(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Zip Code) | ||||||||
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Class | Outstanding at April 28, 2023 | |||||||
Common stock, $0.01 par value |
Page | |||||||||||
As of April 1, 2023 | As of December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Noncurrent assets: | |||||||||||
Property and equipment, net | |||||||||||
Goodwill | |||||||||||
Trademarks and trade names | |||||||||||
Other intangible assets, net | |||||||||||
Right of use assets | |||||||||||
Other assets | |||||||||||
Total noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Other payables and accrued expenses | |||||||||||
Unearned revenue | |||||||||||
Deferred revenue | |||||||||||
Current maturities of long-term debt and finance lease obligations | |||||||||||
Current operating lease obligations | |||||||||||
Total current liabilities | |||||||||||
Noncurrent liabilities: | |||||||||||
Long-term debt and finance lease obligations, less current portion and debt discount | |||||||||||
Noncurrent operating lease obligations | |||||||||||
Deferred revenue | |||||||||||
Other liabilities | |||||||||||
Deferred income taxes, net | |||||||||||
Total noncurrent liabilities | |||||||||||
Commitments and contingencies (See Note 9) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended | |||||||||||
April 1, 2023 | April 2, 2022 | ||||||||||
Revenue: | |||||||||||
Net product sales | $ | $ | |||||||||
Net sales of services and plans | |||||||||||
Total net revenue | |||||||||||
Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||
Products | |||||||||||
Services and plans | |||||||||||
Total costs applicable to revenue | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | |||||||||||
Depreciation and amortization | |||||||||||
Asset impairment | |||||||||||
Other expense (income), net | ( | ||||||||||
Total operating expenses | |||||||||||
Income from operations | |||||||||||
Interest expense (income), net | ( | ||||||||||
Earnings before income taxes | |||||||||||
Income tax provision | |||||||||||
Net income | $ | $ | |||||||||
Earnings per share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Comprehensive income: | |||||||||||
Net income | $ | $ | |||||||||
Unrealized gain on hedge instruments | |||||||||||
Tax provision of unrealized gain on hedge instruments | |||||||||||
Comprehensive income | $ | $ |
Three Months Ended April 1, 2023 | |||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balances at December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||
Stock based compensation | — | — | — | — | — | ||||||||||||||||||
Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
Settlement of 2025 Notes | — | — | — | — | — | ||||||||||||||||||
Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||
Balances at April 1, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Three Months Ended April 2, 2022 | |||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balances at January 1, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||
Stock based compensation | — | — | — | — | — | ||||||||||||||||||
Purchase of treasury stock | ( | — | — | — | — | ( | ( | ||||||||||||||||
Settlement of 2025 Notes | — | — | ( | — | — | — | ( | ||||||||||||||||
Unrealized gain on hedge instruments, net of tax | — | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||
Balances at April 2, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||
Three Months Ended | |||||||||||
April 1, 2023 | April 2, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt discount and deferred financing costs | |||||||||||
Asset impairment | |||||||||||
Deferred income tax expense (benefit) | ( | ||||||||||
Stock based compensation expense | |||||||||||
Losses (gains) on change in fair value of derivatives | ( | ||||||||||
Inventory adjustments | |||||||||||
Other | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Operating lease right of use assets and lease liabilities | |||||||||||
Other assets | |||||||||||
Accounts payable | |||||||||||
Deferred and unearned revenue | |||||||||||
Other liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchase of property and equipment | ( | ( | |||||||||
Other | |||||||||||
Net cash used for investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Repayments on long-term debt | ( | ||||||||||
Proceeds from issuance of common stock | |||||||||||
Purchase of treasury stock | ( | ( | |||||||||
Payments on finance lease obligations | ( | ( | |||||||||
Net cash used for financing activities | ( | ( | |||||||||
Net change in cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash, beginning of year | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental cash flow disclosure information: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid (received) for taxes | $ | $ | ( | ||||||||
Capital expenditures accrued at the end of the period | $ | $ |
Page | |||||
Three Months Ended | |||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||
Cash, cash equivalents and restricted cash: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included in other assets | |||||||||||
$ | $ |
In thousands | As of April 1, 2023 | As of December 31, 2022 | |||||||||
Accounts receivable, net: | |||||||||||
Trade receivables | $ | $ | |||||||||
Credit card receivables | |||||||||||
Other receivables (1) | |||||||||||
Allowance for credit losses | ( | ( | |||||||||
$ | $ | ||||||||||
(1) Includes Coronavirus Aid, Relief, and Economic Security (“CARES”) Act receivable in the amount of $ |
In thousands | As of April 1, 2023 | As of December 31, 2022 | |||||||||
Inventories: | |||||||||||
Raw materials and work in process (1) | $ | $ | |||||||||
Finished goods | |||||||||||
$ | $ | ||||||||||
(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 April 1, 2023 | As of December 31, 2022 | |||||||||
Other payables and accrued expenses: | |||||||||||
Associate compensation and benefits | $ | $ | |||||||||
Self-insurance liabilities | |||||||||||
Capital expenditures | |||||||||||
Advertising | |||||||||||
Reserves for customer returns and remakes | |||||||||||
Legacy management & services agreement | |||||||||||
Income taxes payable (1) | |||||||||||
Supplies and other store support expenses | |||||||||||
Other | |||||||||||
$ | $ |
In thousands | As of April 1, 2023 | As of December 31, 2022 | |||||||||
Other noncurrent liabilities: | |||||||||||
Self-insurance liabilities | $ | $ | |||||||||
Other | |||||||||||
$ | $ |
In thousands | As of April 1, 2023 | As of December 31, 2022 | |||||||||
2025 Notes, due May 15, 2025 | $ | $ | |||||||||
Term loan, due July 18, 2024 | |||||||||||
Revolving credit facility, due July 18, 2024 | |||||||||||
Long-term debt before debt discount | |||||||||||
Unamortized discount and issuance costs - 2025 Notes | ( | ( | |||||||||
Unamortized discount and issuance costs - term loan | ( | ( | |||||||||
Long-term debt less debt discount | |||||||||||
Less current maturities | |||||||||||
Long-term debt - noncurrent portion | |||||||||||
Finance lease obligations | |||||||||||
Less current maturities | ( | ( | |||||||||
Long-term debt and finance lease obligations, less current portion and debt discount | $ | $ |
Three Months Ended | |||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of issuance costs | $ | $ |
Three Months Ended | |||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||
Revenues recognized at a point in time | $ | $ | |||||||||
Revenues recognized over time | |||||||||||
Total net revenue | $ | $ |
Three Months Ended | |||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||
Operating lease cost | |||||||||||
Fixed lease cost (a) | $ | $ | |||||||||
Variable lease cost (b) | |||||||||||
Sublease income (c) | ( | ( | |||||||||
Finance lease cost | |||||||||||
Amortization of finance lease assets | |||||||||||
Interest on finance lease liabilities | |||||||||||
Net lease cost | $ | $ | |||||||||
(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 from sub-leasing of stores includes rental income from leasing space to independent optometrists. |
In thousands | Three Months Ended | ||||||||||
Other Information | April 1, 2023 | April 2, 2022 | |||||||||
Operating cash outflows - operating leases | $ | $ | |||||||||
Right of use assets acquired under operating leases | $ | $ |
Three Months Ended April 1, 2023 | |||||||||||||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||||||||||||
Net product sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Net sales of services and plans | ( | ||||||||||||||||||||||||||||
Total net revenue | ( | ||||||||||||||||||||||||||||
Costs of products | ( | ||||||||||||||||||||||||||||
Costs of services and plans | |||||||||||||||||||||||||||||
Total costs applicable to revenue | ( | ||||||||||||||||||||||||||||
SG&A | |||||||||||||||||||||||||||||
Asset impairment | |||||||||||||||||||||||||||||
Other expense (income), net | ( | ( | |||||||||||||||||||||||||||
EBITDA | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Interest expense (income), net | |||||||||||||||||||||||||||||
Earnings before income taxes | $ |
Three Months Ended April 2, 2022 | |||||||||||||||||||||||||||||
In thousands | Owned & Host | Legacy | Corporate/Other | Reconciliations | Total | ||||||||||||||||||||||||
Net product sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Net sales of services and plans | ( | ||||||||||||||||||||||||||||
Total net revenue | ( | ||||||||||||||||||||||||||||
Costs of products | ( | ||||||||||||||||||||||||||||
Costs of services and plans | |||||||||||||||||||||||||||||
Total costs applicable to revenue | ( | ||||||||||||||||||||||||||||
SG&A | |||||||||||||||||||||||||||||
Asset impairment | |||||||||||||||||||||||||||||
Other expense (income), net | |||||||||||||||||||||||||||||
EBITDA | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Interest expense (income), net | ( | ||||||||||||||||||||||||||||
Earnings before income taxes | $ |
Three Months Ended | |||||||||||
In thousands, except EPS | April 1, 2023 | April 2, 2022 | |||||||||
Net income | $ | $ | |||||||||
After-tax interest expense for 2025 Notes | |||||||||||
Numerator for diluted EPS | $ | $ | |||||||||
Weighted average shares outstanding for basic EPS | |||||||||||
Effect of dilutive securities: | |||||||||||
Stock options | |||||||||||
Restricted stock units | |||||||||||
2025 Notes | |||||||||||
Weighted average shares outstanding for diluted EPS | |||||||||||
Basic EPS | $ | $ | |||||||||
Diluted EPS | $ | $ | |||||||||
Anti-dilutive securities excluded from diluted weighted average common shares |
Three Months Ended | |||||||||||
In thousands, except earnings per share, percentage and store data | April 1, 2023 | April 2, 2022 | |||||||||
Revenue: | |||||||||||
Net product sales | $ | 464,761 | $ | 433,253 | |||||||
Net sales of services and plans | 97,608 | 94,458 | |||||||||
Total net revenue | 562,369 | 527,711 | |||||||||
Costs applicable to revenue (exclusive of depreciation and amortization): | |||||||||||
Products | 173,102 | 164,219 | |||||||||
Services and plans | 80,950 | 71,818 | |||||||||
Total costs applicable to revenue | 254,052 | 236,037 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 249,922 | 228,554 | |||||||||
Depreciation and amortization | 24,813 | 25,151 | |||||||||
Asset impairment | 387 | 406 | |||||||||
Other expense (income), net | (117) | 231 | |||||||||
Total operating expenses | 275,005 | 254,342 | |||||||||
Income from operations | 33,312 | 37,332 | |||||||||
Interest expense (income), net | 4,867 | (4,144) | |||||||||
Earnings before income taxes | 28,445 | 41,476 | |||||||||
Income tax provision | 10,175 | 11,329 | |||||||||
Net income | $ | 18,270 | $ | 30,147 | |||||||
Supplemental operating data: | |||||||||||
Number of stores open at end of period | 1,357 | 1,292 | |||||||||
New stores opened during the period | 8 | 17 | |||||||||
Adjusted Operating Income | $ | 39,873 | $ | 45,304 | |||||||
Diluted EPS | $ | 0.22 | $ | 0.34 | |||||||
Adjusted Diluted EPS | $ | 0.31 | $ | 0.33 | |||||||
Adjusted EBITDA | $ | 62,814 | $ | 68,583 | |||||||
Percentage of net revenue: | |||||||||||
Total costs applicable to revenue | 45.2 | % | 44.7 | % | |||||||
Selling, general and administrative expenses | 44.4 | % | 43.3 | % | |||||||
Total operating expenses | 48.9 | % | 48.2 | % | |||||||
Income from operations | 5.9 | % | 7.1 | % | |||||||
Net income | 3.2 | % | 5.7 | % | |||||||
Adjusted Operating Income | 7.1 | % | 8.6 | % | |||||||
Adjusted EBITDA | 11.2 | % | 13.0 | % |
Comparable store sales growth(1) | Stores open at end of period | Net revenue(2) | ||||||||||||||||||||||||||||||||||||||||||
In thousands, except percentage and store data | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | April 1, 2023 | April 2, 2022 | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | ||||||||||||||||||||||||||||||||||||||
Owned & Host segment | ||||||||||||||||||||||||||||||||||||||||||||
America’s Best | 1.7 | % | (7.3) | % | 905 | 852 | $ | 391,798 | 69.7 | % | $ | 370,038 | 70.1 | % | ||||||||||||||||||||||||||||||
Eyeglass World | (1.3) | % | (6.3) | % | 140 | 127 | 61,116 | 10.9 | % | 58,774 | 11.1 | % | ||||||||||||||||||||||||||||||||
Military | 3.2 | % | (4.1) | % | 54 | 54 | 6,171 | 1.1 | % | 5,985 | 1.1 | % | ||||||||||||||||||||||||||||||||
Fred Meyer | (9.5) | % | 1.4 | % | 29 | 29 | 2,821 | 0.5 | % | 3,122 | 0.7 | % | ||||||||||||||||||||||||||||||||
Owned & Host segment total | 1,128 | 1,062 | $ | 461,906 | 82.1 | % | $ | 437,919 | 83.0 | % | ||||||||||||||||||||||||||||||||||
Legacy segment | (3.2) | % | (4.3) | % | 229 | 230 | 41,276 | 7.3 | % | 42,158 | 8.0 | % | ||||||||||||||||||||||||||||||||
Corporate/Other | — | — | — | — | 64,865 | 11.6 | % | 61,697 | 11.7 | % | ||||||||||||||||||||||||||||||||||
Reconciliations | — | — | — | — | (5,678) | (1.0) | % | (14,063) | (2.7) | % | ||||||||||||||||||||||||||||||||||
Total | 3.0 | % | (4.9) | % | 1,357 | 1,292 | $ | 562,369 | 100.0 | % | $ | 527,711 | 100.0 | % | ||||||||||||||||||||||||||||||
Adjusted Comparable Store Sales Growth(3) | 0.8 | % | (6.8) | % |
Three Months Ended | |||||||||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||||||||
Net income | $ | 18,270 | 3.2 | % | $ | 30,147 | 5.7 | % | |||||||||
Interest expense (income), net | 4,867 | 0.9 | % | (4,144) | (0.8) | % | |||||||||||
Income tax provision | 10,175 | 1.8 | % | 11,329 | 2.1 | % | |||||||||||
Stock based compensation expense (a) | 4,315 | 0.8 | % | 3,734 | 0.7 | % | |||||||||||
Asset impairment (b) | 387 | 0.1 | % | 406 | 0.1 | % | |||||||||||
Amortization of acquisition intangibles (c) | 1,872 | 0.3 | % | 1,872 | 0.4 | % | |||||||||||
Other (f) | (13) | (0.0) | % | 1,960 | 0.4 | % | |||||||||||
Adjusted Operating Income / Adjusted Operating Margin | $ | 39,873 | 7.1 | % | $ | 45,304 | 8.6 | % | |||||||||
Note: Percentages reflect line item as a percentage of net revenue, adjusted for rounding. Some of the percentage totals in the table above do not foot due to rounding differences. |
Three Months Ended | |||||||||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||||||||
Net income | $ | 18,270 | 3.2 | % | $ | 30,147 | 5.7 | % | |||||||||
Interest expense (income), net | 4,867 | 0.9 | % | (4,144) | (0.8) | % | |||||||||||
Income tax provision | 10,175 | 1.8 | % | 11,329 | 2.1 | % | |||||||||||
Depreciation and amortization | 24,813 | 4.4 | % | 25,151 | 4.8 | % | |||||||||||
EBITDA | 58,125 | 10.3 | % | 62,483 | 11.8 | % | |||||||||||
Stock based compensation expense (a) | 4,315 | 0.8 | % | 3,734 | 0.7 | % | |||||||||||
Asset impairment (b) | 387 | 0.1 | % | 406 | 0.1 | % | |||||||||||
Other (f) | (13) | (0.0) | % | 1,960 | 0.4 | % | |||||||||||
Adjusted EBITDA / Adjusted EBITDA Margin | $ | 62,814 | 11.2 | % | $ | 68,583 | 13.0 | % | |||||||||
Note: Percentages reflect line item as a percentage of net revenue, adjusted for rounding. Some of the percentage totals in the table above do not foot due to rounding differences. |
Three Months Ended | |||||||||||
In thousands, except per share amounts | April 1, 2023 | April 2, 2022 | |||||||||
Diluted EPS | $ | 0.22 | $ | 0.34 | |||||||
Stock based compensation expense (a) | 0.05 | 0.04 | |||||||||
Asset impairment (b) | 0.00 | 0.00 | |||||||||
Amortization of acquisition intangibles (c) | 0.02 | 0.02 | |||||||||
Amortization of debt discount and deferred financing costs (d) | 0.00 | 0.00 | |||||||||
Losses (gains) on change in fair value of derivatives (e) | 0.03 | (0.10) | |||||||||
Other (f) | (0.00) | 0.02 | |||||||||
Tax expense (benefit) from stock-based compensation (g) | 0.01 | 0.00 | |||||||||
Tax effect of total adjustments (h) | (0.03) | 0.00 | |||||||||
Adjusted Diluted EPS | $ | 0.31 | $ | 0.33 | |||||||
Weighted average diluted shares outstanding | 92,136 | 94,904 | |||||||||
Note: Some of the totals in the table above do not foot due to rounding differences. |
Three Months Ended | |||||||||||
In thousands | April 1, 2023 | April 2, 2022 | |||||||||
Cash flows provided by (used for): | |||||||||||
Operating activities | $ | 74,064 | $ | 47,117 | |||||||
Investing activities | (27,615) | (28,077) | |||||||||
Financing activities | (28,662) | (9,941) | |||||||||
Net change in cash, cash equivalents and restricted cash | $ | 17,787 | $ | 9,099 |
In thousands, except per share amounts | ||||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||
January 1, 2023 - January 28, 2023 | — | — | — | $ | 50,041 | |||||||||
January 29, 2023 - March 4, 2023 | 419 | $ | 23.20 | 419 | $ | 40,331 | ||||||||
March 5, 2023 - April, 1 2023 | 673 | $ | 22.71 | 673 | $ | 25,041 | ||||||||
Total | 1,092 | $ | 22.90 | 1,092 | $ | 25,041 | ||||||||
(1) Information regarding the Company’s share repurchases can be found in Note 1, Description of Business and Basis of Presentation, in the condensed consolidated financial statements included in Part I. Item 1. of this Form 10-Q. Effective November 8, 2021, the Company’s Board of Directors authorized the Company to repurchase up to $50 million aggregate amount of shares of the Company’s common stock. On November 29, 2021 and February 23, 2022, the Board authorized increases of $50 million and $100 million, respectively, to the share repurchase program for a total authorization of $200 million. The share repurchase authorization expires on December 30, 2023. Following repurchases in the first quarter of fiscal year 2023, $25.0 million remains available under the share repurchase authorization. The timing and amounts of any such repurchases will depend on a variety of factors, including the market price of the Company’s shares and general market and economic conditions. |
Exhibit No. | Exhibit Description | |||||||
Third Amended and Restated Certificate of Incorporation of National Vision Holdings, Inc. - incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 10, 2021. | ||||||||
Third Amended and Restated Bylaws of National Vision Holdings, Inc. - incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on June 10, 2021. | ||||||||
Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||||||||
Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | ||||||||
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | ||||||||
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within Inline XBRL document. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | The cover page of the Company’s Quarterly report on Form 10-Q for the quarter ended April 1, 2023, formatted in Inline XBRL (included within the Exhibit 101 attachments). |
National Vision Holdings, Inc. | ||||||||
Dated: May 11, 2023 | By: | /s/ L. Reade Fahs | ||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
Dated: May 11, 2023 | By: | /s/ Melissa Rasmussen | ||||||
Senior Vice President, Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
/s/ L. Reade Fahs | ||||||||
L. Reade Fahs | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
/s/ Melissa Rasmussen | ||||||||
Melissa Rasmussen | ||||||||
Senior Vice President, Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
/s/ L. Reade Fahs | ||||||||
L. Reade Fahs | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
/s/ Melissa Rasmussen | ||||||||
Melissa Rasmussen | ||||||||
Senior Vice President, Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Apr. 01, 2023 |
Dec. 31, 2022 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 84,555,000 | 84,273,000 |
Common stock, outstanding (in shares) | 78,085,000 | 78,992,000 |
Treasury stock (in shares) | 6,470,000 | 5,281,000 |
Description of Business and Basis of Presentation |
3 Months Ended |
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Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | 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. We operated 1,357 and 1,354 retail optical locations in the United States and its territories as of April 1, 2023 and December 31, 2022, respectively, through our five 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, and our management & services arrangement with Walmart (“Legacy”). 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 31, 2022 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 31, 2022 included in the 2022 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 three months ended April 1, 2023. 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 footnotes to the financial statements for fiscal year 2022 have been reclassified to conform to the fiscal year 2023 presentation. 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. At April 1, 2023, the variable interest entities include 32 professional corporations. The total assets of the consolidated VIEs included in the accompanying Condensed Consolidated Balance Sheets as of April 1, 2023 and December 31, 2022, were $4.0 million and $7.9 million, respectively, and the total liabilities of the consolidated VIEs were $4.6 million and $8.3 million, respectively. Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2023 contains 52 weeks and will end on December 30, 2023. All three month periods presented herein contain 13 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods. Seasonality The consolidated results of operations for the three months ended April 1, 2023 and April 2, 2022, 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 end 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 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. Income Taxes Our effective tax rate for the three months ended April 1, 2023 was 35.8%, reflecting our statutory federal and state rate of 25.4%, tax impacts of consolidated VIEs, reduced deductibility of meals and entertainment expenses and effects of other permanent items. Our effective tax rate for the three months ended April 2, 2022 was 27.3%, reflecting our statutory federal and state rate of 25.5% and effects of other permanent items. Share Repurchases During the three months ended April 1, 2023 and April 2, 2022, the Company repurchased 1.1 million shares of its common stock for $25.0 million, and 0.2 million shares of its common stock for $7.1 million, respectively, under the share repurchase program. As of April 1, 2023, $25.0 million remains available under the share repurchase authorization. In August 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”) which, among other things, provides for a 15% corporate alternative minimum tax based on a prescribed measure of income as well as a 1% excise tax on stock repurchases. Future Adoption of Accounting Pronouncements Reference Rate Reform. The Financial Accounting Standards Board (“FASB”) has issued guidance at various points over the last several years that provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that may be affected by the cessation of the London Inter-bank Offered Rate (“LIBOR.”) We are currently able to apply this new guidance for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2024. A portion of our debt is subject to interest payments that are indexed to LIBOR; additionally, we are party to an interest rate derivative based on LIBOR. We are currently evaluating the effect of this guidance and have not applied the provisions of this guidance during the current fiscal year. Our credit agreement contains methodologies for replacing LIBOR with an alternative reference rate; our interest rate derivative does not contain replacement provisions, but we expect an orderly transition of our derivative’s reference rate. We currently do not anticipate material effects on our operating results, financial position or cash flows as a result of adopting the new guidance. Nevertheless, it is possible that the adoption of this guidance will have a material adverse effect on any or all of our operating results, financial position or cash flows. 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 condensed consolidated financial statements, and therefore, is not described above.
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Details of Certain Balance Sheet Accounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Certain Balance Sheet Accounts | 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:
The following tables provide additional details of certain balance sheet accounts as of the dates shown below:
(1) Income tax receivables of $4.6 million were included in Prepaid expenses and other current assets as of December 31, 2022.
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Fair Value Measurement |
3 Months Ended |
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Apr. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | 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 LIBOR forward rates. See Note 5. “Interest Rate Derivatives” for further details. Non-recurring fair value measurements Tangible Long-lived and Right of Use (“ROU”) Store Assets We recognized impairments of $0.4 million during the three months ended April 1, 2023, and $0.4 million during the three months ended April 2, 2022, related to our long-lived tangible store assets and ROU assets. The impairments were primarily driven by lower than projected customer sales volume in certain stores. The cash flows used in estimating fair value were discounted using a market rate of 10.8%. 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. The estimated remaining fair value of the assets impaired during the three months ended April 1, 2023 and April 2, 2022 was $0.3 million and $2.0 million, respectively. Substantially all of the remaining fair value of the impaired store assets represents the fair value of ROU assets. Additional fair value information Long-term Debt - 2025 Notes The Company has $402.5 million in aggregate principal amount of 2.50% convertible senior notes due on May 15, 2025 (the “2025 Notes”) issued and outstanding as of April 1, 2023. Refer to Note 4. “Long-term Debt” for more information on the 2025 Notes. The estimated fair value of the 2025 Notes was approximately $386.2 million and $553.9 million as of April 1, 2023 and December 31, 2022, 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 4. “Long-term Debt” for more information on the 2025 Notes.
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Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term Debt Long-term debt consists of the following:
Credit Agreement We were in compliance with all covenants related to our long-term debt as of April 1, 2023. 2025 Notes We recognized the following in interest expense (income), net related to the 2025 Notes:
As of April 1, 2023, the remaining period for the unamortized debt issuance costs balance was approximately two years. An immaterial amount of the principal balance of the 2025 Notes was converted during the three months ended April 2, 2022. As of April 1, 2023, the stock price conditions under which the 2025 Notes can be converted at the holders’ option were not met.
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Interest Rate Derivatives |
3 Months Ended |
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Apr. 01, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Derivatives | Interest Rate Derivatives We are party to an interest rate collar to offset the variability of cash flows in LIBOR-indexed debt interest payments. To manage credit risk associated with our interest rate hedging program, we select as counterparties major financial institutions with investment grade credit ratings. The aggregate notional amount of the interest rate collar, which is not designated as a cash flow hedge, was $325.0 million as of April 1, 2023. The fair value of our interest rate collar instrument was an asset of $11.2 million ($9.3 million in Prepaid expenses and other current assets and $1.9 million in Other assets) as of April 1, 2023, and an asset of $14.1 million ($10.0 million in Prepaid expenses and other current assets and $4.1 million in Other assets) as of December 31, 2022. See Note 3. “Fair Value Measurement” for further details. We recognized (gains) losses on the change in fair value of the interest rate collar of $0.5 million and $(9.0) million during the three months ended April 1, 2023 and April 2, 2022, respectively, in , net. Cash flows related to derivatives qualifying as hedges are included in the same section of the Condensed Consolidated Statements of Cash Flows as the underlying assets and liabilities being hedged. Cash flows during the three months ended April 1, 2023 and April 2, 2022 related to derivatives not qualifying as hedges were included in the operating section of the Condensed Consolidated Statements of Cash Flows and were immaterial. Changes in the fair value of the Company’s cash flow hedge derivative instruments from their inception are recorded in Accumulated other comprehensive loss (“AOCL”) if the instruments are deemed to be highly effective as cash flow hedges. As of April 1, 2023, we expect to reclassify approximately $0.8 million of unrealized losses on derivative instruments, net of tax, from AOCL into earnings in the next 12 months as the derivative instruments mature.
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Stock Incentive Plans |
3 Months Ended |
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Apr. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Incentive Plans | Stock Incentive PlansDuring the three months ended April 1, 2023, the Company granted 440,990 performance-based restricted stock units (“PSUs”) and 618,745 time-based restricted stock units (“RSUs”) to eligible employees under the National Vision Holdings, Inc. 2017 Omnibus Incentive Plan (the “2017 Omnibus Incentive Plan”). The PSUs granted in fiscal 2023 are settled after the end of the performance period (i.e., cliff vesting), which begins on the first day of our 2023 fiscal year and ends on the last day of our 2025 fiscal year, and are based on the Company’s achievement of certain performance targets. The RSUs granted in fiscal 2023 vest in three equal installments. |
Revenue From Contracts With Customers |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue From Contracts With Customers | 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), 2) eye exams and 3) wholesale sales of inventory in which our customer is another retail entity. Revenues recognized over time primarily include product protection plans (i.e. warranties), eye care club memberships and management fees earned from our Legacy partner. The following disaggregation of revenues depicts our revenue based on the timing of revenue recognition:
Refer to Note 10. “Segment Reporting” for the Company’s disaggregation of net revenue by reportable segment. As the reportable segments are 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 $4.2 million and $2.7 million during the three months ended April 1, 2023 and April 2, 2022, 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 $0.2 million for the three months ended April 1, 2023 as compared to $0.1 million for the three months ended April 2, 2022. Unsatisfied Performance Obligations (Contract Liabilities) During the three months ended April 1, 2023 and April 2, 2022, we recognized $22.6 million and $24.6 million, respectively, of deferred revenues outstanding at the beginning of each respective period. Our deferred revenue balance as of April 1, 2023 was $86.2 million. We expect future revenue recognition of this balance of $55.3 million, $22.5 million, $7.9 million and $0.5 million in fiscal years 2023, 2024, 2025 and thereafter, respectively.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Our lease costs for the three months ended April 1, 2023 and April 2, 2022 were as follows:
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Leases | Leases Our lease costs for the three months ended April 1, 2023 and April 2, 2022 were as follows:
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Commitments and Contingencies |
3 Months Ended |
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Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 both 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. We believe that the claims in these lawsuits are without merit and intend to oppose the certification of a class and to defend the litigation vigorously. 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 complaint alleges violations of Sections 10(b) and 20(a) of 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. We believe that the claims alleged are without merit and intend to defend the litigation vigorously.
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The Company provides its principal products and services through two reportable segments: Owned & Host and Legacy. The “Corporate/Other” category includes the results of operations of our other operating segments, AC Lens and FirstSight, as well as corporate overhead support. The “Reconciliations” category represents other adjustments to reportable segment results necessary for the presentation of consolidated financial results in accordance with U.S. GAAP for the two reportable segments. 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 segments, including interest expense (income) are excluded from segment EBITDA. There are no revenue transactions between our reportable segments. There are no differences between the measurement of our reportable segments’ 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 each of our segments. 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 the reportable segments.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Diluted EPS related to the 2025 Notes is calculated using the if-converted method; the number of dilutive shares is based on the initial conversion rate associated with the 2025 Notes. The 2025 Notes were dilutive for the three months ended April 1, 2023. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows:
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Description of Business and Basis of Presentation (Policies) |
3 Months Ended |
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Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | 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 31, 2022 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 31, 2022 included in the 2022 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 three months ended April 1, 2023. 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 footnotes to the financial statements for fiscal year 2022 have been reclassified to conform to the fiscal year 2023 presentation. 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.
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Fiscal Year | Fiscal Year Our fiscal year consists of 52 or 53 weeks ending on the Saturday closest to December 31. Fiscal year 2023 contains 52 weeks and will end on December 30, 2023. All three month periods presented herein contain 13 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods.
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Use of Estimates | 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.
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Income Taxes | Income Taxes Our effective tax rate for the three months ended April 1, 2023 was 35.8%, reflecting our statutory federal and state rate of 25.4%, tax impacts of consolidated VIEs, reduced deductibility of meals and entertainment expenses and effects of other permanent items. Our effective tax rate for the three months ended April 2, 2022 was 27.3%, reflecting our statutory federal and state rate of 25.5% and effects of other permanent items.
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Future Adoption of Accounting Pronouncements | Future Adoption of Accounting Pronouncements Reference Rate Reform. The Financial Accounting Standards Board (“FASB”) has issued guidance at various points over the last several years that provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that may be affected by the cessation of the London Inter-bank Offered Rate (“LIBOR.”) We are currently able to apply this new guidance for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2024. A portion of our debt is subject to interest payments that are indexed to LIBOR; additionally, we are party to an interest rate derivative based on LIBOR. We are currently evaluating the effect of this guidance and have not applied the provisions of this guidance during the current fiscal year. Our credit agreement contains methodologies for replacing LIBOR with an alternative reference rate; our interest rate derivative does not contain replacement provisions, but we expect an orderly transition of our derivative’s reference rate. We currently do not anticipate material effects on our operating results, financial position or cash flows as a result of adopting the new guidance. Nevertheless, it is possible that the adoption of this guidance will have a material adverse effect on any or all of our operating results, financial position or cash flows. 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 condensed consolidated financial statements, and therefore, is not described above.
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Details of Certain Balance Sheet Accounts (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents, and Restricted Cash | 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:
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Schedule of Accounts Receivable, Net | The following tables provide additional details of certain balance sheet accounts as of the dates shown below:
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Schedule of Inventories |
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Schedule of Other Payables and Accrued Expenses |
(1) Income tax receivables of $4.6 million were included in Prepaid expenses and other current assets as of December 31, 2022.
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Schedule of Other Non-current Liabilities |
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Long-term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt consists of the following:
We recognized the following in interest expense (income), net related to the 2025 Notes:
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Revenue From Contracts With Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenues | The following disaggregation of revenues depicts our revenue based on the timing of revenue recognition:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Cost | Our lease costs for the three months ended April 1, 2023 and April 2, 2022 were as follows:
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Schedule of Operating Lease Cash Flows |
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Data by Segment | The following is a summary of certain financial data for each of our segments. 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 the reportable segments.
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Earnings Per Share (Tables) |
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Apr. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Basic and Diluted EPS Calculations | A reconciliation of the numerators and denominators of the basic and diluted EPS calculations is as follows:
|
Description of Business and Basis of Presentation - Nature of Operations (Details) |
Apr. 01, 2023
storeBrand
store
|
Dec. 31, 2022
store
|
---|---|---|
Accounting Policies [Abstract] | ||
Number of retail optical locations | store | 1,357 | 1,354 |
Number of store brands | storeBrand | 5 |
Description of Business and Basis of Presentation - Basis of Presentation and Principles of Consolidation (Details) $ in Thousands |
Apr. 01, 2023
USD ($)
corporation
|
Dec. 31, 2022
USD ($)
|
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of corporations | corporation | 32 | |
Assets | $ 2,312,366 | $ 2,291,246 |
Variable Interest Entity, Primary Beneficiary | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Assets | 4,000 | 7,900 |
Liabilities | $ 4,600 | $ 8,300 |
Description of Business and Basis of Presentation - Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Accounting Policies [Abstract] | ||
Effective income tax rate (percent) | 35.80% | 27.30% |
Statutory federal and state rate (Percent) | 25.40% | 25.50% |
Description of Business and Basis of Presentation - Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Accounting Policies [Abstract] | ||
Shares repurchased (in shares) | 1.1 | 0.2 |
Repurchase of common stock, value | $ 25.0 | $ 7.1 |
Stock repurchase program, remaining authorized repurchase amount | $ 25.0 |
Details of Certain Balance Sheet Accounts - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
Apr. 02, 2022 |
Jan. 01, 2022 |
---|---|---|---|---|
Cash, cash equivalents and restricted cash: | ||||
Cash and cash equivalents | $ 246,906 | $ 229,425 | $ 314,642 | |
Restricted cash included in other assets | 1,505 | 1,333 | ||
Total cash, cash equivalents and restricted cash | $ 248,411 | $ 230,624 | $ 315,975 | $ 306,876 |
Details of Certain Balance Sheet Accounts - Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts receivable, net: | ||
Allowance for credit losses | $ (478) | $ (519) |
Accounts receivable, net of allowance | 80,045 | 79,892 |
The CARES Act | ||
Accounts receivable, net: | ||
Government assistance receivable | 9,000 | 9,000 |
Trade receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 44,017 | 41,622 |
Credit card receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | 20,304 | 23,311 |
Other receivables | ||
Accounts receivable, net: | ||
Accounts receivable, gross | $ 16,202 | $ 15,478 |
Details of Certain Balance Sheet Accounts - Inventories (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventories: | ||
Raw materials and work in process | $ 61,973 | $ 64,786 |
Finished goods | 61,551 | 58,372 |
Inventories | $ 123,524 | $ 123,158 |
Details of Certain Balance Sheet Accounts - Other Payables and Accrued Expenses (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Other payables and accrued expenses: | ||
Associate compensation and benefits | $ 35,145 | $ 37,451 |
Self-insurance liabilities | 9,178 | 8,744 |
Capital expenditures | 7,634 | 9,594 |
Advertising | 993 | 3,811 |
Reserves for customer returns and remakes | 8,715 | 7,676 |
Legacy management & services agreement | 4,716 | 6,488 |
Income taxes payable | 12,615 | 103 |
Supplies and other store support expenses | 3,608 | 4,215 |
Other | 20,584 | 16,143 |
Total other payables and accrued expenses | $ 103,188 | 94,225 |
Income tax receivables | $ 4,600 |
Details of Certain Balance Sheet Accounts - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Other noncurrent liabilities: | ||
Self-insurance liabilities | $ 6,579 | $ 6,292 |
Other | 2,499 | 2,608 |
Total other non-current liabilities | $ 9,078 | $ 8,900 |
Fair Value Measurement (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
Dec. 31, 2022 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Asset impairment | $ 387 | $ 406 | |
Estimated fair value of impaired assets | 300 | $ 2,000 | |
Aggregate principal amount | 552,497 | $ 552,497 | |
Convertible Senior Notes | 2025 Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Aggregate principal amount | $ 402,497 | 402,497 | |
Stated interest rate (percent) | 2.50% | ||
Convertible Senior Notes | 2025 Notes | Estimated fair value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Estimated fair value of convertible notes | $ 386,200 | $ 553,900 | |
Minimum | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Discount rate used in impairment analysis (percent) | 10.80% |
Long-term Debt - Summary of Long-term Debt (Details) - USD ($) $ in Thousands |
Apr. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt before debt discount | $ 552,497 | $ 552,497 |
Long-term debt less debt discount | 546,862 | 546,231 |
Less current maturities | 0 | 0 |
Long-term debt - noncurrent portion | 546,862 | 546,231 |
Finance lease obligations | 20,080 | 21,294 |
Less current maturities | (3,240) | (4,137) |
Long-term debt and finance lease obligations, less current portion and debt discount | 563,702 | 563,388 |
Credit Facility | Revolving credit facility, due July 18, 2024 | ||
Debt Instrument [Line Items] | ||
Long-term debt before debt discount | 0 | 0 |
2025 Notes | Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt before debt discount | 402,497 | 402,497 |
Unamortized discount and issuance cost | (5,158) | (5,696) |
Term loan, due July 18, 2024 | Term Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt before debt discount | 150,000 | 150,000 |
Unamortized discount and issuance cost | $ (477) | $ (570) |
Long-term Debt - Interest Expense (Details) - 2025 Notes - Convertible Senior Notes - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 2,516 | $ 2,516 |
Amortization of issuance costs | $ 538 | $ 521 |
Long-term Debt - Narrative (Details) |
3 Months Ended |
---|---|
Apr. 01, 2023 | |
Convertible Senior Notes | 2025 Notes | |
Debt Instrument [Line Items] | |
Remaining period for the unamortized debt issuance costs (in years) | 2 years |
Interest Rate Derivatives (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
Dec. 31, 2022 |
|
Derivative [Line Items] | |||
Estimated reclassification from AOCL to earnings in next 12 months | $ 0.8 | ||
Derivative, Gain, Statement of Income or Comprehensive Income [Extensible Enumeration] | Nonoperating Income (Expense) | Nonoperating Income (Expense) | |
Interest rate collar | |||
Derivative [Line Items] | |||
Notional amount | $ 325.0 | ||
(Gains) losses on change in fair value of derivative | 0.5 | $ (9.0) | |
Interest rate collar | Not designated as hedge | |||
Derivative [Line Items] | |||
Fair value of derivative assets | 11.2 | $ 14.1 | |
Interest rate collar | Not designated as hedge | Prepaid Expenses and Other Current Assets | |||
Derivative [Line Items] | |||
Fair value of derivative assets | 9.3 | 10.0 | |
Interest rate collar | Not designated as hedge | Other Assets | |||
Derivative [Line Items] | |||
Fair value of derivative assets | $ 1.9 | $ 4.1 |
Stock Incentive Plans (Details) |
3 Months Ended |
---|---|
Apr. 01, 2023
installment
shares
| |
PSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted (in shares) | 440,990 |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted (in shares) | 618,745 |
Number of equal vesting installments | installment | 3 |
Revenue From Contracts With Customers - Disaggregation of Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 562,369 | $ 527,711 |
Revenues recognized at a point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | 522,938 | 485,085 |
Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenue | $ 39,431 | $ 42,626 |
Leases - Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Lease cost | ||
Fixed lease cost | $ 23,908 | $ 21,949 |
Variable lease cost | 8,971 | 8,098 |
Sublease income | (941) | (875) |
Amortization of finance lease assets | 857 | 1,081 |
Interest on finance lease liabilities | 449 | 647 |
Net lease cost | $ 33,244 | $ 30,900 |
Leases - Other Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash outflows - operating leases | $ 33,997 | $ 23,409 |
Right of use assets acquired under operating leases | $ 28,643 | $ 27,461 |
Commitments and Contingencies (Details) |
Jan. 27, 2023
officer
|
---|---|
Northern District of Georgia - Federal Court | |
Loss Contingencies [Line Items] | |
Number of company officers filed a complaint | 2 |
Segment Reporting - Narrative (Details) |
3 Months Ended |
---|---|
Apr. 01, 2023
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2023 |
Apr. 02, 2022 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Net income | $ 18,270 | $ 30,147 |
After-tax interest expense for 2025 Notes | 2,359 | 2,345 |
Numerator for diluted EPS | $ 20,629 | $ 32,492 |
Weighted average shares outstanding for basic EPS (in shares) | 78,721 | 81,428 |
Effect of dilutive securities: | ||
Stock options (in shares) | 148 | 229 |
Restricted stock units (in shares) | 356 | 336 |
2025 Notes (in shares) | 12,911 | 12,911 |
Weighted average shares outstanding for diluted EPS (in shares) | 92,136 | 94,904 |
Basic EPS (in usd per share) | $ 0.23 | $ 0.37 |
Diluted EPS (in usd per share) | $ 0.22 | $ 0.34 |
Stock Options, Restricted Stock Units (RSUs) and Convertible Notes | ||
Effect of dilutive securities: | ||
Anti-dilutive securities excluded from diluted weighted average common shares (in shares) | 525 | 214 |
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