SOURCE: Align Technology

Align Technology

April 28, 2016 16:00 ET

Align Technology Announces First Quarter 2016 Results

SAN JOSE, CA--(Marketwired - April 28, 2016) - Align Technology, Inc. (NASDAQ: ALGN)

  • Q1 revenues were up 20.5% year-over-year to $238.7 million, and diluted EPS of $0.50
  • Q1 Clear Aligner shipments were up 25.2% year-over-year to 163.7 thousand cases, international shipments up 34.1% year-over-year
  • Q1 Scanner and Services revenues were up 72.0% year-over-year to $19.0 million

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the first quarter ended March 31, 2016. Clear Aligner case shipments in the first quarter of 2016 (Q1'16) were 163.7 thousand, a 25.2% increase year-over-year. For Q1'16, revenues were $238.7 million, a 20.5% increase year-over-year, and net profit was $40.5 million, or $0.50 per diluted share, up $0.06 over the prior year.

"Q1 was a solid start to 2016 with better than expected revenues and earnings, driven by continued strong year-over-year Invisalign volume growth across our customer base, with North American shipments up 21% and international shipments up 34%. Demand for our new iTero Element scanner remains strong driving a 72% year-over-year growth in scanner and services revenues," said Joe Hogan, Align Technology President and CEO. 

GAAP Summary Financial Comparisons

First Quarter Fiscal 2016

    Q1'16   Q4'15   Q1'15   Q/Q Change     Y/Y Change  
Clear Aligner Shipments     163,695     160,400     130,780     +2.1 %   +25.2 %
Net Revenues   $ 238.7M   $ 230.3M   $ 198.1     +3.7 %   +20.5 %
  Clear Aligner   $ 219.7M   $ 214.0M   $ 187.0     +2.6 %   +17.5 %
  Scanner & Services   $ 19.0M   $ 16.2M   $ 11.1     +17.2 %   +72.0 %
Net Profit   $ 40.5M   $ 48.9M   $ 36.2     (17.0 )%   +12.1 %
EPS   $ 0.50   $ 0.60   $ 0.44   $ (0.10 )   +$0.06  

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

As of March 31, 2016, Align had $680.8 million in cash, cash equivalents and marketable securities compared to $678.7 million as of December 31, 2015.

Additional Aligners at No Charge Effective July 18, 2015

Align implemented its new Additional Aligners policy on July 18, 2015 in which the Company no longer distinguishes between mid-course corrections and case refinements providing doctors the ability to order additional aligners to address either treatment need at no charge, subject to certain requirements. These changes were effective for all new Invisalign Full, Teen, and Assist treatments shipped worldwide after July 18, 2015, as well as any cases that were open as of this date. While this policy change was largely immaterial to the Company's cash flows, it did impact the timing at which the Company recognizes revenue. The Company estimates Q1'16 revenues and pre tax income were lower by approximately $7.5 million due to this change.

Q2 2016 Business Outlook

For the second quarter of 2016 (Q2'16), Align provides the following guidance:

  • Clear Aligner case shipments in the range of 174.5 thousand to 177.0 thousand, up approximately 20.7% to 22.4% over the same period a year ago.
  • Net revenues in the range of $253.3 million to $258.3 million.
  • Diluted EPS in the range of $0.46 to $0.49.

Align Web Cast and Conference Call

Align will host a conference call today, April 28, 2016 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter 2016 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 13634117 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 May 12, 2016.

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 2016, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, and case shipments. 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, 2015, which was filed with the Securities and Exchange Commission on February 25, 2016. 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,
2016
    March 31,
2015
 
             
Net revenues   $ 238,720     $ 198,086  
                 
Cost of revenues     58,093       46,996  
                 
Gross profit     180,627       151,090  
                 
Operating expenses:                
  Selling, general and adminstrative     112,210       88,281  
  Research and development     15,083       13,885  
Total operating expenses     127,293       102,166  
                 
Operating profit     53,334       48,924  
                 
Interest and other income (expense), net     (427 )     (1,452 )
                 
Profit before income taxes     52,907       47,472  
                 
Provision for income taxes     12,361       11,295  
                 
Net profit   $ 40,546     $ 36,177  
                 
Net profit per share                
  - basic   $ 0.51     $ 0.45  
  - diluted   $ 0.50     $ 0.44  
                 
Shares used in computing net profit per share                
  - basic     79,831       80,459  
  - diluted     81,320       81,824  
                   
         
ALIGN TECHNOLOGY, INC.        
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS    
(in thousands)        
         
    March 31,
2016
  December 31,
2015
ASSETS        
         
Current assets:        
  Cash and cash equivalents   $ 154,418   $ 167,714
  Marketable securities, short-term     393,660     359,581
  Accounts receivable, net     178,000     158,550
  Inventories     22,618     19,465
  Prepaid expenses and other current assets     34,307     26,700
    Total current assets     783,003     732,010
             
Marketable securities, long-term     132,690     151,370
Property, plant and equipment, net     148,029     136,473
Goodwill and intangible assets, net     78,606     79,162
Deferred tax assets     57,527     51,416
Other assets     7,705     8,202
             
    Total assets   $ 1,207,560   $ 1,158,633
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 36,258   $ 34,354
  Accrued liabilities     92,723     107,765
  Deferred revenues     145,769     129,553
    Total current liabilities     274,750     271,672
             
Other long term liabilities     40,780     39,035
             
    Total liabilities     315,530     310,707
             
Total stockholders' equity     892,030     847,926
             
    Total liabilities and stockholders' equity   $ 1,207,560   $ 1,158,633
                 
 
ALIGN TECHNOLOGY, INC.            
Q1 2016 FINANCIAL AND BUSINESS METRICS            
(in thousands except average selling price, utilization and doctors trained) 
                                     
    Q1     Q2     Q3     Q4     Fiscal     Q1  
    2015     2015     2015     2015     2015     2016  
Invisalign Clear Aligner Net Revenues by Geography:                                    
  North America   $ 118,844     $ 126,137     $ 124,085     $ 129,663     $ 498,729     $ 135,699  
  International     55,920       61,896       61,265       70,980       250,061       69,850  
  Non-case*     12,265       12,784       12,942       13,405       51,396       14,149  
    Total Clear Aligner Net Revenues   $ 187,029     $ 200,817     $ 198,292     $ 214,048     $ 800,186     $ 219,698  
      YoY % growth     11.2 %     11.7 %     11.3 %     14.8 %     12.3 %     17.5 %
      QoQ % growth     0.3 %     7.4 %     -1.3 %     7.9 %             2.6 %
  *includes Invisalign training, ancillary products, and retainers                                                
                                                 
Average Invisalign Selling Price (ASP):                                                
  Worldwide ASP   $ 1,335     $ 1,300     $ 1,255     $ 1,250     $ 1,285     $ 1,255  
  International ASP   $ 1,410     $ 1,380     $ 1,325     $ 1,315     $ 1,355     $ 1,315  
                                                 
                                                 
Invisalign Clear Aligner Cases Shipped by Geography:                                                
  North America     91,110       99,630       101,260       106,390       398,390       110,500  
  International     39,670       44,940       46,225       54,010       184,845       53,195  
    Total Cases Shipped     130,780       144,570       147,485       160,400       583,235       163,695  
      YoY % growth     16.6 %     28.9 %     23.6 %     26.4 %     22.0 %     25.2 %
      QoQ % growth     3.1 %     10.5 %     2.0 %     8.8 %             2.1 %
                                                 
Number of Invisalign Doctors Cases Shipped To:                                                
  North America     20,165       21,335       21,160       21,835       31,710       22,355  
  International     9,050       9,790       10,150       10,865       16,460       11,280  
    Total Doctors Cases Shipped To     29,215       31,125       31,310       32,700       48,170       33,635  
                                                 
Invisalign Doctor Utilization Rates*:                                                
  North America     4.5       4.7       4.8       4.9       12.6       4.9  
    North American Orthodontists     9.0       9.5       9.9       9.9       31.8       10.4  
    North American GP Dentists     2.9       3.0       2.9       3.1       7.4       3.0  
  International     4.4       4.6       4.6       5.0       11.2       4.7  
    Total Utilization Rates     4.5       4.6       4.7       4.9       12.1       4.9  
  * # of cases shipped/# of doctors to whom cases were shipped                                                
                                                 
Number of Invisalign Doctors Trained:                                                
  North America     870       1,120       1,060       1,270       4,320       870  
  International     1,540       1,335       1,200       1,400       5,475       1,600  
    Total Doctors Trained Worldwide     2,410       2,455       2,260       2,670       9,795       2,470  
    Total to Date Worldwide     96,405       98,860       101,120       103,790       103,790       106,260  
                                                 
Total Net Revenues:                                                
  Clear Aligner Net Revenues   $ 187,029     $ 200,817     $ 198,292     $ 214,048     $ 800,186     $ 219,698  
  Scanner & Services Net Revenues     11,057       8,671       9,344       16,228       45,300       19,022  
    Total Worldwide Net Revenues   $ 198,086     $ 209,488     $ 207,636     $ 230,276     $ 845,486     $ 238,720  
      YoY % growth     9.7 %     8.8 %     9.4 %     15.9 %     11.0 %     20.5 %
      QoQ % growth     -0.3 %     5.8 %     -0.9 %     10.9 %             3.7 %
                                                 
Stock-based Compensation (SBC)                                                
  SBC included in Gross Profit   $ 980     $ 970     $ 984     $ 1,008     $ 3,942     $ 961  
  SBC included in Operating Expenses     10,670       11,860       13,677       12,799       49,006       11,563  
    Total SBC Expense   $ 11,650     $ 12,830     $ 14,661     $ 13,807     $ 52,948     $ 12,524  
                                                 
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)    
     
    Q2'16 Guidance
     
    GAAP
     
Net Revenues   $253.3 - $258.3
     
Gross Margin   75.0% - 75.5%
     
Operating Expenses   $142.7 - $144.2
     
Operating Margin   18.7% - 19.7%
     
Net Income per Diluted Share   $0.46 - $0.49
     
     
Business Metrics:   Q2'16
     
Case Shipments   174.5K - 177.0K
Capital Expenditure   $20M - $25M
Depreciation & Amortization   $5.0M - $5.5M
Diluted Shares Outstanding   81.4M*
Stock Based Compensation Expense   $14.3M
Tax Rate   24.0%
     
* Excludes any stock repurchases during the quarter