EYE - Earnings call transcript Q4 2021 | National Vision Holdings, Inc.

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Operator

Thank you for standing by. And welcome to National Vision's Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's conference is being recorded. to conference like host, to now Mr. would turn over the your I President Investor Mann, of David Vice Relations. ahead, go Please sir.

David Mann

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

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

issued of and the the release of nationalvision.com, a our referenced Web will presentation, on available the morning the are call. after will page replay on call, site, Investors the both this be audio the earnings which be Our during Investor archived webcast section and

presentation Before materials and are Exchange results we to subject Private XXXX. supplemental and the forward-looking in differ the to and factors defined risks begin, our let include, presentation. These The of projections. me remind our measures and actual are measures. the in uncertainties are statements risks Commission. materially you limited in release from that includes and in Securities Securities to earnings the Act statements include our Litigation filings the included identified uncertainties not today's Reform release today's Reconciliation of that expectations in also with presentation and These certain cause as these our non-GAAP could release but and

attention We statements additional in information would and to about non-GAAP to also draw today's like your forward-looking two, slide presentation, for measures.

site. presentations As a Web reminder, reference investor for or the certain expects on section to materials National our Vision supplemental Investors of provide

call over turn Reade. Now, the let me to

Reade Fahs

during say and times. their patient again, care team. these said I'll begin my thank I repeatedly appreciation all I you safe and just past National hope two Thank work, entire Like and staying you, morning, commitment hard today. for by us it team with heartfelt it David, and for are impressed joining this like sharing and customer the I'd to resilience, the continue over ever-changing am you so good to their Vision years, I've to everyone. service all to healthy.

in ever, XXXX for EPS revenue the net four, slide exceeded first billion year adjusted record $X.XX. with to Turning $X of

continue the that with We remote outperform cash ongoing and medicine electronic Best industry improvement our Best digitization brands. target see and XXXX progressed stockholders growth to we expect driving the are in million first paid beyond. in believe for to We the operating for should for XXXX, continue. and report, that runway stores XXX repurchases. both and $XXX long expansion and generated and strategic $XX of and released in growth inventory. We stores which returned XXXX, Greenhouse by key nearly Responsibility share confident million Corporate records, down a health continue initiatives, and ROIC, record increased of invested our debt, America's Eyeglass World's in We to Gas America's we whitespace in our this including flow, We through

Our dimensions. record-setting other All been and variety responsibility a reflected well-received of have a on in rations. year was have corporate efforts stakeholders, ESG all, XXXX been by in investors improved and

Adjusted being in delivered summary we XX% is to the compared just quarter significant in Turning results, the quarter over increased basis We're recovery another of the QX. today's of our XXXX, that have fourth reopening the revenue be Eyeglass store ended operating quarter, XX% we our adjusted are XXXX, through $X.XX. model. brands, during the to of increased QX believe Patrick pleased of ongoing nearly In by EPS comparison. Net take our release, quarter X,XXX to opened few led a quarter results in strength five, detail. America's noted strength with the stores, you our with XXXX sales The of our growth in to to as minutes, adjusted business and will following line reflect for XXXX, our most XX.X% and and QX performance Overall, in growth press fourth and comparable of slide fourth and Best approximately stores helpful results XX a results and durability over the X%, consistent outlook fiscal Due same more top releases. period. We QX of QX as locations. to World. the new income and our increased continues did XXXX

last we're both two six, strength the chapter, during business over demonstrated, proud decades. slide our of has to and the that and pandemic resilience Turning the

been Our economic strong and periods. across consistent has weak business performance

ongoing increased trends, an as eyestrain such as increased mall from usage. population, and performance Our such by is aided screen shopping, things positive ageing migration from

had difficult XXXX, stabilized combined value industry like by year, tailwinds our from that we than expected, share continue level and quarter, from optical our we remains to blue We we're we stimulus, higher by store of and at performance we fact environmental the as a with trends, average elevated expect we a to the ticket last significant pricing demand fragmented, We're actions product light the from ticket. comp up versus macro to lapped average factors encouraged positioning, market comparison us when an fourth lenses. successful and to closures, primarily help government a introductions, benefit helped gains. our XXXX pent The and that highly pleased has favor other opportunity positive the these market confident with our continue have share. In to grow drive were

our With some to value our the target environment, an versus QX current customer of while that completed than our customers we evaluation inflationary pricing offerings. actions implemented are ever money out and We will in we believe pricing, peripheral continuing competitors. seek more save expect appropriate,

far customer back earnings short-term typically, believe we optical based is our Taking coupled thus our store seasonality us. stores the step to slower-than-anticipated illness. for has we the start are to been The the believe in XXXX in confident variant felt traffic macro thus a in in period. solid, has and QX, industry's, XXXX. And optometrist high foundation this health Omicron of staff severe with and to a of winter business category led volatility noted impacted the associate our and unusually have headwinds ability slowdown operations release, far on weather, an affected most during As model. This, in from today's

market been slide this Shifting and will As years, a medical as of on necessity. we initiatives continue move expect us to is seven, build our to to of a saying XXXX, benefit we are provider the for execute position core to being low-cost growth we've continuing investments share. that into we

especially remain fortunate a performance World. sales have stores and Both brands growth, primary engines and World. Eyeglass year, attractive Eyeglass strong growth for to New Best two in delivered America's driver we're last

annual XX least intend to open with double and in at a Eyeglass XXXX, growth increasing to we're result, unit growth World. a our the target, of stores, As plan

a of specific plan. solid support developed Our real estate locations team this pipeline to has

an a The Let's improved about at brand and is World. return growth point. for talk We're Eyeglass especially minute for profile. about runway excited World's inflection Eyeglass

paid World Our strong has performance hit people processes week and momentum really week the investments with and in the XXXX. its off and strong pandemic. have with stride, out, Eyeglass early experienced throughout since

On company's sure an optometrists optometrists. been role always thereby optical of in begins This that we've play our say journey encouraged these are initiatives. the to practice, Optometrists optometrists XXXX, optometrists' heard in making initiatives success eye we our These patients. ongoing for focused so these with more places always are exam retention maintain seeking for far, rates. that means and typically recruiting results customer calls, because in attract on and a related compensation That's key we been continuing new XXXX. implemented, me exam. offering you've the and high early why repeatedly area increase to to be with to thus focus and will programs continue invest In initiatives a accessibility were we've great

serve focus the remote We've medicine these are pleased time has ensure can we progress. and pilots. working increasing to ever patient demand been very to with offerings, Another spent develop significant key our

pleased Optometrists the offering, believe remote it the a benefit while exams with of report Given XXX increase Simply expect over in have we and by like total to of these XXXX, that we flexibility locations I'm offered least from remote put, wins provides, availability. plan locations. the at expand are remote store everybody currently exam medicine. year-end. the medicine a pilots, hundred to In success to patients

remote role As across can a both by time. the result, more play patients geography serving and medicine in that we're excited

growth rollout, customer experience. stores. medicine patient's concurrently digitizing adding along and the remote in customers Marketing, a compete driving during We in we the to believe are proprietary With a by more our word the traffic further given the system, for acquisition effectiveness period of cycle customers In the disruption electronic the be a continues XXXX, aggressively of positive eyeglasses. key record leaned happy our many of in we with marketing. patients our health results, factor marketing-intensive to from mouth XXXX, infrequent category invest And share demonstrate new pandemic. our maximize purchase to to and of we caused a in

Our the and marketing marketing our before. sophisticated to we're digital in than additional CRM marketing team more used tests, efforts and also we run opportunity ever believe

to revenue opportunity insurance co-pays positive in continue Our remain ongoing care to further stores participation a underdeveloped and in tend our category, to an to driver. and We continues elsewhere. go be relative vision programs managed dollars the here see than as

and chain financial to long-term chain Lastly, relationships, supply as are extended strong strength. our efforts date. continue the clout, effective vendor it and our environment, from pertains We've to supply our times, be lead current to mitigate market disruption to benefiting order

inventories of let for ongoing merchandize effectively are the to are financial the currently our chain detailed and Patrick navigate our merchandizing At in results. teams this Our challenge. me discussion turn as position, continue solid over call a more to a supply point,

Patrick Moore

We're expectations. as Thanks, quarter our performed the our everyone. Reade, ahead fourth and business good morning, with results pleased of

performance excellent store-level driven traffic by and positive continued Our execution. trends, was

business capital continue we our while to shareholders. to reinvest and debt the to opportunity our share addition, further reducing returning In grow maximize in to

second the shared third As a consistent results Thus, in store temporary comparability impact XXXX. XXXX. reported reminder, our earnings releases, by results have and with our versus we of affected the quarter and was XXXX closures both of

made are As we is to comments more primarily which believe helpful today a XXXX comparison. we our noted, being

over week Now, growth timing let's due the the by X.X% of XXXX. benefited to which of increased impact turn final on XXXX revenue revenue nearly to than unearned revenue slide expected XX. XX% was the Net versus sales better XXXX, during Omicron

XX quarter, X.X% During stores America's store Eyeglass and count. in opened new Best for World stores a two increase we the

X.X% by in of well increase Compared were XXXX. growth also in a in comps to average growth and and both Eyeglass comparable brands compared World and XXXX growth quarter XX.X% up was both up Adjusted last increase XX.X% America's over For X.X% store fourth as sales increased XXXX, increase slight sales was combined, the XXXX driven as growth ticket QX Best by to average driven customer over unit the same a over our an over in customer store year. transactions. XXXX transactions ticket.

of slide was drive and higher the to payroll, partially as basis advertising increased basis advertising decreased Eyeglass about the increase The Turning to net XXX reflected points Adjusted compared by ticket percent mix The compared World expense ahead mediate of a spending higher and incentive lower to expectations net sales revenue behind higher by occupancy advertising and higher cost expense points driven increased driven inflation, in investments than Eyeglass investment offset spending XXXX. was XXXX. average differences of higher year factors points percentage applicable This XX, basis to XXXX a by of our this overhead were versus to revenue or and versus higher revenue outperformance our and XXX SG&A leverage The margin. expected. this decrease as XXX business, expectations. well compensation. key timing corporate

delighted in another Adjusted year the XXXX to increased the with and to especially revenue $X.XX similar advertising to of be adjusted potential for EPS QX. to diluted $XX.X deliver operating XX% we be growth. XXXX. percentage quarter consistent were Overall, a at expect XXXX income of X% increased We as versus beyond maintained leveraged million to

diluted approach Turning of Slide XX, XXXX million. a on versus record doubled adjusted to income billion XX% nearly XXXX Adjusted nearly record EPS $X.XX. full-year revenue results approximately $XXX operating increased to $X.X net to with a

liquidity of $XXX and available million. $XXX of X.X strong. We And when quarter, from Now to balance turning our was at the At quarter adjusted end the EBITDA Net XXXX. was including nearly $XXX the million. million sheet end ended liquidity of X.X our debt times cash capacity remain revolver. total was slide compared XX, to debt our total to balance times the with fourth

chain million. technology were $XXX record year, that the slightly flow $XX primarily in capital generated For related ended on million below we operating of supply cash We investments, store expectations new to and delays. focused our and expenditures due funded customer-facing

of $XXX in opening With considerable range an as XXXX pleased were acceleration well electronic free as health as technology debt in to records. a We as well such initiate CapEx our a and reduce investments to million reflect store $XXX we are share cash repurchase flows cash higher planning remote and the medicine as our million position, position to cadence further program.

During term loan term in the of $XX we borrowings level in Altogether very balance $XXX loan are term the million. term down $XXX bring and comfortable loan and loan to million prepaid million leverage we voluntarily of quarter, current the down to with paid XXXX, our balance. the

During quarter, shares million of Board under a our for with million shareholders $XX of return million we by the the capital to nearly authorization Directors. $XXX X.X repurchase approved

remaining repurchase program under $XXX our earnings by our and another now million in authorization. the have we noted As release today, $XXX recently million our expanded Board share

our the cash to to competence model management generate deliver sustainable and and and flows today, repurchases board reflects of and our and share authorization ability the strong growth. the business increased Our continue

Regarding current year-over-year X% on comfortable our our a of grew million year, growth At with and inventories approximately its basis. about to position, $XXX level we're and inventory inventory the the store the per support XXXX were plan. ability end

believe execute distribution a our the for help advantage. we to merchandising business manage well us remains that continue competitive in current challenging invest environment. chain and and teams our Our strength supply commitment our to financial to Overall,

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

uncertain, our our and us time of fiscal performance for we providing continuing selected and macro business over gives in are While the XXXX. confidence practice operating sustained full-year outlook our remain environments consistent

XXXX of assumes as range EPS our Against diluted Our Compared we to outlook result as company's to in projects comparable actions and $XXX store outlook solid between respectively. XX.X%, its shares. net and XXXX, related X.X%, to material a a currently outside for income no COVID of know COVID, to outlook negative operations variants, what regulations. the result billion $XX.X $XXX in reflects instability impacts the adjusted million positive geopolitical the flattish a currently our $X.XX deterioration impacts backdrop billion business well and current The QX CAGR average expected as for of assuming of EPS weighted outlook compared Omicron. government the $X.XX revenue of and today, between growth to revenue million represents sales the diluted $X.XX of operating $X.XX between net X to of adjusted last year X.X%, adjusted million one the midpoint and year diluted adjusted as

times some in the in and As past, record a I'd revenue $XX impacts our QX present at last year comparisons first-half. to headwind government million given stimulus we've grow like given to XXXX approaching macro estimate noted earlier. half, in each done short-term, a color the additional Also, provide unique results challenge over Reade we that the the

In first-half to with expect average higher mid-single our and a and exam with we eye a result, the be year. digits more in to comps easier year. in expect line for comps the last to pressure metrics single solidly a in As moderating second-half, negative mid the increased due comparisons, positive a profitability profitability digit ticket decline capacity we

of be For Eyeglass the in ticket. for Store customer with World predominantly evenly will locations expected be over openings coupled we planning growth, typical few America's slight the openings year, as year. are the transaction closings year with is to we this are each continue positive doubling Store best decline year a projected and openings. to average spread

the assumed of to an remote incremental a expansion share initiative EHR anticipate of planned million. our result medicine, We XXXX. in in range couple for dilution $X our of factors Let outlook me in key the other

As these about play in are role excited driving very future will initiatives the Reade we noted, digital that growth.

estimate We revenue to the have about to also impact be XXXX expect will million. income in negative timing currently of a unearned We impact $X adjusted XXXX. operating that

affect timing that impact As revenue recognition XX our day unearned annual a and a seven comparisons. quarter-to-quarter can to reminder, is

product XXXX level applicable XXX year's revenue projects from last to benefited elevated applicable lapped Notably, to to revenue basis XXX net of year points our below outlook revenue, For the an a percentage percentage performance last as be to we record we versus the shifts that cost mix full-year expect revenue. XXX of a XXXX cost are and points ticket. to as as basis increase

we seeing As a Reade to ticket noted, are our stabilized average at late XXXX to higher compared partially QX. as due level actions in pricing

points to also XXX versus basis year. costs to QX, expected to applicable are last XXX about revenue For increase

In we terms primarily deleveraging higher between expect The in increase increase of revenue wage year-over-year. and reflects of investments. basis XX points as expenses, levels of and XXXX XX QX SG&A percentage adjusted would a net to sales SG&A

result, in significant at XXXX the the and basis depreciation midpoint lap estimate the as also margin tax adjusted amortization, our X% guidance To we've provided XXXX, is headwinds. the a exceptional XXXX of range, short-term XX additional on we with As operating assist nearly of which and modeling, above we despite and level margin interest assumptions an expansion approximately rates. points

As operating magnitude the our important underlying excited XXXX. short-term give are performance and we move point, through and we focused strategies to are turn call confidence I'll control. affected improving be can an strength that consistency business to initiatives And and the our might macro that we as today, highlights COVID the can what environment, headwinds, that we affect are this on that which despite further Reade. positioned are At and shared well fourth conditions. quarter we in model. about performance the we've us deliver back and a timing the performance of by quarters our To second of summarize, reminder, refunds In further in tax this the evolving variable first

Reade Fahs

Patrick. Thank you,

corporate XX individuals been of Vision has the of a Turning National ethos our for being core mission, and and moment part decades. slide responsible citizens to

our ratings, Over inventory, greenhouse to recent year, thus our reinforcing Vision's transparency several to risk by emissions and disclosure National publishing stakeholders. made that the first ESG our improvements and needs including such in first improve in journey firsts, our perceived several reflected and and are we've our governance the as These leaps of our journey, ESG scores aligning corporate our past forward lower is efforts report. ESG gas completing responsibility

our people will also Our we groups better philanthropic collaborative helping of philanthropic maximize as summary, Eyeglass well and is Americares as Globally includes is is Last Given see activities. the call better. live a help ESG million the consequently Made program. National corporate about from year, expect responsibility takeaway world with available Web our this. Vision RestoringVision, site. commitments the own our National like responsibility This World's framework section In Cares, and to efforts partnerships made programs in the corporate NBI the and Vision philanthropic impact today's of that and key More Locally, us as information around such

the sustainable can smart investments an our entered third and remote we've business. We're share good we initiatives. at our World Eyeglass we our We growth. further grown market retention about and for business optometrist drive advanced pandemic, medicines to As feel of making inflection control and point our initiatives strengthened about and recruitment, is foundation the year we're the excited what key of growth.

actions, ticket competitive some position we've average pricing stabilized and and cash Our flows our advantage. remain are financial a and strong has taken and

question-and-answer to With start the the and prospects our to turn that, call. of to the this call the portion operator about beyond. year like confident we're reasons, these For I'd for back

Operator

of you. the with Instructions] Citi. Thank line Lejuez first question comes [Operator Our from Paul

open. line is Your

Paul Lejuez

cost the impact much you results how week, talk that the openings, of if then us give you this quarter impacted I'm And Patrick, you questions, guys. what December quantified fourth might could that store the sure an you talk you due And update of the any the any could did thanks, your Hey, that in model a last ROI, just change quarter? in in, new about maybe world maybe saw so, look to when pricing also us curious investment, not in if can in How post-pandemic in terms like view they? level, other actions, were if Couple that give there? the side in those broad about exactly an pricing higher can year? of planning you are you beyond And on updated terms Omicron? payback, fourth store initial on then Thanks. kick actions accelerated

Patrick Moore

take first the the Sure, will Paul, and pricing. on in and good morning. third, Reade I'll

in of affecting In sealing Omicron coming really January, the February, the were the improved doctors, staffing starting last started and and for of with Omicron, both seeing of our in up for associates week the what beginning we ways customers ended store terms affecting we of year, appointment. bulk and their significant

for the revenue, weakened weakening, less we we Again, but out some expected be so, impacts in of was fairly that some on was And the it $X a last week see million million we or But that the then $X two. like impact than to. wouldn't to better. impact to where of kind sales severe, did did call we see our that I did little it guided big had and negative

also [mix] that sales would that of December. in of offset have kind the we So, felt [Ph] some

million Now, is million which to negative XXXX, found well. part $X its of guide into less way as XXXX, our in unearned, of that $X

Reade Fahs

second pricing your think was action. the I question

Paul Lejuez

Yes.

Reade Fahs

should then. assume late That November what you October, is was early sort of

Paul Lejuez

off And anything coming and Reade, above year, this the in future, beyond that?

Reade Fahs

is other the you're actions, what that And saying? pricing

Paul Lejuez

sir. Yes,

Reade Fahs

of we announcing out. sort a that afterwards, anything, Yes, [in we not. fact] we're won't to don't while we always choose have till or [Ph] if rule now. sharing or we of It's any that little be doing Announcing lever as generally

to they're Just broadcast it's several looking we but coming know us, with for pulled money -- a certainly over that. the we're that, it's years. by at our difference looking times competitors. there saving several We'd lever the and past at options, and like between to competitive and reasons, us are we always customers don't have But need

Paul Lejuez

it. Got

Patrick Moore

to breakeven range, we maybe paybacks. store the not brand. are [indiscernible] all X.X terms the the expect But a timeframe, say will cost you of And to so $XXX,XXX the range, frame $XXX,XXX of store has revenues models we see paybacks, We'll same test target of opening, in in really -- continue different We say, Paul, same changed and X.X still kind concepts, to and slightly new to lot the there. some all, or something putting in there, for our configurations economics, a should of the were opening pretty a cadence and America's a where to which shrink future, we similar brand until bit our in Best different EGW is the part the big foreseeable for yes. we're business, and different store of consistency we

Reade Fahs

Yes.

just add And the few in of us to going with. two darn you've about it. And been models that pretty excited so, we're We I'm pleased World. chime we're real new point and say, years in, a have hearing we last opened been as sort configuration Eyeglass inflection think for have

done and pretty out there that's also, that we've recently. So,

Paul Lejuez

luck. Thanks, Good guys.

Patrick Moore

Thanks, Paul.

Reade Fahs

Thank you, Paul.

Operator

Thank you.

the Our question Fargo. comes line with from Zack Wells of Fadem next

is line open. Your

Zack Fadem

Hey, good morning.

So, you've has guiding you've quarters far, anticipated. few past ticket several of been little now. talking about a form thus quarters, some in normalization the in been And bit elevated been for business average than the for that, better your

So, would first that of moderate? all, And between ticket of expected much to talk the And about reduction? is points for margin then, XXXX, what bit price basis gross has driven you attribute here mix, average makeup what can then specifically the pressure of the and XXX a you you of to the ticket? how think

Reade Fahs

less there it's shift, we think are reopening now the we certainly stores, of moderate, above that think we combination for we there were ticket Actually, this is an that since there expectations, at it's average some we we to we've peripheral than previous more been things. levels, features, expected thing, fact is it and and There above the it that moderate. having quite been our we've pre-pandemic elevated point. buying XXXX of to time our blue was out customers expected three me now doing levels. It's chime have of And stimulus it pleased we're is but Let above on you a and to second pleased. mix And start, What stabilized level pretty Patrick, is a stabilized. expected probably light that despite pricing that and saying quite moderate can well, And in and before. action. sort the seen the to

an was it see plus way for it the this to us stabilizing unexpected has. So,

Patrick Moore

it ticket Hey, it's to mean XXX but, the stabilization call gross margin is small XX hurts important we bps practical dilution, for all point the I to I reduction important our basis -- I'll it of Patrick. forward. all to The for bulk remote is is that business And really is XXX that mean, say, ticket rollout growth just going of our it's a there for related. of really for a model, change. amount, purposes, customers, and but ticket that stabilize, financially part the model

part just So, of we through. this have to work

Reade Fahs

Yes, but it's stabilizing, so…

Zack Fadem

income lapsing you in to tier value as cetera, still And considering expect then year? the for perform and inflation stimulus, a do this Reade, to XXXX? lower from how And do headwinds you category the expect the outperform whole, et

Reade Fahs

and that's for seven going shift know, where what so -- been Oh in the it's years. in a seeing a yes. Like especially decade, past trend the certainly a to category, and we're long-term is on I value, don't

a seek to of is factors. think a category some environment, week, definite weather, there don't think And off like the shift and or geography the been -- on, the to is a have weather six towel a beneficiary possible have than it's from with I the the a and days places generally for generally category, for talked we again, said, worst that just the of start so, of pieces started, the us. five the to in malls have a we've us." hosts to all stores to hit shift sort that's and several unchanged, have that's it's on doors and time. inflation the and And have since been will is broad shut they There affected so, the and great weather, whole who reasons it I of storms, in that in the but too slower percent that favors that. in the that chains, predict shut, the days been out all from X% sort is going can't and that's was consumer, independent and about, by what "I'm so terms the two highest expected, or do We of be Omicron was been businesses, threw that shift lot I off when COVID it's think challenged there think have there, like we're those the think, due known for week like, unchanged -- retire, of value, but that, so optics, future too, three category there of out the of any independent I value sort that X% this I to to competitive to much so doctors of -- is people is for. slower not the quite of of that anyone to non-mall start going and from do

So, that's talking in I in a feel been we of public, since about for continuation we've general, XXXX. what went

Operator

you. Thank

UBS. from of comes the question next with Lasser Our Michael line

is line open. Your

Michael Lasser

back-half then would that the the expectation my morning. single-digit mid-to-high around X%. How Your assumed number. experienced of Vision a the for long-term get over that average, guidance for coming year, the comp year-to-date question. of first-half a in course has a And or sales disrupted the expecting Good Thanks than will of negative you be National lot much is you're months? single-digit have higher the loss mid which taking sales you back

Reade Fahs

category. of want can sort chime the of to. This And Michael, our you in thing vagaries and I'll start, you Patrick, the is if about

to got remember, this time. was the really January period. pent of really April not before category. then few optical and back, We March in the April. high of, and a You in and had years the warm-up, March, earlier lower is of talking were demand that, dynamic February sort there a today is up were are seasonality we've And about in Christmas, QX seasonality back came sort storms lot

capacity exam the pent take demand. to March, so have was So, there But of capacity there. up excess we in plenty up least

given happened of couldn't a it Omicron So, if we're more and mess than sort sort seasonality the - seasonality but we weather overall, of a modest was so different. at time recovery category's have assuming fits of the would tougher whole

Michael Lasser

guidance follow-up your them. be XXXX. in My it implies XXXX, where above growth it very question much will you still margin is that Thank for was in

this much you over versus of of prior can Can year to specific experienced where to will prior optometrist couple versus some price you that So, margin of margin year drag of And to it frame margin gross gross tremendous go your pandemic? that the extend will the you. be this year? how as is about a was Thank incremental the on increase this Vision to paying will years. has going National the expansion be wages pandemic compare how cover to you be amount what last gross

Patrick Moore

Sure.

factor are predict attachment and we higher also at it We've As XXXX. ticket is at of products. action. pricing to of part we a a ahead frankly, is we gross level Certainly than, taken margin, new look that modeling the stabilizing

So, I some to obviously every optometrist lab to of things, inflation. wage We expect those low see see still were And year. also Michael, expect advances degree helping. still productivity think

gross maintain fairly that can gains we we that So, have the confident experienced. we are

sales. things and cost of of long-term contracts vendors with have our through terms of come We in partners most that out the

We and plan Reade, add I of But the little shocker asked But anyone we will is cost Coming lot first probably a we long-term that there to there the of are is to we get you to bit confidence to will element revenues of taken more up. a in under of still are much of conservative a posture no gosh, it's pick somewhat That And revenue there. would question provide which gives difficult have back about the just back sales back, contracts. it. listening. too, immune a that think guidance. conservatism how the as that

Michael Lasser

Thank you.

Operator

Thank you.

from Barclays. comes line of question next Our Yih the Adrienne with

is line open. Your

Adrienne Yih

XXX this really those environment. us and phase? much difficult Reade, And I optometrist on initial focus that exam, with year. Thank give you both these of I they sort to end XXX morning; are an remote of well that good as locations what in Yes, they of Eyeglass Are share want more locations type this very in by of on incredibly XXXX and in like done are MSAs outside the guess the -- what's seeing are confidence? World? Any for as initial AB you us phase, utilization giving well of capacity outside data and you. how you can this

Reade Fahs

I we got talking as common And Yes, just the everyone's here. to about so can. that what particular. appreciate vision sure in are set I to question great. make level

in a of sitting the about exam equipment our practicing It's the room talking in store are all expenses, den. let's Doctor doctor not the call exam. all synchronous exam is that from all stores. store, We our patient in in it their amidst

as is they to there. otherwise. doctor to doctor electronic his a if all talking health were due on the would they record customer screen that has the data And the So, video have the

the the has you is a the So, state. doctor key particular in talked difference versus screen room is the of actually thing have in doctor When MSAs, on the that to person. only is with the for experience a the sort license about

to And But, have to don't a that have they so, sitting state. for that in license they do state. be have

will are this the and rollout, we recruit at particular sort of doctors more have we the in -- that state. so as for so, all state-by-state looking doctors that a need that of And

when get short, America's they the in in we're and talking So, that it now all in into of rollout. the a able is it. broader likely phase, is be it of into the at an benefit moving -- a exam Again, a best patient expansion will phase, to have want been is be And to pilot state-by-state the about we've moment. to past, the we've been more sort

So, patients convenience it's they the work. there exam, the customer all enjoy and

all virtually more than a past. I things to think, we're doing getting used the thought lot just in about ever we

it So, and we're serve allows us patients. exam it that expands to capacity excited more by and

Patrick Moore

we're multi-year this, will same the be would did that economics project, Hey, project ROIC a the great. we the over really, of And this elements years. few Well, are a in add. I excited vicinity of also camera about probably we're return scale of retinal our

handle you a really to doctor some for customer even And If one those of a a days second that any having you it traffic about kind a day store to for to is reason, store doctor dark big, in add or it pay a begin a you day. that think one of having where doesn't second is back when take need that investment. can

will we So, early very think accrued ROIC is on. this be

Reade Fahs

get stores. you it stores current down in or the we knows putting if are start road doctor about now right us an have contemplated wouldn't a be the -- easy before road, agnostic area. to the at places this different in to who we think have it'd be And, to to eventually down move stores But we're opportunity that a allows there. in live may And because whether didn't doctor building we we'd will be

may rural be the So, possibility anything there a that's remote yet. this future. stores I'm more But or unlocks. announcing not in that

Adrienne Yih

Now, to with And patient not I the I sort the the this be appointment book is that does right, the much rollout and kind slots of better. equipment. guess utilizing appointment is filling up it they're to question seem is of is very the interesting, the mean, for follow-up with my this just because equipment, time

pretty has accelerate. to significant it a So, positive it long-term, seems starts like ramification if

that So, --

Reade Fahs

the resources it in you add of flex longer business is more that our and way entire skills the about to in just and takes can one have it think -- fungible makes set most you just would geography across critical that the no it. I resource it I use time. most that one location, of and That model

Adrienne Yih

maybe And is percentage quickly, resignation early, I workers. semi-permanent into great customers? know is is question, think Patrick, average coming do customers And guess, largely very you. in do you But my I this tell. you And Reade, difficult Thank that insurance? be Yes. that? rate tap change Vision. of remind workforce the the can about us really benefiting from then, hourly you kind or follow-up what the a how not should it's National that very to do of those How And have

Reade Fahs

Okay.

insurance. and always we in area So, underdeveloped been historically vision the have of

is that true For of business is what it we're insurance. in we it much if always roughly it's minority. XXs. And And they get the we category, when was a it's majority last announced -- for vision the of that say it us, the the been

Patrick Moore

Thirties.

Reade Fahs

best, they that. about Yes, reasons, in the we a customers of take This have thirties first didn't would take and our for even is third I insurance. America's and the in when two patients bought

offered the when of us. money. find to for extent where importantly, vision bought Mark our their when more their store, by networks spending to in we aren't So, future, starting the consumers, people seek because But And I'm them. that when patients resignation to that your to was going us help way, we It's it's your find money, can be when you how will like, great that's things majority by shouldn't and that save we out are it's that or think going think they're jobs be probably people or like in when masked the they're we money least so that, it's always World and money that to going extent out the real Spencer, foreseeable at zero from insurance. non-insured money Eyeglass Walmart value. it Yes, not

Adrienne Yih

and done. of Best luck, Fantastic. well

Reade Fahs

you. much. Thank Thanks so

Operator

you. Thank

Sachs. Our next from comes McShane question of line the Kate Goldman with

open. line Your is

Kate McShane

wage months Thank of discuss help made question. and Hi, costs historically, some for given SG&A, I if you a had make good your should our throughout taking employees about We around versus rates to drivers there just and understand to SG&A. a how of investments will that the XXXX this the could your retention us the last way is or during over you've the investments questions for there continue morning. given think you wondered you we XXXX year? within couple few made advertising

Patrick Moore

a that took color we back where like better we margins. up. few customers you oddity And and advertising and very XXXX, the advertising Kate, of gross on from the with as high optimized. a I'll feel we we were like invested where that we in that had effectiveness, our I various we little I I in XXXX, away reopened it's about In so forms didn't were feel lined frankly years, with last much testing, give step piece because advertising enjoying our they dividends the ended Patrick, that, advertise year of walked line to CRM, sense draw found stores, have to think the much of we some of was and we

of assumes Now, year, that going impacts obviously we little for the get full-year, slight But a see we to as QX. some leverage, and the we're to the Omicron we're impact going de-leverages the I weather guide some we're includes leverage negative disclose our de-leverage, just to to second-half from that that result have today. and going of that when expect

into the second-half So, see more general, in broadly really numbers we're better as better and look I and going I out margins, compares. for to advertising, think

Reade Fahs

category career others that. And, specific themselves regard that's from Kate on And associates share we're the in some nice to our care, I people, vagary you person, aspects lot their a for are that very beautiful numbers your this there's of don't we of will retention that a a and tell sees child moments well you're rates, there's on health that, field, at might our now a first that that stores there you good time. question you're shape a sense of about career staffed different is optical to optician this professional, are look fashion the optical in nice component, they when are as there's helping in working an fulfillment or

formerly in So, there's rough we're frame firms. there's in XX% such had of just down with our that And there's at ocean, winning and we've now them least they're us, experience stores, dedicated that, optical and that's grew one there's that And aware team, a well XX that fulfillment is for And success not our to learning I you growing so real their of great a which around nice from a also are XX always the and career career a a labor and and Vision, stores with and level restaurant long lots a started sort that that those within. has getting tend people sense grow promotions without because to And store great that really entry to like we've given other good. opportunity. competitive, of lot and the things street, about XX at they're the respected role a And is National and company they're like year optical pleased work growth. tracking that optical, is managers is opening give growing of you company you're a so a feel of an you career around. feeling you place like stick if a I'll go

relative you didn't you follow than it's I lot companies little might situation to might you think as expect, understand a of better if a So, optics deeply.

Operator

Thank you.

next Our of question comes Jefferies. the with line Wissink Steph from

is open. line Your

Stephanie Wissink

to guidance. been and our everyone. Most asked margin unpack morning, operating the just questions go Good you. back wanted I but have of Thank

you. margins leverage for margins of to best back looking is a it 'XX understand it are going better, bit little are at your us maybe wage the you you to Are Thank What's in lever? you the this the bit had a in think line? about line operating as you've respect gross I level. expense overall growth like business? like relative kind happening advertising looks a XXXX, tell But the seeing If sounds respect with that margins don't happening the inflation just you. what's can G&A selling and with to sequence the the to

Reade Fahs

I up place QX advertising, choppy operating Steph. sure had ticket that, been high some, low through where missed high of margins make now, pent-up top the right we what maybe we'll costs basis more margins COVID, been everything XX to of fixed ticket, we're P&L across through come off we've taken of again, say beginning I'd at mix And just to and think that's and think year. off extreme points the general, the XXXX. leveraging get we back morning. we've the as if the huge in chapters year, I XX all about Steph, of high just But this stimulus, advantages, stable or demand, of impact here heading a some you done. regarding where be Sure, Good some

you have been that kind would headed there you still a where back little about we're of way insight not you that, there. So, margin if it'll the without give if more are over all would, think we see I opportunities time. into really

at are I expect to We'll ramping. the think look I second-half, investments. we're lack good be said early, second-half, as I remote feeling wage leverage. I'm going pretty to going I advertising the about the those to comps good, see have

our second-half, to then those think XX% first-half when that of over that. is look year. effectively roll from for internal of and me growing comp Certainly think better. So, together all plans this comps over clear weather impact, to into And I of the the we Omicron the going things last indicate we get come

consumer we've kind of in advertising. necessity, industry beyond get be medical get how then that's about I recovery. sales we've where going in maybe lapped think QX is margins provider beyond and to low for gains, in weaker. to impact and we're leveraging trends So, the productivity the get think our that a that, cost great We'll hiccup especially fifth, It's still a see weaker that better world may think longer-term, I assuming got yes, I or the to got modest But We're significant favor. that. in

point it good sure XX% track lot a not about the to that. watch of expansion. feel the there I goal still out one we won't specific at ran being But all of are wage way to but I some and margin kind to and for investments but we're have You today. closer We those communicate up fine nearly

Stephanie Wissink

you Great very much. Thank answer.

Operator

Thank you.

Blair. question Our Carden next William comes of from line with Dylan the

Your line is open.

Dylan Carden

Yes, thanks lot. a

items, on those that. the back this show clarify mentioned the kind maybe some it you're pretty on sounded of comments year; you couple in margins the And had of wanted there Patrick, in half quickly impact on of toward to Just like to of the the here benefit targets, expecting of tele-remote some then is follow-up a new optometrists kind ramping that just kind of years. better a this And not sort then that wage of some wage, target go cycles, of much inflation now store where is plus to we World use XX too in are the Eyeglass on seen having couple forward? there's last catch-up Thanks. year,

Patrick Moore

it to, the effort, year, on is we lacked But I we're lot going a evenly I if we to better because a the think stop indeed we're stock as lot second-half get spread a you we'll probably just we'll going get thank this is then. have so do like stores. in efforts. would it that, the of Yes, don't don't few know the expect going to about feeling to year, next were year dilution XX that's in going better I certainly a this it across couple beginning the do now yes, as that but remote If to multi-year that of

trying in to efforts, medicine more we're of supply second-half. us terms demand specific on given I to our resource remote retention that's market. little my we evermore that for time. and levels wage wages, doing perspective recruiting our will to of flexibility. ways find modeling And of as continued based do like what kind So, geography and In inflation earlier, and allow remote and enhancing on give are across make a I doctors fungible said

and commit abate that that I I hope So, of that kind some XX, our the XX will we goes. go number is We the do one will for there. going from this But, year. than will are going do moved beyond now it that inflation over we've year. XX+ we and more we try year. might And help to see every would to time of then say not am how on right I this And levels.

Dylan Carden

you. Thank Excellent.

Operator

and for have Ladies Thank question. one you. gentlemen, we more time

with question of Loop from the line Markets. Capital comes Anthony final Our Chukumba

line is Your open.

Anthony Chukumba

of Thanks morning. lot information. me for Good fitting in; good

let's you the say of how I guess XX So, more in like differentials a taking to guess it's And just of price I from I months what also Thank your have seeing competitive mean competitors compare do perspective, I sort particularly your terms ago? on one question, competitive are just you. are environment. price?

Patrick Moore

are And the -- differentials price And our space. well consumer that encouraged And are again, gets even value well. that. competitive we that are we think holding taking unchained. up as situation on price generally in groups other think front. yes, so yes, But is the We

Anthony Chukumba

That's helpful. very you. Thank

Operator

Thank you.

Reade Fahs

right. all Good,

Operator

to back I closing this At call like for remarks. Reade time, over would to to the turn

Reade Fahs

report us all all look stakeholders Thank here when [Ph]. Thank we And to all of for much your support. for you very you speaking for thank first continued your with We to you, [Tuwanda] again like And today. results. joining quarter for you would we thank our time. of forward

Operator

this today's participation. Thank you concludes your call. gentlemen, Ladies and conference for

You disconnect. may now

National Vision (EYE) 28 Feb 222021 Q4 Earnings call transcript