Full Press Release Details
National Vision Holdings, Inc. Reports Fourth Quarter and Fiscal 2019 Financial Results
Duluth, Ga. -- February 26, 2020 -- National Vision Holdings, Inc. (NASDAQ: EYE) ("National Vision" or the "Company") today reported its financial results for the fourth quarter and fiscal year ended December 28, 2019 and is providing its outlook for fiscal 2020.
Fourth Quarter 2019 Summary:
Fiscal 2019 Summary:
Reade Fahs, chief executive officer, stated, "The fourth quarter represented a strong finish to another record year of revenues and profitability for National Vision, with double-digit growth in net revenue and Adjusted EBITDA in 2019. The team delivered our 72nd consecutive quarter of positive comparable store sales growth, demonstrating the consistency of our differentiated business model. Our fourth quarter and 2019 results reinforce our belief that our strong value message continues to resonate with patients and customers. We opened eight stores this quarter and continue to gain share in the attractive optical retail market. Last month, we were pleased to announce that, as we embark on our 30th year of optical partnership with Walmart, we will be operating five new additional Vision Centers. Every day, our 13,000-plus associates, including over 2,000 optometrists practicing in or next to our over 1,100 stores, continue to work hard to make quality eye exams and eyewear more affordable to our patients and customers throughout the United States."
Adjusted Comparable Store Sales Growth, Adjusted Diluted EPS, Adjusted Operating Income, Adjusted Operating Margin, 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.
Fourth Quarter 2019 Highlights
Fiscal 2019 Highlights
Balance Sheet and Cash Flow Highlights
Beginning with the first quarter of 2020, the Company intends to update certain components of its presentation of non-GAAP financial measures. First, the Company will begin reporting the new measures, Adjusted Operating Income and Adjusted Operating Margin, as described below under "Non-GAAP Financial Measures." In addition, consistent with its presentation of Adjusted Operating Income, beginning with the first quarter of fiscal 2020, the Company will update its definitions (the "2020 Definitions") of Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS so that such measures no longer exclude new store pre-opening expenses and non-cash rent. Finally, in the fiscal 2020 outlook below, the Company has included Adjusted Operating Income and Adjusted Diluted EPS in lieu of Adjusted Net Income. See "Non-GAAP Financial Measures" below in this press release for definitions and additional information regarding these measures. In connection with the updates to its presentation of non-GAAP financial measures, on February 26, 2020, the Company made available on the Investor page of its website (www.nationalvision.com) certain supplemental information, including a reconciliation of Non-GAAP to GAAP financial measures
utilizing the 2019 Definitions and 2020 Definitions for Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS for the three month periods within and the fiscal years ended December 28, 2019 and December 29, 2018.
The fiscal 2020 outlook information presented below gives effect to the 2020 Definitions and other updates noted above.
The Company is providing the following outlook for the 53 weeks ending January 2, 2021. The Company estimates the 53rd week of fiscal 2020 will contribute approximately $35 million to net revenue, with an approximately break-even impact to Adjusted Diluted EPS due to the net change in margin on unearned revenue.
| Fiscal 2020 Outlook | |
| New Stores | ~ 75 New Stores |
| Adjusted Comparable Store Sales Growth 1 | 3 - 5% |
| Net Revenue | $1.875 - $1.905 billion |
| Adjusted EBITDA 2 | $210 - $215 million |
| Adjusted Operating Income | $120 - $125 million |
| Adjusted Diluted EPS | $0.80 - $0.85 |
| Depreciation and Amortization 3 | $97 - $98 million |
| Interest | $29 - $30 million |
| Tax Rate 4 | ~26.0% |
| Capital Expenditures | $100 - $105 million |
| 1 - For the 52 weeks ending December 26, 2020 2 - As noted above, Adjusted EBITDA using the 2020 Definition is presented and no longer excludes new store pre-opening expense and non-cash rent. In fiscal 2019, new store pre-opening expense and non-cash rent were $3.3 million and $3.2 million, respectively, resulting in 2019 Adjusted EBITDA that would have been $194.1 million if modified to conform to the 2020 Definition of Adjusted EBITDA. Please refer to Exhibit 99.2 in the Company's Form 8-K filing today for supplemental tables providing reconciliations from Adjusted EBITDA to Net Income for the quarterly and fiscal year 2018 and 2019 periods to the 2020 Definition. 3 - Includes amortization of acquisition intangibles of approximately $7.4 million, which is excluded in the definition of Adjusted Operating Income 4 - Excluding the impact of stock option exercises |
The fiscal 2020 outlook information provided above includes Adjusted EBITDA, 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 2020 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 2020 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 fourth quarter 2019 financial results is scheduled for today, February 26, 2020, 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 2086485. A live audio webcast of the conference call will be available on the "Investor" 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 Wednesday, March 4, 2020, by dialing 855-859-2056 from the U.S. or 404-537-3406 from international locations, and entering conference passcode 2086485. 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 one of the largest optical retail companies in the United States with over 1,100 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 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 2020 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, our ability to open and operate new stores in a timely and cost-effective manner and to successfully enter new markets; our ability to recruit and retain vision care professionals for our stores; our relationships with managed vision care companies, vision insurance providers and other third-party payors; our operating relationships with our host and legacy partners; state, local and federal vision care and healthcare laws and regulations; risks associated with managed vision care laws and regulations; our ability to maintain sufficient levels of cash flow from our operations to grow; 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; risks associated with information technology systems and the security of personal information and payment card data collected by us and our vendors; our growth strategy's impact on our existing resources and performance of our existing stores; our ability to manage costs; the success of our marketing, advertising and promotional efforts; risks associated with leasing substantial amounts of space; technological advances that may reduce demand for our products; our ability to retain senior management and attract new personnel; macroeconomic factors and other factors impacting consumer spending beyond the Company's control; issues regarding inventory management; seasonal fluctuations in our business; our increasing reliance on third-party coverage and reimbursement; risks related to our e-commerce business; product liability, product recall or personal injury issues; legal regulatory risks, including adverse judgments or settlements from legal proceedings; we may incur losses arising from our investments in technological innovators in the optical retail industry; our ability to protect our intellectual property; risks related to our significant indebtedness and risks related to interest rates; risks related to our debt agreements, including restrictions that may limit our flexibility in operating our business; and risks related to 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 Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC.
Non-GAAP Financial Measures
To supplement the Company's financial information presented in accordance with GAAP and aid understanding of the Company's business performance, the Company uses certain non-GAAP financial measures, namely "EBITDA," "Adjusted EBITDA," "Adjusted EBITDA Margin," "Adjusted Operating Income," "Adjusted Operating Margin," "Adjusted Net Income," "Adjusted Diluted EPS," "Adjusted SG&A," and "Adjusted SG&A Percent of Net Revenue." We believe EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income, 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.
Beginning with the first quarter of fiscal 2020, the Company is updating its definitions of Adjusted EBITDA, Adjusted SG&A, Adjusted Net Income and Adjusted Diluted EPS discussed below, so that they no longer exclude new store pre-opening expenses and non-cash rent.
EBITDA: We define EBITDA as net income, plus interest expense, income tax provision (benefit), and depreciation and amortization.
Adjusted EBITDA: We define Adjusted EBITDA as EBITDA, further adjusted to exclude stock compensation expense, debt issuance costs, loss on the extinguishment of debt, asset impairment, new store pre-opening expenses, non-cash rent, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, and other expenses.
Adjusted EBITDA Margin: We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net revenue.
Adjusted Operating Income: We define Adjusted Operating Income as net income, plus interest expense and income tax provision (benefit), further adjusted to exclude stock compensation expense, debt issuance costs, loss on extinguishment of debt, asset impairment, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, and other expenses.
Adjusted Operating Margin: We define Adjusted Operating Margin as Adjusted Operating Income as a percentage of net revenue.
Adjusted Net Income: We define Adjusted Net Income as net income, adjusted to exclude stock compensation expense, debt issuance costs, loss on extinguishment of debt, asset impairment, new store pre-opening expenses, non-cash rent, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, other expenses, amortization of acquisition intangibles and deferred financing costs, 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 weighted average diluted common shares outstanding.
Adjusted SG&A: We define Adjusted SG&A as SG&A adjusted to exclude stock compensation expense, new store pre-opening expenses, non-cash rent, secondary offering expenses, management realignment expenses, long-term incentive plan expenses, and other expenses except for the share of losses on equity method investments.
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, 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 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.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income, 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 (loss) or the ratio of net income (loss) 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 GAAP and 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 Subsidiaries
Consolidated Balance Sheets
As of December 28, 2019 and December 29, 2018
In Thousands, Except Par Value
| ASSETS | As of December 28, 2019 | As of December 29, 2018 | |||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 39,342 | $ | 17,132 | |||
| Accounts receivable, net | 44,475 | 50,735 | |||||
| Inventories | 127,556 | 116,022 | |||||
| Prepaid expenses and other current assets | 23,266 | 30,815 | |||||
| Total current assets | 234,639 | 214,704 | |||||
| Property and equipment, net | 366,767 | 355,117 | |||||
| Other assets: | |||||||
| Goodwill | 777,613 | 777,613 | |||||
| Trademarks and trade names | 240,547 | 240,547 | |||||
| Other intangible assets, net | 56,940 | 64,532 | |||||
| Right of use assets | 348,090 | - | |||||
| Other assets | 8,129 | 8,876 | |||||
| Total non-current assets | 1,798,086 | 1,446,685 | |||||
| Total assets | $ | 2,032,725 | $ | 1,661,389 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 40,782 | $ | 43,642 | |||
| Other payables and accrued expenses | 82,829 | 81,004 | |||||
| Unearned revenue | 28,002 | 27,295 | |||||
| Deferred revenue | 55,870 | 52,144 | |||||
| Current maturities of long-term debt and finance lease obligations | 13,759 | 7,567 | |||||
| Current operating lease obligations | 51,937 | - | |||||
| Total current liabilities | 273,179 | 211,652 | |||||
| Long-term debt and finance lease obligations, less current portion and debt discount | 555,933 | 570,545 | |||||
| Non-current operating lease obligations | 331,769 | - | |||||
| Other non-current liabilities: | |||||||
| Deferred revenue | 21,530 | 20,134 | |||||
| Other liabilities | 13,731 | 53,964 | |||||
| Deferred income taxes, net | 60,146 | 61,940 | |||||
| Total other non-current liabilities | 95,407 | 136,038 | |||||
| Commitments and contingencies (See Note 13) | |||||||
| Stockholders' equity: | |||||||
| Common stock, $0.01 par value; 200,000 shares authorized; 80,603 and 78,246 shares issued as of December 28, 2019 and December 29, 2018, respectively; 79,678 and 78,167 shares outstanding as of December 28, 2019 and December 29, 2018, respectively | 805 | 782 | |||||
| Additional paid-in capital | 700,121 | 672,503 | |||||
| Accumulated other comprehensive loss | (3,814 | ) | (2,810 | ) | |||
| Retained earnings | 107,132 | 74,840 | |||||
| Treasury stock, at cost; 925 and 79 shares as of December 28, 2019 and December 29, 2018, respectively | (27,807 | ) | (2,161 | ) | |||
| Total stockholders' equity | 776,437 | 743,154 | |||||
| Total liabilities and stockholders' equity | $ | 2,032,725 | $ | 1,661,389 |
National Vision Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Three Months and Fiscal Years Ended December 28, 2019 and December 29, 2018
In Thousands, Except Earnings Per Share
| Three Months Ended December 28, 2019 (Unaudited) | Three Months Ended December 29, 2018 (Unaudited) | Fiscal Year 2019 | Fiscal Year 2018 | ||||||||||||
| Revenue: | |||||||||||||||
| Net product sales | $ | 329,654 | $ | 292,115 | $ | 1,426,136 | $ | 1,269,612 | |||||||
| Net sales of services and plans | 72,109 | 63,807 | 298,195 | 267,242 | |||||||||||
| Total net revenue | 401,763 | 355,922 | 1,724,331 | 1,536,854 | |||||||||||
| Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||||||
| Products | 130,175 | 121,846 | 574,351 | 511,406 | |||||||||||
| Services and plans | 57,367 | 51,624 | 232,168 | 202,165 | |||||||||||
| Total costs applicable to revenue | 187,542 | 173,470 | 806,519 | 713,571 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative expenses | 178,044 | 166,132 | 744,488 | 687,476 | |||||||||||
| Depreciation and amortization | 23,674 | 19,556 | 87,244 | 74,339 | |||||||||||
| Asset impairment | 1,506 | 15,493 | 8,894 | 17,630 | |||||||||||
| Other expense, net | 2,636 | 658 | 3,611 | 1,487 | |||||||||||
| Total operating expenses | 205,860 | 201,839 | 844,237 | 780,932 | |||||||||||
| Income (loss) from operations | 8,361 | (19,387 | ) | 73,575 | 42,351 | ||||||||||
| Interest expense, net | 7,397 | 9,139 | 33,300 | 37,283 | |||||||||||
| Debt issuance costs | - | 200 | - | 200 | |||||||||||
| Loss on extinguishment of debt | - | - | 9,786 | - | |||||||||||
| Earnings (loss) before income taxes | 964 | (28,726 | ) | 30,489 | 4,868 | ||||||||||
| Income tax provision (benefit) | (2,956 | ) | (10,286 | ) | (2,309 | ) | (18,785 | ) | |||||||
| Net income (loss) | $ | 3,920 | $ | (18,440 | ) | $ | 32,798 | $ | 23,653 | ||||||
| Earnings (loss) per share: | |||||||||||||||
| Basic | $ | 0.05 | $ | (0.24 | ) | $ | 0.42 | $ | 0.31 | ||||||
| Diluted | $ | 0.05 | $ | (0.24 | ) | $ | 0.40 | $ | 0.30 | ||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 79,271 | 77,526 | 78,608 | 75,899 | |||||||||||
| Diluted | 81,785 | 77,526 | 81,683 | 79,041 | |||||||||||
| Comprehensive income (loss): | |||||||||||||||
| Net income (loss) | $ | 3,920 | $ | (18,440 | ) | $ | 32,798 | $ | 23,653 | ||||||
| Unrealized gain (loss) on hedge instruments | 1,489 | (2,354 | ) | (1,350 | ) | 9,488 | |||||||||
| Tax provision (benefit) of unrealized gain (loss) on hedge instruments | 382 | (603 | ) | (346 | ) | 2,430 | |||||||||
| Comprehensive income (loss) | $ | 5,027 | $ | (20,191 | ) | $ | 31,794 | $ | 30,711 |
National Vision Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Fiscal Years Ended December 28, 2019 and December 29, 2018
| Fiscal Year 2019 | Fiscal Year 2018 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 32,798 | $ | 23,653 | |||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||
| Depreciation and amortization | 87,244 | 74,339 | |||||
| Amortization of loan costs | 1,289 | 1,848 | |||||
| Asset impairment | 8,894 | 17,630 | |||||
| Deferred income tax expense (benefit) | (2,378 | ) | (19,340 | ) | |||
| Stock based compensation expense | 12,670 | 20,939 | |||||
| Inventory adjustments | 4,352 | 3,868 | |||||
| Bad debt expense | 8,210 | 7,107 | |||||
| Debt issuance costs | - | 200 | |||||
| Loss on extinguishment of debt | 9,786 | - | |||||
| Other | 5,309 | 2,413 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (6,925 | ) | (14,649 | ) | |||
| Inventories | (15,886 | ) | (28,739 | ) | |||
| Other assets | 10,103 | (7,011 | ) | ||||
| Accounts payable | (2,860 | ) | 7,934 | ||||
| Deferred revenue | 5,122 | 3,839 | |||||
| Other liabilities | 7,353 | 12,597 | |||||
| Net cash provided by operating activities | 165,081 | 106,628 | |||||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | (101,325 | ) | (104,493 | ) | |||
| Other | 694 | 272 | |||||
| Net cash used for investing activities | (100,631 | ) | (104,221 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of long-term debt, net of discounts | 566,550 | 200,000 | |||||
| Proceeds from issuance of common stock | 14,767 | 19,802 | |||||
| Principal payments on long-term debt | (591,925 | ) | (204,275 | ) | |||
| Purchase of treasury stock | (25,646 | ) | (1,928 | ) | |||
| Payments on finance lease obligations | (2,957 | ) | (1,802 | ) | |||
| Payments of debt issuance costs | (2,930 | ) | (1,400 | ) | |||
| Net cash provided by (used for) financing activities | (42,141 | ) | 10,397 | ||||
| Net change in cash, cash equivalents and restricted cash | 22,309 | 12,804 | |||||
| Cash and cash equivalents and restricted cash, beginning of year | 17,998 | 5,194 | |||||
| Cash and cash equivalents and restricted cash, end of year | $ | 40,307 | $ | 17,998 | |||
| Supplemental cash flow information: | |||||||
| Cash paid for interest | 33,935 | 33,469 | |||||
| Cash paid for taxes | 684 | 1,447 | |||||
| Capital expenditures accrued at the end of the period | 9,059 | 14,078 | |||||
| Right of use assets acquired under finance leases | 9,713 | 14,303 | |||||
| Right of use assets acquired under operating leases | 108,712 | - | |||||
| Non-cash issuance of common shares | - | 446 | |||||
| Non-cash purchase of treasury stock | - | (446 | ) |
The following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of cash, cash equivalents and restricted cash shown above:
| Fiscal Year 2019 | Fiscal Year 2018 | ||||||
| Cash and cash equivalents | $ | 39,342 | $ | 17,132 | |||
| Restricted cash included in other assets | 965 | 866 | |||||
| Total cash, cash equivalents and restricted cash | $ | 40,307 | $ | 17,998 |
National Vision Holdings, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Financial Measures
For the Three Months and Fiscal Years Ended December 28, 2019 and December 29, 2018
In Thousands, Except Earnings Per Share
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to Net Income
| In thousands | Three Months Ended December 28, 2019 | Three Months Ended December 29, 2018 | Fiscal Year 2019 | Fiscal Year 2018 | |||||||||||||||
| Net income (loss) | $ | 3,920 | 1.0% | $ | (18,440 | ) | (5.2)% | $ | 32,798 | 1.9% | $ | 23,653 | 1.5% | ||||||
| Interest expense | 7,397 | 1.8% | 9,139 | 2.6% | 33,300 | 1.9% | 37,283 | 2.4% | |||||||||||
| Income tax provision (benefit) | (2,956 | ) | (0.7)% | (10,286 | ) | (2.9)% | (2,309 | ) | (0.1)% | (18,785 | ) | (1.2)% | |||||||
| Depreciation and amortization | 23,674 | 5.9% | 19,556 | 5.5% | 87,244 | 5.1% | 74,339 | 4.8% | |||||||||||
| EBITDA | 32,035 | 8.0% | (31 | ) | 0.0% | 151,033 | 8.8% | 116,490 | 7.6% | ||||||||||
| Stock compensation expense (a) | 1,830 | 0.5% | 7,190 | 2.0% | 12,670 | 0.7% | 20,939 | 1.4% | |||||||||||
| Debt issuance costs (b) | - | -% | 200 | 0.1% | - | -% | 200 | -% | |||||||||||
| Loss on extinguishment of debt (c) | - | -% | - | -% | 9,786 | 0.6% | - | -% | |||||||||||
| Asset impairment (d) | 1,506 | 0.4% | 15,493 | 4.4% | 8,894 | 0.5% | 17,630 | 1.1% | |||||||||||
| New store pre-opening expenses (e) | 473 | 0.1% | 487 | 0.1% | 3,334 | 0.2% | 2,229 | 0.1% | |||||||||||
| Non-cash rent (f) | 823 | 0.2% | 867 | 0.2% | 3,208 | 0.2% | 2,801 | 0.2% | |||||||||||
| Secondary offering expenses (g) | - | -% | 609 | 0.2% | 401 | 0.0% | 2,451 | 0.2% | |||||||||||
| Management realignment expenses (h) | - | -% | - | -% | 2,155 | 0.1% | - | -% | |||||||||||
| Long-term incentive plan (i) | 941 | 0.2% | 2,429 | 0.7% | 2,830 | 0.2% | 7,040 | 0.5% | |||||||||||
| Other (j) | 1,999 | 0.5% | 1,473 | 0.4% | 6,370 | 0.4% | 4,585 | 0.3% | |||||||||||
| Adjusted EBITDA/ Adjusted EBITDA Margin | $ | 39,607 | 9.9% | $ | 28,717 | 8.1% | $ | 200,681 | 11.6% | $ | 174,365 | 11.3% |
Note: Percentages reflect line item as a percentage of net revenue
Reconciliation of Adjusted Net Income to Net Income
| In thousands | Three Months Ended December 28, 2019 | Three Months Ended December 29, 2018 | Fiscal Year 2019 | Fiscal Year 2018 | |||||||||||
| Net income (loss) | $ | 3,920 | $ | (18,440 | ) | $ | 32,798 | $ | 23,653 | ||||||
| Stock compensation expense (a) | 1,830 | 7,190 | 12,670 | 20,939 | |||||||||||
| Debt issuance costs (b) | - | 200 | - | 200 | |||||||||||
| Loss on extinguishment of debt (c) | - | - | 9,786 | - | |||||||||||
| Asset impairment (d) | 1,506 | 15,493 | 8,894 | 17,630 | |||||||||||
| New store pre-opening expenses (e) | 473 | 487 | 3,334 | 2,229 | |||||||||||
| Non-cash rent (f) | 823 | 867 | 3,208 | 2,801 | |||||||||||
| Secondary offering expenses (g) | - | 609 | 401 | 2,451 | |||||||||||
| Management realignment expenses (h) | - | - | 2,155 | - | |||||||||||
| Long-term incentive plan (i) | 941 | 2,429 | 2,830 | 7,040 | |||||||||||
| Other (j) | 1,999 | 1,473 | 6,370 | 4,585 | |||||||||||
| Amortization of acquisition intangibles and deferred financing costs (k) | 2,069 | 2,412 | 8,694 | 9,253 | |||||||||||
| Tax benefit of stock option exercises (l) | (2,406 | ) | (7,578 | ) | (10,089 | ) | (25,544 | ) | |||||||
| Tax effect of total adjustments (m) | (2,466 | ) | (4,102 | ) | (14,933 | ) | (13,309 | ) | |||||||
| Adjusted Net Income | $ | 8,689 | $ | 1,040 | $ | 66,118 | $ | 51,928 |
Reconciliation of Adjusted Diluted EPS to Diluted EPS
| In thousands | Three Months Ended December 28, 2019 | Three Months Ended December 29, 2018 | Fiscal Year 2019 | Fiscal Year 2018 | |||||||||||
| Diluted EPS | $ | 0.05 | $ | (0.24 | ) | $ | 0.40 | $ | 0.30 | ||||||
| Stock compensation expense (a) | 0.02 | 0.09 | 0.16 | 0.26 | |||||||||||
| Debt issuance costs (b) | 0.00 | - | 0.00 | - | |||||||||||
| Loss on extinguishment of debt (c) | 0.00 | 0.00 | 0.12 | 0.00 | |||||||||||
| Asset impairment (d) | 0.02 | 0.20 | 0.11 | 0.22 | |||||||||||
| New store pre-opening expenses (e) | 0.01 | 0.01 | 0.04 | 0.03 | |||||||||||
| Non-cash rent (f) | 0.01 | 0.01 | 0.04 | 0.04 | |||||||||||
| Secondary offering expenses (g) | - | 0.01 | - | 0.03 | |||||||||||
| Management realignment expenses (h) | - | - | 0.03 | - | |||||||||||
| Long-term incentive plan (i) | 0.01 | 0.03 | 0.03 | 0.09 | |||||||||||
| Other (j) | 0.02 | 0.02 | 0.08 | 0.06 | |||||||||||
| Amortization of acquisition intangibles and deferred financing costs (k) | 0.03 | 0.03 | 0.11 | 0.12 | |||||||||||
| Tax benefit of stock option exercises (l) | (0.03 | ) | (0.10 | ) | (0.12 | ) | (0.32 | ) | |||||||
| Tax effect of total adjustments (m) | (0.03 | ) | (0.05 | ) | (0.18 | ) | (0.17 | ) | |||||||
| Adjusted Diluted EPS | $ | 0.11 | $ | 0.01 | $ | 0.81 | $ | 0.66 | |||||||
| Weighted average diluted shares outstanding | 81,785 | 77,526 | 81,683 | 79,041 | |||||||||||
| 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 Revenue to SG&A
| In thousands | Three Months Ended December 28, 2019 | Three Months Ended December 29, 2018 | Fiscal Year 2019 | Fiscal Year 2018 | ||||||||||||||||
| SG&A | $ | 178,044 | 44.3% | $ | 166,132 | 46.7% | $ | 744,488 | 43.2% | $ | 687,476 | 44.7 | % | |||||||
| Stock compensation expense (a) | 1,830 | 0.5% | 7,190 | 2.0% | 12,670 | 0.7% | 20,939 | 1.4 | % | |||||||||||
| New store pre-opening expenses (e) | 473 | 0.1% | 487 | 0.1% | 3,334 | 0.2% | 2,229 | 0.1 | % | |||||||||||
| Non-cash rent (f) | 823 | 0.2% | 867 | 0.2% | 3,208 | 0.2% | 2,801 | 0.2 | % | |||||||||||
| Secondary offering expenses (g) | - | -% | 609 | 0.2% | 401 | -% | 2,451 | 0.2 | % | |||||||||||
| Management realignment expenses (h) | - | -% | - | -% | 2,155 | 0.1% | - | - | % | |||||||||||
| Long-term incentive plan (i) | 941 | 0.2% | 2,429 | 0.7% | 2,830 | 0.2% | 7,040 | 0.5 | % | |||||||||||
| Other (n) | 1,432 | 0.4% | 784 | 0.2% | 4,565 | 0.3% | 2,591 | 0.2 | % | |||||||||||
| Adjusted SG&A/ Adjusted SG&A Percent of Net Revenue | $ | 172,545 | 42.9% | $ | 153,766 | 43.2% | $ | 715,325 | 41.5% | $ | 649,425 | 42.3 | % |
Reconciliation of Adjusted Comparable Store Sales Growth to Total Comparable Store Sales Growth
| Comparable store sales growth (a) | |||||||||||||
| Three Months Ended December 28, 2019 | Three Months Ended December 29, 2018 | Fiscal Year 2019 | Fiscal Year 2018 | 2020 Outlook | |||||||||
| Owned & host segment | |||||||||||||
| America's Best | 9.0 | % | 5.9 | % | 7.1 | % | 7.2 | % | |||||
| Eyeglass World | 6.4 | % | 2.3 | % | 5.8 | % | 6.8 | % | |||||
| Military | 9.9 | % | (19.4 | )% | 1.4 | % | (5.7 | )% | |||||
| Fred Meyer | 1.1 | % | (13.5 | )% | (4.4 | )% | (2.2 | )% | |||||
| Legacy segment (b) | 5.1 | % | (5.6 | )% | 3.1 | % | 0.6 | % | |||||
| Total comparable store sales growth | 10.1 | % | 4.3 | % | 6.5 | % | 6.7 | % | 3.5 - 5.5% | ||||
| Adjusted Comparable Store Sales Growth (c) | 8.1 | % | 2.9 | % | 6.2 | % | 5.7 | % | 3 - 5% |
National Vision Holdings, Inc.
David Mann, CFA, Vice President of Investor Relations
National Vision Holdings, Inc.
Kristina Gross, Vice President of Communications