National Vision Holdings, Inc.

Good day, and thank you for standing by. Welcome to the National Vision Third Quarter 2024 Earnings Conference 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tamara Gonzalez, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to National Vision's third quarter 2024 earnings call. Joining me on the call today are Reid Fogg, CEO, Alex Wilkes, President, and Melissa Rasmussen, CFO. Our earnings release issues this morning and the presentation accompanying our call are both available in the Investors section of our website, nationalvision.com. A replay of the audio webcast will be archived in the Investors section 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 our filings with the Securities and Exchange Commission. The release and today's presentation also includes certain non-GAAP measures. Reconciliation of these measures is included in our release and the supplemental presentation. We would like to draw your attention to slide two in today's presentation for additional information about forward-looking statements and non-GAAP measures. Further, please note that all financial measures in today's commentary are based on a continuing operations basis unless otherwise noted. As a reminder, National Vision provides investor presentations and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Reeve. Reeve?

Thank you, Tamara, and good morning, everyone. Thank you for joining us today. I'll begin with a brief overview of our third quarter results, and we'll then provide an update on the progress we're making to accelerate our transformation, including the actions we plan to take as a result of the completion of our store fleet review. First, for the third quarter, revenues increased 2.9% to $451.5 million. Sales were once again driven by strong managed care results, partially offset by softness in cash pay and lower e-commerce revenue. The trend in managed care strength offsetting performance from cash pay customers is in line with the trends facing the category based on recent reports from others in our space, as well as my ongoing discussions with industry leaders. Adjusted comparable store sales were 0.9% with America's best comps at plus 1.2% and iGlass World at a decline of 0.9%. Eyeglass World was trending towards a positive comp quarter before Hurricane Helene hit. About 30% of Eyeglass World stores are in Florida, and thus the brand was disproportionately affected by the late quarter storm. Adjusted operating income increased 22.2% to $14.3 million. This resulted in adjusted diluted earnings per share of 12 cents. Now I'll turn to our strategic initiatives and the areas in which we are accelerating our transformation. This includes the results of the comprehensive review of our store fleet, the implementation of traffic driving initiatives, and our ongoing focus on expanding exam capacity. Last quarter, we shared that we were taking a hard look at our store fleet as our threshold for underperforming stores has intensified given the current environment. The purpose of this comprehensive review was to ensure that our real estate investments are meeting higher standards with the goal of better optimizing profitability for the long term as this will improve the overall health of the core business. Today, we announced the results of this review, sharing that we plan to close 39 stores through 2026. This includes 21 America's Best stores, nine Eyeglass World stores, and nine Fred Meyer stores. As a result, we expect to deliver approximately $4 million in adjusted EBITDA improvement by the end of 2026. We are grateful to the associates and affiliated optometrists in the affected stores and are working to maximize their transition to other stores where possible. We are also committed to ensuring that there is a seamless transition for the patients and customers who rely on us. As part of our review, we also identified four Eyeglass World stores that we plan to convert to America's Best by the end of 2024. These stores are all in the Detroit market, which America's Best has been in for 38 years and thus has significant brand recognition. Finally, we announced today that we are temporarily moderating new store growth in 2025. We plan to open between 30 and 35 New America's Best stores next year, essentially all in remote-enabled space. Taken together, the store closures and moderating new store growth next year provide us with the capital and dedicated time to focus on improving the patient and customer experience and operational execution in our current base of stores. We are being intentional in taking this time to strengthen our comp base and plan to re-accelerate our new store growth plans towards our more recent opening cadence as our strategies begin to take hold with a renewed focus on profitable growth. Our white space opportunity for growth is significant as we shared with you earlier this year. Our total opportunity is more than double our existing store count with at least 2,500 total stores across our brand. turning next to our initiatives that are focused on driving traffic through new promotions, exciting new product launches, and expanding optometric capacity. This summer, we introduced our new Wise Buys promotion at America's Best to attract more customers via enhanced value perception messaging. We were especially pleased with the results from America's Best's first-ever Progressive's offer of two pairs for $129.95, which includes an eye exam. Following this promotion, we've introduced a new entry progressive bundled offer that provides an ongoing everyday value. We continue to see both promotion and price as viable levers in our ongoing transformation. When it comes to price, we offer a very attractive value proposition to our customers. We will continue to evaluate all aspects of our pricing relative to our position within our category to ensure that our value offering remains compelling to our customers while also balancing the impact of cost inflation. In the area of product, mid-quarter, we launched the Florence by Mills eyewear collection by Stranger Things star Millie Bobby Brown in our America's Best and Eyeglass World stores. As the exclusive retail partner in the US, we are able to provide our value-seeking customers with a fashionable and affordable selection that is tied to a popular celebrity. And at the end of the quarter, We launched our exclusive partnership with Pair Eyewear nationwide at America's Best. Pair Eyewear is a leading customizable stylish and accessible eyewear brand that has to date only been offered online and is generating a lot of excitement. It involves a base frame with a variety of magnetic top frames that allow customers to easily customize their look and style. We've created an innovative personalized shopping experience with a store within a store concept where customers can try on a variety of swappable top frames. This is a win-win partnership. Pear gets access to doctors and store infrastructure, and we get to be the exclusive brick-and-mortar provider of a unique online brand experiencing strong customer interest. We have high hopes for what this can mean in terms of generating consumer excitement for this historically online-only brand, and what it can mean to enhancing our fashion credibility with younger audiences. Lastly, with respect to our efforts in expanding exam capacity, we continue to leverage our remote capabilities to expand exam capacity. As our remote technology solution continues to advance, we are better able to address capacity issues across our fleet, as well as provide doctors with convenient new ways to practice. We now have over 730 locations enabled with remote technology. Remote exams represented about 11% of exams in remote enabled states for the quarter. Encouragingly, this quarter remote doctors' patient seen per day exceeded that of in-store doctors for the first time. We also recently expanded our hybrid remote pilot to 16 stores. Recall this involves optometrists in stores remotely performing exams in other stores based on availability and demand. We have high hopes for the systemic enhancements this approach could potentially generate to see more patients. We believe our remote program is still in early innings, and there continues to be significant opportunity and expected benefits. We remain pleased with our previously announced decision to add incremental late-day appointments. We want to be there for our customers who are ever more returning to traditional working hours. Our optometrist retention levels remain in line with our historical range of 80 to 90%. During the quarter, we saw the lowest OGs resignations in June 3, since 2020. On the recruitment front, we are taking a number of steps to enhance recruiting success, providing additional support to those studying for their board exams while also strengthening our internal recruiting team and its resources. Overall, we're making progress against our initiatives, and we remain on track with our objectives for this year, as noted with our reiteration of guidance. I want to thank all of our teams for their ongoing execution and commitment as we accelerate the pace of change across the organization. I could not be happier with the two new leaders who joined us late this summer and have hit the ground running, bringing fresh perspectives and insights to our teams. Before Melissa covers our financial results and outlook, I would like to share some perspectives on how our business has been reinvigorated by the fresh perspectives brought by our newly appointed president and our new chief of stores. They are leading a reexamination of our operational elements that directly impact the patients and customers. In the process, we've taken a hard look at our operations to uncover areas that directly impact the patient and customer experience across operations, merchandising, marketing, and managed care. Some examples of areas we are improving include consultative selling, modernizing the exam and shopping experience, more personalized marketing, and enhancing the product assortment. I'm optimistic as I have already seen the excitement from our field leadership in response to these new ideas and from our stores to the initial rollout of the first few of them. These are specific areas we can improve that are within our control, each of which we believe will drive higher revenues and increase profitability. I'd like to now turn the call over to Alex Wilkes, who was recently appointed National Vision's president. He and I have been working side-by-side for the past two and a half months. With experience with major frame, lens, and contact lens suppliers, as well as the important leadership roles he played with competitors, Alex has a unique collection of reference points to help guide our ongoing transformation efforts. And with that, I'd like to introduce Alex and let him say a few words before we turn the call over to Melissa. Alex?