National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision” or the “Company”) today reported its financial results for the first quarter ended April 1, 2023.
Reade Fahs, chief executive officer, stated, “Amidst an uncertain macro environment, we delivered positive comparable sales growth for the first quarter driven primarily by strength in our managed care business. Although we continue to experience exam capacity constraints and softness from our core uninsured customer, we are encouraged by the early results we are seeing with Optometrist recruiting and retention initiatives. We remain focused on executing against our strategic initiatives to evolve our operating model to thrive amidst the new realities facing our business and the industry and are reaffirming our guidance for fiscal 2023.”
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.
First Quarter 2023 Summary
- Net revenue increased 6.6% to $562.4 million compared to the first quarter of 2022. Net revenue was positively impacted by 2.0% due to the timing of unearned revenue on net revenue.
- Comparable store sales growth was 3.0% and Adjusted Comparable Store Sales Growth was 0.8%.
- The Company opened eight new stores, closed five stores, and ended the quarter with 1,357 stores. Overall, store count grew 5.0% from April 2, 2022 to April 1, 2023.
- Costs applicable to revenue increased 7.6% to $254.1 million compared to the first quarter of 2022. As a percentage of net revenue, costs applicable to revenue increased 50 basis points to 45.2% compared to the first quarter of 2022. This increase as a percentage of net revenue was primarily driven by the deleverage of optometrist-related costs, partially offset by higher eyeglass margin and increased eyeglass mix.
- SG&A increased 9.3% to $249.9 million compared to the first quarter of 2022. As a percentage of net revenue, SG&A increased 110 basis points to 44.4% compared to the first quarter of 2022. This increase as a percentage of net revenue was primarily driven by higher performance-based incentive compensation and higher payroll, partially offset by advertising leverage.
- Net income decreased 39.4% to $18.3 million compared to the first quarter of 2022. Net income margin decreased 250 basis points to 3.2% compared to the first quarter of 2022.
- Diluted EPS decreased34.6% to $0.22 compared to the first quarter of 2022. Adjusted Diluted EPS decreased 5.4% to $0.31 compared to the first quarter of 2022. The net change in margin on unearned revenue benefited Diluted EPS by $0.06 and Adjusted Diluted EPS by $0.06.
- Adjusted Operating Income decreased 12.0% to $39.9 million compared to the first quarter of 2022. Adjusted Operating Margin decreased 150 basis points to 7.1% compared to the first quarter of 2022. The net change in margin on unearned revenue benefited net income by $6.1 million and Adjusted Operating Income by $8.2 million.
Balance Sheet and Cash Flow Highlights as of April 1, 2023
- The Company’s cash balance was $246.9 million as of April 1, 2023. 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 $566.9 million as of April 1, 2023, consisting of outstanding first lien term loans, convertible senior notes (“2025 Notes”) and finance lease obligations, net of unamortized discounts.
- Cash flows from operating activities for the first quarter of 2023 were $74.1 million compared to $47.1 million for the first quarter of 2022.
- Capital expenditures for the first quarter of 2023 totaled $27.7 million compared to $28.1 million for the first quarter of 2022.
Share Repurchase Program
- In the first quarter, the Company repurchased an additional 1.1 million shares of its common stock for $25.0 million. The Company has $25.0 million remaining under the current share repurchase authorization.
Fiscal 2023 Outlook
The Company’s fiscal 2023 outlook reflects current expected or estimated impacts related to macro-economic 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.
The Company reaffirms the previously provided outlook for its key operating metrics, while updating its expectations for tax rate from 26% to 26% – 28%. The Company is providing the following outlook for the 52 weeks ending December 30, 2023:
| Fiscal 2023 Outlook | |
| New Stores | 65 – 70 |
| Adjusted Comparable Store Sales Growth | 0% – 3% |
| Net Revenue | $2.075 – $2.135 billion |
| Adjusted Operating Income | $48 – $66 million |
| Adjusted Diluted EPS1 | $0.42 – $0.60 |
| Depreciation and Amortization2 | $104 – $106 million |
| Interest3 | ~$3 million |
| Tax Rate4 | 26% – 28% |
| Capital Expenditures | $115 – $120 million |
| 1 – Assumes 80.2 million shares, and does not include 12.9 million shares attributable to the 2025 Notes as they are anticipated to be anti-dilutive to earnings per share for fiscal year 2023 2 – Includes amortization of acquisition intangibles of approximately $7.5 million, which is excluded in the definition of Adjusted Operating Income 3 – Before the impact of gains or losses on change in fair value of derivatives and charges related to amortization of debt discounts and deferred financing costs 4 – Excluding the impact of vesting of restricted stock units and stock option exercises | |
The fiscal 2023 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 2023 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 2023 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
A conference call to discuss the first quarter 2023 financial results is scheduled for today, May 11, 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 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.
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