National Vision Holdings, Inc.

Good day, and thank you for standing by. Welcome to the National Vision's first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Mann, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to National Vision's first quarter 2021 earnings call. Joining me on the call today are Reid Fahs, Chief Executive Officer, and Patrick Moore, Chief Financial Officer. Our earnings release issued this morning and the presentation, which will be referenced during the call, are both available on the Investors section of our website, nationalvision.com, and a replay of the audio webcast will be archived on the Investors page after the call. Before we begin, let me remind you that our earnings materials in today's presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. The release in today's presentation also includes certain non-GAAP measures. Reconciliation of these measures are included in our release and supplemental presentation. We also would like to draw your attention to slide two in today's presentation for additional information about forward-looking statements and non-GAAP measures. As a reminder, National Vision expects to provide certain supplemental materials or presentations for investor reference on the investor section of our website. Now, let me turn the call over to Reid. Thank you, David.

Good morning, everyone. I'd like to thank you all for joining us today. I hope you are all staying healthy and safe. Turning to slide four and a summary of Q1 results. We've been saying since we reopened last June that COVID has hastened the industry trends that we've been benefiting from for many years. Our Q1 results are further evidence of this. This, combined with the great execution of our store teams, who rose to the challenge of serving the increased demand for our low-cost eye exams, glasses, and contact lenses, made Q1 another outstanding quarter for us. Net revenue increased nearly 14%. Adjustable comparable store sales growth increased 35.8% in the quarter, with comps once again led by our two growth brands. Eyeglass World delivered a 48.3% increase, and America's Best delivered a 35.3% increase. The legacy segment had a nearly 30% comp increase, and we continue to generate positive results at the five additional Walmart Vision Centers that we added last year. We opened 25 new stores during the quarter and ended with 1,230 locations for a 4.9% increase in store count versus last year. Adjusted operating income increased 78%, and adjusted EPS increased nearly 73% to 48 cents. which established another record for our first quarter profit as a public company. Finally, we continue to progress in our ESG journey. Most recently, we shared our ESG framework and launched a corporate responsibility section on our website. Q1 quite simply exceeded our expectations. While the pandemic is not over, our year-to-date momentum gives us confidence to raise our full year outlook. In a few minutes, Patrick will take you through our Q1 results and our updated 2021 outlook in more detail. Turning to slide five, as the chart shows, our business has a consistent history of strength and resilience through a variety of economic and external challenges. We're pleased with our continued strong comps this quarter, which we believe are due to several factors. First, we believe the strong results were likely helped by the interplay of the continued hastening of industry trends that have been helping us for a long time, and pent up consumer demand. These trends favor larger, better capitalized value retailers like National Vision. The optical industry remains highly fragmented and we're confident that we continue to outpace the industry and grow market share. Second, we believe our results were aided by the additional rounds of government stimulus. And finally, we believe that our safety first mindset and our rigorous safety protocols have resonated with patients and customers and have been a factor in our strong performance during the pandemic. As we noted on our last call, severe weather negatively impacted customer traffic in February. However, in March, we more than recovered the lost sales from these weather-related disruptions. As we've demonstrated over the years, this highlights the benefits of operating in a category where the purchase is tied to a medical necessity. Patients and customers are choosing to visit our stores at robust levels attracted ever more to our low-cost eye care and eyewear. Thus far, Q2 is off to a strong start with continued sales momentum in April. While the duration of this heightened level of demand remains difficult to predict, we would expect it to moderate over time. Shifting to slide six, let's review our core drivers of growth and how we plan to capitalize on our momentum and further strengthen our competitive advantages. New stores remain a primary focus as we continue to see a sizable white space opportunity with the potential to double our current total store footprint. We are off to a strong start with 25 openings in the first quarter, and we continue to plan to open about 75 stores in 2021. We currently have a solid pipeline of specific locations for this year and into 2022. We're fortunate to have had two very attractive growth engines in America's Best and Eyeglass World. Both brands, especially Eyeglass World, have been performing at an extremely high level since reopening last June. The consistent, strong performance and improved return profile of Eyeglass World gives us the confidence to modestly accelerate our opening plans for the brand in 2022. Optometrists play a key role in our ongoing success, and we have a great network of over 2,200 optometrists associated with the company. Our strong performance this quarter would not have been possible without their tireless hard work and commitment to patient care. As I've said in the past, we can always use more optometrists, and we continue to invest in our optometrist recruitment and retention programs to keep our high retention rates near record levels. With healthy doctor coverage, we're able to meet strong patient demand for eye exams with a safety-first approach. In terms of marketing, we returned to a more typical level of spend this quarter. Marketing, both television and digital, continues to be a key factor in attracting customers and driving traffic to our stores. We're progressing our efforts to be ever more full-funnel marketers, and we're pleased to have acquired many new customers in Q1. In April, we launched new advertising to highlight our exclusive Preve Reveau assortment. The new campaign features our owl with actor and Preve Reveau co-founder, Jamie Foxx. The commercials are viewable on our investor website and via a link on the last page of the presentation. As a reminder, we expanded our partnership with Preve Reveau last year and are pleased to offer their fun and stylish celebrity-endorsed assortment to America's best customers at an attractive value. and we remain the only U.S. optical retail chain that can offer their prescription optical products, given our continued exclusive relationship this year. Another key comp driver is positive word of mouth. We believe that optical retail is a fair category, where those who take the best care of their patients and customers tend to win. During the pandemic, we believe optical consumers are even more attracted to our extreme values, such as the introductory offers for our two growth brands, two for $69 at America's Best, including a free comprehensive eye exam, and two for $78 at Eyeglass World with glasses available that same day. We also think the word of mouth on our safety protocols give the patients and customers great comfort and security. Participation in vision insurance programs remain a positive comp driver. Strong net revenue growth tied to these partnerships continued in the first quarter. We remain underdeveloped relative to the category and continue to see an ongoing opportunity here as managed care dollars and co-pays tend to go further in our stores than elsewhere. Regarding our supply chain, our lab teams rallied to handle the elevated eyeglass volumes during the first quarter. We believe our lab network's capacity positions us well to handle continued consumer demand, and its efficiency remains a key reason that we're able to be a low-cost provider. Merchandise inventories remain in a solid position as well, despite the record sales trends. To date, we have not been impacted by any significant supply chain disruptions or port slowdowns that are impacting other sectors. In terms of our digital and omnichannel initiatives, we continue to progress efforts to expand capacity to see patients as well as opportunities to improve customer engagement throughout the customer journey. all supported by insights from updated consumer and market research. Our efforts in remote medicine are continuing and remain encouraging. Before I turn the call over to Patrick, let me say that we're very pleased with our Q1 performance in this environment. Of course, our performance is at its core a testament to the store-level execution of our teams and their commitment to safety, patient care, and customer service every day, in every store, one patient, and one customer at a time. Looking ahead, we appreciate that the environment remains volatile with risks of COVID variants and a potential uneven economic recovery. At the same time, with continued progress with vaccinations, we remain hopeful that we are on our way to establishing what a new normal can look like. We continue to believe that we're well positioned in an attractive industry and are confident in our growth strategies and ability to build the business for the long term. Now I'll turn the call over to Patrick.