SOURCE: Align Technology

Align Technology

April 23, 2015 16:00 ET

Align Technology Announces First Quarter 2015 Results

SAN JOSE, CA--(Marketwired - Apr 23, 2015) - Align Technology (NASDAQ: ALGN)

  • Q1 revenues of $198 million, up 10% year-over-year, and diluted EPS of $0.44
  • Q1 worldwide Clear Aligner shipments of 131 thousand cases, up 17% year-over-year, with North America up 12% and International up 29%

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the first quarter ended March 31, 2015. Revenues for the first quarter of 2015 (Q1'15) were $198.1 million, a 9.7% increase year-over-year from $180.6 million in the first quarter of 2014 (Q1'14). Clear Aligner case shipments in Q1'15 were 130.8 thousand, a 16.6% increase year-over-year from 112.2 thousand in Q1'14. Net profit for Q1'15 was $36.2 million, or $0.44 per diluted share, compared to $32.4 million, or $0.39 per diluted share in Q1'14. Q1'15 operating income included a one-time benefit of $6.8 million from a refund of Medical Device Excise Taxes paid in 2013, contributing $0.06 per diluted share, net of tax.

"Our first quarter was a bit stronger than we expected, getting us off to a good start to the year. This progress was driven by continued strong year-over-year growth from our International team and solid improvement in our North American business as well," said Thomas M. Prescott, Align president and CEO. "We are pleased to have delivered better than expected results with strong revenues, margins, and EPS, driven primarily by higher Invisalign volume from our North American orthodontists."

Summary Financial Comparisons
(In millions except for shipments and per share amounts)

    Q1'15   Q4'14   Q1'14   Q/Q     Y/Y  
GAAP                        
Clear Aligner shipments     130,780     126,905     112,180     3.1 %     16.6 %
Net revenues   $ 198.1   $ 198.6   $ 180.6     (0.3 )%     9.7 %
  Clear Aligner   $ 187.0   $ 186.4   $ 168.2     0.3 %     11.2 %
  Scanner & Services   $ 11.1   $ 12.2   $ 12.4     (9.1 )%     (10.9 )%
Net profit   $ 36.2   $ 39.5   $ 32.4     (8.5 )%     11.5 %
Diluted EPS   $ 0.44   $ 0.48   $ 0.39   $ (0.04 )   $ 0.05  
                                   

Note: Changes and percentages are based on actual values and may effect totals due to rounding

As of March 31, 2015, Align had $613.0 million in cash, cash equivalents and short-term and long-term marketable securities compared to $602.6 million as of December 31, 2014. We repurchased approximately 0.03 million shares of stock for $1.8 million in Q1'15. These repurchases were part of a three-year, $300 million stock repurchase program announced on April 23, 2014 of which the first $100 million of the program was completed in Q1'15.

Q2 2015 Business Outlook
For the second quarter of 2015 (Q2'15), Align provides the following guidance:

  • Clear Aligner case shipments in a range of 139.5 thousand to 142.0 thousand, up approximately 18% over the same period a year-ago at the mid-point of the range and above our three-year average.
  • Net revenues in a range of $206.6 million to $210.4 million.
  • Diluted EPS in a range of $0.35 to $0.38.

Align Web Cast and Conference Call
Align will host a conference call today, April 23, 2015 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter 2015 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the web cast, go to the "Events & Presentations" section under Company Information on Align's Investor Relations web site at http://investor.aligntech.com. To access the conference call, please dial 201-689-8261 approximately fifteen minutes prior to the start of the call. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13605393 followed by #. For international callers, please dial 201-612-7415 and use the same conference number referenced above. The telephonic replay will be available through 5:30 p.m. ET on April 30, 2015.

About Align Technology, Inc.
Align Technology is the leader in modern clear aligner orthodontics that designs, manufactures and markets the Invisalign® system, which provides dental professionals with a range of treatment options for adults and teenagers. Align also offers the iTero 3D digital scanning system and services for orthodontic and restorative dentistry. Align was founded in March 1997 and received FDA clearance to market the Invisalign system in 1998. Visit www.aligntech.com for more information.

For additional information about the Invisalign system or to find an Invisalign provider in your area, please visit www.invisalign.com. For additional information about the iTero 3D digital scanning system, please visit www.itero.com.

Forward-Looking Statement
This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the second quarter of 2015, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, case shipments, and additional common stock repurchases. Forward-looking statements contained in this news release and the tables below relating to expectations about future events or results are based upon information available to Align as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, actual results may differ materially and adversely from those expressed in any forward-looking statement. Factors that might cause such a difference include, but are not limited to, difficulties predicting customer and consumer purchasing behavior, the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, our ability to successfully achieve the anticipated benefits from the scanner and services business, continued customer demand for our existing and new products, changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages and consumer confidence, the timing of case submissions from our doctors within a quarter, acceptance of our products by consumers and dental professionals, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, Align's ability to develop and successfully introduce new products and product enhancements and the loss of key personnel. These and other risks are detailed from time to time in Align's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission on February 26, 2015. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

           
ALIGN TECHNOLOGY, INC.          
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)          
           
    Three Months Ended
    March 31,
2015
    March 31,
2014
           
Net revenues   $ 198,086     $ 180,646
               
Cost of revenues     46,996       43,395
               
Gross profit     151,090       137,251
               
Operating expenses:              
  Selling, general and adminstrative     88,281       82,067
  Research and development     13,885       13,380
Total operating expenses     102,166       95,447
               
Operating profit     48,924       41,804
               
Interest and other income (expense), net     (1,452 )     601
               
Profit before income taxes     47,472       42,405
               
Provision for income taxes     11,295       9,961
               
Net profit   $ 36,177     $ 32,444
               
Net profit per share              
  - basic   $ 0.45     $ 0.40
  - diluted   $ 0.44     $ 0.39
               
Shares used in computing net profit per share              
  - basic     80,459       81,120
  - diluted     81,824       82,817
                 
         
ALIGN TECHNOLOGY, INC.        
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS    
(in thousands)        
         
    March 31,   December 31,
    2015   2014
ASSETS        
         
Current assets:            
  Cash and cash equivalents   $ 189,978   $ 199,871
  Marketable securities, short-term     254,823     254,787
  Accounts receivable, net     138,159     129,751
  Inventories     14,572     15,928
  Prepaid expenses and other current assets     59,780     56,823
    Total current assets     657,312     657,160
             
Marketable securities, long-term     168,171     147,892
Property, plant and equipment, net     99,764     90,125
Goodwill and intangible assets, net     81,274     82,056
Deferred tax assets     14,630     3,099
Other assets     7,254     7,665
             
    Total assets   $ 1,028,405   $ 987,997
             
LIABILITIES AND STOCKHOLDERS' EQUITY        
             
Current liabilities:            
  Accounts payable   $ 24,996   $ 23,247
  Accrued liabilities     81,711     87,880
  Deferred revenues     93,868     90,684
    Total current liabilities     200,575     201,811
             
Other long term liabilities     34,296     33,415
             
    Total liabilities     234,871     235,226
             
Total stockholders' equity     793,534     752,771
             
  Total liabilities and stockholders' equity   $ 1,028,405   $ 987,997
               
 
ALIGN TECHNOLOGY, INC.
Q1 2015 FINANCIAL AND BUSINESS METRICS
(in thousands except average selling price, utilization and doctors trained) 
 
   
 
    Q1     Q2     Q3     Q4     Fiscal    Q1  
    2014     2014     2014     2014     2014    2015  
Invisalign Clear Aligner Net Revenues by Geography:                                                
  North America   $ 107,910     $ 111,648     $ 113,349     $ 113,670     $ 446,577     $ 118,844  
  International     49,848       55,988       53,439       60,467       219,742       55,920  
  Non-case*     10,481       12,099       11,350       12,300       46,230       12,265  
    Total Clear Aligner Net Revenues   $ 168,239     $ 179,735     $ 178,138     $ 186,437     $ 712,549     $ 187,029  
       YoY % growth     18.8 %     17.2 %     16.0 %     12.2 %     15.9 %     11.2 %
       QoQ % growth     1.2 %     6.8 %     -0.9 %     4.7 %             0.3 %
  *includes Invisalign training, ancillary products, and retainers                                                
                                                 
Average Invisalign Selling Price (ASP):                                                
  Worldwide ASP   $ 1,405     $ 1,405     $ 1,395     $ 1,370     $ 1,395     $ 1,335  
  International ASP   $ 1,620     $ 1,625     $ 1,560     $ 1,510     $ 1,575     $ 1,410  
                                                 
                                                 
Invisalign Clear Aligner Cases Shipped by Geography:                                                
  North America     81,420       84,850       85,405       86,855       338,530       91,110  
  International     30,760       34,450       34,210       40,050       139,470       39,670  
    Total Cases Shipped     112,180       119,300       119,615       126,905       478,000       130,780  
                                                 
Number of Invisalign Doctors Cases Shipped To:                                                
  North America     19,015       19,505       19,550       19,745       29,890       20,165  
  International     7,185       7,685       7,950       8,945       13,450       9,050  
    Total Doctors Cases Shipped To     26,200       27,190       27,500       28,690       43,340       29,215  
                                                 
Invisalign Doctor Utilization Rates*:                                                
  North America     4.3       4.4       4.4       4.4       11.3       4.5  
  North American Orthodontists     8.1       8.4       8.8       8.6       27.7       9.0  
  North American GP Dentists     2.9       2.9       2.8       2.9       6.9       2.9  
  International     4.3       4.5       4.3       4.5       10.4       4.4  
    Total Utilization Rates     4.3       4.4       4.4       4.4       11.0       4.5  
  * # of cases shipped/# of doctors to whom cases were shipped                                                
                                                 
Number of Invisalign Doctors Trained:                                                
  North America     700       1,150       1,125       1,170       4,145       870  
  International     1,255       1,380       1,400       1,255       5,290       1,540  
    Total Doctors Trained Worldwide     1,955       2,530       2,525       2,425       9,435       2,410  
    Total to Date Worldwide     86,515       89,045       91,570       93,995       93,995       96,405  
                                                 
Total Net Revenues:                                                
  Clear Aligner Net Revenues   $ 168,239     $ 179,735     $ 178,138     $ 186,437     $ 712,549     $ 187,029  
  Scanner & Services Net Revenues     12,407       12,796       11,738       12,163       49,104       11,057  
    Total Worldwide Net Revenues   $ 180,646     $ 192,531     $ 189,876     $ 198,600     $ 761,653     $ 198,086  
      YoY % growth     17.6 %     17.5 %     15.4 %     11.4 %     15.4 %     9.7 %
      QoQ % growth     1.3 %     6.6 %     -1.4 %     4.6 %             -0.3 %
                                                 
Stock-based Compensation (SBC)                                                
  SBC included in Gross Profit   $ 800     $ 940     $ 865     $ 965     $ 3,570     $ 980  
  SBC included in Operating Expenses     8,300       9,370       9,045       9,510       36,225       10,670  
    Total SBC Expense   $ 9,100     $ 10,310     $ 9,910     $ 10,475     $ 39,795     $ 11,650  
                                                 
 

Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals.       

 
ALIGN TECHNOLOGY, INC.
BUSINESS OUTLOOK SUMMARY
(unaudited)
 
The outlook figures provided below and elsewhere in this press release are approximate in nature since Align's business outlook is difficult to predict. Align's future performance involves numerous risks and uncertainties and the company's results could differ materially from the outlook provided. Some of the factors that could affect Align's future financial performance and business outlook are set forth under "Forward Looking Information" above in this press release.
   
Financial Outlook
(in millions, except per share amounts and percentages)
   
  Q2'15 Guidance
   
  GAAP
   
Net Revenues $206.6 - $210.4
   
Gross Margin 75.0% - 75.7%
   
Operating Expenses $117.3 - $118.3
   
Operating Margin 18.3% - 19.5%
   
Net Income per Diluted Share $0.35 - $0.38
   
   
Business Metrics: Q2'15
   
Case Shipments 139.5K - 142.0K
Capital Expenditure $20M - $25M
Depreciation & Amortization $4.5M - $5.0M
Diluted Shares Outstanding 82.0M*
Stock Based Compensation Expense $13.7M
Tax Rate 24.0%
   
* Excludes any stock repurchases during the quarter