National Vision Holdings, Inc. (EYE) Earnings Call Transcript & Summary

Welcome, everybody, to our 11:00 session, which I've been promised this is going to be the highlight of the entire conference. So we are excited to have National Vision, a retailer that runs America's best Eyeglass world and a few other segments. We're going to hear all about the story today. With me to my immediate left is Reade, the company CEO, Melissa Rasmussen, who is the recently appointed CFO following in the very, very, very large footsteps of our friend, Patrick Moore, who is also with us today. It's been an interesting time for the National Vision story. I'm going to turn it over to Reade to address a few topics and then we're going to get into some of the elements that were going on. We're excited about it.

First of all, I'd like to compliment, Michael, on his stock choice. We, at National Vision, every year come up with new stocks that we distribute to every -- all the associates in the company and to our favorite analysts as well, and the thought that he remembered that this is last year's stock into this year's stock.

Any company who's willing to provide such colorful advertising, I am more than happy to.

And we came to it because we thought we were spending just much time on this part of the body. We thought we'd spend a bit more time on the other side of the body, but it's astounding what a culturally unifying thing it is to have an annual stock distribution at your company. But I don't think that's what they came to hear about. I actually want to start because we had our earnings call now 2 weeks ago and you asked the first question. And frankly, most people said that, that sort of nailed the key question there because we have been talking a lot about the optometrist market and how there was a scarcity of optometrists post pandemic. This is happening in health care throughout that there's a scarcity of providers. Many providers retired, many providers cut back their -- the number of days they work. So this is across many health care categories, but it happened with optometrists as well. And you -- and your first question was, hey, given the scarcity of optometrists and the cost pressures that no doubt will have on the category, is that a threat to the structural margins of your low-cost model? Because we are the low-cost provider of eye exams, eyeglasses and contact lenses, right? I thought it's a great question, and we've talked a lot about that. We'll probably speak a lot about optometrists here today as well. And our feeling is this. Yes, we are a low-cost provider where our entry price is a wonderful entry price. People save money on eye exam, eye glasses and contacts when they come to us, low-cost provider of a medical necessity. But the cost challenges are facing in our entire category. With the optometrist talent, most people get their eyeglasses and contacts where they get their eyes examined. And so those of us who sell those products need to have optometrist. These cost pressures are across the category. And if they persist, then it will push the pricing up across the category. We will still be high, medium and low players, and we intend to be the low-cost player, and we love that positioning. But we have taken price since the pandemic on a few occasions. We have not exhausted the pricing lever at all, and we think that there is more we have there if we so -- if we need it, I will say that the category -- we like our customers to leave us saying, I saved money by choosing the National Vision brand versus the other vendors out there. We also are very aware that if people don't like the price they pay, then they might choose someplace else 2 years from now. So it's a delicate balance, but we do take price more peripherally than our headline price and could see doing that going forward. We do think our major initiatives that I know we'll be talking about more, which is about remote medicine and offering our doctors sort of scheduling options they really like are going to improve our throughput. But we know our job is to get back to the sort of strong profitable growth foundation that we had pre-pandemic, and we're now dealing with many challenges to our marketplace that -- the pandemic as well.

And I think this is a great topic today because it is of debate recently. I wanted to get a little further. Probably a long time since the start of the IPO in 2017. One of the messages that National Vision has been consistent about [indiscernible] has been, look, our customer is not only the person who comes in and gets the glasses, our customer is the optometrist. You take care of the optometrist and everything else takes care of itself. So one of the questions -- and maybe this is a misperception from external observers is that the optometrists might not work a little harder and National Vision with the thought being that average ticket as anyone who's gone to one and know is very expensive. It might be $400. And at National Vision, the average ticket might be $120 somewhere in that ballpark, Just [indiscernible] level of revenue, optometrists getting as time as much in beyond a level playing with the independent. How do you -- maybe there may not be an issue, but how does the National Vision address that.

So $400 is not our number. Our optometrists, again, we are a price players. So we see more optometrists than more patients come to us, and our entry-level offer is 2 pairs of eyeglasses for $79 with the eye exam included. This is a great deal. Hard for many people to find even an eye exam for $69 or so. So it really is a great deal. And our doctors do tend to see more patients than the average independent does. We set up our systems in such a way that the optometrist only does things that you need for the 4-year degree to do, and now policy degree is 4 years post your undergraduate. And we have lower cost technicians gathering all the data it makes the doctors able to be more productive. In addition, we invest in the best technologies in order to help the doctors be able to see more patients while still providing great care that they care about and making sure it's a great experience for our patients. The most common thing you hear from our patients is, they've never had an eye exam so thorough. And I've always liked [indiscernible] proposition of you come to us because you save money, but the eye exam experience especially is so high tech. It's the, well, I can't believe I pay this and got this and that. That equates to value in a concerned mind.

You might want to add, for this great deal, you can get things that are [indiscernible].

Jamie Fox brand eyeglasses, and they're very popular. Nice pictures of Jamie Fox. It even appeared in our [indiscernible].

Probably, the only presentation today that references Jamie Fox. Okay. All right. Well, we're just getting started. National Vision has this interesting experience over the last few years where pandemic was close. People got a lot of money, especially the core National Vision consumer and came out and bought glasses because they're a medical necessity. And then last year was a softer year across the industry and National Vision felt that. So to what degree -- I'm going to ask 2 questions. One, what degree that some of the demand was simply pulled forward for the industry in 2021? And there's a [indiscernible] cycle and folk said, I got new glasses in '21. I don't need to get them in '22. Are you seeing evidence of that? And then broadening out, what are you seeing for the consumer? It's in a very dynamic environment. For the consumer, you've got good insight with eyesight to what's happening with the consumer?

Let me just unpack the beginning part of that and then ask the 2 questions for the people who are newer to National Vision. So prior to the pandemic, we had 72 executive quarter of positive comparable store sales growth. So from 2002 to the pandemic, we had a negative comp quarter and our average quarter across those 72 quarters was a 5% comp. And if you look at the 4 years prior to the COVID shutdown, our average comp quarter was plus 7%, an immensely consistent much in traffic. Yes, on track. We love to drive our business via traffic and not average sale. Our -- we like our customers to come in, have a great experience, tell their friends. And so it's always a majority traffic driven, and we're really quite proud of that. Pandemic happened, we shut our stores. We reopened our stores very safely mid-2020, and the business just exploded. It was a stunning and wonderful year. Our customer who tends to live paycheck to paycheck, when they have found money, comes to us. So the highest seasonality period historically has been March when our customer gets tax return -- gets a tax refund. And when they get their tax refund, they come in and buy the medical necessity via eye exam and the glasses or the contact lenses. So that's always been optical Christmas with tax refund season. So what happened when we reopened from COVID, our customers have been staying home for several months and not spending money and then they got a huge amount of money from the government. So our customers have never been more flushed than they were that year, and yes, they came in and drove and spent more. The average ticket was higher than it ever was because they were saying, oh, I've got a lot of money. This is great. And that was sort of late 2020 and 2021. And so yes, they bought a lot of glasses and that was not so long ago. And I do think it's fair that, that did disrupt the purchase cycle. Then we got to around April last year, a few weeks after the Ukrainian war broke out and gas prices start to rise and inflation started to rise and our consumers then became very strapped. That consumer that about a year earlier had more cash than they had ever had, all of a sudden became very strapped, and we are still seeing that today. The brunt of the inflation is borne by our customers, and so they are very strapped. Today in the Wall Street Journal, was talking about natural gas prices and the pressure that has, but all these things are coming together. And so the story of last year for the optical category and us was about April. The optical category diminished significantly, primarily related to economic reasons, but also due to the fact that there weren't enough optometrists. Optometrists retired a lot during COVID. Many of them got burned out by the really busy year after COVID and many optometrists cut back, saying we used to work 5 days. I'm tired of 5 days, I need 4 days or 3 days. It's a great rethink. We're seeing this again across health care and across various aspects of the workforce. And so last year was a balanced story for us of the challenge of our consumer -- our budget conscious consumer and the scarcity of ODs of optometrists. I would like to say that off the -- on the customer front, we have about 1/3 of our customers are insured and 2/3 are uninsured. We're less developed in the insurance category than most other chains because our budget-conscious consumer isn't insured. They don't have a job that gives them business insurance. Our insured business, where it wasn't our customers' money, that comped positively all year long. It comped positively in Q4. So when it wasn't their money when they -- when it was the insurance company's money, that business was doing just fine. The challenge for us was with the uninsured customer deal.

It is so fun to sit next [indiscernible]

Thank you. Thank you very much. Right. All right.

With that being all -- that was all very helpful. Tax refunds are going to be down this year, so inevitably, that might have some impact on the business. At some point, it is a medical necessity. When would you expect the replacement cycle from those folks that did buy glasses in 2020 and 2021 to get into their replacement cycle and lead to more normal trends in the industry? And in the meantime, you can't just sit there and wait. So what is cash flow vision you need to drive traffic?

Thank you for that. That is the question that we and the industry are asking, when does the purchase cycle normalize? The purchase cycle had been normal for decades prior to the pandemic, and we are dealing with the weird swings of the purchase cycle now. We've always said, an investment in National Vision is an investment on the biology of the human eye. The biology of the human eye has not changed as we age. Our sight worsens. How is it addressed? Through glasses and contact lenses. So it is an inevitability that they do have to come back to it later because you have to be able to see. When that occurs, I don't know you can delay this purchase. Again, there was a huge influx of the market in the year after we reopened. So I cannot answer that question. We are confident that it will normalize eventually because it had been normal for so long beforehand. So what do we do? You manage what you can manage. You control what you can control. And for us, the other part of the equation was, we simply did not have enough doctors for the demand that was there. So in some areas, there was demand constraints, but also there was demand that we cannot fill because the process starts with an eye exam. So what did we do? We did 2 major initiatives that started last year in an attempt to ensure that as things normalize and as we come out of this, we become the very strong player who has high market share in the number of exam capacity that is out there in America. We did 2 things: one, optometrists like to -- would like to practice from home just like many of you are working more from home than you ever have before. And we had been testing, in late 2021, a method whereby our patients are in our store, they're in the exam room surrounded by very expensive diagnostic equipment and that is capturing a lot of information about their eye digitally and sending it to the optometrists who is sitting in their den. Then the optometrist comes live on the screen to the patient sitting in the chair, having looked at all the data, they would have looked at had they been in the exam room. They're just getting it at home, and they do the final checks through pushing buttons in their den that move dials in the store. So this is a great eye exam. Our patients really very much like it that we always were ahead of time. This is a synchronous remote exam, but you're talking to the doctor in the same way you would. Many of them say, I don't really particularly like somebody breathing 6 inches from my face as generally happened with previous eye exams. So they are even some advantages there. And we said, okay, if this is a key way optometrist going to want to practice in the future, we want to be able to offer that to optometrists. So we enabled 300 of our stores last year with remote exams. So we could talk about that more, if you'd like. The separate initiative is, we had historically been the most rigid in requiring a consistent schedule from our optometrists. We were pro-consumer, you have to be there when the customers want to get their eyes examined and that means doctor, if you want to be a full-time optometrists with us, your days off are going to be Sunday and Wednesday because those are the days where people are least likely to want to get an eye exam. But sadly, if you're going to be our optometrists, you have to work every Saturday because that's when the customers want to come in. In a world of scarce doctors amidst the great rethink of post-COVID values, that wasn't going to work anymore. We were -- the biggest reason people were leaving us was because of our lack of flexibility and because they had to work every Saturday. And the biggest reason people weren't taking are our job offers is around the rigidity of our scheduling. And we said, okay, this is a new world. Champions adapt. We have to adapt to this new marketplace. So in early Q4 of last year, we developed a menu of 4 different scheduling options that they can select from, one of which is the status quo, but one gives you every other Saturday off, one gives you 2 days in a row, Sunday, Monday, et cetera, that sort of thing. And we started testing that in early Q4. We liked what we saw. We started -- we made an expansion decision at the end of the last year, and then earlier this year, we made another expansion decision so that all of America's best will be in that flexible scheduling options arena by midyear of this year. So in answer to your question, how are we driving sales amidst the challenging economic backdrop for our consumer? It is by ensuring that there's eye exam capacity there for everyone who wants it and attempting to drive consumers to that. And we think that will be helpful, and we think we are making the right offensive decisions to ensure that we have strong market share of eye exam capacity as the purchase cycle normalizes so that we can take the most of advantage of it.

This is a great place to ask a question that comes up for debate a lot. On this topic that's been prevalent for the last 6 to 9 months, which is, walk us through why constraints on exam capacity have been so much of a challenge. The perception from an outsider has been, I'm going to America's best because it's such a compelling value proposition, can you find an appointment on Tuesday? I may have to wait until Saturday, and so I would just come then. So how does...

That is not Tuesday to Saturday. It's Tuesday to a week from Saturday. And the way this purchase works is, here sees the patient journey. You're starting to notice you can't read close up or you can't see the street signs and then you go through a period of denial because it really bums you out that your body is failing, and you're getting older and you sort of hope the problem will go away. And then the problem doesn't go away, and you gradually get to the point of saying, I have to address this and then you decide to act, and that's when you start looking for an eye exam. And again, if it's a question of 3, 4, 5 days, that's one thing. If it's booking out further, the further you book out the less likely you are to actually show up for that. The further you have to book out, the more you might look for another option nearby. And this is something we watch a lot is show rates because like with your dermatologists, like with your dentists, why do you get 1,000 texts every time saying, you're going to show up, right? Your appointment said, you haven't forgotten, right? It's because there's nothing worse than having the professional time there, the patients are not showing up and having to wasted professional time. So the further they book out, the less likely they are to show and it goes off a whole system.

Understood. And this is also a good time to ask, is some of the good guys for the optical industry, older people, more screening time all the factors that we know are driving an increased demand for optical services, also creating its own set of challenges? Because correct me if I'm wrong, there just hasn't been an increase in the education system for optometrists. And so your -- there is a mismatch between the supply of available optometrists and the demand for optometrists. I guess the good news is that National Vision is starting to see quick success from on-campus recruiting more so than record campus recruiting last year.

More stocks. They all get stocks.

Yes, right. But how is this issue solved over the long run because it doesn't seem like it that is existing, it's going [indiscernible], right?

That is true. The schools are not spending out anymore on optometrist. What I like about this remote system we have is a very efficient system of having the doctor appear when they're needed. A remote doctor who's looking at the screen for the next exam, there's never a no show. They're just going because they're covering a whole state or sometimes several states. The way the rules work is, if you -- if a doctor has a license where the patient is sitting, it doesn't matter where the doctor is sitting. So what you do is, you take your doctors and make them much more efficient across space and time. Right now, if you -- if a walk-in appears -- and we have a lot of walk-ins, in a store that doesn't have capacity, and we have capacity 5 miles away, that doesn't necessarily help us with a remote doctor, it can go either which way. But the planning scenario is -- it's like a remote doctor can just appear where the patient walks in. The planning scenario is no more optometrists are created every year, and so what you have to do is be the place that's offering the sort of options that they want. Flexible options are there and be a place that offers the mode of practice that they want, which is the remote approach.

And how does this translate to the wage environment for optometrists and how National Vision is managing through that? Like we're pointing out, it's a very tough labor market, broadly speaking, and even more acutely within the optometry segment. So what has been the approach? And is it working? And what can be done moving forward?

So again, it's sort of for the optometrist mid-single-digit wage growth. We're trying to make more of it now incentive-based more of it based on how many patients they see. So variable incentive and that seems to align everyone's -- that would be good for everyone better for the whole system. And -- but really, again, these -- we are in a world where these other considerations like the flexible timing and like being able to practice from home way as equally as compensation these days.

Understood.

Again, part of the rethink post pandemic.

Yes. And adapting to that is critical.

That's what I'd like to point out. So what I see us doing is rapidly adapting to a new environment. And to me, it's so that over the long term, we can get back to the sort of some predictable growth that we've had. I mean we could have not made these investments and you just whither them. So this is about our long-term ambitions of continuing to be a leading growth value optical player in America, and I think one of the messages that you've been offering has been, look, National Vision wasn't always the most dynamic, the most company that was on the forefront of making some of these changes. That mindset has shifted, and now you're in a mindset where you need to make the changes and that's resulting in some additional cost pressure. I think this would be a great opportunity to outline what those costs are because that is probably one of the reasons what the market has been reacting to most intensely.

Let me do the first part, you do the second part on the cost piece.

I think it would be fair to say that pre-pandemic, we as a company, were more leaning towards -- we're more of an analog company. You walked into our stores, you saw...

Dot matrix printers.

You saw paper records everywhere. It was not a digitized experience. It worked. It ticks along. It was a thing of beauty. It was when you've got something working, you replicate, replicate, replicate. I would say that in the post-pandemic environment, we have rapidly shifted towards digitization and that's digitalization of our stores with electronic health records, we remote medicine, digitation of our marketing efforts. We were probably leaning more towards traditional marketing, and I'm now leaning much more towards digital marketing streaming as a ever a higher percentage of our business. Our focus on e-commerce and creating the e-commerce experiences, which are now equal across the category and marketing the e-commerce side. And even investments that we talked about on our call in updating some aspects of our ERP systems. So a big theme is that post-pandemic, the people who were probably a bit too analog prior very much got behind digitization, and that over time creates great efficiencies. Now to the specific cost question.

Yes. So I'll take you through 2 parts of that. As we think about the 2023 guidance that we put out, there are a few factors in that. So we are addressing the doctor capacity constraint that we are dealing with. And as we continue to address that constraint, we'll see our comps increase because we'll have more capacity. The guidance that we put out has about a 100 basis point headwind related to doctor compensation cost, the flexibility initiatives as well as increased product costs. So that's about 50 basis points each related to that. And as Reade had talked about, the incentive compensation, we have aligned more towards the productivity levels of our doctors. So where our doctors are more productive, their incentive compensation is going to reflect that and that's rather than putting it all in the base. So this rewards the doctors that see more patients and that want to work more hours and the doctors that would prefer more laidback schedule. We also have wage inflation in there as well for our doctors. And then on the product cost side of the [indiscernible], we have increased product costs that we have largely mitigated over the past several years. We have done some inventory ahead for some of our products. And then as we enter 2022, late 2022, our vendors had told us that they'd be increasing some prices. And then in 2023, they increased them again. So we had more price increases than we had experienced in the past. Also included in that, we have great -- we have a lot of productivity. As we continue to address the doctor capacity piece, those will get to increased comp and that will leverage all of those expenses. Then as you fast forward into our investment phase, once we finalize the implementation of the remote medicine rollout, so 2024 mid- to late year, we'll expect to see at least 100 basis point improvement in our margins, and that's largely driven because of a few factors. We have doctors that are learning to be productive on the remote platform in addition to the electronic health record, which causes -- everybody that was used to writing things on paper, now they're having to do it digitally. Some doctors pick that up within a couple of days. Some doctors, it takes a couple of weeks, depending on their tech savviness. And with the electronic health records, that's kind of the sole store initiative as well. So you're going from these paper files that you once had to these electronic files and that's fully digitizing our boxes on floor. Once we have that implemented, that investment will end and the training teams that we have that are going around store-to-store, state-to-state training, the employees, the doctors on how to use this equipment will disband as well. So that's what's going to lead with a 100 basis point improvement. The cost of implementation, the productivity, [indiscernible]. As a rolling scale and what you can think about is the stores that were implemented with remote medicine in 2022. They're primarily productive at this point. However, you're seeing a drag on margins because we're still implementing for the 2023 implementations. Those stores are coming up on productivity. So they're [indiscernible]. So even though you're productive in some stores, you're not yet in others. And as we move into '24, you'll expect both '22 and '23 to be fully productive. So you'll just have the drag from the 24 or the 23 stores. So that is where we are seeing this kind of up [assistance] as we do this on rollout. But when it's finally complete, we'll expect to [indiscernible]. It will -- in '25, we'll be fully productive in all stores. You'll see it gradually improve through...

Between now and '25?

Yes.

Yes. And can you give us a sense for -- you had 300 remote medicine stores last year. See if you can remind us what the expectation is for this year?

We're going to do at least 200 stores this year.

200. What is this curve of productivity looked like [Mike Lasser] retired gastroenterologists led the field of medicine because he didn't want to deal with technology. It speaks to the relationship that medical professionals can have at times technology and industry. Maybe some of the challenges that National Vision has had as you deployed this because it's a big cultural change. So give us a sense of, at the micro level, like where -- what would have been the challenges and how do you see it playing out from here?

I don't like to generalize, but I will say, sort of I was talking to one of our area doctors who was talking about [indiscernible] in Arizona, and they said, "I have to teach some of the doctors what right click meant." So...

You said it teach me the same thing. We get it.

So it does show just a curve of adoption and getting used to it. We have not had people build because of it, then there's nothing impacted by it. It is for many old-school doctors a change. And yes, and so this is a startup. And so we feel that we're still in the early innings of getting the benefits from it, but it's a startup within the company. We're pleased that this year it's going to be profitable. Uber wasn't profitable in its second year, and -- but so there is a learning curve to it.

And of the 100 basis point compression that's going to be experienced this year, how much is coming just from the learning curve of the doctors getting up to speed on remote medicine?

So we haven't quantified a breakout specifically between the productivity levels and the training team. But overall bucket of that is 100 basis points. So think about it from the aspect of, if a doctor had typically seen 4 patients in an hour that they're learning how to use the EHR system and the remote system, they may only see 2 patients in an hour while they're trimming up this curve. That flows all the way down.

How will the productivity of a doctor look when this is fully deployed? Can you go from 4 to 5? Or is it more like 4 but you can draw from a doctor in Albuquerque, Mexico that's serving a patient in Richmond, Virginia. So it just helps with the productivity of the overall store production.

You might have a live doctor and a remote doctor and EHR records going throughout the store to make the entire store more productive.

And we would expect to see the remote doctors -- once fully productive, who have higher productivity in store doctors because you're getting your patients out of the queue. So you're not having to wait for the tiers to be clean. You can bounce from queue to queue to see whatever patient is there. And if the patient doesn't show up, that doesn't impact the doctor's productivity level. They just bounce on to the next patient that's available for them.

And then one of the big critical questions that the market wants to know is, how do all the changes that are being made, the electronic health records, remote medicine, increase from medicine increase in the penetration of the insurance as it used as a form of payment. How is this going to impact National Vision's profitability over the long term? It's been quite a journey, seeing a big step up in margins in 2021, and stepping down now, what is the -- you provided the -- getting the 100 basis points back. What are going to be the puts and takes to determine what this -- the profitability looks like?

What we've said is that we're looking at in late '24 and 2025, mid-single-digit comp yielding mid-single-digit margins. And that is a stair step along the way. We are aiming for higher, but we wanted to put a marker in place saying, and we hope to be there then, but we're not stopping there. We're working on ever greater efficiency and productivity of our stores to go up from there.

And it seems like one of the potential good guys, if there is such a big economic environment is the old idea of nicer cars in the parking lot. You started talking about that and this whole idea of trading down, where consumers are facing a little bit of pressure. And they go to the low-cost provider to get the really nice Jamie Fox glasses at quite a reasonable price. You started talking about it middle of last year. It seems like it's happening, but maybe at a slower pace than the previous experiences with the history of National Vision. Is that right? And why is that slowing out like that?

So just to share what Michael's referencing there. So in the '08, '09 recession, we comped steadily through that. And when you called stores and said, why are you doing so well? They would respond with some version of nicer cars in the parking lot. And frankly, at that point in time, our data systems were such that all we could really talk about was nicer cars in the parking lot. We didn't have the level of data and information we have now. Now when we talk about trade down, we can say, people who live in households that make over $100,000 are increasing as a percentage of our business. And that's been steady and gradual since Q2 of last year, a steady gradual improvement. It's very hard to compare a database answer, the subjective answers of '08 to '09. So I really -- I can't -- and again, it is a little like a recession of '08, '09 had high unemployment, but not much inflation, and now we're dealing with a highly inflationary environment, which is just another type of economic uncertainty.

And if there were to be an economic shock like some of what's happening in the banking industry starts to impact Main Street then it might be more analogous to what happened in '08, '09 and that benefit could be.

Definitely, I'm not moving for any more shock. We had enough shock, but the more people become frugal, the more they find out.

Sure. And to the extent that there is a shock, how would you expect that to change market shares? One of the interesting dynamics in 2002 or 2020 was that some of the optometrists that were independents, decided they would [indiscernible]. Would you expect that maybe the middle market teams that don't have access to capital with the averted in net with sell rate [indiscernible]?

Certainly, there are a great many players in our categories who are highly leveraged right now, and that causes a great deal of stress. And frankly, they have many optometrists associated with them. Maybe you'd like to comment on our balance sheet, but we are in a good position relative to nice segments of the category.

Yes. It's one area that I know folks want to hear about.

Yes, sure. As you think about capital allocation, even before the banking instances of late, we had thought about how we wanted to manage our capital allocation. We've always made prudent and just conservative actions with our cash on hand. Our strong balance sheet affords flexibility as we think about our term loan that's coming due in July of '24, we have such a strong cash balance position that if we chose to pay that off, we could certainly do so. But at the rates that we have our debt currently, it may not make sense to do so right now. We also think about how we want to return value to our shareholders. We filed an 8-K on March 9, where we had repurchased $25 million of stock, and we have $25 million remaining on our share repurchase authority. Our cash balances at the end of the year were very strong. We had $229 million in cash, $523 million in liquidity, and our debt balance is $568 million. So we're in a really flexible position to be able to manage the working capital needs of our business in addition to the maturities that we have coming due. We're very fortunate to be in that position.

And we have 2 very, very successful chapters of private equity prior to the pandemic [indiscernible] Berkshire Partners and with KKR. And so we have great experiences with that, but now is the time where it's really nice to be highly levered. And a lot of our competitors are not in that way.

And if there were to be more contagion within the financial system, you feel good about your capital situation or access to liquidity right now?

Absolutely. As I said, we have $523 million in liquidity. Our cash balance is a factor of that, but we also have the $300 million revolving credit facility that has a 0 borrowings under it. And we're an accretive cash positive business. Our model yields positive cash flow as we progress throughout the year.

And our primary bank is Bank of America.

[indiscernible] Reade, this is the UBS. So I want to ask a little bit about the market experiencing direct and any inclamation could be to deal it bit more relative of promotions to try and drive market share. Have you seen any of this behavior in the marketplace? Broadly speaking, how has market share shifted over the last few years? There are a few [indiscernible].

We believe that we maintained market share last year and that we grew market share in the year after we reopened from COVID. And again, we're talking headcount market share, not our market share, and we think that's pretty good given that we're so much less penetrated with managed care. The most interesting thing that has happened competitively in the past sort of year or so has been the return to stores of e-commerce customers. So of course, when everything was shut down sort of the e-commerce with the cool place to be when people couldn't go to stores, but now that optical stores are open again, the e-commerce players are returning to stores. And that's -- it's a store's purchase. It's always been sometimes players come out and say, "Oh, we're going to be e-commerce players, big in e-commerce, but they often end up building stores because that's where people go to get their eyes examined that once you've got your eyes examined there, it's so much easier and more convenient, especially where you can take funding the way you can with us to buy it right there. But the biggest interesting competitive trend has been the erosion of e-commerce and a return to the stores in our category.

So one of the messages we're hearing is, there's been a lot of change in the environment with the consumer over the last few years. National Vision is making some pretty sizable step to evolve with the dynamic marketplace. As you -- what are the biggest risks from here? What if something doesn't go as planned in your mind, what will that -- what will that be?

So here's what you're assuming when you're looking at our stuff. You're assuming that over time, our purchase cycle which for decades had been consistent, will normalize again. And you're assuming that our efforts in remote and scheduling flexibility will be successful in helping us retain the doctors we have and attract new ones and the evidence has been rate that has happened the past few months as we did this for the best few months of recruitment retention in the past 18 months and that a group of people who were when it was great to be consistent, predictable, bang out the same-store every time that when we were doing that because that was successful. Can be people who can say, all right, we're going to work with the times. We're going to accept the new reality and aggressively go after that so that we can continue to thrive over the long term. Those are the assumptions you're making, if you're interested in our stuff right now.

We look forward to seeing your progress. Please join me in thanking Melissa and Reade on a wonderful presentation.

Thank you very much.

Thank you.