National Vision Holdings, Inc. [EYE] Filings

10-Q 1 eye-20240928.htm 10-Q eye-20240928

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________

FORM 10-Q

_______________________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38257

_______________________________________________________________________

National Vision Holdings, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________________


Delaware						46-4841717
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2435 Commerce Ave
Building 2200						30096
Duluth, Georgia						(Zip Code)
(Address of principal executive offices)

(770) 822‑3600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

EYE

Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at October 25, 2024
Common stock, $0.01 par value						78,749,765

NATIONAL VISION HOLDINGS, INC. AND SUBSIDIARIES

Table of Contents


			Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			3
PART I – FINANCIAL INFORMATION			5
	Item 1.	Financial Statements (Unaudited)	5
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Operations and Comprehensive Income	6
		Condensed Consolidated Statements of Stockholders’ Equity	7
		Condensed Consolidated Statements of Cash Flows	9
		Notes to Condensed Consolidated Financial Statements	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4.	Controls and Procedures	42
PART II – OTHER INFORMATION			43
	Item 1.	Legal Proceedings	43
	Item 1A.	Risk Factors	43
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 3.	Defaults Upon Senior Securities	43
	Item 4.	Mine Safety Disclosures	43
	Item 5.	Other Information	43
	Item 6.	Exhibits	44
		Signatures	45

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, may be forward-looking statements.

Words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts or guarantees of future performance and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth in Part I, Item 1A - “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023 (the “2023 Annual Report on Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”), as such risk factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, and also include, but are not limited to, the termination of our partnership with Walmart, including the transition period and other wind down activities, will have an impact on our business, revenues, profitability and cash flows, which impact could be material; market volatility, an overall decline in the health of the economy and other factors impacting consumer spending, including inflation, uncertainty in financial markets, recessionary conditions, escalated interest rates, the timing and issuance of tax refunds, governmental instability, war and natural disasters, may affect consumer purchases, which could reduce demand for our products and materially harm our sales, profitability and financial condition; failure to recruit and retain vision care professionals for in-store roles or to provide remote care offerings could adversely affect our business, financial condition and results of operations; the optical retail industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted; if we fail to open and operate new stores (including as a result of store conversions) in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected; if the performance of our Host brands declines or we are unable to maintain or extend our operating relationships with our Host partners, our business, profitability and cash flows may be adversely affected and we may be required to incur impairment charges; we are a low-cost provider and our business model relies on the low-cost of inputs and factors such as wage rate increases, inflation, cost increases, increases in the price of raw materials and energy prices could have a material adverse effect on our business, financial condition and results of operations; we require significant capital to fund our expanding business, including updating our Enterprise Resource Planning (“ERP”) and Customer Relationship Management (“CRM”), and other technological, systems and capabilities; our ability to successfully implement transformation initiatives (including store fleet optimization); our growth strategy could strain our existing resources and cause the performance of our existing stores to suffer; our success depends upon our marketing, advertising and promotional efforts and if we are unable to implement them successfully or efficiently, or if our competitors are more effective than we are, we may experience a material adverse effect on our business, financial condition and results of operations; we are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs; certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, or future drug development for the correction of vision-related problems may reduce the demand for our products and adversely impact our business and profitability; if we fail to retain our existing senior management team or attract qualified new personnel such failure could have a material adverse effect on our business, financial condition and results of operations; our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage; our operating results and inventory levels fluctuate on a seasonal basis; our e-commerce and omni-channel business faces distinct risks, and our failure to successfully manage those risks could have a negative impact on our profitability; we depend on our distribution centers and/or optical laboratories; we may incur losses arising from our investments in technological innovators in the optical retail industry, including artificial intelligence, which would negatively affect our financial results; environmental, social and governance (“ESG”) issues, including those related to climate change, could have a material adverse

effect on our business, financial condition and results of operations; changing climate and weather patterns leading to severe weather and disasters may cause significant business interruptions and expenditures; future operational success depends on our ability to develop, maintain and extend relationships with managed vision care companies, vision insurance providers and other third-party payors; we face risks associated with vendors from whom our products are sourced and are dependent on a limited number of suppliers; we rely heavily on our information technology systems, as well as those of our vendors, for our business to effectively operate and to safeguard confidential information; any significant failure, inadequacy, interruption or security breach could adversely affect our business, financial condition and operations; we rely on third-party coverage and reimbursement, including government programs, for an increasing portion of our revenues, the future reduction of which could adversely affect our results of operations; we are subject to extensive state, local and federal vision care and healthcare laws and regulations and failure to adhere to such laws and regulations would adversely affect our business; we are subject to managed vision care laws and regulations; we are subject to rapidly changing and increasingly stringent laws, regulations, contractual obligations, and industry standards relating to privacy, data security and data protection which could subject us to liabilities that adversely affect our business, operations and financial performance; we could be adversely affected by product liability, product recall or personal injury issues; failure to comply with laws, regulations and enforcement activities or changes in statutory, regulatory, accounting and other legal requirements could potentially impact our operating and financial results; adverse judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, financial condition and results of operations; we may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business; we have a significant amount of indebtedness which could adversely affect our business and financial position, including limiting our business flexibility and preventing us from meeting our debt obligations; a change in interest rates may adversely affect our business; our credit agreement contains restrictions that limit our flexibility in operating our business; conversion of the 2025 Notes could dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock; and risks related to owning our common stock, including our ability to comply with requirements to design and implement and maintain effective internal controls.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Form 10-Q apply only as of the date of this Form 10-Q or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” or the “Company” in this Form 10-Q mean National Vision Holdings, Inc. and its subsidiaries, unless the context otherwise requires. References to “eye care practitioners” in this Form 10-Q mean optometrists and ophthalmologists and references to “vision care professionals” mean optometrists (including optometrists employed by us or by professional corporations owned by eye care practitioners with which we have arrangements) and opticians.

Website Disclosure

We use our website www.nationalvision.com as a channel of distribution of Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about National Vision Holdings, Inc. when you enroll your e-mail address by visiting the “Email Alerts” page of the Investor Resources section of our website at www.nationalvision.com/investors. The contents of our website are not, however, a part of this Form 10-Q.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

National Vision Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)


In thousands, except par value	As of September 28, 2024		As of December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	81,154	$	149,896
Accounts receivable, net	46,795		86,854
Inventories, net	87,593		119,908
Prepaid expenses and other current assets	28,173		40,012
Total current assets	243,715		396,670

Noncurrent assets:
Property and equipment, net	354,453		360,187
Goodwill	717,544		717,544
Trademarks and trade names	240,547		240,547
Other intangible assets, net	8,450		20,173
Right of use assets	419,709		406,275
Other assets	35,711		28,336
Noncurrent assets of discontinued operations	—		2,779
Total noncurrent assets	1,776,414		1,775,841
Total assets	$	2,020,129	$	2,172,511

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,559	$	67,556
Other payables and accrued expenses	94,124		123,288
Unearned revenue	38,647		48,117
Deferred revenue	63,867		62,867
Current maturities of long-term debt and finance lease obligations	100,993		10,480
Current operating lease obligations	88,933		85,090
Current liabilities of discontinued operations	—		302
Total current liabilities	426,123		397,700

Noncurrent liabilities:
Long-term debt and finance lease obligations, less current portion and debt discount	252,848		450,771
Noncurrent operating lease obligations	388,668		376,814
Deferred revenue	22,704		21,459
Other liabilities	8,826		8,465
Deferred income taxes, net	80,963		87,884

Total noncurrent liabilities	754,009		945,393
Commitments and contingencies (See Note 11)
Stockholders’ equity:
Common stock, $0.01 par value; 200,000 shares authorized; 85,334 and 84,831 shares issued as of September 28, 2024 and December 30, 2023, respectively; 78,691 and 78,311 shares outstanding as of September 28, 2024 and December 30, 2023, respectively	854		848
Additional paid-in capital	801,848		788,967
Accumulated other comprehensive loss	—		(419)
Retained earnings	254,708		254,616
Treasury stock, at cost; 6,643 and 6,520 shares as of September 28, 2024 and December 30, 2023, respectively	(217,413)		(214,594)
Total stockholders’ equity	839,997		829,418
Total liabilities and stockholders’ equity	$	2,020,129	$	2,172,511

The accompanying notes are an integral part of these condensed consolidated financial statements.

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National Vision Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)


	Three Months Ended				Nine Months Ended
In thousands, except earnings (loss) per share	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Revenue:
Net product sales	$	363,156	$	354,566	$	1,113,206	$	1,086,899
Net sales of services and plans	88,359		84,254		272,836		248,519
Total net revenue	451,515		438,820		1,386,042		1,335,418
Costs applicable to revenue (exclusive of depreciation and amortization):
Products	106,392		105,850		330,809		323,286
Services and plans	83,537		77,979		248,246		226,992
Total costs applicable to revenue	189,929		183,829		579,055		550,278
Operating expenses:
Selling, general and administrative expenses	233,991		227,515		705,472		679,115
Depreciation and amortization	22,690		22,476		68,603		66,521
Asset impairment	13,726		1,452		17,701		2,699
Other expense (income), net	—		1		(1)		(103)
Total operating expenses	270,407		251,444		791,775		748,232
Income (loss) from operations	(8,821)		3,547		15,212		36,908
Interest expense, net	4,108		3,722		11,560		10,425
Gain on extinguishment of debt	(859)		—		(859)		—
Earnings (loss) from continuing operations before income taxes	(12,070)		(175)		4,511		26,483
Income tax provision (benefit)	(3,630)		191		2,239		8,198
Income (loss) from continuing operations, net of tax	(8,440)		(366)		2,272		18,285
Loss from discontinued operations, net of tax (See Note 2)	(28)		(73,432)		(2,180)		(68,199)
Net income (loss)	$	(8,468)	$	(73,798)	$	92	$	(49,914)

Basic earnings (loss) per share:
Continuing operations	$	(0.11)	$	(0.00)	$	0.03	$	0.23
Discontinued operations	$	(0.00)	$	(0.94)	$	(0.03)	$	(0.87)
Total	$	(0.11)	$	(0.94)	$	0.00	$	(0.64)
Diluted earnings (loss) per share:
Continuing operations	$	(0.11)	$	(0.00)	$	0.03	$	0.23
Discontinued operations	$	(0.00)	$	(0.94)	$	(0.03)	$	(0.87)
Total	$	(0.11)	$	(0.94)	$	0.00	$	(0.63)

Weighted average shares outstanding:
Basic	78,655		78,163		78,538		78,328
Diluted	78,655		78,163		78,747		78,646

Comprehensive income (loss):
Net income (loss)	$	(8,468)	$	(73,798)	$	92	$	(49,914)
Unrealized gain on hedge instruments	64		255		548		763
Tax provision of unrealized gain on hedge instruments	—		65		128		195
Comprehensive income (loss)	$	(8,404)	$	(73,608)	$	512	$	(49,346)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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National Vision Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)


	Three and Nine Months Ended September 28, 2024
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total Stockholders’ Equity
In thousands	Shares	Amount
Balances at December 30, 2023	78,311	$	848	$	788,967	$	(419)	$	254,616	$	(214,594)	$	829,418
Issuance of common stock	363	4		312		—		—		—		316
Stock-based compensation	—	—		2,431		—		—		—		2,431
Purchase of treasury stock	(116)	—		—		—		—		(2,721)		(2,721)

Unrealized gain on hedge instruments, net of tax	—	—		—		190		—		—		190
Net income	—	—		—		—		11,685		—		11,685
Balances at March 30, 2024	78,558	$	852	$	791,710	$	(229)	$	266,301	$	(217,315)	$	841,319
Issuance of common stock	73	1		353		—		—		—		354
Stock-based compensation	—	—		4,749		—		—		—		4,749
Purchase of treasury stock	(3)	—		—		—		—		(54)		(54)
Unrealized gain on hedge instruments, net of tax	—	—		—		165		—		—		165
Net income (loss)	—	—		—		—		(3,125)		—		(3,125)
Balances at June 29, 2024	78,628	$	853	$	796,812	$	(64)	$	263,176	$	(217,369)	$	843,408
Issuance of common stock	67	1		530		—		—		—		531
Stock-based compensation	—	—		4,506		—		—		—		4,506
Purchase of treasury stock	(4)	—		—		—		—		(44)		(44)
Unrealized gain on hedge instruments, net of tax	—	—		—		64		—		—		64
Net income (loss)	—	—		—		—		(8,468)		—		(8,468)
Balances at September 28, 2024	78,691	$	854	$	801,848	$	—	$	254,708	$	(217,413)	$	839,997

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	Three and Nine Months Ended September 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total Stockholders’ Equity
In thousands	Shares	Amount
Balances at December 31, 2022	78,992	$	842	$	767,112	$	(1,179)	$	320,517	$	(186,179)	$	901,113


Issuance of common stock	282	3		490		—		—		—		493
Stock-based compensation	—	—		4,271		—		—		—		4,271
Purchase of treasury stock	(1,189)	—		—		—		—		(27,609)		(27,609)

Unrealized gain on hedge instruments, net of tax	—	—		—		188		—		—		188
Net income	—	—		—		—		18,270		—		18,270
Balances at April 1, 2023	78,085	$	845	$	771,873	$	(991)	$	338,787	$	(213,788)	$	896,726
Issuance of common stock	70	1		451		—		—		—		452
Stock-based compensation	—	—		5,438		—		—		—		5,438
Purchase of treasury stock	(1)	—		—		—		—		(8)		(8)
Unrealized gain on hedge instruments, net of tax	—	—		—		190		—		—		190
Net income	—	—		—		—		5,614		—		5,614
Balances at July 1, 2023	78,154	$	846	$	777,762	$	(801)	$	344,401	$	(213,796)	$	908,412
Issuance of common stock	27	—		381		—		—		—		381
Stock based compensation	—	—		5,212		—		—		—		5,212
Purchase of treasury stock	(2)	—		—		—		—		(45)		(45)
Unrealized gain on hedge instruments, net of tax	—	—		—		190		—		—		190
Net income (loss)	—	—		—		—		(73,798)		—		(73,798)
Balances at September 30, 2023	78,179	$	846	$	783,355	$	(611)	$	270,603	$	(213,841)	$	840,352

The accompanying notes are an integral part of these condensed consolidated financial statements.

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National Vision Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended
In thousands	September 28, 2024		September 30, 2023
Cash flows from operating activities:
Net income (loss)	$	92	$	(49,914)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	69,934		74,149
Amortization of debt discount and deferred financing costs	1,740		2,604
Amortization of cloud computing implementation costs	3,842		2,028
Asset impairment	17,915		82,114
Deferred income tax expense (benefit)	(6,921)		(413)
Stock-based compensation expense	11,778		15,040
Losses (gains) on change in fair value of derivatives	(34)		(1,942)
Inventory adjustments	3,618		2,886
Other	(283)		2,283
Changes in operating assets and liabilities:
Accounts receivable	39,705		2,743
Inventories	28,697		(311)
Operating lease right of use assets and lease liabilities	(1,692)		59
Other assets	2,082		2,769
Accounts payable	(27,997)		(2,394)
Deferred and unearned revenue	(7,225)		1,218
Other liabilities	(31,884)		20,353
Net cash provided by operating activities	103,367		153,272
Cash flows from investing activities:
Purchase of property and equipment	(63,485)		(81,965)
Other	1,117		(614)
Net cash used for investing activities	(62,368)		(82,579)
Cash flows from financing activities:
Repayments on long-term debt	(218,751)		(1,875)
Proceeds from issuance of long-term debt	115,000		—
Proceeds from issuance of common stock	1,201		1,326
Purchase of treasury stock	(2,819)		(27,662)
Payments of debt issuance costs	(1,703)		(2,869)
Payments on finance lease obligations	(2,279)		(3,085)
Net cash used for financing activities	(109,351)		(34,165)
Net change in cash, cash equivalents and restricted cash	(68,352)		36,528
Cash, cash equivalents and restricted cash, beginning of year	151,027		230,624
Cash, cash equivalents and restricted cash, end of period	$	82,675	$	267,152

Supplemental cash flow disclosure information:
Cash paid for interest	$	7,600	$	6,378
Cash paid for taxes	$	5,996	$	6,338
Capital expenditures accrued at the end of the period	$	9,063	$	8,969

The accompanying notes are an integral part of these condensed consolidated financial statements.

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National Vision Holdings, Inc. and Subsidiaries

Index to Notes to Condensed Consolidated Financial Statements


			Page

1. Description of Business and Basis of Presentation			11
2. Discontinued Operations			14
3. Details of Cost Savings Plan			16
4. Details of Certain Balance Sheet Accounts			17
5. Fair Value Measurement			18
6. Debt			19
7. Interest Rate Derivatives			20
8. Stock Incentive Plans			20
9. Revenue from Contracts with Customers			21
10. Leases			22
11. Commitments and Contingencies			22
12. Segment Reporting			23
13. Earnings (Loss) Per Share			26

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National Vision Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Description of Business and Basis of Presentation

Nature of Operations

National Vision Holdings, Inc. (“NVHI,” the “Company,” “we,” “our,” or “us”) is a holding company whose operating subsidiaries include its indirect wholly-owned subsidiary, National Vision, Inc. (“NVI”) and NVI’s wholly-owned subsidiaries. We are a leading value retailer of eyeglasses and contact lenses in the United States (the “U.S.”). We operated 1,231 and 1,188 retail optical locations in the U.S. and its territories as of September 28, 2024 and December 30, 2023, respectively, through our four store brands, including America’s Best Contacts and Eyeglasses (“America’s Best”), Eyeglass World, Vista Optical locations on select U.S. Army/Air Force military bases (“Military”) and within select Fred Meyer stores. We operated 225 stores for Walmart Inc. (“Walmart”) as of December 30, 2023; these stores are not reflected in the store counts above and the operating results of these stores are presented as discontinued operations. Also presented in discontinued operations are the majority of the operations formerly conducted by the Company’s Arlington Contact Lens (“AC Lens”) subsidiary. Refer to Note 2. “Discontinued Operations” for more information.

Basis of Presentation and Principles of Consolidation

We prepare our unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and, therefore, do not include all information and disclosures required by U.S. GAAP for complete consolidated financial statements. The Condensed Consolidated Balance Sheet as of December 30, 2023 has been derived from the audited consolidated balance sheet for the fiscal year then ended. These condensed consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s consolidated results of the interim period.

Certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted; however, we believe that the disclosures included herein are sufficient for a fair presentation of the information presented. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the fiscal year ended December 30, 2023 included in the 2023 Annual Report on Form 10-K. The Company’s significant accounting policies are set forth in Note 1. within those consolidated financial statements. We use the same accounting policies in preparing interim condensed consolidated financial information and annual consolidated financial statements. There were no changes to our significant accounting policies during the nine months ended September 28, 2024.

The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts within the Condensed Consolidated Statements of Cash Flows and footnotes to the financial statements for fiscal year 2023 have been reclassified to conform to the fiscal year 2024 presentation. Retrospective reclassifications have been made to prior period financial statements and disclosures to present the discontinued operations. Refer to Note 2. “Discontinued Operations” for more information on discontinued operations.

The Company has consolidated certain entities meeting the definition of a variable interest entity (“VIE”) as the Company concluded that it is the primary beneficiary of the entities under the provisions of Accounting Standards Codification 810, Consolidation. As of September 28, 2024, the variable interest entities include 29 professional corporations. The total assets of the consolidated VIEs included in the accompanying Condensed Consolidated Balance Sheets as of September 28, 2024 and December 30, 2023, were $3.5 million and $8.3 million, respectively, and the total liabilities of the consolidated VIEs were $5.5 million and $9.8 million, respectively.

Fiscal Year

Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2024 contains 52 weeks and will end on December 28, 2024. All three and nine month periods presented herein contain 13 and 39 weeks, respectively. All references to years and quarters relate to fiscal periods rather than calendar periods.

Seasonality

The consolidated results of operations for the three and nine months ended September 28, 2024 and September 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year due to seasonality and uncertainty of general economic conditions that may impact our key markets. Historically, our business has realized a higher portion of net revenue, income from operations, and cash flows from operations in the first half of the year, and a lower portion of net revenue, income from operations, and cash flows from operations in the fourth fiscal quarter. The first half seasonality is attributable primarily to the timing of our customers’ personal income tax refunds and annual health insurance program start/reset periods. Seasonality related to fourth quarter holiday

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spending by retail customers generally does not impact our business. Our quarterly consolidated results generally may also be affected by the timing of new store openings, store closings, and certain holidays.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Asset Impairment

Non-cash impairment charges of $13.7 million and $17.7 million were recorded for the three and nine months ended September 28, 2024 related to our Fred Meyer contracts and relationships intangible asset and tangible long-lived store assets and Right of Use (“ROU”) assets, compared to $1.5 million and $2.7 million related to tangible long-lived store assets and ROU assets for the three and nine months ended September 30, 2023. The impairments were recognized in Corporate/Other, and are reflected in Asset impairment in the Condensed Consolidated Statements of Operations and Comprehensive Income. Refer to Note 5. “Fair Value Measurement” for additional information on impairment charges.

We tested the Fred Meyer contracts and relationships intangible asset for recoverability as of September 28, 2024 due to the decision to close certain Fred Meyer stores as part of our store fleet review in the current period. We determined that the carrying value of the asset was not recoverable and recognized an impairment of $10.5 million related to this asset during the three and nine months ended September 28, 2024.

Aggregate intangible asset amortization expense is included in Depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Aggregate future estimated intangible asset amortization expense is shown in the following table:


Fiscal Year	In thousands
2024 - remainder of fiscal year	182
2025	714
2026	677
2027	677
2028	677
Thereafter	5,523
	$	8,450

Impairments of tangible long-lived store assets and ROU assets were primarily driven by lower than projected customer sales volume in certain stores and other entity-specific assumptions, and also reflect the effects of certain store closure decisions made as part of the Company’s store optimization review in the current period. We considered multiple factors including, but not limited to: forecasted scenarios related to store performance and the likelihood that these scenarios would be ultimately realized; and the remaining useful lives of the assets.

Store fleet review

During the three months ended September 28, 2024, we completed a comprehensive store fleet review and decided on actions to address identified stores. As a result of this review, we plan to close 39 stores and convert four Eyeglass World stores to America’s Best stores. During the three and nine months ended September 28, 2024, we recognized costs of $1.1 million consisting primarily of lease termination costs and termination benefits for certain associates. Substantially all of the costs were recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income.

Additional costs incurred related to the store fleet review during the three and nine months ended September 28, 2024 include $10.5 million of non-cash intangible asset impairment and $2.7 million of non-cash tangible long-lived and ROU asset impairment, both recognized in Asset impairment in the Condensed Consolidated Statements of Operations and Comprehensive Income. Refer to Note 5. “Fair Value Measurement” for additional information on the impairment charges.

All costs incurred related to the store fleet review were recognized in the Corporate/Other category. Liabilities related to this plan are recorded in Other payables and accrued expenses in the Condensed Consolidated Balance Sheets.

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Income Taxes

Prior to the second quarter of 2024, the Company’s quarterly provision (benefit) for income taxes was calculated using the annualized effective tax rate (“AETR”) method, which applies an estimated annual effective tax rate to pre-tax income or loss. For the three and nine months ended September 28, 2024, the Company calculated the provision (benefit) for income taxes using a discrete effective tax rate (“ETR”) method. The Company determined that due to the fact that small changes in the Company’s estimated pretax income or loss would result in significant changes in the estimated AETR, the historical method would not provide a reliable estimate for the three and nine months ended September 28, 2024.

Our effective tax rate for the three months ended September 28, 2024 was 30.1%, reflecting our statutory federal and state rate of 25.2%, tax impacts of consolidated VIEs and effects of other permanent items. Our effective tax rate for the three months ended September 30, 2023 was (109.1)%, reflecting our statutory federal and state rate of 25.4%, reduced deductibility of meals and entertainment and effects of other permanent items.

Our effective tax rate for the nine months ended September 28, 2024 was 49.6%, reflecting our statutory federal and state rate of 25.2%, tax impacts of consolidated VIEs, non-deductible compensation expense and other permanent items. Our effective tax rate for the nine months ended September 30, 2023 was 31.0%, reflecting our statutory federal and state rate of 25.4%, tax impacts from reduced deductibility of meals and entertainment and non-deductible compensation expenses, and effects of other permanent items.

Share Repurchases

Effective February 23, 2024, the Board of Directors authorized the Company to repurchase up to $50 million aggregate amount of shares of the Company’s common stock until January 3, 2026. As of September 28, 2024, $50 million remains available under the share repurchase authorization. During the nine months ended September 30, 2023, the Company repurchased 1.1 million shares of its common stock for $25.0 million.

Investments

In the second quarter of fiscal year 2023, we completed an investment in an entity specializing in applying artificial intelligence-powered screening and diagnostic tools to retinal imaging. We invested $1.0 million during the nine months ended September 28, 2024. As of September 28, 2024, we have invested a total of $2.8 million in the entity. We have agreed to invest up to an additional $0.5 million in the entity upon the completion of certain milestones. The investment is recognized in Other assets in the Condensed Consolidated Balance Sheets and in Other in the investing section of the Condensed Consolidated Statements of Cash Flows for the nine months ended September 28, 2024. The investment is valued at cost.

Discontinued Operations

In accordance with ASC 205-20 “Presentation of Financial Statements: Discontinued Operations,” a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In the period in which the component meets held-for-sale or discontinued operations criteria, the major current assets, non-current assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations.

Our operations related to Walmart, including our former Legacy reportable segment, as well as the majority of our AC Lens operations, met the requirements to be classified as discontinued operations. Accordingly, we classified the results of these operations as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. The results of all discontinued operations, less applicable income taxes, are reported as components of net income separate from the net income of continuing operations, and certain assets and liabilities associated with these operations were classified as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets for the periods presented. Additionally, the cash flows and comprehensive income of discontinued operations have not been segregated and are included in the interim Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Operations and Comprehensive Income, respectively, for all periods presented. All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted. For additional information, see Note 2. “Discontinued Operations.”

Future Adoption of Accounting Pronouncements

Segment reporting. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update provides, among other things, enhanced segment disclosure requirements including disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years

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beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

Income taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and for interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220-40): Expense Disaggregation Disclosures (“ASU 2024-03”). This update requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of sales and SG&A, and is intended to improve the disclosures about an entity’s expenses including purchases of inventory, employee compensation, depreciation and amortization. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

The Enhancement and Standardization of Climate-Related Disclosures for Investors. In March 2024, the SEC issued its final rules on the enhancement and standardization of climate-related disclosures for investors. Subsequent to issuance, the rules became the subject of litigation. The SEC has issued a stay to allow the legal process to proceed and has indicated that it will publish a new effective date for the rules, if ultimately implemented, at the conclusion of the stay. Unless legal challenges to the rule prevail, this rule will require registrants to disclose certain climate-related information in registration statements and annual reports, and includes revisions to Regulation S-X (including disclosure related to severe weather events and other natural conditions), which would apply to the Company’s financial statements. The Company is currently evaluating the rule to determine the impact on its consolidated financial statements and disclosures.

The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on the Company’s financial statements, and therefore, is not described above.

2. Discontinued Operations

On July 20, 2023, the Company received a notice of non-renewal from Walmart of the Management & Services Agreement by and between NVI and Walmart, dated as of May 1, 2012 (as amended, supplemented or otherwise modified from time to time, the “Walmart MSA”). In accordance with the terms of the Walmart MSA and the notice, the agreement terminated as of February 23, 2024 (the “Termination Date”). In connection with the termination of the Walmart MSA, the Amended and Restated Supplier Agreement between NVI and Walmart, dated as of January 17, 2017; the agreement between FirstSight Vision Services, Inc. (“FirstSight”), a wholly-owned subsidiary of the Company, and Walmart, which arranged for the provision by FirstSight of optometric services at optometric offices next to certain Walmart stores throughout California; and certain other related agreements also terminated as of the Termination Date. The Walmart MSA includes provisions governing the transition period and post-termination obligations of the parties.

AC Lens delivered notices of non-renewal of the agreements it has with Walmart and its affiliate Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements terminated during the three months ended June 29, 2024, and the Company wound down the majority of AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club.

We recorded a net (benefit) expense of $(0.6) million and $5.1 million, respectively, during the three and nine months ended September 28, 2024, and $2.0 million during the three and nine months ended September 30, 2023 associated with the termination of the Walmart MSA and wind down of AC Lens, which consisted of employee compensation benefits, early termination fees, and other exit related costs. These charges were recorded in both Selling, general, and administrative expenses and Costs applicable to revenue for discontinued operations. The plan has been substantially completed and we do not anticipate additional material costs related to this plan.

As a result of the termination of the Walmart MSA and wind down of AC Lens operations, our former Legacy reportable segment and certain other results previously included in our Corporate/Other and Reconciliations categories, met the criteria to be presented as discontinued operations. Accordingly, the assets and liabilities and results of operations of the discontinued operations have been presented in the tables below.

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Refer to Note 3. “Details of Cost Savings Plan” for more information on the cost savings plan related to our continuing operations.

Major classes of assets and liabilities related to discontinued operations are presented in the table below. We have retained working capital and deferred tax balances related to discontinued operations; consequently, these items are not part of the disposal group.


In thousands	As of September 28, 2024		As of December 30, 2023
Noncurrent assets:
Property and equipment, net	$	—	$	2,376
Right of use assets	—		304
Other intangible assets, net	—		99

Total noncurrent assets of discontinued operations	$	—	$	2,779

Current liabilities:
Current operating lease obligations	$	—	$	302
Total current liabilities of discontinued operations	$	—	$	302

The following table presents income (loss) from discontinued operations, net of tax:


	Three Months Ended				Nine Months Ended
In thousands	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Revenue:
Net product sales	$	(109)	$	80,990	$	126,961	$	246,343
Net sales of services and plans	—		12,546		4,513		38,304
Total net revenue	(109)		93,536		131,474		284,647
Costs applicable to revenue (exclusive of depreciation and amortization):
Products	110		61,557		109,638		184,737
Services and plans	(119)		6,640		2,643		18,902
Total costs applicable to revenue	(9)		68,197		112,281		203,639
Operating expenses:
Selling, general and administrative expenses	(210)		22,190		22,954		64,483
Depreciation and amortization	—		1,931		1,331		7,628
Asset impairment	214		79,382		214		79,415
Other expense (income), net	(67)		(20)		(87)		(50)
Total operating expenses	(63)		103,483		24,412		151,476
Loss from discontinued operations before income taxes	(37)		(78,144)		(5,219)		(70,468)
Income tax benefit from discontinued operations	(9)		(4,712)		(3,039)		(2,269)
Loss from discontinued operations, net of tax	$	(28)	$	(73,432)	$	(2,180)	$	(68,199)

The following table presents significant non-cash items and cash flows from investing activities related to discontinued operations:

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	Nine Months Ended
	September 28, 2024		September 30, 2023
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	$	1,331	7,628
Asset impairment	214		79,415

Stock-based compensation expense	(1)		720

Inventory adjustments	442		(84)
Other	(1,647)		—
Cash flows from investing activities:
Purchase of property and equipment	—		(1,762)
Other	1,738		—

3. Details of Cost Savings Plan

In connection with the discontinued operations, the Company implemented a cost savings plan that included optimizing non-customer facing labor costs, as well as reducing travel expenses and third-party spend. We have incurred $1.9 million of employee compensation benefits since the inception of the cost savings plan, which is included within our continuing operations results. The plan has been substantially completed and we do not anticipate additional material costs related to this plan. The liability related to this plan is recorded in Other payables and accrued expenses in the Condensed Consolidated Balance Sheets. Some remaining payments are not anticipated to occur until fiscal year 2025. This disclosure excludes the impact of the Walmart partnership termination and wind down of AC Lens operations, which are currently presented under discontinued operations.


In thousands	Employee Compensation Benefits
Balance at December 30, 2023	$	1,800
Expenses recognized during the period	69
Payments during the period	(1,643)

Balance at September 28, 2024	$	226

Employee compensation benefits

During the nine months ended September 28, 2024 and the three and nine months ended September 30, 2023, respectively, we recognized $0.1 million in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to termination benefits for certain associates; these charges were recognized in accordance with FASB guidance on employers’ accounting for postemployment benefits and guidance on accounting for costs associated with exit or disposal activities, as appropriate.

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4. Details of Certain Balance Sheet Accounts

The following table provides a reconciliation of cash and cash equivalents reported within the Condensed Consolidated Balance sheets to the total of Cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statement of Cash Flows:


	Nine Months Ended
In thousands	September 28, 2024		September 30, 2023
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	81,154	$	265,815
Restricted cash included in other assets	1,521		1,337
	$	82,675	$	267,152

The following tables provide additional details of certain balance sheet accounts as of the dates shown below:


In thousands	As of September 28, 2024		As of December 30, 2023
Accounts receivable, net:
Trade receivables	$	18,522	$	43,518
Credit card receivables	15,414		27,905
Other receivables (1)	13,059		15,747
Allowance for credit losses	(200)		(316)
	$	46,795	$	86,854
(1) Includes Coronavirus Aid, Relief, and Economic Security (“CARES”) Act receivable in the amount of $9.0 million as of September 28, 2024 and December 30, 2023.


In thousands	As of September 28, 2024		As of December 30, 2023
Inventories, net:
Raw materials and work in process (1)	$	58,502	$	57,367
Finished goods	29,091		62,541
	$	87,593	$	119,908
(1)Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not separately present raw materials and work in process.


In thousands	As of September 28, 2024		As of December 30, 2023
Other payables and accrued expenses:
Associate compensation and benefits	$	30,113	$	62,614
Self-insurance liabilities	9,883		9,139
Capital expenditures	9,063		5,412
Advertising	6,150		6,446
Reserves for customer returns and remakes	4,841		9,093
Payable to Walmart	—		6,068
Income taxes payable	1,621		1,863
Supplies and other store support expenses	4,140		5,434
Litigation settlements (See Note 11)	4,950		500

Other	23,363		16,719
	$	94,124	$	123,288

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In thousands	As of September 28, 2024		As of December 30, 2023
Other noncurrent liabilities:

Self-insurance liabilities	$	6,051	$	5,657
Other	2,775		2,808
	$	8,826	$	8,465

5. Fair Value Measurement

Recurring fair value measurements

Interest Rate Derivatives

We recognize as assets or liabilities at fair value the estimated amounts we would receive or pay upon a termination of interest rate derivatives prior to their scheduled expiration dates. The fair value is based on information that is model-driven and whose inputs were observable (Level 2 inputs) such as Term SOFR forward rates. See Note 7. “Interest Rate Derivatives” for further details.

Non-recurring fair value measurements

We recognized impairments of $13.7 million and $17.7 million during the three and nine months ended September 28, 2024, respectively, primarily related to our Fred Meyer contracts and relationships intangible asset and our long-lived tangible store assets and ROU assets, and $1.5 million and $2.7 million during the three and nine months ended September 30, 2023, respectively, primarily related to our long-lived tangible store assets and ROU assets. A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate. These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy.

Long-lived Store and ROU Store Assets

The cash flows used in estimating fair value were discounted using market rates of 11.0% to 11.5%. The estimated remaining fair value of the store assets impaired during the nine months ended September 28, 2024 and September 30, 2023 was $3.8 million and $2.8 million, respectively; the estimated remaining fair values include amounts estimated at various dates during the related fiscal years. Substantially all of the remaining fair value of the impaired store assets represents the fair value of ROU assets.

Finite-Lived Intangible Assets

Related to the impairment recognized for the Fred Meyer contracts and relationships intangible asset, we estimated fair value using the discounted cash flow method of the income approach. The cash flows included assumptions about future extensions of our relationship with Fred Meyer, as well as assumptions about future revenue growth and profitability, and were discounted using a rate of 9%. The estimated remaining fair value of the asset was $8.4 million as of September 28, 2024. Refer to Note 1. “Description of Business and Basis of Presentation” for more details on the Fred Meyer contracts and relationships intangible asset.

Additional fair value information

Term Loan A and Revolving Loans

Since the borrowings under the $257.5 million outstanding principal first lien term loan (“Term Loan A”) and revolving credit loans in an aggregate principal amount of $300.0 million (the “Revolving Loans”) utilize variable interest rate setting mechanisms such as Term SOFR, the fair values of these borrowings are deemed to approximate the carrying values. We also considered the effect of our own credit risk on the fair values of Term Loan A and Revolving Loans. Refer to Note 6. “Debt” for more information on these borrowings.

2025 Notes

The Company has $84.8 million in aggregate principal amount of 2.50% convertible senior notes due on May 15, 2025 (the “2025 Notes”) issued and outstanding as of September 28, 2024. Refer to Note 6. “Debt” for more information on the 2025 Notes. The estimated fair value of the 2025 Notes was approximately $83.0 million and $303.3 million as of September 28, 2024 and December 30, 2023, respectively. The estimated fair value of the 2025 Notes is based on the prices the 2025 Notes have traded in the market as well as overall market conditions on the date of valuation, stated coupon rates, the number of coupon payments each year and the maturity dates, and represents a Level 2 measurement in the fair value hierarchy. Refer to Note 6. “Debt” for more information on the 2025 Notes.

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6. Debt

Our debt consists of the following:


In thousands	As of September 28, 2024		As of December 30, 2023
2025 Notes, due May 15, 2025	$	84,774	$	302,497
Term Loan A, due June 13, 2028	257,500		146,250
Revolving Loans, due June 13, 2028	—		—
Debt before unamortized discount and issuance costs	342,274		448,747
Unamortized discount and issuance costs - 2025 Notes	(330)		(2,497)
Unamortized discount and issuance costs - Term Loan A	(1,716)		(1,066)
Debt less debt discount and issuance costs	340,228		445,184
Less current maturities	(98,024)		(7,500)
Long-term debt - noncurrent portion	242,204		437,684
Finance lease obligations	13,613		16,067
Less current maturities	(2,969)		(2,980)
Long-term debt and finance lease obligations, less current portion, discount, and issuance costs	$	252,848	$	450,771

Scheduled annual maturities of debt are as follows:


Fiscal Period	In thousands
2024 - remainder of fiscal year	$	3,313
2025	101,337
2026	13,250
2027	13,250
2028	211,124
Thereafter	—
	$	342,274

Credit Agreement

On August 9, 2024, Nautilus Acquisition Holdings, Inc. (“Holdings”), a Delaware corporation and a wholly-owned subsidiary of National Vision Holdings, Inc., National Vision, Inc. (“Borrower”), a Georgia corporation and a wholly-owned subsidiary of the Company, and certain other subsidiaries of the Company entered into a Joinder Agreement (the “Joinder Agreement”) to the Second Amended and Restated Credit Agreement, dated as of June 13, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Holdings, Borrower, the other credit parties party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

The Joinder Agreement provides for, among other things, the establishment of incremental term loans in an aggregate principal amount of $115.0 million, provided to the borrower on August 9, 2024. These incremental term loans under the Joinder Agreement have the same terms as the existing term loans under the Second Amended and Restated Credit Agreement, dated as of June 13, 2023.

The additional borrowings resulted in $0.9 million of fees deferred on the Condensed Consolidated Balance Sheets during the three and nine months ended September 28, 2024. After giving effect to additional borrowings, $257.5 million principal remains outstanding under Term Loan A.

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2025 Notes

On August 12, 2024, the Company used the proceeds of the incremental term loan, together with cash from the balance sheet, to repurchase $217.7 million aggregate principal amount of the 2025 Notes for an aggregate cash repurchase price of $215.0 million plus accrued and unpaid interest on such notes. The repurchase was accounted for as an extinguishment of debt and resulted in an extinguishment gain of $0.9 million on the Company’s Condensed Consolidated Statements of Operations during the three and nine months ended September 28, 2024, which includes a write-off of related deferred issuance costs of $1.0 million and immediate recognition of third party-fees of $0.8 million. After giving effect to the repurchase, $84.8 million principal amount remains outstanding. Our effective interest rate remained at 3.2% as of September 28, 2024.

Based on the initial conversion rate, the 2025 Notes were convertible into 12.9 million shares of our common stock and we reserved for the possible issuance of 16.5 million shares, which is the maximum amount that could be issued upon conversion. As of September 28, 2024, the 2025 Notes are convertible into 2.7 million shares of our common stock and a maximum of 3.5 million shares of our common stock. See Note 13. “Earnings Per Share” for the treatment of earnings per share in relation to the 2025 Notes.

The 2025 Notes mature on May 15, 2025, and due to the upcoming maturity the outstanding principal balance of $84.8 million is reflected as a current liability in the accompanying Condensed Consolidated Balance Sheets as of September 28, 2024. As of September 28, 2024, the Company has $293.6 million of availability under its revolving credit facility, in addition to $81.2 million of cash on hand, which provides the Company with sufficient liquidity to repay the remaining balance of the 2025 Notes as they become due.

We recognized the following in Interest expense (income), net related to the 2025 Notes:


	Three Months Ended				Nine Months Ended
In thousands	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Contractual interest expense	$	1,132	$	2,516	$	4,913	$	7,547
Amortization of issuance costs	$	254	$	617	$	1,142	$	1,733

As of September 28, 2024, the stock price conditions under which the 2025 Notes can be converted at the holders’ option were not met.

We were in compliance with all covenants related to our debt as of September 28, 2024.

7. Interest Rate Derivatives

We were party to an interest rate collar to offset the variability of cash flows in Term SOFR-indexed debt interest payments. The interest rate collar matured on July 18, 2024.

We recognized immaterial (gains) losses on the change in fair value of the interest rate collar during the three months ended September 28, 2024, and recognized $(0.5) million during the nine months ended September 28, 2024. During the three and nine months ended September 30, 2023 we recognized (gains) losses of $(0.4) million and $(2.7) million, respectively.

Cash flows related to derivatives qualifying as hedges are included in the same section of the Consolidated Statements of Cash Flows as the underlying assets and liabilities being hedged. Cash flows during the nine months ended September 28, 2024 and September 30, 2023 related to derivatives not qualifying as hedges were included in the operating section of the Condensed Consolidated Statements of Cash Flows and were immaterial.

8. Stock Incentive Plans

On June 12, 2024, the Company’s stockholders approved the amendment and restatement of the National Vision Holdings, Inc. 2017 Omnibus Incentive Plan (as amended and restated, the “2017 Omnibus Incentive Plan”), increasing the number of shares of common stock of the Company authorized for issuance under the 2017 Omnibus Incentive Plan by an additional 5.6 million shares.

During the nine months ended September 28, 2024, the Company granted 332,216 performance-based restricted stock units (“PSUs”) and 852,025 time-based restricted stock units (“RSUs”) to eligible employees and non-employee directors under the 2017 Omnibus Incentive Plan and the 2014 Stock Incentive Plan for Key Employees of National Vision Holdings, Inc. (formerly known as Nautilus Parent, Inc.) and its Subsidiaries (the “2014 Stock Incentive Plan”). The PSUs granted in fiscal 2024 will be settled after the end of the performance period (i.e., cliff vesting), which begins on the first day of our 2024 fiscal year and ends on the last day of our 2026 fiscal year, and

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are based on the Company’s achievement of certain performance targets. The RSUs granted in fiscal 2024 vest primarily in three equal annual installments.

9. Revenue from Contracts with Customers

The majority of our revenues are recognized either at the point of sale or upon delivery and customer acceptance, paid for at the time of sale in cash, credit card, or on account with managed care payors having terms generally between 14 and 120 days, with most paying within 90 days. For sales of in-store non-prescription eyewear and related accessories, and paid eye exams, we recognize revenue at the point of sale. Our point in time revenues include 1) retail sales of prescription and non-prescription eyewear, contact lenses and related accessories to retail customers (including those covered by managed care) and 2) eye exams. Revenues recognized over time primarily include product protection plans (i.e. warranties) and eye care club memberships.

The following disaggregation of revenues depicts our revenue based on the timing of revenue recognition:


	Three Months Ended				Nine Months Ended
In thousands	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Revenues recognized at a point in time	$	419,643	$	407,181	$	1,290,205	$	1,240,768
Revenues recognized over time	31,872		31,639		95,837		94,650
Total net revenue	$	451,515	$	438,820	$	1,386,042	$	1,335,418

Refer to Note 12. “Segment Reporting” for the Company’s disaggregation of net revenue among the Owned & Host reportable segment, as well as the Corporate/Other and Reconciliation categories. As our reportable segment is aligned by similar economic factors, trends and customers, the reportable segment disaggregation view best depicts how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors.

We record reductions in revenue for estimated price concessions granted to managed care providers. The Company considers its revenue from managed care customers to include variable consideration and estimates such amounts associated with managed care customer revenues using the history of concessions provided and cash receipts from managed care providers. We reduced our net revenue for variable consideration of $5.5 million and $3.7 million during the three months ended September 28, 2024 and September 30, 2023, respectively, and $12.5 million and $10.8 million during the nine months ended September 28, 2024 and September 30, 2023, respectively.

Accounts Receivable

Credit loss expense recognized on our receivables, which is presented in SG&A expenses in the Company’s Condensed Consolidated Statements of Operations, was immaterial for the three months ended September 28, 2024, and $0.1 million for the three months ended September 30, 2023, and $0.2 million and $0.4 million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Unsatisfied Performance Obligations (Contract Liabilities)

During the three months ended September 28, 2024 and September 30, 2023, we recognized $23.1 million and $23.1 million, respectively, of deferred revenues outstanding at the beginning of each respective period. During the nine months ended September 28, 2024 and September 30, 2023, we recognized $54.4 million and $53.7 million, respectively, of deferred revenues outstanding at the beginning of each respective period.

Our deferred revenue balance as of September 28, 2024 and December 30, 2023 was $86.6 million and $84.3 million, respectively. We expect future revenue recognition of the September 28, 2024 balance of $43.4 million, $26.2 million, $13.8 million and $3.2 million in fiscal years 2024, 2025, 2026 and 2027, respectively.

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10. Leases

Our lease costs for the three and nine months ended September 28, 2024 and September 30, 2023 were as follows:


	Three Months Ended				Nine Months Ended
In thousands	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Operating lease cost
Fixed lease cost (a)	$	25,628	$	24,258	$	76,701	$	71,317
Variable lease cost (b)	9,428		9,255		28,232		27,198
Sublease income (c)	(379)		(330)		(1,044)		(955)
Finance lease cost
Amortization of finance lease assets	564		775		1,805		2,525
Interest on finance lease liabilities	300		401		948		1,290
Net lease cost	$	35,541	$	34,359	$	106,642	$	101,375

(a) Includes short-term leases, which are immaterial.
(b) Includes costs for insurance, real estate taxes and common area maintenance expenses, which are variable as well as lease costs above minimum thresholds for Fred Meyer stores and lease costs for Military stores.
(c) Income primarily from sub-leasing of stores includes rental income from leasing space to independent optometrists.


In thousands	Nine Months Ended
Other Information	September 28, 2024		September 30, 2023

Operating cash outflows - operating leases	$	84,062	$	76,747

Right of use assets acquired under operating leases	$	84,559	$	85,989

11. Commitments and Contingencies

Legal Proceedings

From time to time, the Company is involved in various legal proceedings incidental to its business. Because of the nature and inherent uncertainties of litigation, we cannot predict with certainty the ultimate resolution of these actions and, should the outcome of these actions be unfavorable, the Company’s business, financial position, results of operations or cash flows could be materially and adversely affected.

The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If either or both of the criteria are not met, we reassess whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, we disclose the estimate of the amount of the loss or range of losses, or that an estimate of loss cannot be made. The Company expenses its legal fees as incurred.

We are currently and may in the future become subject to various claims and pending or threatened lawsuits in the ordinary course of our business.

On September 23, 2022, we were served with notice of a lawsuit filed by a former employee in California state court alleging, on behalf of a proposed class of employees, several violations of California wage and hour laws. On December 9, 2022, the case was removed to the federal District Court for the Northern District of California. On January 18, 2023, we were served with a related representative action filed in California state court pursuant to California’s Private Attorneys General Act. We filed an answer to this action on February 17, 2023. On September 29, 2023, the state court set the PAGA action for trial on October 7, 2024. The parties attended mediation on March 11, 2024, but a resolution of the matter was not reached at that time. Following mediation, the parties agreed to a settlement of all claims alleged by the named plaintiff on behalf of himself and all putative class members and other aggrieved employees. The Company will pay $4.5 million for the gross settlement fund in connection with the

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settlement. The settlement is subject to approval by the court following a fairness hearing. The parties agreed to move the federal and state court actions to state court for review of the settlement terms agreed to by the parties.

On June 6, 2023, the Company was served with notice of a former employee’s intention to file a representative action against the Company pursuant to California’s Private Attorneys General Act based on alleged violations of California’s wage and hour laws. On June 22, 2023, the Company was served with a related lawsuit filed by the former employee in California state court alleging, on behalf of a proposed class of employees, violations of California wage and hour laws. On July 24, 2023, the Company filed its answer and a notice of removal of the case to the federal District Court for the Southern District of California. On July 28, 2023, the Company filed a Notice of Related Cases, seeking for both the case currently pending in the Northern District of California and described in the paragraph above and this case to be assigned to the same Judge/Magistrate Judge in an effort to save judicial effort and avoid duplication of labor. On August 15, 2023, the parties filed a stipulation to stay the case in the Southern District of California pending the resolution of the lawsuit pending in the Northern District of California. On August 21, 2023, the court entered an Order to Show Cause why the action should not be either dismissed or transferred to the federal court for the Northern District of California. Following the parties’ submission of their respective responses, the court dismissed the action without prejudice on September 11, 2023. The plaintiff retains his ability to pursue a PAGA action in state court pursuant to the June 6, 2023 notice. On January 22, 2024, the plaintiff filed a demand for arbitration of the claims set forth in the Complaint previously filed in state court in June 2023. The Company filed its response to the arbitration demand and the parties have engaged in limited discovery. We dispute the plaintiff’s allegations and intend to vigorously defend the litigation.

On January 27, 2023, a purported class action complaint was filed in federal court in the Northern District of Georgia against the Company and two of the Company’s officers (the “Securities Class Action”). The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 for materially false and misleading statements made between May 2021 and May 2022. The complaint seeks unspecified damages as well as equitable relief. On March 28, 2023, the original plaintiff, City of Southfield General Employees Retirement System, and a new plaintiff, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, filed a lead plaintiff motion, seeking to be appointed co-lead plaintiffs. On April 3, 2023, the Company along with its named officers filed a motion to dismiss the complaint. On May 19, 2023, the court granted the lead plaintiff motion. On June 30, 2023, the plaintiffs filed an amended complaint, which added a claim under Section 20A of the Exchange Act and extended the alleged class period to February 28, 2023. On August 21, 2023, the Company filed a motion to dismiss the amended complaint. The plaintiffs filed their response in opposition to this motion on October 5, 2023. On March 30, 2024, the court granted the Company’s motion and dismissed the amended complaint with prejudice. On April 29, 2024, the plaintiffs filed a motion for reconsideration of the order granting the motion to dismiss. The Company and named officers filed a response in opposition to the plaintiffs’ motion for reconsideration on May 13, 2024, and the plaintiffs then filed a reply in support of their motion on May 28, 2024. The Company disputes the allegations asserted by plaintiffs and will continue to defend the litigation vigorously.

On May 23, 2024, a stockholder derivative complaint was filed by a stockholder in the Delaware Court of Chancery, purportedly on behalf of the Company (the “Derivative Action”). The Derivative Action is based on the same alleged facts and circumstances as the Securities Class Action and names certain of the Company’s officers, including our Chief Executive Officer and Chief Operating Officer, and the Company’s directors who were members of the Company’s Board of Directors during the relevant time period as defendants. The Derivative Action alleges claims for breach of fiduciary duty, unjust enrichment, and violations of the Exchange Act and seeks to recover damages on behalf of the Company. On July 24, 2024, the Company along with the named defendants, filed a motion to dismiss the complaint. On September 9, 2024, the plaintiff filed an amended complaint. Defendants filed a motion to dismiss the amended complaint on October 31, 2024. The defendants dispute the allegations made by the plaintiff and intend to vigorously defend the litigation.

12. Segment Reporting

The Company provides its principal products and services through one reportable segment: Owned & Host. The “Corporate/Other” category includes the results of operations of our other operating segments, as well as corporate overhead support. Revenues from the Corporate/Other category are attributable to our dedicated e-commerce website and FirstSight operations. Our dedicated e-commerce website was previously managed by AC Lens and was transitioned to NVI. FirstSight sells single-service health plans in connection with the operations of America’s Best operations in California. The “Reconciliations” category represents other adjustments to reportable segment results necessary for the presentation of consolidated financial results in accordance with U.S. GAAP. Our former Legacy reportable segment and certain other results previously included in the Corporate/Other and Reconciliations categories met the requirements to be classified as discontinued operations. Refer to Note 2. “Discontinued Operations” for information related to our discontinued operations.

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Our reportable segment profit measure is earnings before interest, tax, depreciation and amortization (“EBITDA”) or net revenue, less costs applicable to revenue, less SG&A expenses. Depreciation and amortization, asset impairment, and other corporate costs that are not allocated to the reportable segment, including interest expense (income), net are excluded from segment EBITDA. There are no differences between the measurement of our reportable segment’s assets and consolidated assets. There have been no changes from prior periods in the measurement methods used to determine reportable segment profit or loss, and there have been no asymmetrical allocations to segments.

The following is a summary of certain financial data for our Owned & Host reportable segment and Corporate/Other and Reconciliations categories. Reportable segment information is presented on the same basis as our consolidated financial statements, except for net revenue and associated costs applicable to revenue, which are presented on a cash basis, including point of sales for managed care payors and excluding the effects of unearned and deferred revenue, consistent with what the Chief Operating Decision Maker (“CODM”) regularly reviews.

Asset information is not included in the following summary since the CODM does not regularly review such information for our reportable segment.


	Three Months Ended September 28, 2024
In thousands	Owned & Host		Corporate/Other		Reconciliations		Total
Net product sales	$	356,404	$	5,338	$	1,414	$	363,156
Net sales of services and plans	88,678		—		(319)		88,359
Total net revenue	445,082		5,338		1,095		451,515
Costs of products	101,535		4,366		491		106,392
Costs of services and plans	83,504		33		—		83,537
Total costs applicable to revenue	185,039		4,399		491		189,929
SG&A	179,229		54,762		—		233,991
Asset impairment	—		13,726		—		13,726
Other expense (income), net	—		—		—		—
Gain on extinguishment of debt	—		(859)		—		(859)
EBITDA	$	80,814	$	(66,690)	$	604
Depreciation and amortization							22,690
Interest expense, net							4,108
Loss from continuing operations before income taxes							$	(12,070)


	Three Months Ended September 30, 2023
In thousands	Owned & Host		Corporate/Other		Reconciliations		Total
Net product sales	$	346,538	$	8,273	$	(245)	$	354,566
Net sales of services and plans	84,388		(1)		(133)		84,254
Total net revenue	430,926		8,272		(378)		438,820
Costs of products	99,793		6,063		(6)		105,850
Costs of services and plans	77,979		—		—		77,979
Total costs applicable to revenue	177,772		6,063		(6)		183,829
SG&A	169,020		58,495		—		227,515
Asset impairment	—		1,452		—		1,452
Other expense (income), net	—		1		—		1
EBITDA	$	84,134	$	(57,739)	$	(372)
Depreciation and amortization							22,476
Interest expense, net							3,722
Loss from continuing operations before income taxes							$	(175)

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	Nine Months Ended September 28, 2024
In thousands	Owned & Host		Corporate/Other		Reconciliations		Total
Net product sales	$	1,086,311	$	21,682	$	5,213	$	1,113,206
Net sales of services and plans	275,107		—		(2,271)		272,836
Total net revenue	1,361,418		21,682		2,942		1,386,042
Costs of products	312,566		17,112		1,131		330,809
Costs of services and plans	248,168		78		—		248,246
Total costs applicable to revenue	560,734		17,190		1,131		579,055
SG&A	532,930		172,542		—		705,472
Asset impairment	—		17,701		—		17,701
Other expense (income), net	—		(1)		—		(1)
Gain on extinguishment of debt	—		(859)		—		(859)
EBITDA	$	267,754	$	(184,891)	$	1,811
Depreciation and amortization							68,603
Interest expense, net							11,560
Earnings from continuing operations before income taxes							$	4,511


	Nine Months Ended September 30, 2023
In thousands	Owned & Host		Corporate/Other		Reconciliations		Total
Net product sales	$	1,060,684	$	25,500	$	715	$	1,086,899
Net sales of services and plans	250,901		—		(2,382)		248,519
Total net revenue	1,311,585		25,500		(1,667)		1,335,418
Costs of products	304,671		18,560		55		323,286
Costs of services and plans	226,990		2		—		226,992
Total costs applicable to revenue	531,661		18,562		55		550,278
SG&A	502,638		176,477		—		679,115
Asset impairment	—		2,699		—		2,699
Other expense (income), net	—		(103)		—		(103)
EBITDA	$	277,286	$	(172,135)	$	(1,722)
Depreciation and amortization

National Vision Holdings, Inc. [EYE] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-08]
10-K	[2024-02-27]
10-Q	[2023-11-09]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-01]
10-Q	[2022-11-10]
10-Q	[2022-08-11]
10-Q	[2022-05-10]
10-K	[2022-02-28]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-03]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-26]
10-Q	[2019-11-07]
10-Q	[2019-08-06]
10-Q	[2019-05-09]
10-K	[2019-02-27]
10-Q	[2018-11-13]
10-Q	[2018-08-14]
S-1	[2018-07-23]
10-Q	[2018-05-15]
S-1	[2018-03-12]
10-K	[2018-03-08]
10-Q	[2017-12-07]
S-1	[2017-09-29]