National Vision Holdings, Inc. (EYE)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue grew 3.9% to $437.3M with comparable store sales +2.6% (Adjusted comps +1.5%); GAAP diluted EPS was $(0.37) on a non-cash goodwill impairment, while Adjusted EPS was $(0.04). Adjusted operating income improved to $3.2M.
• Sequentially, revenue fell vs Q3 ($451.5M) and margins compressed (Adj. operating margin 0.7% vs 3.2% in Q3), driven by higher adjusted SG&A and impairment, partly offset by lower optometrist costs and higher eyeglass margin.
• Transformation levers are gaining traction: average ticket +3% with conversion stable; managed care is ~40% of FY sales and comped high-single-digit through 2024; >730 locations enabled for remote exams (12% of exams in enabled states; remote doctor productivity exceeded in-store in 2H).
• FY25 outlook (53-week year) guides revenue to $1.901–$1.955B, Adjusted operating income $73–$88M, and Adjusted EPS $0.52–$0.64, with ~50 bps operating margin expansion “more than entirely” from SG&A leverage; includes ~$35M revenue and ~$3M Adj OI from the 53rd week.
• Stock catalysts: visible SG&A reduction (~$12M in 2025) following >10% corporate support workforce elimination, moderated new store openings (30–35), and mix shift to managed care; near-term risk is the negative traffic trend that emerged mid-February.

What Went Well and What Went Wrong

• What Went Well

  • “Eighth consecutive quarter of positive comparable store sales growth,” supported by new selling methods, targeted pricing, and acceleration in managed care sales.
  • Average ticket up 3% in Q4 with conversion holding steady as tactical pricing on frames and salesforce training rolled out.
  • Remote care and capacity: >730 remote-enabled locations; ~12% of exams in enabled states; remote doctors’ patients/day exceeded in-store in 2H FY24.

• What Went Wrong

  • GAAP loss of $(29.4)M with $(0.37) EPS due largely to a non-cash goodwill impairment (Eyeglass World brand/other assets). Adjusted EPS was flat vs prior year at $(0.04).
  • Sequential margin pressure: Adjusted operating margin fell to 0.7% (from 3.2% in Q3) as adjusted SG&A rose (legal/professional for transformation and higher payroll/IT amortization), despite lower optometrist costs and better eyeglass margins.
  • Traffic turned negative in the last two weeks of February after a strong January, prompting a wider FY25 outlook range (macro/weather uncertainty).

Financial Results

Revenue mix (Q4)

Brand-level comps (quarterly)

KPIs and operating metrics

Other operating metrics (FY 2024)

• Managed care share of revenue ≈ 40% (comping high single digits in 2024).
• Remote-enabled locations >730; remote exams ≈ 12% of exams in enabled states (FY); remote MD productivity > in-store in 2H.
• Cash from operations $133.6M; capex $95.5M; cash $73.9M; total debt $350.0M at year-end.

Store actions in Q4

• Opened 20 America’s Best; closed 7 America’s Best and 4 Eyeglass World; converted 4 Eyeglass World to America’s Best.

Non-GAAP adjustments (Q4)

• Net change in margin on unearned revenue benefited Adjusted EPS by $0.02 and Adjusted OI by $2.5M.
• GAAP EPS affected by non-cash goodwill impairment (Eyeglass World and other assets).

Guidance Changes

Note: Management said FY25 margin expansion (~50 bps at midpoint) is “more than entirely” from SG&A leverage.

Earnings Call Themes & Trends

Management Commentary

• “We delivered our eighth consecutive quarter of positive comparable store sales growth driven by new selling methods, targeted pricing actions and…acceleration in managed vision care sales.” — Reade Fahs, CEO.
• “Our priorities are focused on driving comparable store sales with an intense focus on disciplined expense management…we eliminated just over 10% of our existing corporate support positions…meaningfully reducing SG&A.” — Alex Wilkes, President.
• “Adjusted operating income increased to $3.2 million and adjusted diluted earnings per share was a loss of $0.04…full year bottom line performance above our expectations.” — Reade Fahs.
• “We ended 2024 with over 730 locations enabled with remote technology…remote doctor patients seen per day, exceeding that of in-store doctors in the second half.” — Reade Fahs.
• “At the midpoint, [FY25] assumes adjusted operating margins increase ~50 bps…more than entirely driven by SG&A leverage.” — Melissa Rasmussen, CFO.

Q&A Highlights

• Margin expansion drivers: FY25 ~50 bps operating margin improvement largely from ~$12M SG&A reduction; initiatives expected to add upside over time.
• Comps build and cadence: Expect balanced mix of ticket and traffic in 2025; ticket strength holding post-Q4 actions; short-term choppiness in Feb noted.
• Remote rollout: Continue expansion where laws allow; remote normalized; new stores in eligible states to be remote-enabled.
• Managed care vs cash pay: Managed care ~40% of sales and growing high-single-digit comps; more insulated from macro given coverage; goal to personalize marketing and product for this cohort.
• Tariff exposure: <10% of cost base exposed to China tariffs; Mexico <1% after mitigation if imposed.
• Store closures: Majority of identified underperformers addressed by FY26; closures expected to add ~$4M to adj. EBITDA by end of FY26.

Estimates Context

• S&P Global consensus estimates for Q4 2024 (revenue/EPS/EBITDA) were unavailable at the time of request due to a data access limit; as a result, we cannot quantify beat/miss vs Street for the quarter.
• Management indicated FY24 adjusted EPS of $0.52 (above the high end of prior FY24 guidance) and guided FY25 adjusted EPS to $0.52–$0.64; absent Street numbers, estimate revisions will likely center on SG&A leverage, 53rd-week contribution ($35M rev/$3M adj. OI), and mixed ticket/traffic assumptions.

Key Takeaways for Investors

• Mix shift to managed care is durable and margin-supportive: managed care ≈40% of revenue and comped high-single-digit in 2024; strategy focuses on personalized offers and curated product for this cohort.
• Ticket-driven recovery is underway (Q4 ticket +3% with stable conversion) from tactical pricing and training; sustaining traffic remains the swing factor amid macro variability.
• Structural cost actions underpin FY25 margin expansion (~50 bps midpoint), with ~$12M SG&A reduction and moderated new store growth (30–35).
• Remote exams and capacity investments are now embedded capabilities (>730 remote-enabled locations; 12% of exams in enabled states), supporting throughput and doctor productivity.
• Asset optimization continues: closure/conversion program (39 closures by FY26; 4 conversions) should add ~$4M annualized adj. EBITDA by end of FY26; near-term revenue headwind manageable.
• FY25 guidance is credible but prudently wide after mid-Feb traffic softness; 53rd week provides ≈$35M revenue and ≈$3M adj. OI cushion.
• Leadership continuity through transition (CFO change) and strengthened transformation bench (Accenture, Adobe CRM, agency of record) should aid execution on personalization and omnichannel.