National Vision Holdings, Inc. Reports Fourth Quarter and Fiscal 2021 Financial Results

Expands Share Repurchase Program by $100 Million

Quarterly highlights compared to fourth quarter 2019:

• Net revenue increased 18.9% to $477.9 million
• Comparable store sales growth of 13.8%; Adjusted Comparable Store Sales Growth of 11.5%
• Net income increased 58.6% to $6.2 million; Diluted EPS increased 56.2% to $0.07
• Adjusted Operating Income increased 1.7% to $16.8 million
• Adjusted Diluted EPS increased 35.4% to $0.13
• Announces plans to open at least 80 new stores in 2022

Quarterly highlights compared to fourth quarter 2020:

• Net revenue decreased 3.8% to $477.9 million
• Comparable store sales growth of 1.7%; Adjusted Comparable Store Sales Growth of 1.2%
• Net income decreased 82.3% to $6.2 million; Diluted EPS decreased 82.2% to $0.07
• Adjusted Operating Income decreased 73.3% to $16.8 million
• Adjusted Diluted EPS decreased 71.3% to $0.13

DULUTH, Ga.–(BUSINESS WIRE)–National Vision Holdings, Inc. (NASDAQ: EYE) (“National Vision” or the “Company”) today reported its financial results for the fourth quarter and fiscal year ended January 1, 2022 and is providing its outlook for fiscal 2022.

Given the impact of the COVID-19 pandemic in 2020, consistent with our second and third quarter releases, this release includes a comparison of fiscal 2021 results to fiscal 2019 pre-COVID results, in addition to a comparison to fiscal 2020. For a complete discussion of fiscal 2021 results as compared to fiscal 2020, please see the Form 10-K filing for the year ended January 1, 2022 filed with the Securities and Exchange Commission.

“National Vision had another great year in 2021, delivering record annual sales and profitability. We capped it off with better-than-expected results in the fourth quarter, including positive comps driven once again by an increase in customer transactions,” stated Reade Fahs, chief executive officer.

“While our start to 2022 has been challenged by short-term macro headwinds related to the Omicron variant and severe weather impacting store operations and customer traffic, we remain excited about our ability to continue to grow market share. Our two growth brands – America’s Best and Eyeglass World – continue to perform well reflecting the on-going consistency of our business model. Given our white space opportunity, and the continued favorable market share shifts toward our value positioning, we have increased our planned new store openings to at least 80 stores this year, including a doubling of our annual Eyeglass World builds.”

Mr. Fahs concluded, “I have been so impressed with the resilience and dedication to patient and customer care demonstrated by the entire National Vision team, including the 2,000-plus optometrists practicing in or next to our stores, as we all navigate these unusual times. Going forward, while the macro environment remains dynamic, I remain confident in our ability to deliver the consistent sustainable growth we have experienced for the past few decades.”

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.

Fourth Quarter 2021 Summary compared to Fourth Quarter 2019

• Net revenue increased 18.9% to $477.9 million compared to the fourth quarter of 2019.
• Net revenue was positively impacted by 1.1% due to the timing of unearned revenue.
• Comparable store sales growth was 13.8% and Adjusted Comparable Store Sales Growth was 11.5%.
• During the fourth quarter of 2021, the Company opened 16 new stores and ended the quarter with 1,278 stores. Overall, store count grew 11.0% from December 28, 2019 to January 1, 2022.
• Costs applicable to revenue increased 16.1% to $217.7 million compared to the fourth quarter of 2019. As a percentage of net revenue, costs applicable to revenue decreased 110 basis points to 45.6% compared to the fourth quarter of 2019. This decrease as a percentage of net revenue was primarily driven by increased eyeglass mix and higher eyeglass margin.
• Selling, general and administrative expenses (“SG&A”) increased 26.2% to $224.8 million compared to the fourth quarter of 2019. As a percentage of net revenue, SG&A increased 270 basis points to 47.0% compared to the fourth quarter of 2019. This increase as a percentage of net revenue was primarily driven by higher advertising investment, and to a lesser extent, higher corporate overhead and payroll expense, partially offset by leverage of occupancy expense and lower performance-based incentive compensation.
• Net income increased 58.6% to $6.2 million compared to the fourth quarter of 2019.
• Diluted earnings per share increased 56.2% to $0.07 compared to the fourth quarter of 2019. Adjusted Diluted EPS increased 35.4% to $0.13 compared to the fourth quarter of 2019. The net change in margin on unearned revenue positively impacted Adjusted Diluted EPS by $0.03.
• Adjusted Operating Income increased 1.7% to $16.8 million compared to the fourth quarter of 2019. Adjusted Operating Margin decreased 60 basis points to 3.5% compared to the fourth quarter of 2019. The net change in margin on unearned revenue benefited Adjusted Operating Income by $3.5 million.

Fourth Quarter 2021 Summary compared to Fourth Quarter 2020

• Net revenue decreased 3.8% to $477.9 million compared to the fourth quarter of 2020. Net revenue was negatively impacted by 1.4% due to the timing of unearned revenue.
• The 14th week in the fourth quarter of fiscal 2020 added $32.2 million to net revenue and approximately $0.01 to diluted earnings per share for the quarter and the year. The additional week is not included in comparable store sales growth and Adjusted Comparable Store Sales Growth for the quarter or the year.
• Comparable store sales growth was 1.7% and Adjusted Comparable Store Sales Growth was 1.2%.
• The Company opened 16 new stores and ended the quarter with 1,278 stores. Overall, store count grew 6.1% from January 2, 2021 to January 1, 2022.
• Costs applicable to revenue increased 0.6% to $217.7 million compared to the fourth quarter of 2020. As a percentage of net revenue, costs applicable to revenue increased 200 basis points to 45.6% compared to the fourth quarter of 2020. This increase, as a percentage of net revenue, was primarily driven by higher growth in optometrist-related costs, lower eyeglass mix, and lower eyeglass margin.
• SG&A increased 12.5% to $224.8 million compared to the fourth quarter of 2020. As a percentage of net revenue, SG&A increased 680 basis points to 47.0% compared to the fourth quarter of 2020. This increase, as a percentage of net revenue, was driven by higher payroll expense, higher advertising investment, and corporate overhead.
• Net income decreased 82.3% to $6.2 million compared to the fourth quarter of 2020.
• Diluted earnings per share decreased 82.2% to $0.07 compared to the fourth quarter of 2020. Adjusted Diluted EPS decreased 71.3% to $0.13 compared to the fourth quarter of 2020. The net change in margin on unearned revenue negatively impacted Adjusted Diluted EPS by $0.04.
• Adjusted Operating Income decreased 73.3% to $16.8 million compared to the fourth quarter of 2020. Adjusted Operating Margin decreased 910 basis points to 3.5% compared to the fourth quarter of 2020. The net change in margin on unearned revenue negatively impacted Adjusted Operating Income by $5.5 million.

Fiscal 2021 Summary compared to Fiscal 2019

• Net revenue increased 20.6% to $2.08 billion compared to fiscal year 2019. Net revenue was positively impacted by 0.2% due to the timing of unearned revenue.
• Comparable store sales growth was 15.1% and Adjusted Comparable Store Sales Growth was 14.7%.
• Costs applicable to revenue increased 12.2% to $904.8 million compared to fiscal year 2019. As a percentage of net revenue, costs applicable to revenue decreased 330 basis points to 43.5% compared to fiscal year 2019. This decrease as a percentage of net revenue was primarily driven by higher eyeglass mix, higher eyeglass margin, and lower growth in optometrist-related costs.
• SG&A increased 21.0% to $900.8 million compared to fiscal year 2019. As a percentage of net revenue, SG&A increased 10 basis points to 43.3% compared to fiscal year 2019. This increase as a percentage of net revenue was primarily driven by increases in advertising investment and performance-based incentive compensation, offset by leverage of corporate overhead and occupancy expenses.
• Net income increased 291% to $128.2 million compared to fiscal year 2019.
• Diluted earnings per share increased 257% to $1.43 compared to fiscal year 2019. Adjusted Diluted EPS increased 97.7% to $1.48 compared to fiscal year 2019. The net change in margin on unearned revenue positively impacted Adjusted Diluted EPS by $0.02.
• Adjusted Operating Income increased 79.1% to $204.7 million compared to fiscal year 2019. Adjusted Operating Margin increased 320 basis points to 9.8% compared to fiscal year 2019. The net change in margin on unearned revenue positively impacted Adjusted Operating Income by $2.7 million.

Fiscal 2021 Summary compared to Fiscal 2020

• Net revenue increased 21.5% to $2.08 billion compared to fiscal year 2020. Net revenue was positively impacted by 0.4% due to the timing of unearned revenue.
• Comparable store sales growth was 22.4% and Adjusted Comparable Store Sales Growth was 23.0%.
• Costs applicable to revenue increased 15.0% to $904.8 million compared to fiscal year 2020. As a percentage of net revenue, costs applicable to revenue decreased 250 basis points to 43.5% compared to fiscal year 2020. This decrease as a percentage of net revenue was primarily driven by lower growth in optometrist-related costs, increased eyeglass mix and higher eyeglass margin.
• SG&A increased 24.3% to $900.8 million compared to fiscal year 2020. As a percentage of net revenue, SG&A increased 90 basis points to 43.3% compared to fiscal year 2020. This increase as a percentage of net revenue was primarily driven by increases in advertising investment and performance-based incentive compensation, partially offset by leverage of store payroll and occupancy expenses.
• Net income increased 254% to $128.2 million compared to fiscal year 2020.
• Diluted earnings per share increased 227% to $1.43 compared to fiscal year 2020. Adjusted Diluted EPS increased 62.6% to $1.48 compared to fiscal year 2020. The net change in margin on unearned revenue positively impacted Adjusted Diluted EPS by $0.05.
• Adjusted Operating Income increased 52.6% to $204.7 million compared to fiscal year 2020. Adjusted Operating Margin increased 200 basis points to 9.8% compared to fiscal year 2020. The net change in margin on unearned revenue positively impacted Adjusted Operating Income by $5.5 million.

Balance Sheet and Cash Flow Highlights

• The Company’s cash balance was $305.8 million as of January 1, 2022. 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 $570.1 million as of January 1, 2022, 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 2021 increased to $258.9 million compared to $235.0 million for 2020 and $165.1 million for 2019.
• Capital expenditures for 2021 totaled $95.5 million compared to $76.8 million for 2020 and $101.3 million for 2019.
• In November 2021, the Company voluntarily prepaid $50 million in existing term loans.

Share Repurchase Program

• In November 2021, the Company’s board of directors authorized an increase in the Company’s repurchase program up to $100 million aggregate amount of shares of the Company’s common stock. During the fourth quarter of 2021, the Company repurchased 1,425,285 shares of its common stock for a total consideration of $69.9 million under the share repurchase program.
• In February 2022, the board authorized another $100 million increase in the repurchase program, which now has $130 million remaining.

Fiscal 2022 Outlook

The Company is continuing its practice of providing selected full year guidance for 2022 and the outlook reflects current expected impacts related to COVID-19. However, the ultimate impacts of COVID-19 on the Company’s financial outlook remains uncertain. The outlook shown below assumes no material deterioration to the Company’s current business operations as a result of geopolitical instability or COVID-19 and its variants, government actions and regulations, but does take into account first quarter to date impacts from the Omicron variant and severe weather.

The Company is providing the following outlook for the 52 weeks ending December 31, 2022:

The fiscal 2022 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 2022 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 2022 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 2021 financial results is scheduled for today, February 28, 2022, 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 8984784. 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 Monday, March 7, 2022, by dialing 855-859-2056 from the U.S. or 404-537-3406 from international locations, and entering conference passcode 8984784. 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 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 2022 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, including risks stemming from vaccination and testing programs and mandates; customer behavior in response to the continuing pandemic and its more recent outbreaks of variants, including the impact of such behavior on in-store traffic and sales; overall decline in the health of the economy and other factors impacting consumer spending, including inflation; 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; the impact of wage rate increases, inflation, cost increases and increases in raw material prices and energy prices; our growth strategy straining our existing resources and causing the performance of our existing stores to suffer; our ability to successfully and efficiently 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; 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; risks associated with environmental, social and governance issues, including climate change; 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 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 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.

Contacts

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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