Upgrade to SI Premium - Free Trial

National Vision Holdings, Inc. Reports Third Quarter 2018 Financial Results

November 13, 2018 6:55 AM

DULUTH, Ga., Nov. 13, 2018 (GLOBE NEWSWIRE) -- National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision” or the “Company”) today reported its financial results for the third quarter and nine months ended September 29, 2018.

Reade Fahs, chief executive officer, stated, “We are very pleased with our third quarter and year-to-date results. Our team delivered its 67th consecutive quarter of positive comparable store sales growth, driven primarily by increases in customer transactions. We opened 18 stores this quarter, and are on track to achieve our 2018 store opening plans. Our third quarter results reflect the ongoing strength of our differentiated business model and compelling value proposition that continue to resonate with customers. In addition, we further expanded our contact lens distribution relationship with Walmart in September, and we are pleased to have recently signed a multi-year extension of our lens purchasing agreement with Essilor. We continue to strive to deliver on our mission to make quality eye exams and eyewear more affordable for our patients and customers, and our optometrists and associates work hard every day toward making this possible. Finally, we are providing additional insights regarding our previously provided 2018 Outlook.”

Adjusted comparable store sales growth, adjusted diluted EPS, adjusted EBITDA, adjusted EBITDA margin, adjusted net income and EBITDA are not measures recognized under generally accepted accounting principles (“GAAP”). Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.

Third Quarter 2018 Highlights

Nine-Month Period Highlights

Balance Sheet and Cash Flow Highlights as of September 29, 2018

Recent Developments

Fiscal 2018 OutlookThe Company is providing the following insights for the remainder of fiscal 2018:

The fiscal 2018 outlook information provided above includes Adjusted EBITDA and Adjusted Net Income 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 2018 outlook information provided above 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.

Conference Call DetailsA conference call to discuss the third quarter 2018 financial results is scheduled for today, November 13, 2018, 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 8174138. 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 Tuesday, November 20, 2018, by dialing 855-859-2056 from the U.S. or 404-537-3406 from international locations, and entering conference passcode 8174138. A replay of the audio webcast will also be archived on the “Investors” section of the Company’s website.

About National Vision Holdings, IncNational Vision Holdings, Inc. is one of the largest optical retail companies in the United States with over 1,000 retail stores in 44 states plus the District of Columbia and Puerto Rico. With a mission of helping people by making quality eyecare 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, Vista Opticals inside Fred Meyer stores and on select military bases, and several e-commerce websites, offering a variety of products and services for customers’ eyecare needs.

Forward-Looking StatementsThis 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 made above under Fiscal 2018 Outlook and those related to our expectations regarding the performance of our industry, growth strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. 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. Such forward-looking statements are subject to various risks and uncertainties, including our ability to open and operate new stores in a timely and cost-effective manner and to successfully enter new markets; our ability to maintain sufficient levels of cash flow from our operations to grow; our ability to recruit and retain vision care professionals for our stores; state, local and federal vision care and healthcare laws and regulations; our relationships with managed vision care companies, vision insurance providers and other third-party payors; our operating relationships with our host and legacy partners; the risk of loss or disruption in our distribution centers and optical laboratories; risks associated with vendors from whom our products are sourced; competition in the optical retail industry; our dependence on a limited number of suppliers; risks associated with information technology systems and the security of personal information and payment card data collected by us and our vendors; macroeconomic factors and other factors impacting consumer spending beyond the Company’s control; our growth strategy’s impact on our existing resources and performance of our existing stores; our ability to retain senior management and attract new personnel; our ability to manage costs; the success of our marketing, advertising and promotional efforts; risks associated with leasing substantial amounts of space; product liability, product recall or personal injury issues; our compliance with managed vision care laws and regulations; our reliance on third-party reimbursements; our ability to manage our inventory balances and inventory shrinkage; risks associated with our e-commerce business; seasonal fluctuations in our operating results and inventory levels; technological advances that may reduce the demand for our products, and future vision correction alternatives and drug development for the correction of vision-related problems; risks of losses arising from our investments in technological innovators in the optical retail industry; our failure to comply with, or changes in, laws, regulations, enforcement activities and other requirements; impact of any adverse judgments or settlements resulting from legal proceedings; our ability to adequately protect our intellectual property; our leverage; restrictions in our credit agreement that limits our flexibility in operating our business; our ability to generate sufficient cash flow to satisfy our debt service obligations; our dependence on our subsidiaries to fund all of our operations and expenses; risks associated with maintaining the requirements of being a public company; and our ability to comply with requirements to design, implement and maintain effective internal controls. Additional factors that could cause National Vision’s results to differ materially from those described in the forward-looking statements can be found under the heading entitled Part I, Item 1A - “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 30, 2017 (the “2017 Annual Report”), as filed with the Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. 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. 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.

Non-GAAP Financial MeasuresTo 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 EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net Income” and “Adjusted Diluted EPS.” We believe EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Diluted EPS 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 tax provision and depreciation and amortization.

Adjusted EBITDA: We define Adjusted EBITDA as EBITDA, further adjusted to exclude stock compensation expense, costs associated with debt refinancing, asset impairment, non-cash inventory write-offs, management fees, new store pre-opening expenses, non-cash rent, litigation settlement, secondary offering expenses, long-term incentive plan expenses, and other expenses.

Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total net revenue.

Adjusted Net Income: We define Adjusted Net Income as net income, plus stock compensation expense, costs associated with debt refinancing, asset impairment, non-cash inventory write-offs, management fees, new store pre-opening expenses, non-cash rent, litigation settlement, secondary offering expenses, long-term incentive plan expenses, other expenses, amortization of acquisition intangibles and deferred financing costs, and tax benefit of stock option exercises, less the tax effect of these adjustments.

Adjusted Diluted EPS: We define Adjusted Diluted EPS as Adjusted Net Income divided by diluted weighted average common shares outstanding.

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, compared to when the order is delivered), utilizing cash basis point of sale information from stores; (ii) stores are added to the calculation in their 13th full month; (iii) closed stores are removed from the calculation for time periods that are not comparable; (iv) sales from partial months of operation are ignored 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.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Comparable Store Sales Growth are not recognized terms under GAAP and should not be considered as an alternative to net income, the ratio of net income to net revenue, or diluted earnings per share 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 GAAP to Non-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 SubsidiariesCondensed Consolidated Balance SheetsAs of September 29, 2018 and December 30, 2017In Thousands, Except Par Value Information(Unaudited)

ASSETSAs of September 29, 2018 As of December 30, 2017
Current assets:
Cash and cash equivalents$48,881 $4,208
Accounts receivable, net38,875 43,193
Inventories99,280 91,151
Prepaid expenses and other current assets24,065 23,925
Total current assets211,101 162,477
Property and equipment, net340,626 304,132
Other assets:
Goodwill792,744 792,744
Trademarks and trade names240,547 240,547
Other intangible assets, net66,624 72,903
Other assets9,052 10,988
Total non-current assets1,449,593 1,421,314
Total assets$1,660,694 $1,583,791
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$30,885 $35,708
Other payables and accrued expenses81,465 77,611
Unearned revenue23,035 27,739
Deferred revenue53,951 62,993
Current maturities of long-term debt7,863 7,258
Total current liabilities197,199 211,309
Long-term debt, less current portion and debt discount566,932 561,980
Other non-current liabilities:
Deferred revenue20,723 31,222
Other liabilities42,291 46,044
Deferred income taxes, net75,378 73,648
Total other non-current liabilities138,392 150,914
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 200,000 shares authorized;77,136 and 74,654 shares issued as of September 29, 2018 andDecember 30, 2017, respectively; 77,082 and 74,654 sharesoutstanding as of September 29, 2018 and December 30, 2017,respectively770 746
Additional paid-in capital659,480 631,798
Accumulated other comprehensive loss(1,059) (9,868)
Retained earnings100,113 37,145
Treasury stock, at cost; 54 and 28 shares as of September 29, 2018and December 30, 2017, respectively(1,133) (233)
Total stockholders’ equity758,171 659,588
Total liabilities and stockholders’ equity$1,660,694 $1,583,791

National Vision Holdings, Inc. and SubsidiariesCondensed Consolidated Statements of Operations and Comprehensive IncomeFor the Three and Nine Months Ended September 29, 2018 and September 30, 2017In Thousands, Except Per Share Information(Unaudited)

Three Months Ended Nine Months Ended
September 29,2018 September 30,2017 September 29,2018 September 30,2017
Revenue:
Net product sales$319,312 $283,648 $977,497 $867,192
Net sales of services and plans68,113 62,441 203,435 186,297
Total net revenue387,425 346,089 1,180,932 1,053,489
Costs applicable to revenue (exclusiveof depreciation and amortization):
Products130,951 115,752 389,560 349,099
Services and plans51,637 46,606 150,541 135,474
Total costs applicable to revenue182,588 162,358 540,101 484,573
Operating expenses:
Selling, general and administrativeexpenses184,424 151,251 519,564 445,714
Depreciation and amortization19,080 15,352 54,080 44,404
Asset impairment2,137 — 2,137 1,000
Litigation settlement— — — 7,000
Other expense, net411 568 829 744
Total operating expenses206,052 167,171 576,610 498,862
(Loss) income from operations(1,215) 16,560 64,221 70,054
Interest expense, net9,407 14,851 28,144 40,965
Debt issuance costs— — — 2,702
(Loss) earnings before income taxes(10,622) 1,709 36,077 26,387
Income tax (benefit) provision(16,438) 163 (7,863) 9,267
Net income$5,816 $1,546 $43,940 $17,120
Earnings per share:
Basic$0.08 $0.03 $0.58 $0.30
Diluted$0.07 $0.03 $0.56 $0.29
Weighted average shares outstanding:
Basic76,118 56,414 75,361 56,363
Diluted79,710 58,459 78,571 58,281
Comprehensive income:
Net income$5,816 $1,546 $43,940 $17,120
Unrealized gain on hedge instruments2,267 2,255 11,842 2,176
Tax provision of unrealized gain onhedge instruments(580) (872) (3,033) (843)
Comprehensive income$7,503 $2,929 $52,749 $18,453

National Vision Holdings, Inc. and SubsidiariesCondensed Consolidated Statements of Cash FlowsFor the Nine Months Ended September 29, 2018 and September 30, 2017In Thousands(Unaudited)

Nine Months Ended
September 29,2018 September 30,2017
Cash flows from operating activities:
Net income$43,940 $17,120
Adjustments to reconcile net income to net cash provided by operatingactivities:
Depreciation and amortization54,080 44,404
Amortization of loan costs1,287 3,075
Asset impairment2,137 1,000
Deferred income tax (benefit) expense(8,060) 8,922
Non-cash stock option compensation13,749 3,140
Non-cash inventory adjustments2,491 4,695
Bad debt expense4,981 4,513
Debt issuance costs— 2,702
Other1,555 388
Changes in operating assets and liabilities:
Accounts receivable(663) (9,254)
Inventories(10,620) (7,001)
Other assets381 2,487
Accounts payable(4,823) (5,838)
Deferred revenue6,235 9,022
Other liabilities9,282 16,876
Net cash provided by operating activities115,952 96,251
Cash flows from investing activities:
Purchase of property and equipment(78,813) (67,135)
Purchase of investments— (1,500)
Other136 125
Net cash used for investing activities(78,677) (68,510)
Cash flows from financing activities:
Proceeds from issuance of long-term debt— 173,712
Proceeds from issuance of common stock— 1,004
Proceeds from exercise of stock options14,032 1,088
Principal payments on long-term debt(4,275) (6,236)
Purchase of treasury stock(900) —
Payments on capital lease obligations(1,256) (710)
Debt issuance costs— (2,702)
Dividend to stockholders— (170,983)
Net cash provided by (used for) financing activities7,601 (4,827)
Net change in cash, cash equivalents and restricted cash44,876 22,914
Cash, cash equivalents and restricted cash, beginning of year5,193 5,687
Cash, cash equivalents and restricted cash, end of period$50,069 $28,601

The following table provides a reconciliation of cash and cash equivalents reported within the condensed consolidated balance sheets to the total of cash, cash equivalents and restricted cash shown above:

Nine Months Ended
September 29,2018 September 30,2017
Cash and cash equivalents$48,881 $27,621
Restricted cash included in other assets1,188 980
Total cash, cash equivalents and restricted cash$50,069 $28,601

National Vision Holdings, Inc. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial MeasuresReconciliation of Net Income to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPSFor the Three and Nine Months Ended September 29, 2018 and September 30, 2017In Thousands, Except Per Share Information(Unaudited)

Three Months Ended Nine Months Ended
In thousandsSeptember 29,2018 September 30,2017 September 29,2018 September 30,2017
Net income$5,816 1.5% $1,546 0.4% $43,940 3.7% $17,120 1.6%
Interest expense9,407 2.4% 14,851 4.3% 28,144 2.4% 40,965 3.9%
Income tax (benefit) provision(16,438)(4.2)% 163 —% (7,863)(0.7)% 9,267 0.9%
Depreciation and amortization19,080 4.9% 15,352 4.4% 54,080 4.6% 44,404 4.2%
EBITDA17,865 4.6% 31,912 9.2% 118,301 10.0% 111,756 10.6%
Stock compensation expense (a)10,629 2.7% 1,151 0.3% 13,749 1.2% 3,140 0.3%
Debt issuance costs (b)— —% — —% — —% 2,702 0.3%
Asset impairment (c)2,137 0.6% — —% 2,137 0.2% 1,000 0.1%
Non-cash inventory write-offs (d)— —% — —% — —% 2,271 0.1%
Management fees (e)— —% 271 0.1% — —% 845 0.1%
New store pre-opening expenses (f)512 0.1% 618 0.2% 1,742 0.1% 1,896 0.2%
Non-cash rent (g)420 0.1% 381 0.1% 1,228 0.1% 1,035 0.1%
Litigation settlement (h)— —% — —% — —% 7,000 1.0%
Secondary offering expenses (i)702 0.2% — —% 1,842 0.2% — 0.7%
Long-term incentive plan(j)4,611 1.2% — —% 4,611 0.4% — —%
Other (k)1,927 0.5% 1,828 0.5% 3,112 0.3% 3,041 0.2%
Adjusted EBITDA/ Adjusted EBITDA Margin$38,803 10.0% $36,161 10.4% $146,722 12.4% $134,686 12.8%
Note: Percentages reflect line item as a percentage of net revenue

Three Months Ended Nine Months Ended
In thousandsSeptember 29,2018 September 30,2017 September 29,2018 September 30,2017
Net income$5,816 $1,546 $43,940 $17,120
Stock compensation expense (a)10,629 1,151 13,749 3,140
Debt issuance costs (b)— — — 2,702
Asset impairment (c)2,137 — 2,137 1,000
Non-cash inventory write-offs (d)— — — 2,271
Management fees (e)— 271 — 845
New store pre-opening expenses (f)512 618 1,742 1,896
Non-cash rent (g)420 381 1,228 1,035
Litigation settlement (h)— — — 7,000
Secondary offering expenses (i)702 — 1,842 —
Long-term incentive plan(j)4,611 — 4,611 —
Other (k)1,927 1,828 3,112 3,041
Amortization of acquisitionintangibles and deferred financingcosts (l)2,279 2,884 6,840 8,628
Tax benefit of stock optionexercises (m)(13,900) — (17,964) —
Tax effect of total adjustments (n)(5,943) (2,853) (9,027) (12,623)
Adjusted Net Income$9,190 $5,826 $52,210 $36,055

Three Months Ended Nine Months Ended
September 29,2018 September 30,2017 September 29,2018 September 30,2017
Diluted EPS$0.07 $0.03 $0.56 $0.29
Stock compensation expense (a)0.13 0.02 0.17 0.05
Debt issuance costs (b)— — — 0.05
Asset impairment (c)0.03 — 0.03 0.02
Non-cash inventory write-offs (d)— — — 0.04
Management fees (e)— — — 0.01
New store pre-opening expenses (f)0.01 0.01 0.02 0.03
Non-cash rent (g)0.01 0.01 0.02 0.02
Litigation settlement (h)— — — 0.12
Secondary offering expenses (i)0.01 — 0.02 —
Long-term incentive plan(j)0.06 — 0.06 —
Other (k)0.02 0.03 0.04 0.05
Amortization of acquisition intangibles and deferred financing costs (l)0.03 0.05 0.09 0.15
Tax benefit of stock option exercises (m)(0.17) — (0.23) —
Tax effect of total adjustments (n)(0.07) (0.05) (0.11) (0.22)
Adjusted Diluted EPS$0.12 $0.10 $0.66 $0.62
Weighted average diluted shares outstanding79,710 58,459 78,571 58,281
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.(b) Fees associated with the borrowing of $175.0 million in additional principal under our first lien credit agreement during the first fiscal quarter of 2017.(c) Reflects write-off of capitalized software and property and equipment for the three and nine months ended September 29, 2018. Reflects the complete write-off of a cost basis investment for the nine months ended September 30, 2017.(d) Reflects write-offs of inventory relating to the expiration of a specific type of contact lenses that could not be sold and required disposal.(e) Reflects management fees paid to KKR Sponsor and Berkshire in accordance with our monitoring agreement with them. The monitoring agreement was terminated automatically in accordance with its terms upon the consummation of the IPO in October 2017(f) Pre-opening expenses, which include marketing and advertising, labor and occupancy expenses incurred prior to opening a new store, are generally higher than comparable expenses incurred once such store is open and generating revenue. We believe that such higher pre-opening expenses are specific in nature and amount to opening a new store and as such, are not indicative of ongoing core operating performance. We adjust for these costs to facilitate comparisons of store operating performance from period to period. Pre-opening costs are permitted exclusions in our calculation of Adjusted EBITDA pursuant to the terms of our first lien credit agreement.(g) Consists of the non-cash portion of rent expense, which reflects the extent to which our straight-line rent expense recognized under GAAP exceeds or is less than our cash rent payments.(h) Amounts accrued related to settlement of litigation.(i) Expenses related to our secondary public offerings for the three and nine months ended September 29, 2018.(j) Cash expenses pursuant to a long-term incentive plan for non-executive employees who were not participants in the management equity plan for the three and nine months ended September 29, 2018. This plan was effective in 2014 following the acquisition of the Company by KKR, and this payout was triggered as a result of the secondary offering of common stock by KKR and other selling shareholders completed in the third quarter of 2018.(k) Other adjustments include amounts that management believes are not representative of our operating performance, including our share of losses on equity method investments of $0.4 million and $0.4 million for the three months ended September 29, 2018 and September 30, 2017 and $1.0 million and $0.7 million for the nine months ended September 29, 2018 and September 30, 2017, respectively; the amortization impact of the KKR Acquisition-related adjustments (e.g., fair value of leasehold interests) of $0.2 million and $(0.1) million for the three months ended September 29, 2018 and September 30, 2017 and $0.3 million, and $(0.2) million for the nine months ended September 29, 2018 and September 30, 2017, respectively; expenses related to preparation for being an SEC registrant that were not directly attributable to the IPO and therefore not charged to equity of $0.6 million and $1.8 million for the three and nine months ended September 30, 2017, respectively; differences between the timing of expense versus cash payments related to contributions to charitable organizations of $(0.3) million for each of the three months ended September 29, 2018 and September 30, 2017 and $(0.8) million for each of the nine months ended September 29, 2018 and September 30, 2017, respectively; costs of severance and relocation of $0.3 million and $0.7 million for the three months ended September 29, 2018 and September 30, 2017 and, $0.9 million and $1.0 million for the nine months ended September 29, 2018 and September 30, 2017 respectively; excess payroll taxes related to stock option exercises of $0.9 million and $1.2 million for the three and nine months ended September 29, 2018, respectively; and other expenses and adjustments totaling $0.4 million for the three months ended September 29, 2018 and September 30, 2017 and $0.5 million for the nine months ended September 29, 2018 and September 30, 2017, respectively.(l) Amortization of acquisition intangibles related to the increase in the carrying values of intangible assets as a result of the KKR Acquisition of $1.9 million for each of the three months ended September 29, 2018 and September 30, 2017 and $5.6 million for each of the nine months ended September 29, 2018 and September 30, 2017. Amortization of deferred financing costs is primarily associated with the March 2014 term loan borrowings in connection with the KKR Acquisition and, to a lesser extent, amortization of deferred loan discount costs associated with the May 2015 and February 2017 incremental first lien term loans and the November 2017 first lien term loan refinancing, aggregating to $0.4 million, $1.0 million, $1.3 million and $3.1 million for the three months ended September 29, 2018 and September 30, 2017 and nine months ended September 29, 2018 and September 30, 2017, respectively.(m) Tax benefit associated with accounting guidance adopted at the beginning of fiscal year 2017 (Accounting Standards Update 2016-09, Compensation - Stock Compensation), requiring excess tax benefits to be recorded in earnings as discrete items in the reporting period in which they occur.(n) Represents the tax effect of the total adjustments at our combined statutory federal and state income tax rates.

Reconciliation of Adjusted Comparable Store Sales Growth to Total Comparable Store Sales GrowthFor the Three and Nine Months Ended September 29, 2018 and September 30, 2017(Unaudited)

Comparable store sales growth (a)
ThreeMonthsEnded September29, 2018 ThreeMonthsEnded September30, 2017 NineMonthsEnded September29, 2018 NineMonthsEnded September30, 2017
Owned & host segment
America’s Best8.4% 10.2% 7.6% 9.6%
Eyeglass World8.9% 2.4% 8.2% 5.0%
Military(2.4)% (12.3)% (1.5)% (8.9)%
Fred Meyer(5.7)% (0.1)% 1.9% (2.3)%
Legacy segment0.0% 1.3% 2.5% (0.3)%
Total comparable store sales growth7.0% 8.3% 7.4% 7.4%
Adjusted comparable store sales growth(b)6.8% 7.0% 6.6% 6.7%

(a) Total comparable store sales calculated based on consolidated net revenue excluding the impact of (i) corporate/other segment net revenue, (ii) sales from stores opened less than 12 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. Comparable store sales growth for America's Best, Eyeglass World, Military, and Fred Meyer is calculated based on cash basis revenues consistent with what the Chief Operating Decision Maker reviews, and consistent with reportable segment revenues presented in the "Segment Reporting" footnote in our condensed consolidated financial statements included in Part I. Item 1. of our quarterly report on Form 10-Q, with the exception of the legacy segment, which is adjusted as noted in (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 a decrease of 0.1% and 1.3% from total comparable store sales growth based consolidated net revenue for the three months ended September 29, 2018 and September 30, 2017, respectively, and a decrease of 0.7% and 0.5% from total comparable store sales growth based on consolidated net revenue for the nine months ended September 29, 2018 and September 30, 2017, respectively, 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), resulting in a decrease of 0.1% from total comparable store sales growth based on consolidated net revenue for the three months ended September 29, 2018, and a decrease of 0.1% and 0.2% from total comparable store sales growth based on consolidated net revenue for the nine months ended September 29, 2018 and September 30, 2017, respectively.

Investors:

National Vision Holdings, Inc.David Mann, CFA, Vice President of Investor Relations(470) 448-2448[email protected]

Media:

National Vision Holdings, Inc.Kristina Gross, Director of Communications(470) 448-2355[email protected]

National Vision.jpg

Source: National Vision Holdings, Inc.

Categories

Press Releases

Next Articles