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National Vision Holdings, Inc. (EYE)

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National Vision Holdings Inc. (EYE)

Q4 2018 Results Earnings Conference Call

February 27, 2019, 10:00 AM ET

Company Participants

David Mann - VP-IR

Reade Fahs - CEO

Patrick Moore - CFO

Conference Call Participants

Paul Lejuez - Citigroup

Robbie Ohmes - Bank of America

Simeon Gutman - Morgan Stanley

Matthew McClintock - Barclays

Ashley Helgans - Jefferies

Bob Drbul - Guggenheim

Zach Fadem - Wells Fargo

Michael Lasser - UBS

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the National Vision Fourth Quarter Fiscal 2018 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's call, Mr. David Mann, Vice President of Investor Relations. Mr. Mann, you may begin.

David Mann

Thank you and good morning, everyone. Welcome to National Vision’s fourth quarter 2018 earnings call. Joining me on the call today are Reade Fahs, Chief Executive Officer; and Patrick Moore, Chief Financial Officer.

Our earnings release issued this morning and the supplemental presentation which will be referenced during the call are both available on the Investors section of our website, nationalvision.com. In addition, a replay of this morning's conference call will be available later today. The replay number as well as access code can be found in the earnings release. A replay of the audio webcast will also be archived on the Investors section of our website.

Before we begin, let me remind you our earnings release and 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 and today's presentation also include certain non-GAAP measures. Reconciliation of these measures are included in our release and the supplemental presentation which can be found on our website.

We would also like to draw your attention to Slide 2 in today's presentation for additional information about forward-looking statements and non-GAAP measures. In addition from time to time, National Vision expects to provide certain supplemental materials or presentations for investor reference on our investor section of our website.

Turning to Slide 3. On today's call, Reade will discuss recent business highlights and provide a business update. Patrick we'll then review our fourth quarter and fiscal 2018 financial performance as well as details of our fiscal 2019 outlook. Following the prepared remarks, we will open the call for questions.

Now, let me turn the call over to Reade.

Reade Fahs

Thank you, David. Good morning, everyone.

It's a pleasure to be speaking with you today on our sixth call as a public company. If you turn to Slide 4, I’ll take you through our Q4 and full-year highlights. 2018 was another record year for National Vision with Q4 reflecting another solid quarter of performance.

Q4 net revenue increased 10.6%. We opened 16 stores in Q4, which resulted in 74 new stores open for the year. We ended the year with 1,082 stores or 6.8% growth. Q4 represented our 68th consecutive quarter of positive comparable store sales growth. This streak has continued for 17 years.

We are quite proud of the consistency of this track record. Adjusted comparable store growth in Q4 was up 2.9%. The growth was led by our growth brands with a 5.9% increase at America's best and 2.3% at Eyeglass World. For the year, comps at America's Best Eyeglass World were up 7.2% and 6.8% respectively. Adjusted EBITDA increased 16.3% and adjusted net income improved $4.4 million swinging to a positive $1 million.

Another sign of customer satisfaction and ambassadorship is our Net Promoter Scores, which we track closely. The annual NPS at all our brands increased to record levels this year. Since year-end, we've also had two noteworthy achievements that occurred in January. First, we opened our fourth domestic optical lab this one in Plano, Texas.

This state-of-the-art lens manufacturing facility further positions National Vision to meet the expanding optical needs of consumers. Second, S&P upgraded the debt credit rating on National Vision to double B minus.

Turning to Slide 5, 2018 was again filled with a number of highlights at National Vision. We expanded our footprint, increased market share and continue to reinvest in our business for future growth. The optical retail market remains highly fragmented and we continue to see a large opportunity in front of us.

We're pleased to be driving profitable current growth, while at the same time reinvesting for sustainable long-term growth and market share gains. Our partnerships grew stronger as we signed a multi-year lens supply agreement with Essilor and expanded our contact lens distribution relationship with Walmart, the first expansion of our overall Walmart relationship since 2013.

America's Best celebrated its 40th anniversary of delivering excellent value to cost conscious American patients and customers. Our advertising progress forward with continued positive response to the Owl campaign that America's best and the successful new Mr. World campaign at Eyeglass World. Our merchandising team continued to deliver assortments that exceed customer expectations yet a great values.

Another example of this was our rollout of the Oakley brand to America's best story. We're proud of the service that we provide patients and customers in our story. In addition to our record NPS scores, Eyeglass World received well-deserved notice for America's Best customer service in an independent Newsweek survey of consumers.

Read the rest of this transcript on seekingalpha.com