Positions Company to Enhance Focus on
Delivering Further Profitable Growth Across Its Remaining
Business
Announces Preliminary Second Quarter 2023
Financial Results and Reaffirms Fiscal 2023 Outlook
National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision”
or the “Company”), the nation’s second largest optical retailer
providing quality, affordable eye care and eyewear, today announced
its partnership with Walmart Inc. (“Walmart”) will be ending in
2024. This includes supplying and operating Vision Centers in
select Walmart stores, providing contact lens distribution and
related services to Walmart and its affiliate, and arranging for
the provision of optometric services at certain Walmart locations
in California.
“We value and appreciate the contributions that our partnership
with Walmart has had in helping us grow National Vision over the
past three decades. With the progression of growth opportunities in
our freestanding brands – America’s Best and Eyeglass World, we
have become the second largest optical chain in the U.S. and a
major force in providing low-cost eye exams, eyeglasses and contact
lenses to budget-conscious American families,” said Reade Fahs,
chief executive officer of National Vision. “While this decision
was not expected, we look forward to beginning a new chapter as a
more streamlined company ever more focused on delivering value to
our stakeholders through our mission of making eyewear and eye care
more affordable and accessible. We are grateful for and thank all
our associates and associated optometrists who have been part of
our Walmart journey.”
Fahs continued, “As we look ahead, we remain focused on
executing our strategic initiatives and making changes to our cost
structure to best align with our go-forward operating model. In
addition, we remain focused on returning to a mid-single digit
adjusted operating margin.”
On July 20, 2023, Walmart notified National Vision that it is
not renewing its agreement for the Company to operate Vision
Centers inside select Walmart locations as of February 23, 2024.
Walmart also notified FirstSight Vision Services, Inc.
(“FirstSight”), a wholly owned subsidiary of National Vision
licensed as a single-service health plan in California, that as of
February 23, 2024, it is ending the relationship whereby FirstSight
arranges for the provision of optometric services at offices next
to certain Walmart stores in California. In connection with these
non-renewals, Arlington Contacts Lens Service, Inc. (“AC Lens”),
National Vision’s wholly owned subsidiary, notified Walmart and its
affiliate that it is not renewing its agreements for wholesale and
e-commerce contact lenses distribution and related services.
National Vision expects the AC Lens agreements will terminate on
June 30, 2024.
National Vision’s Legacy segment, which consists of the
operations and supply of inventory and laboratory processing
services to Vision Centers in select Walmart retail locations,
combined with the Company’s wholesale distribution and e-commerce
portion of AC Lens tied to Walmart and its affiliate, which is
included in its Corporate/Other segment, contributed $348.9 million
in net revenue and $15.0 million in Total Consolidated Earnings
Before Income Taxes (EBIT) in fiscal 2022. Set forth in the table
below is the estimated financial impact from the termination of
these businesses based on fiscal 2022 total consolidated results
and the Legacy and Corporate/Other segments.
Fiscal Year 2022 – Estimated
Financial Impact
In thousands
Reported Total Consolidated
Results
Legacy Segment Impact
Corporate/Other Segment
Impact*
Total Impact from Termination of
Walmart Businesses**
Total net revenue
$
2,005,404
$
(151,877)
$
(196,995)
$
(348,872)
Total costs applicable to revenue
$
925,587
$
(70,040)
$
(173,526)
$
(243,566)
SG&A
$
915,355
$
(58,217)
$
(28,270)
$
(86,487)
Net income
$
42,122
EBITDA
$
161,231
$
(23,620)
$
4,801
$
(18,819)
Depreciation and amortization
$
99,956
$
3,770
Earnings before income taxes
$
60,813
$
(15,049)
* Reflects the estimated total impact of
the termination of the Company’s wholesale distribution and
e-commerce portion of AC Lens tied to Walmart and its affiliate and
does not include FirstSight impacts.
**Reflects the estimated total impact of
the termination of the Legacy segment and the Company’s wholesale
distribution and e-commerce portion of AC Lens tied to Walmart and
its affiliate. The estimated total impact does not include
FirstSight impacts.
The Company expects EBITDA contribution from Walmart and its
affiliate businesses in fiscal 2023 to be lower than in fiscal
2022.
In connection with the termination of these agreements, the
Company expects to record noncash goodwill and intangible asset
impairment charges of approximately $60 million and $10 million,
respectively, in the third quarter of fiscal 2023.
Second Quarter 2023 Preliminary Financial Results and Fiscal
2023 Outlook
National Vision also announced its preliminary unaudited
financial results for the quarter ended July 1, 2023. The Company
noted that these preliminary results have been prepared in good
faith on a consistent basis with prior periods; however National
Vision has not yet completed its financial closing procedures for
the quarter ended July 1, 2023, and its actual results are subject
to change and could be materially different from this preliminary
financial information. Such preliminary information should not be
regarded as a representation by National Vision or its management
as actual results for the quarter ended July 1, 2023.
$ in thousands, except per share
amounts
Three months ended July 1,
2023
Three months ended July 2,
2022
Change
Net revenue
$
525,340
$
509,555
3.1
%
Comparable store sales growth
(0.1
)%
(11.0
)%
Adjusted Comparable Store Sales Growth
1.0
%
(12.4
)%
Stores opened
24
22
Stores closed
1
—
Ending store count
1,381
1,314
5.1
%
Net income
$
5,614
$
9,734
(42.3
)%
Diluted EPS
$
0.07
$
0.12
(40.8
)%
Adjusted Operating Income
$
16,448
$
27,780
(40.8
)%
Adjusted Diluted EPS
$
0.17
$
0.21
(19.1
)%
National Vision noted that its fiscal 2023 second quarter
performance was largely in line with its expectations and driven
primarily by continued strength from its managed care business and
ongoing execution of its strategic initiatives. The year-over-year
change in Adjusted Operating Income was primarily driven by the
Company’s ongoing investments in strategic initiatives and the
normalization of incentive compensation, as the Company expected,
partially offset by the timing of certain selling, general and
administrative expense as well as lower depreciation expense in the
quarter.
The Company also today reaffirmed its fiscal 2023 outlook as
previously communicated on May 11, 2023, and, given its
year-to-date performance, the Company expects Adjusted Operating
Income and Adjusted Diluted Earnings Per Share (EPS) to be at or
above the midpoint of its previously provided guidance ranges.
The information provided above includes preliminary estimates of
Adjusted Operating Income and Adjusted Diluted EPS, which are
non-GAAP financial measures management uses in measuring
performance.
Additionally, the fiscal 2023 outlook is forward-looking,
subject to significant business, economic, regulatory and
competitive uncertainties and contingencies, including constraints
on exam capacity, 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. The ultimate
impact of these factors on the Company’s financial outlook remains
uncertain and assumes no material deterioration to the Company’s
current business operations as a result of such factors or as a
result of the end of the Walmart partnership. 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 2023
outlook. The Company uses these forward-looking measures internally
to assess and benchmark its results and strategic plans. See
“Forward-Looking Statements” below.
The Company expects to provide more detail on its second quarter
2023 financial results and fiscal-year 2023 outlook on its upcoming
conference call on August 10, 2023, 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 in 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 the second
largest optical retail company (by sales) in the United States with
over 1,300 stores in 44 states and Puerto Rico. With a mission of
helping people by making quality eye care and eyewear more
affordable and accessible, the company operates five retail brands:
America’s Best Contacts & Eyeglasses, Eyeglass World, Vision
Centers inside select Walmart stores, and Vista Opticals inside
select Fred Meyer stores and on select military bases, and several
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 related These statements include, but are not
limited to, statements contained under “Second Quarter 2023
Preliminary Financial Results and Fiscal 2023 Outlook” as well as
other statements related to our current beliefs and expectations
regarding the Company’s strategic direction, market position,
prospects and future results. You can identify these
forward-looking statements by the use of words such as
“preliminary,” “guidance,” “outlook,” “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “could,”
“seeks,” “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, those set forth in
our Annual Report on Form 10-K under the heading “Risk Factors” and
in subsequent filings by National Vision with the SEC. Potential
risks and uncertainties include those relating to our ability to
recruit and retain vision care professionals, management and retail
associates, our ability to compete for managed vision care
contracts, our ability to obtain favorable terms, such as discounts
and rebates, from optical vendors and generate cash to fund our
business and service our debt obligations, and our ability to
replace lost Walmart locations with new America’s Best or Eyeglass
World stores and support the carrying value of the intangible
assets at these brands or replace the lost revenues and cash flows.
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 SEC, including our Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K, 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 press 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 “Adjusted Operating Income,” “Adjusted Diluted
EPS,” “EBITDA” and “Adjusted Comparable Stores Sales Growth.” We
believe Adjusted Operating Income and Adjusted Diluted EPS and
EBITDA 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.
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, and certain
other expenses.
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 the term loan
borrowings, amortization of the conversion feature and deferred
financing costs related to the 2025 Notes when not required under
U.S. GAAP to be added back for diluted earnings per share, losses
(gains) on change in fair value of derivatives, certain other
expenses, and tax expense (benefit) from stock-based compensation,
less the tax effect of these adjustments.
EBITDA: We define EBITDA as net income, plus interest
expense (income), net, income tax provision (benefit), and
depreciation and amortization.
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.
Adjusted Operating Income, Adjusted Diluted EPS, EBITDA 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, 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
Reconciliation of Non-GAAP to
GAAP Financial Measures
In Thousands, Except Earnings Per
Share
(Unaudited)
Preliminary Reconciliation of
Adjusted Operating Income to Net Income
Three Months Ended
Three Months Ended
In thousands
July 1, 2023
July 2, 2022
Net income
$
5,614
$
9,734
Interest expense (income), net
1,836
3,963
Income tax provision
275
4,674
Stock-based compensation expense (a)
5,473
3,638
Asset impairment (b)
893
3,509
Amortization of acquisition intangibles
(c)
1,872
1,872
Other (f)
485
390
Adjusted Operating Income
$
16,448
$
27,780
Preliminary Reconciliation of
Adjusted Diluted EPS to Diluted EPS
Three Months Ended
Three Months Ended
Shares in thousands, except per share
amounts
July 1, 2023
July 2, 2022
Diluted EPS
$
0.07
$
0.12
Stock-based compensation expense (a)
0.07
0.05
Asset impairment (b)
0.01
0.04
Amortization of acquisition intangibles
(c)
0.02
0.02
Amortization of debt discount and deferred
financing costs (d)
0.01
0.01
Losses (gains) on change in fair value of
derivatives (e)
0.00
(0.01
)
Other (i)
0.01
0.00
Tax expense (benefit) from stock-based
compensation (g)
0.00
0.00
Tax effect of total adjustments (h)
(0.03
)
(0.03
)
Adjusted Diluted EPS
$
0.17
$
0.21
Weighted average diluted shares
outstanding
78,343
80,403
Note: Some of the totals in the table
above do not foot due to rounding differences.
(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 of primarily property,
equipment and lease-related assets on closed or underperforming
stores.
(c)
Amortization of the increase in carrying
values of finite-lived intangible assets resulting from the
application of purchase accounting to the acquisition of the
Company by affiliates of KKR & Co. Inc.
(d)
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.
(e)
Reflects losses (gains) recognized in
interest expense (income), net on change in fair value of
de-designated hedges.
(f)
Other adjustments include amounts that
management believes are not representative of our operating
performance (amounts in brackets represent reductions in Adjusted
Operating Income and Adjusted Diluted EPS), which are primarily
related to excess payroll taxes on vesting of restricted stock
units and exercises of stock options, executive severance and
relocation and other expenses and adjustments.
(g)
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.
(h)
Represents the income tax effect of the
total adjustments at our combined statutory federal and state
income tax rates.
(i)
Reflects other expenses in (f) above,
including debt issuance costs of $0.2 million for the three months
ended July 1, 2023.
Preliminary Reconciliation of
Adjusted Comparable Store Sales Growth to
Total Comparable Store Sales
Growth
Three Months Ended July 1,
2023
Three Months Ended July 2,
2022
Total comparable store sales growth
(a)
(0.1
)%
(11.0
)%
Adjustments for effects of: (b)
Unearned & deferred revenue
1.2
%
(1.2
)%
Retail sales to Legacy partner’s
customers
(0.1
)%
(0.2
)%
Adjusted Comparable Store Sales Growth
1.0
%
(12.4
)%
(a)
Total comparable store sales is calculated
based on consolidated 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.
(b)
There are two differences between total
comparable store sales growth based on consolidated 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 the changes from total comparable store sales growth
based on consolidated net revenue as shown in the table above; and
(ii) Adjusted Comparable Store Sales Growth includes retail sales
to the Legacy partner’s customers (rather than the revenues
recognized consistent with the management & services agreement
with the Legacy partner), resulting in the changes from total
comparable store sales growth based on consolidated net revenue as
shown in the table above.
Reconciliation of EBITDA
to Net Income
In thousands
Fiscal Year 2022
Net income
$
42,122
Interest expense
462
Income tax provision
18,691
Depreciation and amortization
99,956
EBITDA
$
161,231
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726000207/en/
Investor Contact: Angie McCabe
investorrelations@nationalvision.com (770) 212-7605
Media Contact: Racheal Peters media@nationalvision.com
(470) 448-2303
National Vision (NASDAQ:EYE)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
National Vision (NASDAQ:EYE)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024