EYE - Earnings call transcript Q4 2018 | National Vision Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the National Vision Fourth Quarter Fiscal 2018 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's call, Mr. David Mann, Vice President of Investor Relations. Mr. begin. may you Mann,

David Mann

good earnings Welcome call. and fourth National quarter XXXX morning, you to everyone. Vision’s Thank

Financial Joining Reade Officer; Chief Fahs, on Chief me the Executive and call Patrick today are Officer. Moore,

morning and earnings be during website, Investors call the nationalvision.com. issued the Our both on of the referenced available release are section presentation which supplemental will this our

be earnings as In later today. available A call will well access the will addition, as be audio a the section replay on also of this our found code of replay be can replay website. release. the conference number in of morning's webcast The Investors archived

for in and measures. presentation The presentation your release non-GAAP Securities information like Before statements risks limited of statements differ about attention are we and today's release statements the our and forward-looking as earnings non-GAAP defined included uncertainties X our subject to in projections. which expectations identified Exchange include presentation draw XXXX. These These be risks found Securities include to today's me are are could the release to begin, in uncertainties website. Act filings results additional can our remind We our and supplemental the cause the would actual certain you Reform materially include measures and release Reconciliation also and with not measures. and Commission. in today's in on to of and that these our the also to forward-looking but presentation Private and factors Slide from let Litigation

reference website. our or expects to presentations investor National section from addition for certain provide Vision our In supplemental to of time, materials on investor time

will as our outlook. today's quarter and and financial XXXX Slide call, our business review update. well business fiscal fiscal details discuss to highlights Turning performance fourth Patrick we'll of then XXXX On recent X. a as provide Reade

call open for questions. Following remarks, the will we prepared the

Reade. to the Now, call let over me turn

Reade Fahs

Thank with public David. to our Good be speaking as you, a a It's company. on pleasure today call you morning, everyone. sixth

QX, XX We the or turn and continued full-year stores highlights. reflecting I’ll net with for to for you store the quarter National open our stores If record which growth. in through We Vision Slide XX resulted take XXth year QX streak increased This ended consecutive opened sales positive in of QX X,XXX you revenue X, years. new year. QX performance. quarter XX.X%. X.X% represented XXXX of another for stores growth. year with comparable another was our solid XX has QX

the We growth record. growth up of are proud was The X.X% a best at was track World. increase X.X% and by at America's quite of with Eyeglass consistency growth this Adjusted in our store led brands X.X%. comparable QX

were Adjusted Eyeglass million a swinging up America's World year, increased income and For net adjusted Best EBITDA to and positive million. at respectively. X.X% the XX.X% comps X.X% improved $X.X $X

two we to satisfaction of sign noteworthy Another this brands year. had achievements we've year-end, record ambassadorship which at customer Since NPS levels our occurred our all Net January. closely. Scores, track The Promoter increased also that in is annual and

optical meet to lab National positions of consumers. the Plano, expanding our needs facility manufacturing opened this we lens First, further in domestic state-of-the-art This Vision fourth optical Texas. one

the debt upgraded Second, National minus. S&P double credit on Vision to rating B

market time long-term National to for again opportunity growth, market market business our was see a to share continue reinvest of growth sustainable share reinvesting at We're Turning to gains. Vision. highly large and number in fragmented increased footprint, pleased continue and front while expanded us. current with be same growth. driving we XXXX The remains and filled profitable the at for X, Slide to a our optical We of future highlights retail in

our expanded multi-year its XXth a signed Essilor celebrated patients excellent since first and we relationship Best Walmart, conscious expansion America's as of and to American anniversary with stronger grew delivering relationship overall distribution partnerships XXXX. our supply customers. with Walmart contact of Our lens lens the value agreement cost

continued that new Mr. forward response America's to with Our Eyeglass the advertising successful and campaign Owl the best at World. positive World progress campaign

merchandising assortments exceed great Our customer a values. expectations deliver yet team continued to that

this of customers Another of was in we example of story. America's the service our patients We're to Oakley brand story. our and that the proud rollout best provide

in In an consumers. NPS World received survey for of customer Best well-deserved scores, addition Eyeglass record independent our to notice America's Newsweek service

We our worth strengthened addition independent a Taylor, refinance$XXX directors rating of We balance Virginia have with XXXX. acknowledged who our the Hepner our and provided progress valuable agreement. upgrade. board we of two insights enhance continue members, million sheet credit with Tom our during board to credit as Moody's of

large new program for Eyeglass our successful America's mission We in social Girls strides also the a with made Boys in & and Clubs our Best, pilot advancements partnership of World.

store Turning weak sales quarter across to store highlights the quarters performance in both comparable times. sales Slide and graph store economic positive XX game. This it X, comp growth was economic cycle and demonstrating strong of comps, team are consistency of the further another

a see, periods been necessity. benefits of fluctuate our over the we which you comps medical consistent can can time longer of believe of is nice As our quarter-to-quarter it's purchase tied one but to

in by slight ticket comps increase an well driven quarter, a average as This in were transaction. primarily as increase

customer negatively comps were a calendar More year. of count. strong. quite our quarter been on quarter transaction the vision of significantly was week customer one count by closed specifically, five the by on We have transactions stores number last high fourth transaction. in insurance to volume negative impacted weather. less Also, traffic impacted a related driven the the that calls, compared in increases in transaction XXXX of severe most had customer As typically our result that fourth past day we've impact final believe the selling the quarter to of stated This unique when for had is as historically

with hard increases by of said positive driven Having Eyeglass in that, brands. that customers more XXXX, comp results gaining in double-digit less this in share year's operating segment difficult pleased a we're increases as of continue back. robust improvement evenly and were comp Best average the in to more the as attractive consistent $XX comparable with market highlights transactions store benefits in of believe We stores growth, as store well Importantly, These we sales prefer. mature an host performance. value-oriented business With by XXXX. attractive were optical transactions our brands the new growing of our we keep growth to models. driven comps experts, our coming retail we ticket working billion our comparisons in optical industry, team sales performance legacy with are deliver Overall last in primarily growth face having as and for our America’s from leadership comps

Our team a management at focus time. customer highly continues on to execution. experienced one day, and Every patient one

we the our Turning At to optical looked and the third we path drivers continued core to and U.S. we fastest share to of growth were end see X, growing. the retailer the XXXX, of Slide continue execute market growth. on to a In we largest among in gains. believe that XXXX,

stores us. this current as space opportunity footprint. we new our XX wide again that following continue our has the year open formula-based a see about given the of size We First, well primary plan for approach to to stores focus worked

continue XXXX, and with to majority the of World. be solid a America’s retain of for optometrists. pipeline success attract ongoing will in into year Best to remainder is in A this and have to our openings Eyeglass locations key the our We the brand our ability

off to in help their want mentorship experienced having the it succeed start and company and be the for as optometrists the pure This burdens to to enhanced optometrist-centric We and looking without focus loans, own are student many on stores. an or training place running strong optometry whether optometrists, of receptionists. graduates, optometric their onboarding, choice of new for such optometrists condition paying for means place ability programs be

Our paying XXXX. as are experience optometrist rate efforts we retention in an improved off

six fact, began tracking since the ago. rate best we In optometrist our years retention it was

in we to store driving Second, to growth on continue sales look focus XXXX. comparable

from stores Our well new maturing comp insurance are as as our key drivers initiative. and marketing comp waterfall vision the

provider the best new gets in eyeglasses are excellent of believe want the prices years. drive $XX this Our gain core $XX.XX We our and free customers as as at how few medical friends this We traction eye America's that low and We first service Best total of be mature we deliver XX% satisfied value they pairs for our our comprehensive our ensure customers customer and Eyeglass awareness stores to known value. to glasses for low-cost grows necessity. customers to the over spent two pairs extreme our the exam leaves important believe mouth of received traffic that customer represented store. service as around, of their and the believe positive XXXX. customer brands World. We Existing a stores. or including word our and strive that to at growth stores customers little at repeat of Two great they customers at that tell

advertising to experience. for to customers well another back to marketing customers digital continue great come We television invest and new as as in existing attract remind

the Our Best store. drive to America's for helping for World to and campaign World traffic Mr. are Owl campaign our TV Eyeglass

with continue versions team new marketing of advertising agency our Our external to catchy up campaign. come and advertising

into partnerships didn't percentage consumers tied for key the our progress cost increase everyday played remains while of revenue lab support us comp being efficiencies. our share they ad. customers, fourth the that and tied factor our paid allows ever-expanding investments resonate We quarter that towards being to and state-of-the-art are We new our better our the drive continue manufacturing our a reason a our Net our remains support new true We is can't and of of everyday Owl low-cost. fast-growing in gains. lab like programs remind a and today We operating vision facility frequently much Owl in too our awareness under-penetrated to revenue. of growth years everyday these to from continue initiatives a business growth centralized remain effectiveness be And we’re Best. to relative meeting and minority customers how our a coming our opening network they advance has in low-cost needs pleased We believe vision to say at in future. paying shop provides vision without XXXX. labs and America's month. operation both Net campaign provider. that Participation XXXX. to and a of to Our continues driver. low-price, off believe This continue advertising to insurance. industry advantage of world-class optical positive our the for and our we Owl with the competitive low-cost. We're Operationally, hear The Texas revenue marketing are brands insurance the the market in last if to a much in they've insurance all key eyeglass and

progress omni-channel the operating to efforts efficiency. We to continue our and customer improve experience

exam, has One higher. trend of initiatives online our scheduling been and which key continues to mobile of the eye

past on to noted situation. the we've continue calls, As we monitor closely tariff

exposure related a overall material impact from been to have tariffs cases, to future our that estimate imported applicable to XX% than limited China expected We cost China Our eyeglass from revenue on on which potentially total to already are our cost. to have is tariffs. imports not product subject that imposed products less of is and to

like responsibilities additional tariffs this to that review the management by the quarter. special I eliminated which comment through January, of are change contingency operations. company current by that briefly brand the took the advisory the to was end responsibilities. our to mitigate with his to board. on place a that options the consolidating our earlier Separately we leadership the SVP our the from has and agreed Jeff transitioning way in continue announced in capacity QX, impact position The company assumed We I'd that many adviser the and event in is COO to have serve COO. a in and Jeff COO of Jeff’s enacted. reorganizing modified special position realignment position In was the streamlines prompted our XXXX his continuing had in new McAllister and of as Jeff position role relationship the we in as

Let me call now hand Patrick. to the over

Patrick Moore

Slide morning, X. begin Thanks, remarks on everyone. good Reade, and My

store The As store quarter. business perform revenue of in and continues business fundamental two comparable Reade are drivers our our fourth noted, to new the growth. well growth sales

quarter, and XX the one we closed During store. opened new stores

Best or our For brands. the America's opened with stores and we and in five entirely in year, unit increase XX the closed openings X.X% World locations Eyeglass growth year-over-year

unit combined, brands increased For in these two growth growth XX.X% the quarter.

ramping and and newer and to openings have that expand were awareness. store of of in we chart our years where about are balanced a five increased capital. versus the three comps still cash our markets. We're stores the potential to new these sales approximately quarter our adjusted comparable building taken excited our continue pay XXXX existing stores between our store newer of a back X.X% lot majority XX.X% basis. there. presents invest base see Our new new invested note year. sales growth and The mature In on store markets, to increase last We markets calculated Same competitors the and fourth historically our

comparable fourth sales to much were growth for As Reade store basis events, XX quarter stores of mentioned, the about five which closed by due hurt weather points.

an The a by increase in customer by the transactions, the in remain stores. as stores the day of transactions comp were in primarily increase growth slight one selling average the final two As the was week driven negatively year of with impact impacted less well in as of ticket today closed. closed

driven America's increases comps were Importantly, in average for transactions. driven were Eyeglass primarily customer by transactions increases ticket and in by and comps Best

to stock, relatively the robust fourth in During a X.X in were of a the the in comp quarter fourth strongest and brands flat. and comps generated three was costs solid XXXX almost fourth fourth of year's which brand its declined quarter, quarter. comparison strong respectively. X.X% the Best we years. X.X% comparisons in two-year gains our last comp On Legacy for compared generated America's X.X% quarter, growth World Eyeglass Legacy comps faced

statement income Slide on Turning to highlights XX.

was a impacted the element As had increase a as percentage net before was business. Net higher approximately over $XXX.X optometrist cost the unit of from a XX- distribution growth points Walmart. relationship. due lens year. larger is revenue million basis Cost driven revenue were timing market. managed of XXX of Walmart revenue. a revenue about that impact comp relationship year with of and net solid revenue last last included In Walmart versus positively benefited distribution of XX.X% to geographic certain experienced Walmart of to expenses our by relationship basis line XX.X% an of coverage minimal offset points result business eye increased business revenue this which revenue the to million. increase care well versus the the year. a one increased basis by impact This by with wage quarter, XX applicable in the by lens mix contact contact contribution partially but or Cost we reflect higher The to revenue of result a as XXX profitability. to exam of new points applicable inflation Optometrist-related expanded growth, of from as earn net expanded growth the to unchanged Revenue expanded sales growing $X as pick as was our percentage

they doctors, competitive the salaries our that pay good for work do. we For

network paid which optometrists expenses work noted, to contact attract improved benefited XX important compensation part XX would sponsor primarily of extent versus SG&A and our fourth adjusted an was the of and a this by quarter. Oklahoma expanded and the ongoing year the reverse XX.X% Depreciation million hard benefited of support partially year. to to to omni a decreased in timing The XX.X% increased percentage of net well a channel-related expense capital basis our very in citizens’ compensation and X.X% optical expense including basis retain net stores managed of million growth Adjusted well receivables the EBITDA change from or year. equation write-offs retention the distribution impact deferred expenses primarily that by the and points IPO-related in resulted Higher fourth margin percentage compared would our amortization reflects $XXX in decrease care the quarter of quarter last benefit year Adjusted long-term due revenue. the relationship, and XXXX. by amortization increased lens laboratories, fees in lower XXX as This $X.X as our from debt of some initiative from of last a fourth impact X.X% basis down growth of quarter points margin as leases, the in lower Interest debt offset of we investments rate. and in the rose investments. were year. first as net unearned points basis decrease last revenue expect this this debt EBITDA revenue. both levels cost We as last expenses Reade increased versus is these by the on to quarter. which the pay of in points driven decrease stock SG&A with As XXX incentive IPO

recorded tax approximately share diluted $XX XX% fourth our benefit benefit $XX XXXX. $X.X million of of terms $X.X tax $X of compared a project Adjusted per adjusted to year We income rate option a In to of new loss excluding one-time excluded exercises. dollar $X.XX tax Adjusted compared to swung last option from and exercises. net million of profit last a we EPS profit million million impact stock benefit a and this million tax increased this diluted year from option the the year. with the stock income XXXX to the the $X.XX associated quarter a quarter to of taxes, be the legislation. in $XX tax exercises benefit This reflected income benefit a

results. and to Turning XX year Slide full our

expanded X.X%, the optometrist's margin We're net fourth some help the investments, EBITDA and these gains XX.X%. reinvest capabilities gains to decreased $XXX was the net highlights XX unearned consistency margins the consistent to EBITDA were growth and offset over and margin continued to of XX%. debt revenues as top adjusted growth loan net over business time. line EBITDA basis in receive was expenses revenue. points drive public reflects times. adjusted rate end Slide debt such XX our the and to Walmart market almost sales On we in X.X was the This of increased contact points. from share lens our XX% margin business. on million, production have company performance channel relatively business advertising, store omni longer to by believe will credit pleased impact on total basis the Adjusted million term the the delivered comparable at continued XX adjusted from term. by and partially up This stable higher Our of September $XX over into change We XXXX our benefit as have programs, quarter, corporate debt our balance be upgrade in was the AX our cash Moody’s interest which lowered We pleased to were rating related

during addition, our with basis triggered additional interest the our credit to by which corporate rate costs. the from DD- Loan by million refinancing loan borrowing XX pleased which tranch completed A Term on loan lowered points Term the interest a A Loan In In lowered XX existing $XXX basis on that raised rating rate XXXX, new loan January of the to very quarter We're a S&P our we improvements rate. points. that provision an

the $XXX CapEx the in Texas with For the initiatives Folkestone year including in million majority with growth expenditures our our capital outlook new of invested lab. we line

earnings now in which to release. some our XXXX I'll regarding with XX, Slide commentary we today's outlook included Turning conclude

our percent a new EBITDA billion and brands year, continue to is XXXX. outlook comparable growth especially to our the while between our America's growth we XXXX $X.XXX between last XXth from remember opening net approximately for as $XX.X well, brand. XX at to range the challenging Best of another strong and We store consecutive expect XXX million. will in adjusted Net perform and X% of that in the stores, year, to million to trend million same-store income comp project of revenues four vested billion million $XXX sales $XX.X Our we years comparisons important X% be facing growth positive follows. sales $X.XXX adjusted It's

that As the is plan Eyeglass to and to existing a these the be year continue markets business X% result, Store Most each as XXXX to will expected in first as closings this locations be range our predominantly typical remainder year. we X% of towards responsible skewed to comp will stores. outlook. be reflected with being openings America's growth our half year. store the a World of opening in believe the project Best it in is store are We

this $XX contact Walmart margin for expect We adjusted planned $XX business. million lens would impact estimate relatively in dampen million due the profitability which security $X incremental to Walmart incremental incremental of adjusted contribution cyber stable to margin line our We this of to the relationship, million be despite from to year. revenue business noted this as expanded before generate EBITDA in distribution to our the that approximately investment minimal in EBITDA

estimated to will impact well margin decisions XXX security cyber to the We're EBITDA to is delivering adjusted margins growth. adjusted EBITDA investment stable future XX to basis be drive of points while investment basis over points growth. have that a smart as making pleased Specifically, as negative

million and $XX our growth e-store to more growth Since support land at to the at rate midpoint depreciation growth, XX% expect that capabilities. we've been XXXX, $XX of recently investing growth increased in and in high system or rate about enhanced million similar amortization improvements omni-channel a to XXXX. We and and

growth depreciable should investments, continue G&A to lives few the revenue over Given next of the these growth years. outpace

of investment. million CapEx or Finally, estimate million the to XXXX to $XX expense we between $XX similar $XXX and and interest $XXX million to very level million annual

see year business. consistent can growth underlying another the our in we As driven from of momentum guidance, by expect you our

P&L XXXX. that Let affect factors in will me highlight a few the other

SG&A as increase the business applicable revenue. to with First, expenses and of as contact a of percentage distribution reduce will percentage our revenue cost lens Walmart incremental our a revenue

stable margins in expect this of Walmart Before the XXXX. we generally business, would impact

to turn to to expect flat we flat to As to be a applicable would down SG&A revenue, up and cost of revenue slightly. percentage

investment near-term growth Second, but of investment cyber is to the security plan a support an forward pressure This enhanced formally important an an our focus. is business. it's momentum

Finally, our as Over growth this our for $X investments time, expect up, ramps range XXXX, a a future new to example lab in will we that depreciation. amount million cost we lab a unit adjusted prime drive we're to making benefits from is believe today Texas performance. of see the similar $X.X lab. drag we expect this In to see million to of modest in EBITDA of

So of income the heavier adjusted $X overall impact range little is million to $X.X a to net million. in the

As not we specific prior we have guidance. calls, quarterly indicated on do provide

However we expected quarter-to-quarter these do want you into the to of items in that make take on sure comparison XXXX. account impact

as adjusted items vendor of certain timing the We as first in majority the range The and the collectively these items is tied net revenue quarter, $X in to of margin well that timing-related the rebates. unearned in of million. of expect million change $X the on impact will estimated impact EBITDA to

we cyber Additionally, expect EBITDA from in support the security care can you of expect from our the and continued But solid our outlook, year. we remainder our as the growth. over adjusted see growth investments would of impact managed

business timing quarters and affect between and enter timing quarter-to-quarter a our reminder, can tax of second experience due as peak our our while selling our a variable is fluctuations other first season, to factors. refunds As we that can the performance

basis. to semi-annual annual Our delivered on results business has consistent a very

XXXX, result new the or no to we material on to on our sheet. balance with liability million our for of alters a liabilities are estimate standards. $XXX as standard adopting are impact lease corresponding adoption and operating $XXX This that accounting flows assets new additional in required As in will X, cash We the leases right of accounting asset to January and profitability. use we million range record

in and financial to as noncash made lease in to immaterial operations. noted These revisions we period related statements Finally, nature and filing, accounting. business prior related revisions to XX-K not today's release were

our of note forward very the forward, adjusted our initiatives XXXX. summary, XXXX consistent As over back turn year in the roll million. of with is to and you In would of growth. how we the projected these pleased executing look the this that performance We're think focused to and revisions will about At vicinity delivering our impact impact Reade. in $X we're EBITDA on growth I XXXX call point, another consistent to outlook

Reade Fahs

Thank you, Patrick.

the moment Clear of mission, Vision Collective. For to share of closing like I'd work our the

In project of partner something year We poor. enterprises, Starting have, of the that to people. collectively expand the of District Bangladesh to we ecosystem world's with glasses Sherpur sustainably us and into for program Northern we call and place the available groups variety launched for the of a groups social in coordinated with reasons past, a problem a dedication non-governmental Clear the us can the organizations, a an Bangladesh XXX of working Vision - we all Collective someday ideal manner. chose the and January, proving form pilot as these of with for the million businesses, Bangladesh's approaches of shared to test governments hopes that began their to together a impress in half many lack in and solving affordable the that a ago, of

to this Essilor, philanthropic in happiness internal arm OneSight customer of to remarks. This patient business-wise are formulas. recently restoring be for would We contact and be - and we with will to Q&A and see store low-priced dedication I to turn back unable of and exam to abroad, of which in prepared glasses best and our our session. team who want sharing - glasses, consequently working to partnership operator collective bring VisionSpring, providing concludes was our strive call news sight, lenses; their forward the to entire the execution and governments up other start [indiscernible] vision, I thank the their to We until the We successful and home at work the while action well look to our and those otherwise. future. others. orbit, possibility local at

Operator

comes Paul from Lejuez with Citigroup. question first Our

Paul Lejuez

you moving what's the have core, drag talk in you cost FY on margin just severe What And seen any lens you business. do Just And the fourth can quarters? curious and XXXX, it optometrist's parts if get EG cash to I'm for for can flow and to relates prior curious, assume Free core. gross curious the if the less quarter on I'm Patrick. the provide just that. you assumption FY with Thanks. related optometrist's AB that, happening relative XXXX about the costs. Walmart business, as from

Reade Fahs

last - in question, Paul, part? that the that say missed missed third I I the last

Paul Lejuez

XXXX. for flow cash Free

Reade Fahs

Inside Walmart a got unpacking business, of put the little increase in owned penetration. the wage gross kind care of AC two business eye of host. if contact and by were look general, if that generally the Most that business being core was our so offset to those I as and managed legacies. we've margins we've So inflations and degree performance gross from new distribution the and of lens margin, combined and discussed And early the a mix. better paid continue we lines to is being higher owned in impact to compensation exams more at the Lens we new in aside, host quarter flat take the

of function margins core stable in fairly mostly So business, mix. a the

bit really The same, seen that little continued growth, significantly cash our or In during it’s of bit that’s similar terms terms CapEx stores mean so will the little that of EBITDA bulk free improve new go and I Paul. year. into guidance. will inflation balances spike we'll our trending that’s cash a up really, OD and I improving that's a the be guidance. flow We’ve pressures, be, about of haven't – in been seen

Paul Lejuez

might how a the up this cash just from impact of what quarter, that free sort tick And curious expect flow. inventory should just a we bit in side,

Reade Fahs

little was intentional. norm. the was very of That And a out it

and potential forward aware, about the the opportunistic were we've As us tariffs for kind of in in into you're We talked very help if China took fluid. this that those to play could in year. tariffs that’s some come December event buys

it a out So and was that move. little a of guardrails was a defensive of bit little

think XXXX. any would I ranges of out expect see as wouldn’t other So about be than that say inventory that buy to levels normal we forward I

Patrick Moore

that product a of benefit perishable. a Nice isn't

to. want you if ahead buy can You

Operator

from with America. Bank comes question Ohmes next Robbie of Our

Robbie Ohmes

comps. mid-single you're to little back I into forecast talk a the maybe maybe was year know, then you been this is with long-term the you or of some to upside you you are comp more hoping, could the X% doing. X% think but there X% that. in things Do maybe comparisons guys to could year this that, tough guidance more average you the expect bit roll how on the sort line that X% understand a below and and drive Reade I more have doing run conservative? about Are that that maybe get to and just to and digit being about range for thoughts Patrick,

that to launch upside did so there? this that Is grow Are a those year? did You of initiatives well. It Thanks. could drive going campaigns. lot there advertising

Patrick Moore

to to responsible obviously be to Robbie, that. a range. a comps. for call we for the this talk perform as X% well profitably year I'll start to know business up we range or going used range weather we I'd and in again in did hurricanes range We our we're get meeting know little guidance We hopefully never events X% flow-through past on We guidance conservative. XXXX. don't that and set it's about it feel if beating think that of you'll like exceed to we I philosophy in that provide think XXXX, confident or XXXX? to in degree bit But very that the We see quite in and benefits that what

Robbie Ohmes

follow up call question to legacy can on out? on strategies performance the Walmart, the there. that you a just there stores improve And the Any

Reade Fahs

of But us there's in course think X.X of XXXX. put that hurt comparisons. that year, place execution business that year in in the we since our those have brands comp was points and legacy that our happens. brands, make did less early a was opportunities sharper year-over-year one had of I in host First selling Last tough best up day areas sort and our to that XXXX. in those adjustments some ensure we And of we've to all, comp

and we that. in crisper offset to were. nice strong comp growth changes such I just some brands it's going our in to made course be that growth we our we're we've And So think have also than of

Operator

Gutman comes from Simeon Stanley. Morgan Our next question with

Simeon Gutman

just investments for focus thinking public time? roll should company that model picture. there get more broadly XXXX thinking this then to I'm allow it? business about costs investments, allow do been leverage first My have or on technology beyond. dollar look should I'd growth IPO post margin say off that model if over to – expansion, the on maybe question we is And big and business Curious

Patrick Moore

I'll question. take that

you aside This XXXX to maintained while the capital puts about core stable company Walmart. continuing the drive think I good has and margins of future grow-over So as of combined, as mix the implications growth mentioned. business relatively kind new to investments make and XXXX

dollars bulk drill market advertising our traffic in we increased into Legacy have build relatively the the and profit our been So host done spend, that or while as of own We've degree investing. stable. of We've new margins and awareness. drive where

growth. levels important met discussed supporting out rolling retention programs site of built of market comments very lab. just my component for a new we've in managed remarked are new better recruiting for our last our we domestic We as wage this earlier, year, And We've optometrists. state-of-the-art I've care

seen. where those, AB. advertising stable general would inflation, and record as We've place see national in been smart earn degree even lab, invest also retailers been each advertising efficiencies wage we've most in reduce of have growth. track and our a corporate for would I expect out continue leverage do that unit some comp time without ways I heavily. costs relatively we I we get strong focused managed to that. think of through I expect see think and costs have of So to we cost to We're on us investing to margins consistent affecting

as I'm So specific story. define a ready expansion to margin not this

before that right said the I've spending foundation As I like do for related feel that. in

Simeon Gutman

my rationale was I will How for the position. wanted is know Walmart. responsibilities shouldn't ask it What I vision? those commentary to about question, about a was role be talk Reade. the in think all Can up when we look, it follow created? COO the next on you My get done? And

So than about you answer relationship? regard talk anything with that, expanding rather can that maybe to new

Reade Fahs

part. was Jeff them. the always And a change change in Again, distribution frequently that Walmart our The taking second the expansion recently role and focused I'll in with in about Walmart. by Jeff we advisory modified has them that second next last of and and relationship touch contact a been anything lens roles up business part on group. the of the take the variety feel COO the in on the that partner We're sort of the take year dividing remains position year, we're and of topics we his first. being I'll the with great have serve change relationship. quite through There's reflect no relationship strong. I'm did a agreed company, within pieces the capacity an prompted to in many end nor reorganizing and other way of with

expecting the business We not have are there, team not of interruption for very my optical highly sort anniversary been company. folks, XXth I'm have experienced a long time; of all we're going I’ll and who big anywhere. with consistently folks a so here

yes. So,

Operator

question next from with Matthew comes Our Barclays. McClintock

Matthew McClintock

challenges a have the noise delay do first with issues the to there now near-term refunds any you any in any That’s that in business regarding press you my facing from question. wondering, or I your right all or Thanks. seeing pressure are tax expect out Reade, was is that?

Reade Fahs

of selling an talk early. retailers are QX. events currently we you're and we talk about entering our the is December It important like part tax of the selling to This optics is key season. refunds don't middle sort for other and are most optics for is don't season. QX-QX Where – talking we we are about about is we intra-quarter in QX like So, about what don't not to

to their refund customer tax starting core now dollars. just is Our get

comment So, medical But in really necessity. to purchase on to any tied that. way a hard a were it's

by eyes go and you so. get to great need provide fix bad, Your we it able there to to be values life, in out

a how seeing but play and can and how the So still QX seeing sort how cards refund much play the in the the we’re I QX share cards card QX bit not tax in on really of now. of QXsort

Matthew McClintock

provide. you did I that – appreciate you the could that color

is that. spend DNA for you in thank the My said. over that question just you years DNA the second of think is of – So I elevated couple terms comment Patrick next the

adjusted relationship years I stay of year, DNA the couple if over accounts growth? for we your to think that in EBITDA most Should did not well? the this all increase expect next of as

Patrick Moore

in phone, the that depreciation process lives the to the moved XXXX than year stores still on those to – remarked per flow we're have that stretch longer in out we're and year. the of capitalized building I XX as per XX in outs back DNA of from lives still company five years. XX about And terms In – build

in getting fall rates depreciation share we that right returns years cycle investment growth We're pleased should we're We're So we of expect those the off. are an that. normalize see in bit. We're of growth the of We're kind acceleration. are making. out the somewhat revenue as with DNA we seeing with market for outpace that to and the that pleased next getting we're that investments a couple new store with pleased of

Operator

with question comes Jefferies. Our from next Wissink Stephanie

Ashley Helgans

we your Wissink. This our be taking for something guidance clarity Steph is net tax distinct income that around imply would to and related Thanks EBIT Ashley Is question. Helgans Any going appreciated. on rate. with the reconciled that on Thanks. is for stock to When comp?

Patrick Moore

Yes. I the We've XXXX comp of seen think stock and and was then swings some pretty substantial million impact. in XXXX.I earlier about $X.X used number

as helpful that little more detail the would rate and around be noise top So tax compensation, later go well. stock there XX% to unpack of happy is future in that forward right any a be if to expected on excluding

Operator

Drbul Bob next Our comes question Guggenheim. with from

Bob Drbul

trending base, as stores? can income Do you and Just where household getting Oakley your guess like the and levels a frames that's as that questions second into terms you the you think income newer, about are your you brand. continue the addition sort mix I and view Thank invest best in you us of glasses, you you couple in where of better, and the well? are is, of customer update mentioned talk the an the Can advertising, on of to customer good, a on, terms on in product, updated in you. the an higher and of piece give

Reade Fahs

Yes.

summary the things say consistent. pretty those are I’d both to staying So is

increase contrast customers. But do similarly And in the cost change Oakley, going message but that to of conscious, in changes significant to of overall. of end to at consumers we demographics So we the our still names aren't advertise by a consumer that. excited our change do a are range, many buying like high some seeing or certainly in minority consumers target the have for and seeing We're large entering are brand the when on our category. our We mix like are the that. of a halo not in a not so else on sort nice that still keep in halo the fancy comes heads big that’s having names But names seeing yeah, gives store. a American they're we it's fresh have those we're a a we their and everything our nice like to effect of there's sort a there, –

So a it's way long time. The sort that for been balance. a thing of it's

consumer a significance really great a that. goes. There's change as that. have product from of in customer the loves Steady in nice value. there. to No that mix base. change ugly name So in no But it's she There's

Operator

Wells with Instructions] Fargo. [Operator Fadem Zach comes Our from next question

Zach Fadem

additional you're On that online could else Curious try-on? on scheduling. exam you're Curious testing what offerings you the omni-channel front. digital online about you if front, like talked talk about considering that

Reade Fahs

see things. communications. them your Yes. text of sorts of of appointment trial We in to am various touch that sequencing of every things scheduling sort and and confident and of of confirm sort sort and online sort of innovation sort there all like we're is looked out at those and We I sorts with of staff ways like of sort exams in in mode.

is try-on company. Now, an leading in the we try-on and I considered think are virtual virtual have trialing what investment

think innovation and track impact we term. the going almost trial us everything that and any so going And impact we in near is to is to

Zach Fadem

to you towards on cannibalization stores. impact respect results XX year. this we cannibalization your Do your the openings with on and to XX of months? in also comment Could then next as XXXX over trending to your existing expect move with And you markets the weigh

Reade Fahs

a When always we're a calculate it We the deciding near talk we feeling we whether not how to hearing going store models. something us – is. you're a XXXX. cannibalization on are forma, that is going But before cannibalization in location. in lot to depends about always all we factor select I'm But to our pro do be

Zach Fadem

And penetration? any of one more the quick trend one, care managed changes in

Reade Fahs

influenced the for we're say and penetrated in I to years. Nothing relative to come nicely our the under in that is continues XXXX. grow nicely But money us. believe decision non-managed would minority several it's insurance-related dramatic, us. to when We care has therefore out to you that value your continue grow past because care by of true the because it's I industry believe It I'll not still penetrated Managed business. you and It for your over overall. years. things, say, And to, we're will about that’s consistent One continue seek reasons. is, business comes that for growth over a two

much growing So didn’t all. business bought at in so still why And is we're business. over why America's didn't sort of, it that's take it we in under penetrated we're participate penetrated and when insurance non-insurance It insurance. - even Best, had

more adding companies with year will So plans of one and the steadily have America's that that insurance story relationships has Best the us since been continue. helped we bought that’s and

Operator

UBS. next our with Michael question from comes Lasser And

Michael Lasser

been to the increase question, increase? ticket average the average and incentivized differently in any drive driving stores been ticket have the My what's these

Reade Fahs

sort but That's but incentivized saw incentive comps like choosing we people to eyeglasses. fancier between a how stores the of not related play driven were We we was lenses product customer eyeglasses mix been There's of glasses and difference shift contacts, contacts. any Traffic say no to increase, not especially of in average continues a way. sell is contact that better to for that. by behavior lenses. most that The generally and difference where to buy contact We'd there and be main added drive the people driver ticket. differently have No. just value modest

Michael Lasser

of is change with fourth trend that contacts in more eyeglasses? quarter driven a was been the by the sort the term? the from than where So has comp And longer the over dynamic rather

Patrick Moore

It's Patrick, Michael.

One of last huge the year. year. the selling was two That our the factors what was one QX That one week in that year. lost the other can of last day or the big of top in of think week a we – sales is weeks be

ticket, loss, the we whatever two-day that a I and wouldn’t a really So move due really But lost it or a on factor it call day. to Average it, didn't put in quarter. big factor put on day

the five days. had impact that denominator closed. a pretty big comps had of stores out on that traffic. And terms decent selling And selling day-out of additionally, you So overall a the were of in

what kind So seeing. zeroed quarter of and saw that looked as a were at the with trends week, we little consistent we we've excluding that in last been more

Michael Lasser

my And XXXX? about up follow-up amount of in should think question were about X% adjustment Patrick we is, How number towards the that aggregate year-over-year. XXXX looking

Patrick Moore

call – areas like. were and and a we add-backs comp the were that obviously K. all of couple just on unpack after disclosed it large in can abnormal. our There you'd if the We certainly that One stock was

brands. compensation. in other any incentive impaired second had finally, And We was we trend area impairment. military some The then goodwill the

we're of call million some in and mid-single there. guardrails normal the saw figures stock of backs, still between so the kind of And comp out I you a range. military, would What add degrees digit upper

Michael Lasser

Thank very you much.

Reade Fahs

that on noncash get adjusted all the to momentum of purpose And EBITDA. the of out is items the

Operator

back now thank management would participating to turn session. in to the gentlemen, for closing I any like and today's over you Ladies question-and-answer for call remarks.

Reade Fahs

joining Thank want National in you for continued you, your and interest thank Vision. to for Sherrie. We today us

included America's of those We online go to again you For XX first quite a to very which who are like and both World, later you of we our with our this look report have when Eyeglass invite we forward fun for Best all you ads speaking would to television latest presentation. you our Thank Slide much. see and on link quarter spring results.

Operator

today's This conference. thank program. the you Ladies for in participating concludes gentlemen, and

all day. have disconnect and a may You wonderful

National Vision (EYE) 27 Feb 192018 Q4 Earnings call transcript