Ongoing macroeconomic uncertainty of the U.S. economy, constraints to exam capacity and the COVID-19 pandemic continued to adversely affect our sales in the second quarter of 2022 and may continue to impact our performance going forward.

Our operations consist of two reportable segments:

Trends and Other Factors Affecting Our Business

Various trends and other factors will affect or have affected our operating results, including:

Overall economic trends, consumer preferences and demand

Vision care professional recruitment, coverage, and expanded offerings

Our ability to continue to attract and retain qualified vision care professionals affect exam capacity and is critical to our operations. Our operations, like those of many of our competitors, depend on our ability to offer both eyewear and eye exams. We compete with other optical retail companies, health systems and group practices for vision care

We remain committed to our long-term vision and continue to position ourselves to make progress against our key initiatives while balancing the near-term challenges and uncertainty presented by the COVID-19 pandemic and other macroeconomic factors. We believe the following factors may continue to influence our short-term and long-term results:

•Managed care and insurance;

•Our ability to source and distribute products effectively; and

•Industry competition and consolidation

How We Assess the Performance of Our Business

Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS (collectively, the "Company Non-GAAP Measures")

The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net revenue.

Three Months Ended July 2, 2022 compared to Three Months Ended July 3, 2021

Legacy segment net revenue. Net revenue decreased $5.8 million, or 13.2%, driven by negative comparable store sales growth.

Corporate/Other segment net revenue. Net revenue increased $0.4 million, or 0.6%, driven primarily by higher online retail business.

Depreciation and amortization expense of $25.2 million for the three months ended July 2, 2022 increased $1.2 million, or 5.1%, from $24.0 million for the three months ended July 3, 2021 primarily driven by new store openings.

Six Months Ended July 2, 2022 compared to Six Months Ended July 3, 2021

Legacy segment net revenue. Net revenue decreased $7.2 million, or 8.2%, driven by negative comparable store sales growth.

Corporate/Other segment net revenue. Net revenue increased $0.8 million, or 0.7%, driven primarily by increases in wholesale fulfillment.

Costs of products as a percentage of net product sales increased from 36.3% for the six months ended July 3, 2021 to 38.3% for the six months ended July 2, 2022, primarily driven by reduced eyeglass mix and lower eyeglass margin.

Owned & Host SG&A. SG&A as a percentage of net revenue increased from 34.6% for the six months ended July 3, 2021 to 37.5% for the six months ended July 2, 2022, driven primarily by higher payroll and occupancy expense.

Adjusted Operating Income, Adjusted Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS

Because of these limitations, EBITDA and the Company Non-GAAP Measures should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

The following table reconciles our Adjusted Operating Income, Adjusted Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin to net income; and Adjusted Diluted EPS for the periods presented:

Note: Percentages reflect line item as a percentage of net revenue, adjusted for rounding

July 3, 2021 July 2, 2022 July 3, 2021 Diluted EPS

Note: Some of the totals in the table above do not foot due to rounding differences

As of July 2, 2022, we had $254.4 million in cash and cash equivalents and $293.6 million of availability under our revolving credit facility, which includes $6.4 million in outstanding letters of credit.

As of July 2, 2022, we had $150.0 million of term loan outstanding under our credit agreement. We were in compliance with all covenants related to our long-term debt as of July 2, 2022.

Net change in cash, cash equivalents and restricted cash $ (51,271)

Net Cash Provided by Operating Activities

Net Cash Used for Investing Activities

Net Cash Used For Financing Activities

Critical Accounting Policies and Estimates

Adoption of New Accounting Pronouncements

© Edgar Online, source Glimpses