Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the National Vision Holdings First Quarter 2023 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Caitlin Churchill of Investor Relations. Please go ahead.

Caitlin Churchill

morning, good and you, everyone. Thank Vision's Welcome XXXX Call. Quarter to National Earnings First

will portion of today on Fahs, Patrick COO, us me the are Rasmussen, Moore, during and Q&A with also Joining the call. call is CFO. Melissa Reade be the available and the CEO;

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

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

presentation and in included Reconciliation measures. these of the release certain non-GAAP also is The release presentation. measures and supplemental our include today's

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

investor As of on the materials our presentations a Investors website. Vision reminder, for National provides section supplemental and investor reference

Now let me turn the call over to Reade.

Reade Fahs

execute we to joining mission for eye Since we and new believe realities to profitability today. to continue staying deliver make of us us last the initiatives improved care position Caitlin. our and you, we affordable while all. for that more adapting you Thank morning, marketplace sales true eyewear the Good post-pandemic in to all to Thank focused to March, you everyone. spoke on our

progress me our these review performance. QX highlights review I let from initiatives, Before on

the translated store above compared This slightly year-over-year our QX to performance Overall, sales Beginning the and comparable we XXXX. in adjusted of of QX stronger with in business. into a to what Slide X. QX care adjusted in growth for quarter saw increase from mix similar managed sales of net reflected came revenue even expectations X.X% on EPS period. $X.XX a an with X.X%

Our customers' most care before typically the less to insured fourth benefits Managed is first quarter inflation in business company the strongest reset of timing. business managed customers since pressured are pays due bill. in insurance and is the they care the by quarter benefit plan as expire using

addition, happen offerings see X as traded impact higher-income In number capacity the our uninsured impact in shift inflation to from of on mitigate a as well who during in the core tough budget-conscious as to customers tends economy. constraints. a value-priced of continued exam customers sales continued more our quarter, the helped These we greater the into trends

our making progress now against and Slide we're Turning X the initiatives. to key

As Vision our moving amidst path we include business discussed new realities on the is the National rapidly and to and inflationary business pressures adapt thrive our realities and industry. our wallets. These to down the quarter, persistent capacity customers' constraints exam new last our business facing

Let's capacity. start with exam

comps objectives, capacity positive, There strength components our model. optimal achieving are of are achieving business we where X capacity. demonstrating stores in to whole, exam thus the On the are

in the is our practice of The who and currently alongside retention stores. first optometrists

is we've in to previously our retention optometrist shared, rate range. As the XX% XX%

rate with compared retirements XXXX our and retention XXXX, other improved are XXXX in XXXX. to pandemic-related there from factors, mainly to within variability due that range While some increased

expect levels, over XXXX. step-up QX Given in to retention our healthy in retention see another XXXX we

our of optometrists new recruitment The to second the network. is

more of by network. in options menu our are We have a our recruitment optometrists are pleased that of flexible retention to strong aided the recruitment start a off this Both available and efforts scheduling year. addition to been

being are out year, and quarter, of we last in last first these this year. were the updates As results, piloted they on rolled late further discussed positive half based

optimize balance shopping optometrist. We with learn new management that best desired goes program this by schedule desired along the to patterns customer the with continue how and to the flexibility

to patients and remote optometrists capacity. Third, see geographies. licensed. with be improve Remote medicine country to we're states ability they patients medicine multiple care This remote-enabled exam provides because access help remote capabilities greater with see are in in the exam to across is licensed patients optometrists deploying where can our across the and rooms

it additional program fairly capacity is sophisticated over exam and time. to organization, a expect within unlock Our start-up remote our we significantly

While it year. and we on this contribute continue profitability the evolve program, learn to to remains track to

important and that to a dim greatest dark strong an benefit, covering in of supplementing out live course, when the the office situations in-person optometrist is coverage also stores, provides in is doctor is demand. there there's of store benefit the While is and an where

encourage the on at account taking into our track pauses recently at published a everyone a remain take into expansion remote-enabled on our demonstrating year, We planned additional for an XXX video I stores our with exam. least peak look volume to for this periods website, we stores. remote expected

EHR designed a paper is that environment, and which the cost more structure. the rolling efficiently overall work of make electronic response remote our is our the we're this rising we're our store In current should, of with in variety rightsize example over to ongoing store An efforts records. health to digitization both with stores time, of to improve driving that cost our help This out or to our efficiency program productivity. conjunction includes than capabilities medicine and record traditional

us competitive to all. In provide options continue to eye quality potential best executing addition, pricing eyewear changes our it determine our a will and our at mission and the pricing dive care within into position as for to architecture, a while conducting deep we landscape we're help that value our study update

conservatism, are new Finally, of marketing new that with relatively via and consumers respect attract a to expanding including omnichannel consumer spending constantly programs, we those testing variety offerings.

will consumer normalize. purchase human which cycle, consistent to decades the over believe in to eye, the the that, of to continue biology the We time, due remained eventually pandemic, the prior

growth. ongoing store our regarding Now

During the approximately stores quarter, stores opened X we to new on XX this new track and XX to are first open year.

and months expectations. XX over continuing in opened stores well our perform are to past with new the line Our

on Slide to eyeglass expand the continue illustrated X, store over space on in in world and front great As to continue base capitalize opportunity see our us. we'll white opportunity best America's time, to of we

to In Vision for summary, aggressive we are taking success position action the National marketplace. post-pandemic in

taking, signs somewhat confidence giving progress see was we're guidance April of in is we While time. us reaffirming which to at anticipated, our softer we the beginning than previously from are actions XXXX encouraging this

XXXX to detailed more Melissa I'll a now of results outlook. our call turn discussion financial for over and the the

Melissa Rasmussen

good and everyone. Thank morning, Reade, you,

start And discussed, stronger-than-expected driven primarily based better As by progress store are had to to see to the actions of are originally a guided. comparable leading growth year, care on managed the than beginning we slightly we sales taking. X.X%, sales, Reade adjusted we

I'll quarter in more Now detail. our performance financial first cover

X.X% revenue, X% X. the quarter increased which year. to growth includes of benefited revenue Net revenue from to prior Turning in for the This period. by Slide impact compared the timing the unearned the

the World X new Best we X stores. closed quarter, opened Eyeglass During America's and stores X and

stores. World store over we For growth the growth with and combined, X,XXX last our total base and unit brands ended America's year, the increased quarter X% Best Eyeglass

XXXX and Reade previous increase and quarter this new with comparable mentioned, to driven consistent XX and of by we stores ticket track in year, open compared grew XX our the Adjusted store As average to first transactions. are X.X% an guidance. between on sales

Turning XX. to Slide

mix. As compared first SG&A margin year higher XXXX. cost basis the to applicable the The were payroll. during as key XX our driven Adjusted well points as and higher year by partially quarter percentage of eyeglass costs store offset advertising performance-based The percentage deleverage revenue included points, normalization given factors the last to factors behind expense higher revenue was compensation of net increased this the which the eyeglass basis XXX this increased optometrist-related period. revenue, by partially by of a versus of as incentive expense offset plans incentive leverage of increase increased

and year of decreased to Adjusted Adjusted compared operating normalization driven operating in year. was basis last compensation income in million costs optometrist-related to the XXX the compared million prior period. by the incentive margin primarily points increase X.X%, $XX.X to $XX.X

instruments costs the Net financing interest discount was amortization per and Adjusted EPS $X.XX diluted debt million, includes and on related period. was million. $X.X prior to mark-to-market derivative year share in losses $X.X deferred compared charges of of $X.XX expense to which

turning Now to Slide XX.

Our balance cash a ended with million the remained liquidity of We quarter credit sheet capacity of total facility. and including million, from our balance available $XXX.X and liquidity strong. $XXX.X revolving

the of We no have term loan mandatory payments total million XXXX. July until due in matures of debt outstanding principal $XXX.X with

with We exploring refinancing maturity, an ended are the facility provide credit loan adjusted in net we advance to and to revolving our expect update We quarter for X.Xx. their options of of debt EBITDA when appropriate. and term currently

customer-facing store CapEx the We initiatives. million. $XX.X focused of flow in technology cash remain key operating expenditures, new track $XX.X $XXX our generated support in on of we and capital to investments on XXXX for primarily growth quarter, the million million and to $XXX During invested million range openings

we under price repurchase share During share. million the an of for returned at share the quarter, repurchase per million capital stockholders shares $XX of to X.X the average with program $XX.XX

on million authorization. basis. $XX repurchase declined a have We under remaining Inventory year-over-year share per store the X% current

enhance invest continue we sheet teams flow utilize customer experience our inventory support strong strategic market levels continued balance and and will our confident current in initiatives execute to XXXX. merchandising sufficient our our continue in we cash Our position. to are Overall, to and well, growth to to distribution strengthen our are and

Turning now Slide XX. to our outlook on

key outlook last XXXX We provided fiscal year reaffirming we for that earnings are metrics our call. our on

expect adjusted average growth billion, to between operating XX X% share, billion store XX.X shares. openings and assuming million sales We net comparable X% million diluted $XX to and $XX to of by million; between revenue Adjusted $X.XXX year. to this EPS $X.XXX and new adjusted per $X.XX XX income weighted continue store diluted $X.XX between supported and

certain a year we our of resulting first the a the of to be of the second of reduced year of quarterly of of fiscal tax to in XX%, tax Act result includes a tax cadence below expectation. which to from range expect the XXXX the XX% in our decrease perspective, XXXX, the the Embedded rate rate expectation rate expenses Appropriations From in is impact quarter quarter Consolidated as second full expiration the quarter the deductibility guidance in for XXXX.

full to line move year our XXXX, half As we more expect be guidance. rate we in with the our back into tax of

As headwinds tax facing, April than lower last was Reade year. macro-related refunds softer customers and somewhat our we due to versus this patients anticipated core year stated uninsured previously, including are ongoing

of and of with this in second high range, year margin operating timing growth single-digit investments the the increased quarter we in adjusted and doctor-related dollar this product expect pressured. adjusted Given be continue to SG&A the costs, expected to SG&A deleverage

initiatives, strategic continue constraints. including addressing quarter, back trends this improve expect to second as we execute the of sales to the half beyond our capacity year doctor Looking we in

In summary, we to executing we are on for our remain strategy our on this track achieve year. and believe focused objectives

As in while progress initiatives respect exam especially with Reade making, the technology. our as of the exam capacity and still we early, implementation through remote expanding encouraged mentioned, our retention further as are we recruiting well to are our efforts by

the we digitization margins initiative. expect for initial remote efficiencies As drive we we improve, store as further move beyond implementation to to corporate technology, with operating our especially continue phase and

we to our further structure increased the industry. addition, position to pricing offset In continue our maintaining costs and evaluate within while opportunities

back Thank you for to today. call the I'll turn Reade. time your now

Reade Fahs

Thank you, Melissa.

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In the thrive rapidly from are new takeaways summary, our the post-pandemic we are: the to amidst marketplace. today's key adapting business call realities of

recruitment stores, corporate investments are including term, in towards heading efforts improved retention, continue and medicine direction our And optometric office digitization marketing making progress remote for the AI. towards improved experience, Our efforts care productivity. of exam we're to investments capacity. improved all patient and right in longer The and

our While we consumer to will our the reiterating guidance the return more our budget-conscious that pressured, the for patterns. eventually historical and reiterating normal remains cycle are optical conviction purchase year

start session. call the operator I'd the our to Now like to to back turn Q&A

Operator

[Operator Instructions].

UBS. Our first Michael question Lasser comes from of

Michael Lasser

few to the closer improvement cycle the in mention of had better, you that to you in glasses and purchased how quarter trade-down would we're were and if that the be X replacement because quantify meaning last most economic the those in the optometrist the years, in getting comp seeing challenging getting benefit improvement the between your you factors? might of the capacity Reade, conditions, disaggregate recent

Reade Fahs

availability I with improvements them you, exam would and in -- this way. the eye begin Thank eye capacity, rank great front. Great, I would on question. would exam Michael. availability with manage I order appointment or

I'd correlate wealthier second piece, as a in Your in to trade in say that trade-down actually has increase people second effect care would say the care the it tend but down. the one trade-down because benefit. have -- care managed the it managed piece was bit managed be does with increased I'd not

to we at think I'd I think that say cycle premature announce that. It the to will when it's So at I can looking normalization of yet. I'm come. managed care talk to forward premature and capacity, day, this come, am but about will confident just it's the point. I it point Michael,

Michael Lasser

internal attribute want clarify I take of improvement that in I potential value made a National April making you talked the that could to mean to sort about, benefits in not of was price Vision. clarify, the were the could at that reversal softness you that you execution the and the changes. you you up you were same prices about mostly Does -- any seeing to offering comments And maintain to you of time first Okay. refunds just hoping would drove trying that while deep continue the And the tax you quarter. that challenges

Reade Fahs

start softness to guidance me other anticipated. first to little want point than -- piece. do refund we of point. the with I out Yes, Let but April is it did was reiterating balance was are think for we think softer April your And than more tax tax related tax that related I a the our again, And refund year, things.

that into There's pieces. we're On at especially the baked something that's inflationary pricing always world. pricing side, an other but of at, looking we're small our looking in amount guidance, a

of comments sort relative we're we the on checks that whole. a some there in think to fresh We looking there there our basis, some as may deeper be getting industry a opportunities shared regular do on So dive little perspectives also a we it in because yes, price that aspects at. also we're doing on various

So perspectives inflationary environment. always in on fresh good to that an have

Michael, And correct. absolutely you are

to value player. committed being are We a

what competition. actions. for us for, be having people want known That we to is committed are this there what that us for. we is are a in to come world, But still between further is and gap constantly the nice pricing what That price may opportunities deliver. We to and

Operator

Wells Our from from Fargo. comes next question Zach Fadem

Zachary Fadem

for that it's recruiting whether looking from a bit curious Could separately, of out and your you remote working. medicine called type your that an on Reade, talk is means points new versus results retention And and you're proof initiatives. what what impact store stores optometrist existing new as for about has you encouraging openings? things then

Reade Fahs

Okay. the Yes, existing of in versus new stores. terms

the year it to retention recruitment that the year last last year -- going the than we better looks front it than is is was year, be like better So before. on said again, on this what front and

trajectory And year student in is out, encouraged that also recruitment are our point of terms year, of ahead and we was record. a but I healthy. is didn't last by retention. tracking So last recruitment

A in we So students until season. of the But a make end QX, early we're the so little decisions ahead lot in there. there. don't very tracking

which that So they're with our months, what And of also conviction the does opportunities. to look more piece, stores, remote terms out even white if us relating we the opened that past stores ahead line in over at of reinforces expectations, we mean for space in in pointed the stores? white the can new that XX We new opportunity remote think, space help us. you

look more terms to the want course, our to we the what manner to wanted who objectives, available are achieving What in of come I to Really positive. capacity expand customers exam in remote do for us. just where for a important of we want, we comps cost-efficient capacity point, to is we are success, our reinforce want make slots our and

So and so deliver great. is where doing the optometrists we reinforces getting What we're those we're get this that's model environment, comps we're of just it that are model. able our all -- is that's can harder to our model, But chasing deliver to good. -- sort optometrists in positive, are where

Zachary Fadem

the year a of for X- in we category? would the just talk to and and expect multiyear to extent the what a stimulus it. about 'XX pull that accelerated the Reade, Got X-year gains you to in years cycle cycle, impact XXXX, and replacement the you away replacement be solid saw the a of And just of from a now considering X 'XX And we pandemic forward XXXX can are category? growth

Reade Fahs

the consistent a category the high course, a you is have the cycle cycle because prior believing our the have been of customers purchase entire They're it's a which very we're care, category that cash will this category. believing normalized cycle budget dip penetration managed challenge. because -- and for most category of the it. of care consumers. category decades percentage entire throughout extent not as the challenge conscious around are is paying March of purchase you category-wide the were normalization We, lower-income of is or from managed that But low bit April, that it's purchase last insulated themselves. pandemic. year the facing a So a of the sort The normalize to to To a in eventually has

the normalize a for the and they makes so It into at normalize the and And bring all the the lots a believe eventually to nicer which of purchase with and -- back they the which were, was unusual increase and quite and must when or human which after category given That boom lot believe the classes, has biology of general, category Then inflation, people cycle tell unprecedented. this year -- contributes is I was of of younger in entire will buy bought that can't the screen is tended eventually. pulled the eye cycle people eye this the to We reopening. lots time. just this usage, purchase we you the hit glasses and will category. like strain, trends also.

Operator

of comes next Jefferies. from Taj Phillips Our question

Brian Tanquilut

first the Tanquilut guess I Jefferies. for quarter. on question Reade, Congrats Brian you. It's my from

see or in any that strategy, capacity have As and store eye rollout metrics that way? or clinician of store can see terms reducing or that or the improvement there you maybe your are exams productivity the early we hours clinician the patients you from virtual days think in recruitment a and in can't don't about remote

Reade Fahs

Well, Patrick COO. is our

is responsibility, over big you. his program. I'll turn of to that Patrick, remote he our One looking

Patrick Moore

Yes.

a for and win initiative game Just reminder dark is for and store it's doctors, as for our It care patients is changer our as remote dim -- well. everybody, a clear stores. teams a

and double-digit a seen have coverage where in We've terms capacity at improvement. coverage stores we need. look do of substantial we productivity in demand So

as, So around productivity sales store to comps. track frankly, metrics capacity, doctor matching as we well do demand, and

of EBITDA -- promote. in mid-single-digit dilutive did in contribution the We the was we EBITDA year, benefit We in positive QX. Last see a quarter in were were it millions. terms to

best. least retention. industry, another We their that bringing is think us and expecting to new across doctors to this healthy methodologies remote for that year, just also XXX XXX. It's a sites having roll at of offer capability are do fits form We theme is that in the the out doctors flexibility to practice general live

the these answer at do different yes, is, play, we lots those come look things key So initiatives. your all into as we track and question progress and of to

Brian Tanquilut

And my then maybe follow-up.

here of of and versus sort to so the leverage talked You But maybe the intending to reach companies get your how you briefly. health and or health -- care outreach that on really retail share things more about can capabilities are care you us Toku if just strategy footprint. capabilities or with traditional you into side to can planning your

Reade Fahs

X Yes, question. that. sort of things. I think When I longer-term for and Thank that's big think picture a of of great optometry trends, you

I that in situations think a of nonemployee work It versus ever desire situations. first employment. there's more, employee seems to

post-pandemic basis, but flexibility. think going appealing aspects on modes of a ever are more practice I also This to like I of practice longer-term remote medical of sort also flexibility more also to days, generation, period, our initiative. in terms And of that's about this optometrists. think be

various for I we XX want years had optometrists have a the career. environments have variety everything like of it's their we of in our because a to who brands of it we say to employee to are there. to there's mantra environment, past spend out leasing a have for When different for different creating mode We available entire environments, if -- from just practice, optometrists

medically. more term, longer was, about talked I trend last the So

eye we're doing year. each millions As I exams said, of

and do. And not of stores is network. our Vision diseases what part trained but all are to find that big the ocular alongside manner have of And and of care-oriented practicing We diseases. just National health they in optometrists optometrists find a prescriptions, thousands to manner all these of

they hypertension, to first someone person those diabetes or be along to lines. oftentimes something are tell have optometrists Our

medical that many the only the interaction our have to patients, that of For going with it's year. they're professional

as important. sort responsibility of We optometrists primary it's that care. a the the health So big network very regard of offering

Some said our of us, of care entry point we a are patients. have health lot people for an to sort for

early-stage Toku is startup. an

us But be through health patients value Let's clear to the of disease, that. eye promise all things, back a able to photograph think and the manner to of quick on diabetes, that, simple we care cardiovascular can an care-related added be system. being that of come being to assess of able hypertension, their the overall health

America even in for think an could that America AI, range point health time. role this year's are play at to think how is but of an role Again, is and technologies of that of greater our Toku And we be like not are in advancing, important this some longer is overall outcomes stores we're in sort to valuable alongside nature. going that, in that health about care practicing like deliver can optometrists patients. care we network playing in guidance, This health the the who

so signing a more we're what value and And see provide. can few to we learn added that ever about teams

Operator

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

Anthony Chukumba

Congrats start XXXX. strong on the to

perspective optometrist deep that my it's a whether competition from from or seeing anything the there Costco, in notable or a there just some competitive promotional chains retailers Walmart? the of the larger perspective. is you're that independents stores some like are you're for in Is seeing from or -- Just of landscape, anything discount like the question,

Reade Fahs

yes. Well,

sort talking of is it since the new pandemic, real. for we've optometrists but been it's since So about, competition very not

groups' about. And what this chains operating so of is are any talking size all

the cash sector real. that very The So very sector care care strength more also managed real. the that is than of is growth pay managed of so and

trends, throughout market sense during what aspects being is of in least sense that with space, a in deceleration that our pieces In at I changes retail a there's the think a I at maintaining which seen And direct-to-consumer best we're is big the is there in my related stores. exception of pandemic, terms high or and back sector in the of trend sort large share maintaining with e-commerce e-commerce was line towards of other share share. market don't to now

So category well. that our as happening is within

think back least aside the managed even optometrist to I bit -- the more we at again, I'm changes other And than store. of I say from we front. that, But a the care e-commerce wouldn't care in growing don't growth, share, the on there managed shortage are maintaining not those. deceleration little are maybe and towards other saying

Anthony Chukumba

Got it. And then question. just a related

In -- translate compensation -- expectations? you your new competition terms what well. does very optometrist of had obviously, real initiatives you as know mentioned, relative I the some for given for to into that optometrists, as

So maybe that modest a bit.

Melissa Rasmussen

Anthony, Melissa. it's

costs As we think past seen optometrist-related the growth about have quarter the optometrist increase about for had the basis over compensation an in higher in we a compensation, we of And year. XX points.

added productivity our to significant well tie as pressure. wage have opportunity to We doctors variable their And continue level pay. of to costs their compensation just see inflationary optometrist we as overall actions in to

And as more with that productive. that are eye so then the component, exams they benefits compensation provide incentive more

rightsize can year. initiatives become product we about to costs -- forward. are that we efficient XXX so that point And between expect to doing We we investment more and structure these as throughout overall and the in or efforts a our basis putting the cost variety optometrist cost increases do offset cost headwind we're related still increased split of store evenly

Operator

from comes Citi. Hughes question next Paul from Our

Brandon Cheatham

retain they is same just with wanted of similarities do issue? they for is Are making you going their really stores. sure a Or the Like retirement open This own to capacity-constrained know that where it are just Brandon the issue? competitive And enough there just a on optometrists package stores? doctor it to the Or are is going? really you turnover a Or it kind are Cheatham I Like offer to practice? of them? ones? Paul. is the kind any in dig on

Reade Fahs

So thank you, Brad.

looks broad In they're terms in that, said sort board. lower leaving in are leave I terms the we're a that it with keeping up of that we're a job themes retention nice was of like with that on our says that, numbers. what where where -- better again, say versus go not they there us. When is Having and in it's optometrists in over better of improvement all us, of 'XX -- associated doing 'XX, track for 'XX them

So well. that's again, trend. recruitment is healthy And and the as

trend, sorry -- nationally, of to just -- means, you that the your cut of But optometrists lot factor has they more yes, bigger than there year And otherwise. think are more number retirements or if the be in the days pandemic. slots been wanted the -- following a about of bigger work. exam -- year to about is it less actually, reason The as the retirements would a overall, the a back there that point

So incentivize are X days but want that if to up to they and X during a a factors, or ramp pick variety day programs bit. there we of stay at X and days here busy at a up times doctors their those of sort maybe traditional to incentive have be

again, we we're be to programs want fronts. spend trying environments change collection Again, cycle flexibility, And optometrists' which, success decisions to of those optometrists by And sorts ever-wider to with career. throughout their time of when designing about different optometrists, to lifestyle to your change where appeal to are we all through an to pleased over we talk career, the career. of options we're of who over create entire way, time flexible trying on life the the are offer seeing our the

Brandon Cheatham

correct the on is of if wrong, then think product contact the on And most coming front, sense. me business. I'm the like of cost and that, I side Makes

And seeing So walk can what's on kind the some you through that of competitive you're pricing? us business? in flowing dynamics contact through just then that of

Melissa Rasmussen

Yes.

costs, split in March doctor the product the impact As expecting about higher that about product investment costs. we to announced see XXX between think in point basis increase both the we and were we

those is product expected to product and increased is the That into is We it easily of costs business. side go that contact in second the effect to the of primarily related quarter lens a year, the shoppable.

comes price as as up. So goes harder take to -- price cost

continue to cost date. it that so, We pricing where That we to that do competitive have to evaluate has March, take where and some landscape we our guidance able seen released factored it been in and have sense and pricing into of sense. makes the non-headline we'll makes offset to the have we increases been taken measures

Operator

from Simeon Stanley. of next Morgan comes question Our Gutman

Simeon Gutman

It's wanted about changes. price Simeon. I to ask

a the expecting this for Can opening I guess, quarters. there's like that enact price about a you what's being are invest? Is you changes? talk contemplated? It -- And decision been seems to time frame I make openness. talking think we've more about the few Is it better what it point?

Reade Fahs

doing deeper said, could as actions way, of Yes, Thank baked talking our that those pricing vetting that fresh ideas sort and a have potential number on we Yes. you, non-headline into sort are some And looking in getting actions. we again, that, are we're of guidance, on we're a in also over other perspectives price study about some and be those we're level taken. we pricing to that time. and Simeon. And we -- dive how and of of would forward feather

beyond done something especially think done again, are some be apt time, business this can pricing quickly, gets this of price. be is are more we our a things there end we aspects headline our And at QX. -- was very pricing where than And think could to we in And be generally, been but more the competitors generally are. pull have the we different feathered lever these traditionally in over that the opportunity, lot environment, there been a taken -- but of -- there have can of [indiscernible] reasonably small things

Simeon Gutman

And then parts. my follow-up, I'll have X

pay, if at look your the comp that's care First, customer managed right notation? and you between

Reade Fahs

Yes. Yes.

Simeon Gutman

year if causing talk investments it that and talk you basis could it throughout or the points year-over-year, getting about on And my few or not is in between then movement cetera? the EBIT, follow-up part that are deleverage, is the EBITDA Is second why why? narrower which spread and and those? adjusted of or how abate the down et I then it may the of wider drivers but the you know about based Can don't ODs,

Reade Fahs

the the to consumer managed between and Managed to comps of care is cash difference Melissa comps very is I'm second weaker. first part. strong, it, part going is call our The cash significant. pay that, the going is take care and take and pay our,

QX. comps significant played of strength a delivering -- positive the in care the managed So comps role

Do there, to second part you want take the Melissa?

Melissa Rasmussen

Yes.

factors the As in been that tied that year-over-year, on increasing addition, place, is combined, to were related the of we those addition the incentive are of EBITDA the investment related year-to-year decline creating product With that adjusted compensation reset in we to many that in putting think seeing. that costs, the to you're in we EBITDA and, we've all into that spoke about drag about the March factors what in discussed in initiatives March. doctor the in increasing cost

Operator

Our from BofA Robbie Securities. of comes question next Ohmes

Molly Baum

margin. on Molly for One gross is Baum to wanted question This Ohmes. Robbie ask on I clarification

full pressure expect think, mentioned, You year. basis you I XXX the of still points for that

So bit seeing? of little of come that? in we your just some in deeper. that anticipate XQ Sorry, weaker dive be wanted Should expectations? the the bit there. a on a give cadence additional the just come details of to expectations that in maybe any Did Could you second terms quarter I able provide you your what year-to-date ahead just trends to little to of you're maybe might details some given are

Melissa Rasmussen

Yes.

product And think we starting relatively close first in quarter had gross for the second came as because in reason effect largely quarter. that to go referred margin about March the that is the expectations. year, increased for in to costs we the So into

throughout in tied basis be March XXX doctor basis XX to between pretty began the product about in and talked the we second investment, the quarter. is which points year which that increases, then expect ratable points We to cost split

Molly Baum

sense. makes That it. Got

just a SG&A. to quarter, bigger then line deleverage on gross is of margin terms of in that the it function expense thinking opposed second maybe as Is the to the and then way better about related a some So top piece?

Melissa Rasmussen

Yes.

So what the in growth as first you lower quarter. SG&A slightly that The in piece, saw we will into be about we go second dollars think you as the quarter. than expect have SG&A we'll some

openings, driven higher of bit range, the timing in in be expect reset store the the see compensation beyond. little addition occupancy high single-digit by our expecting and second largely incentive we're that, However, new that to And expense quarter based we we a on to to about. spoke

Operator

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

Dylan Carden

recruitment, was in just sort trends go-forward of more curious, is of done I availability and you of now of remote sort you've as scheduling which issue, around more and I to a initiatives encouraging between sort capacity, flexible some would speak imagine care of doctor of through you walking the in of that? your this is how the maybe kind and of is timing anything tangibly to this expect kind get some way of working more kind and early year what you're that around seeing and else, out of the

Reade Fahs

Okay.

like words it's ever of in improving I'm health, before is they remote the so they both days recruitment the improving -- generally So improving, for creating the using a least encouraging, at the would start reinforce a there's those always recruitment, way. With that. summer more capacity can XX retention, time of working to in And tend the and course, I students all agree. along word from are arrive doctor, delay to

that do as is again, our -- our that's we that's baked projections reiterate So -- that. and into guidance,

but terms solved have of the initiatives the we the in promise it's We terms in of we have flexibility not remote, are believing of yet. in programs

can come is it's going the but just and positive. getting is future. where better. -- reinforcing a making way, to with of are in are to the in us, comps the pleased we us. yet. that, to confidence capacity we're because are the this capacity, direction The And Again, the not the solved consumers sure right We our deliver But trends game we want have

Dylan Carden

point So . that driving retention I'm to encouragement that, really taking at is this from relative the

Reade Fahs

learning exams retention X. better us, is and and for see on recruitment getting time. we better and encouraging, Remote still over a all a generating curve, still say profitably encouraging. No, start-up, is I'd it is but it's

Dylan Carden

the how around down you Can And to trade comments Okay. understand directly managed help that? not care me impact. And... maybe is then related

Reade Fahs

is related. hope you No, I took directly away it

tend wealthier do have benefits us than care, So to people further go with otherwise. care they managed managed

overlap strong a X. there's so And between the

you think -- they would in they would So lockstep. go

Dylan Carden

No, I think...

Reade Fahs

I if you're But They that sorry misstated are overlap. correct. -- before. I'm there's

Dylan Carden

It's No. fault. my

in that year thought last or idea the at happening commentary this the delayed is relative the is maybe so people impact force where to that point? greater And was trade-down

Reade Fahs

And It is people's is that wealthier yes, as versus hits books, -- yes, should continue. trade-down inflation ever increasing. prior year Yes. pocket

Operator

next comes Our Robert from Drbul from Guggenheim. the of line question

Robert Drbul

as store it like are when at why My make you does plan. considering you sense question all -- to keep stores the is you the And look slowing new adding the new years? I guess, at recent pace maybe what pace opening headwinds consider store around the of the same rollout? optometrists, do around

Reade Fahs

opened look expectations. doctors line historical over the overall, store, ability an place either we've if again, for perform localized continue get months, is you in XX to they a practice where encouraging the it So stores highly to -- place the you to with past thing sort at a to may of otherwise. Where or be doctors

many in places, factor always past. dark So for had of we not reason, which store. the it's in show our store We're also some And to doctor a a and we many if, can open related. a that's never with yet up striving doesn't remote, very open

then time, have think that space We working, the stores again, we remote opportunity. promise going. increase our could the actually real. very white And and is is we're if new space over still are that, white still But

Operator

Our comes question Adrian next Yih. from

Adrienne Yih

for I Reade, I of couple you. guess have kind questions a of higher-level

in kind April Is in in from what's to come what comments sort And are you exam that of -- -- tax was the do of unfulfilled half on the guess I seeing exams? see near pressure sort unfulfilled of sort term assumption summer, reduce tax capacity doctors as the of on under increase assuming that then increase doctor some to recovery? more of tax these nature? exam how feel refunds. too sort early question now changes. it you is With -- pressure any macro back to pressure about refund my Is

the And balanced think about the and year, then thinking -- year year? should how in up heavy out we're that SG&A, that is investment portion what About kind of gets on XXXX? streamlines this more for of we or out Melissa, and how just that out-out for if X SG&A into the a

Reade Fahs

about for the half the hiring. the increasing in the contemplated guidance year the what the And second balance through then take the the go you of I'll SG&A? year, of the from don't capacity why question Melissa,

Melissa Rasmussen

[indiscernible] tie a Sure. softer, bit what April lower low-income we little think Adrienne, be believe did season being our consumer. we as to refund about a with that we tax for

in that into that And that we're initiatives as we it's the guidance But period. a we place expand continue talk capacity. information weeks of have to to factored we putting into take the taken the that and all we're that just that about and couple to today. have to May soon expect of exam reaffirmed hold We date too

have expect better do year first the we've in quarter. the so far than to slightly of what back So seen we half comps the

reset the modeling a as that we've talked the we that think we the talked do ago. headwinds year, And about we incentive the about compensation occupancy SG&A, about and few this increased related expect moments to expense

that to investments currently. expect we with we leverage the of improvement last year, XXX place point many implementation about putting operating get think we're in beyond place, as we we to As And to that to the this March expect many margins phase, teams we at expanded as implementation initiatives that in mid-single get digits, the productivity being some we of that of putting those those in least back initiatives. for see the related basis past in we're expect spoke we

Reade Fahs

all you of year. -- the guidance. coming the part balance the student there took on and balance had just assess are a now, we puts encouraged what looking is the question, as the year, -- new increase This of that's that in Melissa project of of is the Doctors, of hiring, year takes new but And doctors encouraging you've but got felt plan, QX right is so than our capacity, it's factors through. record but more that balance student year. your that Last in comfortable those, this quite the through lot so better we a the to our all QX little the of hiring. always It's bit last was a than reiterating and part out by you hires part plus. on we're about plan, Adrienne, we And

Operator

turn I time, closing like this to remarks. Reade would to At it now for back

Reade Fahs

here thank we much, you joining thank second for support, we our today. great and quarter all forward results. to report a look very you you all Thank you Good. when again to much. day. speaking Thank for very us your ongoing and And you Gerald, Have

Operator

your participation for This today's conclude you conference. Thank in does the program.

disconnect. may now You

National Vision (EYE) 11 May 232023 Q1 Earnings call transcript