Quarterly highlights compared to second quarter 2019:
- Net revenue increased 28.0% to $549.5 million
- Comparable store sales growth of 22.5%; Adjusted Comparable
Store Sales Growth of 23.5%
- Net income increased 267% to $37.6 million; Diluted EPS
increased 230% to $0.42
- Adjusted Operating Income increased 125% to $65.6 million
- Adjusted Diluted EPS increased 163% to $0.48
National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision”
or the “Company”) today reported its financial results for the
second quarter ended July 3, 2021.
Given the lack of comparability to the second quarter of fiscal
2020 when the Company temporarily closed all of its retail
locations to the public through early June due to COVID-19, this
release includes a comparison of fiscal 2021 results to fiscal 2019
pre-COVID results, in addition to a condensed comparison to fiscal
2020. For a complete discussion of fiscal 2021 results as compared
to fiscal 2020, please see our Quarterly Report on Form 10-Q for
the quarter ended July 3, 2021 filed with the Securities and
Exchange Commission.
“The National Vision team delivered exceptionally strong results
for the second quarter,” stated Reade Fahs, chief executive
officer. “We believe our continued operating momentum further
demonstrates the benefit from the hastening of industry trends that
favor our low price model and strong store-level execution to meet
heightened demand for affordable eyewear and eye care. I would like
to thank the 2,000-plus optometrists and over 13,000 associates at
National Vision for their continued resilience and commitment to
serve our patients and customers.”
Mr. Fahs continued, “During the quarter, we opened 20 stores and
achieved another major milestone, as our trailing twelve month net
revenue surpassed $2 billion. Also, we were pleased by the positive
trend in customer transactions throughout the quarter, especially
in June when we lapped record re-opening results last year. Looking
ahead, we continue to be excited about our long-term opportunities
for expansion and market share growth. Given our consistent
performance since re-opening last year and our safety first
approach, we are confident in our ability to navigate the
challenging and dynamic environment and remain in a position of
strength to drive long-term value for our stakeholders.”
Adjusted Comparable Store Sales Growth, Adjusted Operating
Income, Adjusted EBITDA, Adjusted Diluted EPS, Adjusted Operating
Margin, Adjusted EBITDA Margin, and EBITDA are not measures
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.
Second Quarter 2021 Summary compared to Second Quarter
2019
- Net revenue increased 28.0% to $549.5 million compared to the
second quarter of 2019.
- The impact from the timing of unearned revenue on net revenue
and profitability was immaterial.
- Comparable store sales growth was 22.5% and Adjusted Comparable
Store Sales Growth was 23.5%.
- During the second quarter of 2021, the Company opened 20 new
stores, closed one store, and ended the quarter with 1,249 stores.
Overall, store count grew 10.7% from June 29, 2019 to July 3,
2021.
- Costs applicable to revenue increased 16.5% to $235.9 million
compared to the second quarter of 2019. As a percentage of net
revenue, costs applicable to revenue decreased 430 basis points to
42.9% compared to the second quarter of 2019. This decrease as a
percentage of net revenue was primarily driven by lower growth in
optometrist costs, increased eyeglass mix and higher eyeglass
margin.
- SG&A increased 28.5% to $234.2 million compared to the
second quarter of 2019. As a percentage of net revenue, SG&A
increased 20 basis points to 42.6% compared to the second quarter
of 2019. This increase as a percentage of net revenue was primarily
driven by higher stock compensation expense, higher
performance-based incentive compensation and higher advertising
investment, partially offset by leverage of corporate overhead and
occupancy expenses.
- Net income increased 267% to $37.6 million compared to the
second quarter of 2019.
- Diluted earnings per share increased 230% to $0.42 compared to
the second quarter of 2019. Adjusted Diluted EPS increased 163% to
$0.48 compared to the second quarter of 2019.
- Adjusted Operating Income increased 125% to $65.6 million
compared to the second quarter of 2019. Adjusted Operating Margin
increased 510 basis points to 11.9% compared to the second quarter
of 2019.
Second Quarter 2021 Summary compared to Second Quarter 2020
(condensed)
- Net revenue increased 111% to $549.5 million compared to the
second quarter of 2020.
- Net revenue was positively impacted by 16.5% due to the timing
of unearned revenue.
- Comparable store sales growth was 99.1% and Adjusted Comparable
Store Sales Growth was 76.7%.
- The Company opened 20 new stores, closed one store, and ended
the quarter with 1,249 stores. Overall, store count grew 5.5% from
June 27, 2020 to July 3, 2021.
- Net income increased 186% to $37.6 million compared to the
second quarter of 2020.
- Diluted earnings (loss) per share increased 176% to $0.42
compared to the second quarter of 2020. Adjusted Diluted EPS (loss)
increased 217% to $0.48 compared to the second quarter of 2020. The
net change in margin on unearned revenue positively impacted
Adjusted Diluted EPS by $0.29.
- Adjusted Operating Income increased 290% to $65.6 million
compared to the second quarter of 2020. Adjusted Operating Margin
increased 2,510 basis points to 11.9% compared to the second
quarter of 2020. The net change in margin on unearned revenue
positively impacted Adjusted Operating Income by $32.5
million.
Six-Month Period 2021 Summary compared to Six-Month Period
2019
- Net revenue increased 21.7% to $1.1 billion compared to the
same period of 2019.
- Net revenue was negatively impacted by 0.8% due to the timing
of unearned revenue.
- Comparable store sales growth was 15.5% and Adjusted Comparable
Store Sales Growth was 16.7%.
- The Company opened 45 new stores, closed one store, and ended
the period with 1,249 stores.
- Costs applicable to revenue increased 11.1% to $460.6 million
compared to the same period of 2019. As a percentage of net
revenue, costs applicable to revenue decreased 400 basis points to
42.5% compared to the same period of 2019. This decrease as a
percentage of net revenue was primarily driven by higher eyeglass
margin, a higher mix of exam sales, and a lower growth in
optometrist costs.
- SG&A increased 21.7% to $457.8 million compared to the same
period of 2019. As a percentage of net revenue, SG&A was
unchanged at 42.2% compared to the same period of 2019. As a
percentage of net revenue, the leverage of corporate overhead,
occupancy and advertising expenses was offset by higher
performance-based incentive compensation and higher stock
compensation expense.
- Net income increased 193% to $81.0 million compared to the same
period of 2019.
- Diluted earnings per share increased 163% to $0.89 compared to
the same period of 2019. Adjusted Diluted EPS increased 96.3% to
$0.97 compared to the same period of 2019. The net change in margin
on unearned revenue negatively impacted Adjusted Diluted EPS by
$0.04.
- Adjusted Operating Income increased 85.7% to $133.2 million
compared to the same period of 2019. Adjusted Operating Margin
increased 420 basis points to 12.3% compared to the same period of
2019. The net change in margin on unearned revenue negatively
impacted Adjusted Operating Income by $5.8 million.
Six-Month Period 2021 Summary compared to Six-Month Period
2020 (condensed)
- Net revenue increased 48.5% to $1.1 billion compared to the
same period of 2020.
- Net revenue was positively impacted by 1.1% due to the timing
of unearned revenue.
- Comparable store sales growth was 48.9% and Adjusted Comparable
Store Sales Growth was 53.3%.
- Net income increased 338% to $81.0 million compared to the same
period of 2020.
- Diluted earnings (loss) per share increased 310% to $0.89
compared to the same period of 2020. Adjusted Diluted EPS (loss)
increased 855% to $0.97 compared to the same period of 2020. The
net change in margin on unearned revenue positively impacted
Adjusted Diluted EPS by $0.07.
- Adjusted Operating Income increased to $133.2 million compared
to the same period of 2020. Adjusted Operating Margin increased
1,180 basis points to 12.3% compared to the same period of 2020.
The net change in margin on unearned revenue positively impacted
Adjusted Operating Income by $6.1 million.
Balance Sheet and Cash Flow Highlights as of July 3,
2021
- The Company’s cash balance was $408.3 million as of July 3,
2021. The Company had no borrowings under its $300.0 million first
lien revolving credit facility, exclusive of letters of credit of
$6.4 million.
- Total debt was $620.4 million as of July 3, 2021, consisting of
outstanding first lien term loans, convertible senior notes and
finance lease obligations, net of unamortized discounts.
- In June 2021, the Company voluntarily prepaid $117.4 million in
existing Term A loans. In addition, the Company amended its credit
agreement to reduce the applicable margin for interest rate
calculations and modify certain financial covenants back to
pre-COVID terms.
- Cash flows from operating activities for the first six-months
of 2021 were $189.8 million compared to $71.4 million for the same
period of 2020 and $119.3 million for the same period of 2019.
- Capital expenditures for the first six-months of 2021 totaled
$38.8 million compared to $25.8 million for the same period of 2020
and $52.1 million for the same period of 2019.
Fiscal 2021 Outlook
The Company’s updated fiscal 2021 outlook reflects the currently
expected impacts related to COVID-19, however, the ultimate impacts
of COVID-19 on the Company’s financial outlook remain uncertain.
The outlook shown below assumes no material deterioration to the
Company’s current business operations as a result of COVID-19 and
its variants, governmental actions and regulations. Given the
uncertainties, dynamic nature, variants, and unknown duration of
the pandemic, the Company is continuing to evaluate additional
measures that may be taken to respond to the impact of COVID-19 on
its business.
The Company is providing the following updated outlook for the
52 weeks ending January 1, 2022:
Updated Fiscal 2021
Outlook
Prior Fiscal 2021
Outlook
New Stores
~75
~75
Adjusted Comparable Store Sales
Growth1
19% - 22%
16% - 19%
Net Revenue
$2.01 - $2.06 billion
$1.975 - $2.025 billion
Adjusted Operating Income
$180 - $187 million
$155 - $162 million
Adjusted Diluted EPS2
$1.28 - $1.33
$1.07 - $1.12
Depreciation and Amortization3
~$98 million
$97 - $98 million
Interest4
~$25 million
~$28 million
Tax Rate5
~26%
~26%
Capital Expenditures
$100 - $105 million
$100 - $105 million
1 - For the 52 weeks ending January 1,
2022 compared to the 52 weeks ended January 2, 2021
2 - Assumes 96.3 million shares, including
12.9 million shares for the convertible notes calculated using the
if-converted method
3 - Includes amortization of acquisition
intangibles of approximately $7.5 million for the 52 weeks ending
January 1, 2022
4 - Before the impact of gains or losses
related to hedge ineffectiveness and charges related to
amortization of debt discounts and deferred financing costs
5 - Excluding the impact of stock option
exercises
The fiscal 2021 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 GAAP 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 2021 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 2021 outlook. The Company uses these
forward looking measures internally to assess and benchmark its
results and strategic plans.
Conference Call Details
A conference call to discuss the second quarter 2021 financial
results is scheduled for today, August 12, 2021, at 10:00 a.m.
Eastern Time. The U.S. toll free dial-in for the conference call is
866-754-6931 and the international dial-in is 636-812-6625. The
conference passcode is 5298057. A live audio webcast of the
conference call will be available on the “Investors” section of the
Company’s website www.nationalvision.com/investors, where
presentation materials will be posted prior to the conference
call.
A telephone replay will be available shortly after the broadcast
through Thursday, August 19, 2021, by dialing 855-859-2056 from the
U.S. or 404-537-3406 from international locations, and entering
conference passcode 5298057. 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. is the second largest optical
retail company in the United States (by sales) with more than 1,200
retail stores in 44 states plus the District of Columbia 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.
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 2021 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 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 COVID-19 pandemic
and its resurgence and variants, and the impact of evolving
federal, state, and local governmental actions in response thereto;
customer behavior in response to the continuing pandemic and its
more recent outbreaks of variants; our ability to keep our reopened
stores open in a safe and cost-effective manner, or at all, in
light of the continuing COVID-19 pandemic and its resurgence and
variants; our ability to recruit and retain vision care
professionals for our stores in general and in light of the
pandemic; our ability to develop, maintain and extend relationships
with managed vision care companies, vision insurance providers and
other third-party payors; our ability to maintain the performance
of our host and legacy brands and our current operating
relationships with our host and legacy partners; our ability to
adhere to extensive state, local and federal vision care and
healthcare laws and regulations; our compliance with managed vision
care laws and regulations; our ability to maintain sufficient
levels of cash flow from our operations to execute or sustain our
growth strategy or obtain additional financing at satisfactory
terms or at all; the loss of, or disruption in the operations of,
one or more of our distribution centers and/or optical
laboratories, resulting in the inability to fulfill customer orders
and deliver our products in a timely manner; risks associated with
vendors from whom our products are sourced, including our
dependence on a limited number of suppliers; our ability to compete
successfully; our ability to effectively operate our information
technology systems and prevent interruption or security breach; our
growth strategy straining our existing resources and causing the
performance of our existing stores to suffer; the impact of wage
rate increases, inflation, cost increases and increases in raw
material prices and energy prices; our ability to successfully
implement our marketing, advertising and promotional efforts; risks
associated with leasing substantial amounts of space, including
future increases in occupancy costs; the impact of certain
technological advances, and the greater availability of, or
increased consumer preferences for, vision correction alternatives
to prescription eyeglasses or contact lenses, and future drug
development for the correction of vision-related problems; our
ability to retain our existing senior management team and attract
qualified new personnel; overall decline in the health of the
economy and other factors impacting consumer spending; our ability
to manage our inventory; seasonal fluctuations in our operating
results and inventory levels; our reliance on third-party coverage
and reimbursement, including government programs, for an increasing
portion of our revenues; risks associated with our e-commerce and
omni-channel business; product liability, product recall or
personal injury issues; our failure to comply with, or changes in,
laws, regulations, enforcement activities and other requirements;
the impact of any adverse litigation judgments or settlements
resulting from legal proceedings relating to our business
operations; risk of losses arising from our investments in
technological innovators in the optical retail industry; our
ability to adequately protect our intellectual property; our
significant amount of indebtedness and our ability to generate
sufficient cash flow to satisfy our debt obligations; a change in
interest rates as well as changes in benchmark rates and
uncertainty related to the foregoing; restrictions in our credit
agreement that limits our flexibility in operating our business;
potential dilution to existing stockholders upon the conversion of
our convertible notes; 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 subsequently
filed reports, 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,” and “Adjusted SG&A Percent of Net
Revenue.” We believe EBITDA, Adjusted Operating Income, Adjusted
Operating Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted
Diluted EPS, Adjusted SG&A and Adjusted SG&A Percent of 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 (loss), plus
interest expense, income tax provision (benefit) and depreciation
and amortization.
Adjusted Operating Income: We define Adjusted Operating
Income as net income (loss), plus interest expense and income tax
provision (benefit), further adjusted to exclude stock compensation
expense, asset impairment, litigation settlement, management
realignment expenses, long-term incentive plan expense,
amortization of acquisition intangibles, and other expenses.
Adjusted Operating Margin: We define Adjusted Operating
Margin as Adjusted Operating Income as a percentage of net
revenue.
Adjusted EBITDA: We define Adjusted EBITDA as net income,
plus interest expense, income tax provision (benefit) and
depreciation and amortization, further adjusted to exclude stock
compensation expense, asset impairment, litigation settlement,
management realignment expenses, long-term incentive plan expense,
and other expenses.
Adjusted EBITDA Margin: We define Adjusted EBITDA Margin
as Adjusted EBITDA as a percentage of net revenue.
Adjusted Diluted EPS: We define Adjusted Diluted EPS as
diluted earnings (loss) per share, adjusted for the per share
impact of stock compensation expense, asset impairment, litigation
settlement, management realignment expenses, long-term incentive
plan expense, amortization of acquisition intangibles, amortization
of debt discount and deferred financing costs of our term loan
borrowings, amortization of costs related to our 2025 Notes, losses
(gains) on change in fair value of derivatives, other expenses, and
tax benefit of stock option exercises, less the tax effect of these
adjustments. We adjust for amortization of costs related to the
2025 Notes only when adjustment for these costs is not required in
the calculation of diluted earnings per share according to U.S.
GAAP.
Adjusted SG&A: We define Adjusted SG&A as
SG&A, adjusted to exclude stock compensation expense,
management realignment expenses, long-term incentive plan expense,
and other expenses.
Adjusted SG&A Percent of Net Revenue: We define
Adjusted SG&A Percent of Net Revenue as Adjusted SG&A as a
percentage of net revenue.
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. We did not adjust our
calculation of Adjusted Comparable Store Sales Growth for the
temporary closure of our stores to the public in 2020 as a result
of the COVID-19 pandemic.
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
Adjusted Comparable Store Sales Growth are not recognized terms
under 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 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 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
As of July 3, 2021 and January
2, 2021
In Thousands, Except Par
Value
(Unaudited)
ASSETS
As of July 3, 2021
As of January 2, 2021
Current assets:
Cash and cash equivalents
$
408,301
$
373,903
Accounts receivable, net
54,733
57,989
Inventories
120,863
111,274
Prepaid expenses and other current
assets
24,466
23,484
Total current assets
608,363
566,650
Property and equipment, net
335,504
341,293
Other assets:
Goodwill
777,613
777,613
Trademarks and trade names
240,547
240,547
Other intangible assets, net
45,766
49,511
Right of use assets
343,708
340,141
Other assets
17,715
17,743
Total non-current assets
1,760,853
1,766,848
Total assets
$
2,369,216
$
2,333,498
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
77,677
$
64,861
Other payables and accrued expenses
116,508
110,309
Unearned revenue
39,071
32,657
Deferred revenue
68,612
58,899
Current maturities of long-term debt and
finance lease obligations
4,285
3,598
Current operating lease obligations
64,330
58,356
Total current liabilities
370,483
328,680
Long-term debt and finance lease
obligations, less current portion and debt discount
616,160
651,763
Non-current operating lease
obligations
326,478
327,371
Other non-current liabilities:
Deferred revenue
23,483
20,828
Other liabilities
14,272
17,415
Deferred income taxes, net
80,003
80,939
Total other non-current liabilities
117,758
119,182
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 200,000
shares authorized; 82,828 and 82,183 shares issued as of July 3,
2021 and January 2, 2021, respectively; 81,855 and 81,239 shares
outstanding as of July 3, 2021 and January 2, 2021,
respectively
828
821
Additional paid-in capital
739,380
795,697
Accumulated other comprehensive loss
(3,093
)
(4,400
)
Retained earnings
231,184
142,880
Treasury stock, at cost; 973 and 944
shares as of July 3, 2021 and January 2, 2021, respectively
(29,962
)
(28,496
)
Total stockholders’ equity
938,337
906,502
Total liabilities and stockholders’
equity
$
2,369,216
$
2,333,498
National Vision Holdings, Inc.
and Subsidiaries
Condensed Consolidated
Statements of Operations and Comprehensive Income
For the Three and Six Months
Ended July 3, 2021, June 27, 2020 and June 29, 2019
In Thousands, Except Earnings Per
Share
(Unaudited)
Three Months Ended
Six Months Ended
July 3, 2021
June 27, 2020
June 29, 2019
July 3, 2021
June 27, 2020
June 29, 2019
Revenue:
Net product sales
$
458,206
$
209,707
$
357,533
$
901,273
$
602,548
$
740,693
Net sales of services and plans
91,283
50,300
71,918
182,396
127,163
149,973
Total net revenue
549,489
260,007
429,451
1,083,669
729,711
890,666
Costs applicable to revenue (exclusive
of depreciation and amortization):
Products
167,028
97,635
145,654
326,719
254,005
299,658
Services and plans
68,918
43,145
56,852
133,917
105,329
114,817
Total costs applicable to revenue
235,946
140,780
202,506
460,636
359,334
414,475
Operating expenses:
Selling, general and administrative
expenses
234,235
136,582
182,278
457,828
330,323
376,154
Depreciation and amortization
24,025
21,924
20,819
47,580
46,734
41,234
Asset impairment
519
2,411
1,790
1,478
13,766
3,872
Litigation settlement
—
—
—
—
4,395
—
Other expense (income), net
(65
)
(92
)
356
(130
)
(158
)
829
Total operating expenses
258,714
160,825
205,243
506,756
395,060
422,089
Income (loss) from operations
54,829
(41,598
)
21,702
116,277
(24,683
)
54,102
Interest expense, net
10,096
15,502
8,968
16,426
22,957
18,029
Debt issuance costs
92
136
—
92
136
—
Earnings (loss) before income taxes
44,641
(57,236
)
12,734
99,759
(47,776
)
36,073
Income tax provision (benefit)
7,040
(13,403
)
2,477
18,726
(13,685
)
8,387
Net income (loss)
$
37,601
$
(43,833
)
$
10,257
$
81,033
$
(34,091
)
$
27,686
Earnings (loss) per share:
Basic
$
0.46
$
(0.55
)
$
0.13
$
0.99
$
(0.42
)
$
0.35
Diluted
$
0.42
$
(0.55
)
$
0.13
$
0.89
$
(0.42
)
$
0.34
Weighted average shares
outstanding:
Basic
81,601
80,325
78,318
81,457
80,226
78,262
Diluted
96,082
80,325
81,424
96,044
80,226
81,437
Comprehensive income (loss):
Net income (loss)
$
37,601
$
(43,833
)
$
10,257
$
81,033
$
(34,091
)
$
27,686
Unrealized gain (loss) on hedge
instruments
2,959
4,111
(2,246
)
4,609
(4,747
)
(3,519
)
Tax provision (benefit) of unrealized gain
(loss) on hedge instruments
756
1,050
(576
)
3,302
(1,206
)
(902
)
Comprehensive income (loss)
$
39,804
$
(40,772
)
$
8,587
$
82,340
$
(37,632
)
$
25,069
Note: The three and six-months ended July 3, 2021 diluted EPS is
calculated using the if-converted method for the 2025 Notes adding
back $2.4 million and $4.7 million of interest expense (after tax)
related to the 2025 Notes, respectively, and assuming conversion of
the 2025 Notes at the beginning of 2021.
National Vision Holdings, Inc.
and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
For the Six Months Ended July
3, 2021, June 27, 2020 and June 29, 2019
In Thousands
(Unaudited)
Six Months Ended
July 3, 2021
June 27, 2020
June 29, 2019
Cash flows from operating
activities:
Net income (loss)
$
81,033
$
(34,091
)
$
27,686
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
47,580
46,734
41,234
Amortization of debt discount and deferred
financing costs
2,268
2,717
892
Asset impairment
1,478
13,766
3,872
Deferred income tax expense (benefit)
14,582
(13,686
)
8,239
Stock based compensation expense
10,201
5,445
4,717
Losses (gains) on change in fair value of
derivatives
125
4,871
—
Inventory adjustments
619
2,883
2,043
Other
1,253
3,328
6,759
Changes in operating assets and
liabilities:
Accounts receivable
2,393
(14,408
)
(8,662
)
Inventories
(10,208
)
6,814
8,319
Operating lease right of use assets and
lease liabilities
149
1,174
1,948
Other assets
(1,148
)
2,047
6,137
Accounts payable
12,816
11,630
3,458
Deferred and unearned revenue
18,782
8,025
5,006
Other liabilities
7,885
24,171
7,631
Net cash provided by operating
activities
189,808
71,420
119,279
Cash flows from investing
activities:
Purchase of property and equipment
(38,812
)
(25,796
)
(52,103
)
Other
22
265
315
Net cash used for investing activities
(38,790
)
(25,531
)
(51,788
)
Cash flows from financing
activities:
Borrowings on long-term debt, net of
discounts
—
548,769
—
Repayments on long-term debt
(117,375
)
(369,269
)
(2,500
)
Proceeds from exercise of stock
options
5,738
5,998
2,066
Purchase of treasury stock
(1,466
)
(74
)
—
Payments of debt issuance costs
(900
)
(12,400
)
—
Payments on finance lease obligations
(2,526
)
(1,587
)
(1,190
)
Net cash provided by (used for) financing
activities
(116,529
)
171,437
(1,624
)
Net change in cash, cash equivalents and
restricted cash
34,489
217,326
65,867
Cash, cash equivalents and restricted
cash, beginning of year
375,159
40,307
17,998
Cash, cash equivalents and restricted
cash, end of period
$
409,648
$
257,633
$
83,865
Supplemental cash flow disclosure
information:
Cash paid for interest
$
14,640
$
13,810
$
17,438
Cash paid (received) for taxes
$
6,995
$
(1,452
)
$
513
Capital expenditures accrued at the end of
the period
$
8,827
$
11,265
$
22,033
National Vision Holdings, Inc.
and Subsidiaries
Reconciliation of Non-GAAP to
GAAP Financial Measures
For the Three and Six Months
Ended July 3, 2021, June 27, 2020 and June 29, 2019
In Thousands, Except Per Share
Information
(Unaudited)
Reconciliation of Adjusted Operating
Income to Net Income
Three Months Ended
Six Months Ended
In thousands
July 3, 2021
June 27, 2020
June 29, 2019
July 3, 2021
June 27, 2020
June 29, 2019
Net income (loss)
$
37,601
$
(43,833
)
$
10,257
$
81,033
$
(34,091
)
$
27,686
Interest expense
10,096
15,502
8,968
16,426
22,957
18,029
Income tax provision (benefit)
7,040
(13,403
)
2,477
18,726
(13,685
)
8,387
Stock compensation expense (a)
7,213
3,352
1,741
10,201
5,445
4,717
Asset impairment (b)
519
2,411
1,790
1,478
13,766
3,872
Litigation settlement (c)
—
—
—
—
4,395
—
Management realignment expenses (d)
—
—
—
—
—
2,155
Long-term incentive plan (e)
—
—
781
—
—
722
Amortization of acquisition intangibles
(f)
1,871
1,851
1,851
3,744
3,702
3,702
Other (i)
1,241
(307
)
1,223
1,641
1,149
2,467
Adjusted Operating Income
$
65,581
$
(34,427
)
$
29,088
$
133,249
$
3,638
$
71,737
Net income (loss) margin
6.8
%
(16.9
)%
2.4
%
7.5
%
(4.7
)%
3.1
%
Adjusted Operating Margin
11.9
%
(13.2
)%
6.8
%
12.3
%
0.5
%
8.1
%
Note: Percentages reflect line item as a
percentage of net revenue, adjusted for rounding
Reconciliation of EBITDA and Adjusted
EBITDA to Net Income
Three Months Ended
Six Months Ended
In thousands
July 3, 2021
June 27, 2020
June 29, 2019
July 3, 2021
June 27, 2020
June 29, 2019
Net income (loss)
$
37,601
$
(43,833
)
$
10,257
$
81,033
$
(34,091
)
$
27,686
Interest expense
10,096
15,502
8,968
16,426
22,957
18,029
Income tax provision (benefit)
7,040
(13,403
)
2,477
18,726
(13,685
)
8,387
Depreciation and amortization
24,025
21,924
20,819
47,580
46,734
41,234
EBITDA
78,762
(19,810
)
42,521
163,765
21,915
95,336
Stock compensation expense (a)
7,213
3,352
1,741
10,201
5,445
4,717
Asset impairment (b)
519
2,411
1,790
1,478
13,766
3,872
Litigation settlement (c)
—
—
—
—
4,395
—
Management realignment expenses (d)
—
—
—
—
—
2,155
Long-term incentive plan (e)
—
—
781
—
—
722
Other (i)
1,241
(307
)
1,223
1,641
1,149
2,467
Adjusted EBITDA
$
87,735
$
(14,354
)
$
48,056
$
177,085
$
46,670
$
109,269
Net income (loss) margin
6.8
%
(16.9
)%
2.4
%
7.5
%
(4.7
)%
3.1
%
Adjusted EBITDA Margin
16.0
%
(5.5
)%
11.2
%
16.3
%
6.4
%
12.3
%
Note: Percentages reflect line item as a
percentage of net revenue, adjusted for rounding
Reconciliation of Adjusted Diluted EPS
to Diluted EPS
Three Months Ended
Six Months Ended
In thousands, except per share amounts
July 3, 2021
June 27, 2020
June 29, 2019
July 3, 2021
June 27, 2020
June 29, 2019
Diluted EPS
$
0.42
$
(0.55
)
$
0.13
$
0.89
$
(0.42
)
$
0.34
Stock compensation expense (a)
0.08
0.04
0.02
0.11
0.07
0.06
Asset impairment (b)
0.01
0.03
0.02
0.02
0.17
0.05
Litigation settlement (c)
—
—
—
—
0.05
—
Management realignment expenses (d)
—
—
—
—
—
0.03
Long-term incentive plan (e)
—
—
0.01
—
—
0.01
Amortization of acquisition intangibles
(f)
0.02
0.02
0.02
0.04
0.05
0.05
Amortization of debt discount and deferred
financing costs (g)
0.01
0.03
0.01
0.01
0.03
0.01
Losses (gains) on change in fair value of
derivatives (h)
0.02
0.06
—
—
0.06
—
Other (m)
0.01
—
0.02
(0.01
)
0.01
0.03
Tax benefit of stock option exercises
(j)
(0.04
)
—
(0.01
)
(0.05
)
(0.04
)
(0.02
)
Tax effect of total adjustments (k)
(0.04
)
(0.05
)
(0.02
)
(0.05
)
(0.12
)
(0.06
)
Adjusted Diluted EPS
$
0.48
$
(0.41
)
$
0.18
$
0.97
$
(0.13
)
$
0.49
Weighted average diluted shares
outstanding
96,082
80,325
81,424
96,044
80,226
81,437
Note: Some of the totals in the table
above do not foot due to rounding differences
Reconciliation of Adjusted SG&A and
Adjusted SG&A Percent of Net Revenue to SG&A
Three Months Ended
Six Months Ended
In thousands
July 3, 2021
June 27, 2020
June 29, 2019
July 3, 2021
June 27, 2020
June 29, 2019
SG&A
$
234,235
$
136,582
$
182,278
$
457,828
$
330,323
$
376,154
Stock compensation expense (a)
7,213
3,352
1,741
10,201
5,445
4,717
Management realignment expenses (d)
—
—
—
—
—
2,155
Long-term incentive plan (e)
—
—
781
—
—
722
Other (l)
1,241
(307
)
776
1,641
1,149
1,460
Adjusted SG&A
$
225,781
$
133,537
$
178,980
$
445,986
$
323,729
$
367,100
SG&A Percent of Net Revenue
42.6
%
52.5
%
42.4
%
42.2
%
45.3
%
42.2
%
Adjusted SG&A Percent of Net
Revenue
41.1
%
51.4
%
41.7
%
41.2
%
44.4
%
41.2
%
Note: Percentages reflect line item as a
percentage of net revenue
(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 property,
equipment and lease related assets on closed or underperforming
stores.
(c)
Expenses associated with
settlement of litigation.
(d)
Expenses related to a
non-recurring management realignment described in the Current
Report on Form 8-K filed with the SEC on January 10, 2019.
(e)
Expenses pursuant to a long-term
incentive plan for non-executive employees who were not
participants in the management equity plan for fiscal year 2019.
This plan was effective in 2014 following the acquisition of the
Company by affiliates of KKR & Co. Inc. (the "KKR
Acquisition").
(f)
Amortization of the increase in
carrying values of finite-lived intangible assets resulting from
the application of purchase accounting to the KKR Acquisition.
(g)
Amortization of deferred
financing costs and other non-cash charges related to our long-term
debt. We adjust for amortization of costs related to the 2025 Notes
only when adjustment for these costs is not required in the
calculation of diluted earnings per share according to U.S. GAAP.
Amortization of debt discount and deferred financing costs in
aggregate total $1.0 million, $2.5 million and $0.5 million for the
three months ended July 3, 2021, June 27, 2020 and June 29, 2019,
respectively, and $1.2 million, $2.7 million and $0.9 million for
the six months ended July 3, 2021, June 27, 2020 and June 29, 2019,
respectively.
(h)
Reflects losses (gains)
recognized in interest expense on change in fair value of
de-designated hedges of $2.4 million and $4.9 million for the three
months ended July 3, 2021 and June 27, 2020, respectively, and $0.1
million and $4.9 million for the six months ended July 3, 2021 and
June 27, 2020, respectively.
(i)
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),
including our share of losses on equity method investments of $0.4
million for the three months ended June 29, 2019 and $1.0 million
for the six months ended June 29, 2019; the amortization impact of
adjustments related to the KKR Acquisition, (e.g., fair value of
leasehold interests) of $0.1 million for each of the three months
ended July 3, 2021, June 27, 2020 and June 29, 2019, respectively,
and $0.2 million for each of the six months ended July 3, 2021,
June 27, 2020 and June 29, 2019, respectively; costs of severance
and relocation of $0.7 million, $0.2 million and $0.6 million for
the three months ended July 3, 2021, June 27, 2020 and June 29,
2019, respectively, and $0.8 million, $0.5 million and $0.8 million
for the six months ended July 3, 2021, June 27, 2020 and June 29,
2019, respectively; excess payroll taxes related to stock option
exercises of $0.2 million and $0.1 million for the three months
ended July 3, 2021 and June 29, 2019, respectively, and $0.3
million, $0.3 million and $0.1 million for the six months ended
July 3, 2021, June 27, 2020 and June 29, 2019, respectively;
incremental costs directly related to adapting the Company’s
operations during the COVID-19 pandemic of $0.6 million for the six
months ended June 27, 2020; and other expenses and adjustments
totaling $0.2 million and $(0.7) million for the three months ended
July 3, 2021 and June 27, 2020, respectively, and $0.3 million,
$(0.5) million and $0.3 million for the six months ended July 3,
2021, June 27, 2020 and June 29, 2019, respectively.
(j)
Tax benefit associated with
accounting guidance requiring excess tax benefits related to stock
option exercises to be recorded in earnings as discrete items in
the reporting period in which they occur.
(k)
Represents the income tax effect
of the total adjustments at our combined statutory federal and
state income tax rates.
(l)
Reflects other expenses in (i)
above, except for our share of losses on equity method investments
of $0.4 million for the three months ended June 29, 2019 and $1.0
million for the six months ended June 29, 2019.
(m)
Reflects other expenses in (i)
above, including the impact of stranded tax effect of $(2.1)
million for the six months ended July 3, 2021 associated with our
interest rate swaps that matured in 2021.
Reconciliation of Adjusted
Comparable Store Sales Growth to Total Comparable Store Sales
Growth
Comparable store sales
growth(a)
Second Quarter
Year to Date
2021 vs. 2019
2021 vs. 2020
2021 vs. 2019
2021 vs. 2020
2021 Outlook
Owned & Host segment
America’s Best
26.1
%
81.8
%
18.4
%
54.9
%
Eyeglass World
27.1
%
67.6
%
22.3
%
57.1
%
Military
(0.2
)%
65.0
%
(1.6
)%
38.1
%
Fred Meyer
(8.7
)%
61.1
%
(10.3
)%
36.1
%
Legacy segment
11.4
%
58.2
%
6.1
%
42.6
%
Total comparable store sales growth
22.5
%
99.1
%
15.5
%
48.9
%
18% - 21%
Adjusted Comparable Store Sales Growth
(b)
23.5
%
76.7
%
16.7
%
53.3
%
19% - 22%
(a)
Total comparable store sales
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. 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 10. “Segment
Reporting” in our unaudited condensed consolidated financial
statements included in Part I. Item 1. in our Quarterly Report on
Form 10-Q, with the exception of the Legacy segment, which is
adjusted as noted in clause (b) (ii) below.
(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 following changes from total comparable
store sales growth based on consolidated net revenue: an increase
of 1.2% for second quarter 2021 vs. 2019, a decrease of 21.6% for
second quarter 2021 vs. 2020, an increase of 1.2% for year to date
2021 vs. 2019 and an increase of 4.4% for year to date 2021 vs.
2020; 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 following
changes from total comparable store sales growth based on
consolidated net revenue: a decrease of 0.2% for second quarter
2021 vs. 2019 and a decrease of 0.8% for second quarter 2021 vs.
2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210812005177/en/
Investors:
National Vision Holdings, Inc. David Mann, CFA, Vice President
of Investor Relations (470) 448-2448
investor.relations@nationalvision.com
Media:
National Vision Holdings, Inc. Racheal Peters, Manager of
External Communications (470) 448-2303 media@nationalvision.com
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