuing
Operations to Net Income
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Total net revenue
$
542,523
$
520,797
Net income
11,685
18,270
Income (loss) from discontinued
operations, net of tax
(554
)
2,297
Income from continuing operations, net
of tax
12,239
15,973
Interest expense, net
4,256
4,867
Income tax provision
7,915
8,246
Depreciation and amortization
23,637
22,734
EBITDA from continuing
operations
48,047
51,820
Stock-based compensation expense (a)
2,435
4,087
Asset impairment (b)
456
354
Litigation settlement (c)
4,450
—
ERP implementation expenses (g)
516
—
Other (h)
3,117
(17
)
Adjusted EBITDA from continuing
operations
$
59,021
$
56,244
Net income margin
2.2
%
3.5
%
Adjusted EBITDA Margin from continuing
operations
10.9
%
10.8
%
Note: Percentages reflect line item as a
percentage of total net revenue, adjusted for rounding.
Reconciliation of Adjusted Diluted EPS
from Continuing Operations to Diluted EPS
Three Months Ended
Shares in thousands, except per share
amounts
March 30, 2024
April 1, 2023
Diluted EPS
$
0.15
$
0.22
Diluted EPS from discontinued
operations
(0.01
)
0.02
Diluted EPS from continuing
operations
0.16
0.20
Stock-based compensation expense (a)
0.03
0.04
Asset impairment (b)
0.01
0.00
Litigation settlement (c)
0.06
—
Amortization of acquisition intangibles
(d)
0.00
0.00
Amortization of debt discount and deferred
financing costs (e)
0.01
0.00
Derivatives fair value adjustments (f)
0.03
0.03
ERP implementation expenses (g)
0.01
—
Other (h)
0.04
(0.00
)
Tax expense from stock-based compensation
(i)
0.01
0.01
Tax effect of total adjustments (j)
(0.05
)
(0.02
)
Adjusted Diluted EPS from continuing
operations
0.30
0.27
Adjusted Diluted EPS from discontinued
operations
0.01
0.04
Adjusted Diluted EPS
$
0.32
$
0.31
Weighted average diluted shares
outstanding
78,826
92,136
Note: Some of the totals in the table
above do not foot due to rounding differences.
Reconciliation of Adjusted Diluted EPS
from Discontinued Operations to Diluted EPS from Discontinued
Operations
Three Months Ended
Shares in thousands, except per share
amounts
March 30, 2024
April 1, 2023
Diluted EPS from discontinued
operations
$
(0.01
)
$
0.02
Stock-based compensation expense (a)
0.00
0.00
Asset impairment (b)
—
0.00
Amortization of acquisition intangibles
(d)
0.00
0.02
Other (l)
0.02
0.00
Tax expense from stock-based compensation
(i)
0.00
0.00
Tax effect of total adjustments (j)
(0.01
)
(0.00
)
Adjusted Diluted EPS from discontinued
operations
$
0.01
$
0.04
Weighted average diluted shares
outstanding
78,826
92,136
Note: Some of the totals in the table
above do not foot due to rounding differences.
Reconciliation of Adjusted Diluted EPS
to Diluted EPS
Three Months Ended
Shares in thousands, except per share
amounts
March 30, 2024
April 1, 2023
Diluted EPS
$
0.15
$
0.22
Stock-based compensation expense (a)
0.03
0.05
Asset impairment (b)
0.01
0.00
Litigation settlement (c)
0.06
—
Amortization of acquisition intangibles
(d)
0.01
0.02
Amortization of debt discount and deferred
financing costs (e)
0.01
0.00
Derivative fair value adjustments (f)
0.03
0.03
ERP implementation expenses (g)
0.01
—
Other (k)
0.06
(0.00
)
Tax expense from stock-based compensation
(i)
0.01
0.01
Tax effect of total adjustments (j)
(0.05
)
(0.03
)
Adjusted Diluted EPS
$
0.32
$
0.31
Weighted average diluted shares
outstanding
78,826
92,136
Note: Some of the totals in the table
above do not foot due to rounding differences.
Reconciliation of Adjusted SG&A
from Continuing Operations to SG&A from Continuing
Operations
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Total net revenue
$
542,523
$
520,797
SG&A
245,366
233,331
Stock-based compensation expense (a)
2,435
4,087
Litigation settlement (c)
4,450
—
ERP implementation expenses (g)
516
—
Other (h)
3,117
(17
)
Adjusted SG&A from continuing
operations
$
234,848
$
229,261
SG&A from continuing operations
Percent of Net Revenue
45.2
%
44.8
%
Adjusted SG&A from continuing
operations Percent of Net Revenue
43.3
%
44.0
%
Note: Percentages reflect line item as a
percentage of total net revenue.
Reconciliation of Total Company Net
Revenue to Total net revenue
Three Months Ended
In thousands
March 30, 2024
April 1, 2023
Total net revenue
$
542,523
$
520,797
Total net revenue from discontinued
operations
18,384
41,572
Total Company Net Revenue
$
560,907
$
562,369
(a)
Non-cash charges related to stock-based
compensation programs, which vary from period to period depending
on the timing of awards and performance vesting conditions.
(b)
Reflects write-off related to impairment
of long-lived assets, primarily impairment of property, equipment
and lease-related assets on closed or underperforming stores.
(c)
Expenses associated with settlement of
certain litigation.
(d)
Amortization of the increase in carrying
values of finite-lived intangible assets resulting from the
application of purchase accounting following the acquisition of the
Company by affiliates of KKR & Co. Inc.
(e)
Amortization of deferred financing costs
and other non-cash charges related to our long-term debt. We adjust
for amortization of deferred financing costs related to the 2025
Notes only when adjustment for these costs is not required in the
calculation of diluted earnings per share under U.S. GAAP.
(f) The adjustments for the derivative fair value (gains) and
losses have the effect of adjusting the (gain) or loss for changes
in the fair value of derivative instruments and amortization of
AOCL for derivatives not designated as accounting hedges. This
results in reflecting derivative (gains) and losses within Adjusted
Diluted EPS during the period the derivative is settled. (g) Costs
related to the Company’s ERP implementation.
(h)
Other adjustments include amounts that
management believes are not representative of our operating
performance (amounts in brackets represent reductions in Adjusted
Operating Income, Adjusted Diluted EPS and Adjusted EBITDA), which
are primarily related to costs associated with the digitization of
paper-based records of $1.8 million, costs primarily related to the
wind down of AC Lens of $0.9 million for the three months ended
March 30, 2024, excess payroll taxes on vesting of restricted stock
units and exercises of stock options, executive severance and
relocation and other expenses and adjustments.
(i)
Tax expense (benefit) associated with
accounting guidance requiring excess tax expense (benefit) related
to vesting of restricted stock units and exercises of stock options
to be recorded in earnings as discrete items in the reporting
period in which they occur.
(j) Represents the income tax effect of the total adjustments at
our combined statutory federal and state income tax rates.
(k)
Reflects other expenses in (h) above, as
well as $1.9 million for the three months ended March 30, 2024 that
are related to the termination of the Walmart MSA and are presented
in discontinued operations.
(l)
Reflects costs primarily related to the
termination of the Walmart MSA of $1.8 million and other immaterial
adjustments for costs applicable to revenue for the three months
ended March 30, 2024.
Reconciliation of Adjusted Comparable Store Sales Growth from
Continuing Operations to Total Comparable Store Sales Growth from
Continuing Operations
Comparable store sales growth
from continuing operations (a)
Three Months Ended March 30,
2024
Three Months Ended April 1,
2023
Owned & Host segment
America’s Best
1.2
%
1.7
%
Eyeglass World
(5.0
)%
(1.3
)%
Military
(1.4
)%
3.2
%
Fred Meyer
(5.9
)%
(9.5
)%
Total comparable store sales growth
from continuing operations
1.4
%
3.4
%
Adjustments for effects of: (b)
Unearned & deferred revenue
(1.0
)%
(2.1
)%
Adjusted Comparable Store Sales Growth
from continuing operations
0.4
%
1.3
%
(a)
Total comparable store sales is calculated
based on consolidated net revenue from continuing operations
excluding the impact of (i) Corporate/Other segment net revenue,
(ii) sales from stores opened less than 13 months, (iii) stores
closed in the periods presented, (iv) sales from partial months of
operation when stores do not open or close on the first day of the
month and (v) if applicable, the impact of a 53rd week in a fiscal
year. Brand-level comparable store sales growth is calculated based
on cash basis revenues consistent with what the CODM reviews, and
consistent with reportable segment revenues presented in Note 12.
“Segment Reporting” in our unaudited condensed consolidated
financial statements included in Part I. Item 1. in our Quarterly
Report on Form 10-Q for the period ended March 30, 2024.
(b)
Adjusted Comparable Store Sales Growth
from continuing operations includes the effect of deferred and
unearned revenue as if such revenues were earned at the point of
sale, resulting in the changes from total comparable store sales
growth from continuing operations based on consolidated net revenue
from continuing operations.
Reconciliation of Adjusted Comparable
Store Sales Growth to Total Comparable Store Sales Growth
Comparable store sales growth
(a)
Three Months Ended March 30,
2024
Three Months Ended April 1,
2023
2024 Outlook (b)
Owned & Host segment
America’s Best
1.2
%
1.7
%
Eyeglass World
(5.0
)%
(1.3
)%
Military
(1.4
)%
3.2
%
Fred Meyer
(5.9
)%
(9.5
)%
Walmart stores
(13.5
)%
(3.2
)%
Total comparable store sales
growth
2.1
%
3.0
%
2.5% - 4.5%
Adjustments for effects of: (b)
Unearned & deferred revenue
(1.1
)%
(2.0
)%
Retail sales to Walmart’s customers
(1.1
)%
(0.2
)%
Adjusted Comparable Store Sales
Growth
(0.1
)%
0.8
%
2.0% - 4.0%
(a)
Total comparable store sales is calculated
based on consolidated Total Company Net Revenue excluding the
impact of (i) Corporate/Other segment net revenue, (ii) sales from
stores opened less than 13 months, (iii) stores closed in the
periods presented, (iv) sales from partial months of operation when
stores do not open or close on the first day of the month and (v)
if applicable, the impact of a 53rd week in a fiscal year.
Brand-level comparable store sales growth is calculated based on
cash basis revenues consistent with what the CODM reviews, and
consistent with reportable segment revenues presented in Note 12.
“Segment Reporting” in our unaudited condensed consolidated
financial statements included in Part I. Item 1. in our Quarterly
Report on Form 10-Q for the period ended March 30, 2024, with the
exception of Walmart stores, which is adjusted as noted in (b) (ii)
below.
(b)
There are two differences between total
comparable store sales growth based on consolidated Total Company
Net Revenue and Adjusted Comparable Store Sales Growth: (i)
Adjusted Comparable Store Sales Growth includes the effect of
deferred and unearned revenue as if such revenues were earned at
the point of sale, resulting in changes from total comparable store
sales growth based on consolidated Total Company Net Revenue; and
(ii) Adjusted Comparable Store Sales Growth includes retail sales
to Walmart’s customers (rather than the revenues recognized
consistent with the management & services agreement with
Walmart), resulting in changes from total comparable store sales
growth based on consolidated Total Company Net Revenue as shown in
the table above; (iii) with respect to the Company’s 2024 Outlook,
Adjusted Comparable Store Sales Growth includes an estimated 0.5%
decrease for the effect of deferred and unearned revenue as if such
revenues were earned at the point of sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508912021/en/
Investors: investor.relations@nationalvision.com National
Vision Holdings, Inc. Tamara Gonzalez
ICR, Inc. Caitlin Churchill
Media: media@nationalvision.com
National Vision Holdings, Inc. Racheal Peters
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