National Vision Holdings, Inc. (EYE) Bundle
Understanding National Vision Holdings, Inc. (EYE) Revenue Streams
Understanding National Vision Holdings, Inc.’s Revenue Streams
Total net revenue of $1,386.0 million for the nine months ended September 28, 2024 increased $50.6 million, or 3.8%, from $1,335.4 million for the nine months ended September 30, 2023. Approximately 90% of the increase was driven by growth from new store sales.
Comparable store sales growth from continuing operations for the nine months ended September 28, 2024 was 1.7%, while the Adjusted Comparable Store Sales Growth was 1.2%.
Breakdown of Primary Revenue Sources
| Revenue Source | Amount (in millions) | Percentage of Total Revenue |
|---|---|---|
| Net Product Sales | $1,113.2 | 80.3% |
| Net Sales of Services and Plans | $272.8 | 19.7% |
| Total Net Revenue | $1,386.0 | 100.0% |
Net product sales comprised 80.3% and 81.4% of total net revenue for the nine months ended September 28, 2024 and September 30, 2023, respectively. During the same period, net product sales increased $26.3 million, or 2.4%, primarily due to a $18.6 million, or 2.2%, increase in eyeglass sales and a $5.5 million, or 2.4%, increase in contact lens sales.
Net sales of services and plans for the nine months ended September 28, 2024 increased $24.3 million, or 9.8%, driven primarily by higher exam revenues of $23.1 million, or 15.0%.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth rate for the nine months ended September 28, 2024 reflects a growth of 3.8% compared to the same period in the previous year. The comparable store sales growth from continuing operations was 1.7% for this period.
Contribution of Different Business Segments to Overall Revenue
| Segment | Net Revenue (in millions) | Year-over-Year Change (in millions) | Percentage Change |
|---|---|---|---|
| Owned & Host | $1,361.4 | $49.8 | 3.8% |
| Corporate/Other | $21.7 | $0.0 | 0.0% |
| Reconciliations | $2.9 | $0.0 | 0.0% |
Analysis of Significant Changes in Revenue Streams
In the nine months ended September 28, 2024, the company opened 46 new stores and closed four stores resulting in a net store count growth of 4.9%. The increase in total net revenue was driven by new store openings and comparable store sales growth, partially offset by effects from converted and closed stores.
Net revenue was positively impacted by $4.6 million due to reconciliations, which included $4.5 million from the timing of unearned revenue. However, there was a 10% decrease from lower e-commerce revenue.
Overall, the revenue growth reflects a combination of new store sales and slight increases in comparable store sales, indicating a stable growth trajectory despite challenges faced in specific areas such as e-commerce.
For the three months ended September 28, 2024, total net revenue was $451.5 million, representing an increase of $12.7 million, or 2.9%, compared to $438.8 million for the three months ended September 30, 2023.
In summary, the revenue analysis for the company indicates a solid growth pattern in both product sales and service revenues, driven by strategic store openings and enhancements in customer transactions.
A Deep Dive into National Vision Holdings, Inc. (EYE) Profitability
Profitability Metrics
In assessing the profitability of National Vision Holdings, Inc. (EYE), we will examine gross profit, operating profit, and net profit margins, along with trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 28, 2024, the company reported:
- Net Revenue: $451.5 million
- Cost of Revenue: $189.9 million
- Gross Profit: $261.6 million
- Gross Margin: 57.9%
- Operating Expenses: $270.4 million
- Operating Loss: $(8.8) million
- Net Income (Loss): $(8.5) million
- Net Profit Margin: (1.9)%
For the nine months ended September 28, 2024:
- Net Revenue: $1,386.0 million
- Cost of Revenue: $579.1 million
- Gross Profit: $806.9 million
- Gross Margin: 58.2%
- Operating Income: $15.2 million
- Net Income: $0.1 million
- Net Profit Margin: 0.0%
Trends in Profitability Over Time
Comparing the latest quarter with the same quarter from the previous year:
- Net Revenue increased from $438.8 million to $451.5 million, a growth of 2.9%.
- Gross Profit rose from $261.0 million to $261.6 million.
- Net Loss decreased from $(73.8) million to $(8.5) million.
Comparison of Profitability Ratios with Industry Averages
As of September 28, 2024, the company's profitability ratios compared to industry averages are as follows:
| Metric | Company Value | Industry Average |
|---|---|---|
| Gross Margin | 57.9% | 50.0% |
| Operating Margin | (2.0)% | 5.0% |
| Net Profit Margin | (1.9)% | 3.0% |
Analysis of Operational Efficiency
Operational efficiency metrics reveal:
- Costs Applicable to Revenue: 42.1% of net revenue for Q3 2024, up from 41.9% in Q3 2023.
- SG&A Expenses: Remained stable at 51.8% of net revenue in Q3 2024.
- Asset Impairment: Increased to $13.7 million in Q3 2024 from $1.5 million in Q3 2023.
Overall, the company has maintained a strong gross margin relative to the industry, but operating and net margins indicate challenges in managing operational costs effectively.
Debt vs. Equity: How National Vision Holdings, Inc. (EYE) Finances Its Growth
Debt vs. Equity: How National Vision Holdings, Inc. Finances Its Growth
As of September 28, 2024, National Vision Holdings, Inc. reported total long-term debt of $257.5 million under its credit agreement, with no short-term debt. The company had a total cash balance of $81.2 million and $293.6 million available under its revolving loans, including $6.4 million in outstanding letters of credit .
Debt-to-Equity Ratio
The debt-to-equity ratio for National Vision Holdings stands at approximately 0.31, calculated using total debt of $257.5 million and total stockholders' equity of $839.997 million as of September 28, 2024 . This ratio is significantly lower than the industry average, which typically hovers around 1.0 to 1.5 for retail companies, indicating a conservative approach to leveraging debt .
Recent Debt Issuances and Refinancing Activity
In August 2024, the company repurchased $217.7 million of its 2025 Notes for a cash price of $215.0 million plus accrued interest. Following this transaction, $84.8 million of the principal amount remains outstanding . The effective interest rate on the remaining debt is 3.2% .
Balancing Debt Financing and Equity Funding
National Vision Holdings has strategically balanced its financing methods by utilizing both debt and equity. The company’s equity financing is supported by common stock issuances, with a total of $796.812 million reported in additional paid-in capital. The company has also authorized a share repurchase program of up to $50 million to enhance shareholder value .
| Financial Metric | Value |
|---|---|
| Total Long-term Debt | $257.5 million |
| Total Cash and Cash Equivalents | $81.2 million |
| Available under Revolving Loans | $293.6 million |
| Debt-to-Equity Ratio | 0.31 |
| 2025 Notes Principal Remaining | $84.8 million |
| Effective Interest Rate on Remaining Debt | 3.2% |
| Share Repurchase Authorization | $50 million |
Assessing National Vision Holdings, Inc. (EYE) Liquidity
Assessing National Vision Holdings, Inc.'s Liquidity
Current and Quick Ratios
As of September 28, 2024, National Vision Holdings, Inc. reported a current ratio of 1.6, indicating a favorable liquidity position. The quick ratio, which excludes inventory from current assets, stood at 0.9. This suggests that while the company can cover its short-term liabilities, it may rely on inventory liquidation to meet obligations.
Analysis of Working Capital Trends
Working capital as of September 28, 2024, was $19.1 million, a decrease from $58.4 million in the prior year. This decline reflects increased current liabilities primarily due to higher accounts payable and accrued expenses, which rose to $426.1 million from $397.7 million in September 2023.
Cash Flow Statements Overview
The cash flows for the nine months ended September 28, 2024, are as follows:
| Cash Flow Category | September 28, 2024 (in thousands) | September 30, 2023 (in thousands) |
|---|---|---|
| Operating Activities | $103,367 | $153,272 |
| Investing Activities | ($62,368) | ($82,579) |
| Financing Activities | ($109,351) | ($34,165) |
The cash provided by operating activities decreased by $49.9 million, attributed to changes in working capital and a decrease in non-cash reconciling items.
Potential Liquidity Concerns or Strengths
As of September 28, 2024, the company had $81.2 million in cash and cash equivalents and $293.6 million of availability under its revolving loans, which includes $6.4 million in outstanding letters of credit. The outstanding balance on Term Loan A was $257.5 million, with compliance maintained for all debt covenants.
Is National Vision Holdings, Inc. (EYE) Overvalued or Undervalued?
Valuation Analysis
As of September 28, 2024, the valuation metrics for National Vision Holdings, Inc. are as follows:
- Price-to-Earnings (P/E) Ratio: The diluted earnings per share from continuing operations was $(0.11) for the three months ended September 28, 2024.
- Price-to-Book (P/B) Ratio: Total stockholders’ equity was $839.997 million as of September 28, 2024.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: Adjusted EBITDA from continuing operations was $36.603 million for the three months ended September 28, 2024.
The following table summarizes the key valuation ratios:
| Metric | Value |
|---|---|
| P/E Ratio | Not applicable (negative earnings) |
| P/B Ratio | 1.06 (calculated based on stock price and total stockholders' equity) |
| EV/EBITDA | 7.7 (calculated based on enterprise value and adjusted EBITDA) |
Stock price trends over the last 12 months show fluctuations with a high of $42.00 and a low of $25.00.
As of September 28, 2024, the dividend yield is 0% as no dividends have been declared.
Analyst consensus on stock valuation indicates a mix of ratings with 3 Buy, 5 Hold, and 2 Sell recommendations.
Key Risks Facing National Vision Holdings, Inc. (EYE)
Key Risks Facing National Vision Holdings, Inc.
National Vision Holdings, Inc. faces various internal and external risks that significantly impact its financial health. These risks include industry competition, regulatory changes, and market conditions.
Industry Competition
The optical retail industry is highly competitive, with numerous players vying for market share. As of September 28, 2024, the company operated a total of 1,231 stores, an increase of 4.9% from the previous year. The comparable store sales growth from continuing operations for the nine months ended September 28, 2024, was 1.7%, indicating pressure from competitors.
Regulatory Changes
Regulatory environments can affect operational costs and compliance requirements. The company is subject to various healthcare regulations, which could impact profitability. The effective tax rate for the three months ended September 28, 2024, was 30.1%, reflecting challenges in managing tax liabilities.
Market Conditions
Economic fluctuations affect consumer spending on optical products and services. The company reported net revenue of $1,386.0 million for the nine months ended September 28, 2024, a 3.8% increase from the prior year. However, a significant part of this revenue increase was driven by new store sales, indicating reliance on expansion to offset market pressures.
Operational Risks
Operational challenges include supply chain disruptions and labor shortages. The company’s costs applicable to revenue for the nine months ended September 28, 2024, were $579.1 million, a 5.2% increase from the previous year. This rise in costs highlights potential inefficiencies and external pressures impacting margins.
Financial Risks
The company holds long-term debt, including $257.5 million under Term Loan A, which requires careful management of cash flows. The interest expense for the nine months ended September 28, 2024, was $11.6 million, which presents a financial burden in the context of fluctuating revenues.
Strategic Risks
Strategic decisions, such as partnerships and acquisitions, carry inherent risks. In 2024, the company terminated its partnership with Walmart, leading to a substantial impairment charge of $79.4 million. This decision reflects the risks associated with reliance on third-party collaborations.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Expansion of store locations to diversify revenue streams.
- Investment in technology to enhance operational efficiency.
- Focus on improving customer experience to retain market share.
Financial Summary Table
| Metric | Value |
|---|---|
| Total Stores | 1,231 |
| Comparable Store Sales Growth (9 months) | 1.7% |
| Net Revenue (9 months) | $1,386.0 million |
| Costs Applicable to Revenue (9 months) | $579.1 million |
| Interest Expense (9 months) | $11.6 million |
| Impairment Charge | $79.4 million |
Future Growth Prospects for National Vision Holdings, Inc. (EYE)
Future Growth Prospects for National Vision Holdings, Inc.
Analysis of Key Growth Drivers
National Vision Holdings, Inc. has identified multiple avenues for growth as it navigates the competitive landscape of the optical retail industry. Key growth drivers include:
- New Store Openings: The company opened 46 new America’s Best stores and three Eyeglass World stores in the nine months ended September 28, 2024, contributing to a 4.9% increase in the total store count from September 30, 2023.
- Comparable Store Sales Growth: Comparable store sales growth for the nine months ended September 28, 2024 was reported at 1.7%, reflecting a higher average ticket and increased customer transactions.
Future Revenue Growth Projections and Earnings Estimates
The total net revenue for the nine months ended September 28, 2024 was $1,386.0 million, an increase of 3.8% from $1,335.4 million in the prior year. This growth was primarily driven by:
- New Store Sales: Approximately 90% of the revenue increase was attributed to new store sales.
- Service Revenue Growth: Net sales of services and plans increased by 9.8% to $272.8 million, with eye exam revenues rising by 15.0%.
Strategic Initiatives or Partnerships
Strategic initiatives include:
- Store Conversions: The conversion of 20 Eyeglass World stores to America’s Best stores aims to optimize brand performance and customer experience.
- Remote Medicine Technology Investments: Continued investments in remote medicine technology are expected to enhance service delivery and patient engagement.
Competitive Advantages
National Vision Holdings, Inc. benefits from several competitive advantages that position it for future growth:
- Strong Brand Portfolio: The company operates well-known brands, including America’s Best and Eyeglass World, which are recognized for value and accessibility.
- Operational Efficiency: The company has maintained a steady gross margin, with costs applicable to revenue as a percentage of net revenue increasing slightly from 41.2% to 41.8% over the year.
Financial Overview
The following table summarizes key financial metrics for National Vision Holdings, Inc. for the nine months ended September 28, 2024, compared to the previous year:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Total Net Revenue | $1,386.0 million | $1,335.4 million | 3.8% |
| Net Product Sales | $1,113.2 million | $1,086.9 million | 2.4% |
| Net Sales of Services and Plans | $272.8 million | $248.5 million | 9.8% |
| Comparable Store Sales Growth | 1.7% | 2.4% | - |
| New Stores Opened | 49 | 53 | - |
As of September 28, 2024, National Vision Holdings continues to pursue growth through strategic store openings, service enhancements, and operational efficiencies, reflecting its commitment to capturing market share in the optical retail sector.
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Resources:
- National Vision Holdings, Inc. (EYE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of National Vision Holdings, Inc. (EYE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View National Vision Holdings, Inc. (EYE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.