SOURCE: Align Technology

Align Technology

January 28, 2016 16:00 ET

Align Technology Announces Fourth Quarter and 2015 Results

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

  • Q4 revenues of $230.3 million, up 15.9% year-over-year, and diluted EPS of $0.60
  • Q4 Clear Aligner shipments of 160.4 thousand cases, up 26.4% year-over-year
  • Q4 international Clear Aligner shipments, up 34.8% year-over-year and 33.7% of total worldwide case shipments
  • 2015 revenues of $845.5 million, up 11.0% year-over-year, and diluted EPS of $1.77
  • 2015 Clear Aligner shipments of 583.2 thousand cases, up 22.0% year-over-year

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the fourth quarter and year ended December 31, 2015. Clear Aligner case shipments in the fourth quarter of 2015 (Q4'15) were 160.4 thousand, a 26.4% increase year-over-year. For Q4'15, revenues were $230.3 million, a 15.9% increase year-over-year, and net profit was $48.9 million, or $0.60 per diluted share, up $0.12 over the prior year.

Clear Aligner case shipments in 2015 were 583.2 thousand, a 22.0% increase year-over-year. For 2015, revenues were $845.5 million, an 11.0% increase year-over-year and net profit was $144.0 million, or $1.77 per diluted share, flat compared with the prior year.

"The fourth quarter was a strong finish to another record year for Align," said Joe Hogan, Align Technology President and CEO. "Better than expected revenue and earnings were driven by record Invisalign volume, which was up 26% year-over-year. These results reflect strong growth across our customer base and geographies -- from both an increase in the number of submitters as well as cases per doctor. In addition, strong scanner revenue growth of 33% year-over-year exceeded expectations as shipments of the new iTero Element began ramping this quarter resulting in record scanner shipments."

Continued Hogan, "For the full year 2015, over half a million patients started Orthodontic treatment with Invisalign, an increase of 22% compared to 13% last year. Our increased growth rate reflects continued adoption and utilization from international doctors and a solid rebound in North America, both driven by investments in territory coverage and sales and marketing programs, including clinical education. Product and technology innovation is also a key growth driver for the Company, and as a result, in 2015 we continued to see increased clinical confidence in Invisalign treatment for our customers worldwide."

GAAP Summary Financial Comparisons
Fourth Quarter Fiscal 2015

    Q4'15   Q3'15   Q4'14   Q/Q Change     Y/Y Change  
Clear Aligner Shipments     160,400     147,485     126,905   +8.8 %   +26.4 %
Net Revenues   $ 230.3M   $ 207.6M   $ 198.6M   +10.9 %   +15.9 %
  Clear Aligner   $ 214.0M   $ 198.3M   $ 186.4M   +7.9 %   +14.8 %
  Scanner & Services   $ 16.2M   $ 9.3M   $ 12.2M   +73.7 %   +33.4 %
Net Profit   $ 48.9M   $ 27.6M   $ 39.5M   +77.0 %   +23.6 %
EPS   $ 0.60   $ 0.34   $ 0.48   +$0.26     +$0.12  

Fiscal 2015

    2015   2014   Y/Y Change  
Clear Aligner Shipments     583,235     478,000     +22.0 %
Net Revenues   $ 845.5M   $ 761.7M     +11.0 %
  Clear Aligner   $ 800.2M   $ 712.5M     +12.3 %
  Scanner & Services   $ 45.3M   $ 49.1M     (7.7 )%
Net Profit   $ 144.0M   $ 145.8M     (1.2 )%
EPS   $ 1.77   $ 1.77   $ 0.00  

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

As of December 31, 2015, Align had $678.7 million in cash, cash equivalents and marketable securities compared to $602.6 million as of December 31, 2014. We repurchased approximately 0.2 million shares of stock for $11.2 million in Q4'15 and 1.7 million shares for $101.8 million in 2015. These repurchases were collectively part of a three-year, $300 million stock repurchase program announced in April 2014, of which there is approximately $100 million remaining for repurchases through April 2017.

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 Q4'15 and 2015 reported revenues and pre tax income were lower by approximately $7.0 million and $14 million, respectively due to this change.

Q1 2016 Business Outlook
For the first quarter of 2016 (Q1'16), Align provides the following guidance:

  • Clear Aligner case shipments in the range of 161.3 thousand to 163.7 thousand, up approximately 23% to 25% over the same period a year ago.
  • Net revenues in the range of $232.5 million to $236.6 million.
  • Diluted EPS in the range of $0.37 to $0.40.

Align Web Cast and Conference Call
Align will host a conference call today, January 28, 2016 at 4:30 p.m. ET, 1:30 p.m. PT, to review its fourth quarter and 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 13627358 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 February 11, 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 first 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, 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     Year Ended  
    December 31,
2015
  December 31,
2014
    December 31,
2015
    December 31,
2014
 
                       
Net revenues   $ 230,276   $ 198,600     $ 845,486     $ 761,653  
                               
Cost of revenues     57,466     47,938       205,376       183,210  
                               
Gross profit     172,810     150,662       640,110       578,443  
                               
Operating expenses:                              
  Selling, general and adminstrative     99,582     85,893       390,239       332,068  
  Research and development     13,889     13,276       61,237       52,799  
Total operating expenses     113,471     99,169       451,476       384,867  
                               
Operating profit     59,339     51,493       188,634       193,576  
                               
Interest and other income (expense), net     313     (1,716 )     (2,533 )     (3,207 )
                               
Profit before income taxes     59,652     49,777       186,101       190,369  
                               
Provision for income taxes     10,775     10,236       42,081       44,537  
                               
Net profit   $ 48,877   $ 39,541     $ 144,020     $ 145,832  
                               
Net profit per share                              
  - basic   $ 0.61   $ 0.49     $ 1.80     $ 1.81  
  - diluted   $ 0.60   $ 0.48     $ 1.77     $ 1.77  
                               
Shares used in computing net profit per share                              
  - basic     79,481     80,266       79,998       80,754  
  - diluted     81,051     81,691       81,521       82,283  
                               
 
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
    December 31,
2015
    December 31,
2014
ASSETS          
           
Current assets:          
  Cash and cash equivalents   $ 167,714     $ 199,871
  Marketable securities, short-term     359,581       254,787
  Accounts receivable, net     158,550       129,751
  Inventories     19,465       15,928
  Prepaid expenses and other current assets     26,700 *     56,823
    Total current assets     732,010       657,160
               
Marketable securities, long-term     151,370       147,892
Property, plant and equipment, net     136,473       90,125
Goodwill and intangible assets, net     79,162       82,056
Deferred tax assets     51,416 *     3,099
Other assets     8,202       7,665
               
    Total assets   $ 1,158,633     $ 987,997
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Current liabilities:              
  Accounts payable   $ 34,354     $ 23,247
  Accrued liabilities     107,765       87,880
  Deferred revenues     129,553       90,684
    Total current liabilities     271,672       201,811
               
Other long term liabilities     39,035       33,415
               
    Total liabilities     310,707       235,226
               
Total stockholders' equity     847,926       752,771
               
  Total liabilities and stockholders' equity   $ 1,158,633     $ 987,997
               
 
* As of December 31, 2015 we early adopted Accounting Standards Update No. 2015-17, Income Taxes (Topic 740), which simplifies the presentation of deferred income taxes. Under the new standard, both deferred tax liabilities and assets are required to be classified as noncurrent in a consolidated balance sheet. The prior reporting period was not retrospectively adjusted.
 
 
ALIGN TECHNOLOGY, INC.
Q4 2015 FINANCIAL AND BUSINESS METRICS
(in thousands except average selling price, utilization and doctors trained)
 
    Q4       Fiscal     Q1     Q2     Q3     Q4     Fiscal  
    2014       2014     2015     2015     2015     2015     2015  
Invisalign Clear Aligner Net Revenues by Geography:                                            
  North America   $ 113,670       $ 446,577     $ 118,844     $ 126,137     $ 124,085     $ 129,663     $ 498,729  
  International     60,467         219,742       55,920       61,896       61,265       70,980       250,061  
  Non-case*     12,300         46,230       12,265       12,784       12,942       13,405       51,396  
    Total Clear Aligner Net Revenues   $ 186,437       $ 712,549     $ 187,029     $ 200,817     $ 198,292     $ 214,048     $ 800,186  
      YoY % growth     12.2   %     15.9 %     11.2 %     11.7 %     11.3 %     14.8 %     12.3 %
      QoQ % growth     4.7   %             0.3 %     7.4 %     -1.3 %     7.9 %        
  *includes Invisalign training, ancillary products, and retainers                                                          
                                                           
Average Invisalign Selling Price (ASP):                                                          
  Worldwide ASP   $ 1,370       $ 1,395     $ 1,335     $ 1,300     $ 1,255     $ 1,250     $ 1,285  
  International ASP   $ 1,510       $ 1,575     $ 1,410     $ 1,380     $ 1,325     $ 1,315     $ 1,355  
                                                           
                                                           
Invisalign Clear Aligner Cases Shipped by Geography:                                                          
  North America     86,855         338,530       91,110       99,630       101,260       106,390       398,390  
  International     40,050         139,470       39,670       44,940       46,225       54,010       184,845  
    Total Cases Shipped     126,905         478,000       130,780       144,570       147,485       160,400       583,235  
                                                           
Number of Invisalign Doctors Cases Shipped To:                                                          
  North America     19,745         29,890       20,165       21,335       21,160       21,835       31,710  
  International     8,945         13,450       9,050       9,790       10,150       10,865       16,460  
    Total Doctors Cases Shipped To     28,690         43,340       29,215       31,125       31,310       32,700       48,170  
                                                           
Invisalign Doctor Utilization Rates*:                                                          
  North America     4.4         11.3       4.5       4.7       4.8       4.9       12.6  
    North American Orthodontists     8.6         27.7       9.0       9.5       9.9       9.9       31.8  
    North American GP Dentists     2.9         6.9       2.9       3.0       2.9       3.1       7.4  
  International     4.5         10.4       4.4       4.6       4.6       5.0       11.2  
    Total Utilization Rates     4.4         11.0       4.5       4.6       4.7       4.9       12.1  
  * # of cases shipped/# of doctors to whom cases were shipped                                                          
                                                           
Number of Invisalign Doctors Trained:                                                          
  North America     1,170         4,145       870       1,120       1,060       1,270       4,320  
  International     1,255         5,290       1,540       1,335       1,200       1,400       5,475  
    Total Doctors Trained Worldwide     2,425         9,435       2,410       2,455       2,260       2,670       9,795  
    Total to Date Worldwide     93,995         93,995       96,405       98,860       101,120       103,790       103,790  
                                                           
Total Net Revenues:                                                          
  Clear Aligner Net Revenues   $ 186,437       $ 712,549     $ 187,029     $ 200,817     $ 198,292     $ 214,048     $ 800,186  
  Scanner & Services Net Revenues     12,163         49,104       11,057       8,671       9,344       16,228       45,300  
    Total Worldwide Net Revenues   $ 198,600       $ 761,653     $ 198,086     $ 209,488     $ 207,636     $ 230,276     $ 845,486  
      YoY % growth     11.4   %     15.4 %     9.7 %     8.8 %     9.4 %     15.9 %     11.0 %
      QoQ % growth     4.6   %             -0.3 %     5.8 %     -0.9 %     10.9 %        
                                                           
Stock-based Compensation (SBC)                                                          
  SBC included in Gross Profit   $ 965       $ 3,570     $ 980     $ 970     $ 984     $ 1,008     $ 3,942  
  SBC included in Operating Expenses     9,510         36,225       10,670       11,860       13,677       12,799       49,006  
    Total SBC Expense   $ 10,475       $ 39,795     $ 11,650     $ 12,830     $ 14,661     $ 13,807     $ 52,948  
                                                           
                                                           
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)    
     
    Q1'16 Guidance
     
    GAAP
     
Net Revenues   $232.5 - $236.6
     
Gross Margin   73.5% - 74.1%
     
Operating Expenses   $130.9 - $132.4
     
Operating Margin   17.2% - 18.2%
     
Net Income per Diluted Share   $0.37 - $0.40
     
     
Business Metrics:   Q1'16
     
Case Shipments   161.3K - 163.7K
Capital Expenditure   $20M - $25M
Depreciation & Amortization   $5.0M - $5.5M
Diluted Shares Outstanding   81.1M*
Stock Based Compensation Expense   $13.5M
Tax Rate   25.0%
     
* Excludes any stock repurchases during the quarter