National Vision Holdings, Inc.

Good day, and thank you for standing by. Welcome to the National Vision second quarter 2021 earnings call. At this time, our 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 the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would like to hand today's conference over to your speaker, Vice President of Investor Relations, David Mann. Please go ahead.

Thank you and good morning, everyone. Welcome to National Vision's second 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 investor section of our website, nationalvision.com, and a replay of the audio webcast will be archived on the investor's 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 in the 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. Let's begin by thanking our National Vision team for continuing to rise to the challenge. Due to our collective hard work, dedication, and commitment to patient care, our results over the past year have been remarkable. And for the first time in our company's history, our trailing 12-month net revenue surpassed $2 billion. Turning to slide four and a summary of Q2 results, As noted in our press release, our results today are being compared to the second quarter of fiscal 2019. Due to the significant impact from the extended voluntary closure of our operations in the spring of 2020, we believe 2019 is a more helpful basis for comparison. As you read in our earnings release this morning, we delivered exceptional top and bottom line performance in the second quarter. Net revenue increased 28% over the second quarter of 2019, with adjusted comparable store sales growth of 23.5% over the same period. The top-line strength was broad-based and led by our growth brands, America's Best and Eyeglass World, with strength at our legacy segment as well. The outsized growth that we've experienced over the last year is further evidence that COVID has hastened the industry trends that we've been benefiting from for many years. We're confident that we're continuing to grow market share and believe that this should continue. We opened 20 new stores during the quarter and ended with 1,249 locations. Adjusted operating income increased 125%, and adjusted EPS increased 163% to 48 cents, which established another record for our second quarter profits. Finally, we continue to progress in our EST journey and published our first greenhouse gas inventory this week. Q2 quite simply exceeded our expectations. While the pandemic is clearly 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 Q2 results and our updated 2021 outlook in more detail. Turning to slide five. As the chart shows, our business has demonstrated remarkable consistency over the past two decades with 72 quarters of positive comparable store sales growth prior to our COVID closing, with an instant return to an even healthier comp performance since reopening in June last year. This results from a number of factors, including being the value price provider of a medical necessity. Also, industry trends continue to favor larger, better-capitalized value retailers like National Vision. According to a leading industry source, the market share of the top 10 optical retailers grew nearly 500 basis points last year to exceed 40%. Yet the optical industry remains highly fragmented, and we're confident we have a significant opportunity to continue to grow our market share. Q2 started out strong and likely benefited from government stimulus checks, As the quarter continued, our business remained healthy in May and June, as rising vaccination rates and increased mobility likely played a role in bringing more patients and customers back to stores. Our store teams remained focused on safely meeting this heightened demand for low-cost eye exams, glasses, and contact lenses. We continue to believe that our safety-first mindset and our rigorous safety protocols have resonated with patients and customers and and have been a factor in our strong performance during the pandemic. We are pleased with our momentum as we exited June with positive transaction trends compared to last year's record performance. In terms of Q3 in the second half, we expect this positive transaction trend to continue. The back-to-school season has begun amidst the ongoing uncertainties of COVID and its variants And while it's still quite early, we've seen a ramp in back-to-school traffic that is more aligned with pre-COVID trends than with 2020. Shifting to slide six, we see a path to continued growth and sustained market share gains. Based on the latest industry data, we believe that we were the second largest optical retailer by sales in North America last year and among the fastest-growing. Let me provide an update on our core growth initiatives and how we plan to maximize our opportunities 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 nearly double our current total store footprint. We opened 45 stores year-to-date and are well on our way to open about 75 stores in 2021. We currently have a solid pipeline of specific locations for this year and into 2022. Our real estate team is executing well to find locations that fit the formula that's worked for us in the past, including sites to support our plan for a modest acceleration in eyeglass world openings next year due to their ongoing success. We're fortunate to have two very attractive growth engines in America's Best and Eyeglass World. Both brands have achieved new highs during the pandemic. We're excited by the strong sales gains delivered across our store network at both newer and mature stores. Notably, at our highest volume locations, we saw a significant jump in the number of stores with an annual net revenue exceeding $3 million, thus showing the potential of what our growth brand boxes can achieve. Our strong performance this quarter and over the last year would not have been possible without the admirable hard work and commitment to patient care that of our network of over 2,200 optometrists. We continue to invest in our optometrist recruitment and retention programs to keep our high retention rates near record levels. One program worth noting was the successful education symposium that we held for doctors in June. We provided continuing education and networking opportunities to over 1,500 participating optometrists from our network. This is just another example of what makes us an ever more optometric-centered and optometric-friendly healthcare company. As you've heard me say before, we are always seeking more optometrists. At this time of year, we're excited to welcome newly graduated optometrists to the National Vision family and believe we are one of the top destinations for these new grads. In terms of marketing, we return to a more typical level of spend this quarter. Marketing continues to be a key factor in attracting customers and driving traffic to our stores. Our advertising investment in both television and digital channels is consistent with our strategy to grow market share and maximize opportunities during the pandemic and beyond. As a result, we are pleased to have acquired many new customers in Q2. We believe the positive word of mouth from happy patients and customers continues to play a key role in driving comps, that the combination of low prices and excellent customer service leads to satisfied repeat customers and positive word-of-mouth referrals. Additionally, we believe that our safety-first approach and protocols have resonated with patients and customers during the pandemic. Participation in vision insurance programs remains a positive comp driver. Strong net revenue growth tied to these partnerships continued in the second 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 have continued to adeptly handle elevated eyeglass volumes. Our lab network is well positioned with the capacity in place to handle projected future needs and remains a key reason that we're a low-cost provider. Merchandise inventories remain in a solid position despite the record sales trends. Our merchandise teams have worked hard in this environment to maintain inventory flows. To date, we have not been impacted by any of the significant supply chain disruptions that are impacting other sectors. In terms of our digital and omnichannel initiatives, we continue to advance efforts to expand capacity to see patients as well as opportunities to improve engagement throughout the customer journey. Our efforts in remote medicine are continuing, and we're pleased with the progress and the additional flexibility that remote exams provide. Before I turn the call over to Patrick, let me say that we could not be more pleased with our Q2 performance in this environment. Results like these are due to the consistent execution and hard work of the entire National Vision team, their commitment to safety, patient care, and customer service every day and in every store, one patient and one customer at a time. I could not have more respect for how the team has risen to the many challenges of the pandemic. Looking ahead, we appreciate that the environment remains volatile with growing risks of COVID variants and a potential uneven economic recovery. Given our consistent performance since reopening last year and our safety-first approach, we are confident in our ability to navigate the challenging and dynamic environment and remain in a position of strength. Now, I'll turn the call over to Patrick.