SOURCE: Align Technology

Align Technology

January 30, 2014 16:00 ET

Align Technology Announces Record Fourth Quarter and Fiscal 2013 Results

SAN JOSE, CA--(Marketwired - Jan 30, 2014) - Align Technology, Inc. (NASDAQ: ALGN)

  • Q4 Net revenues of $178.3 million increased 24.8% year-over-year
  • Q4 Invisalign clear aligner net revenues of $166.2 million increased 25.1% year-over-year
  • Q4 GAAP Earnings per diluted share (EPS) of $0.51
  • 2013 Net revenues of $660.2 million, increased 17.9% year-over-year
  • 2013 GAAP diluted EPS was $0.78, non-GAAP diluted EPS was $1.54

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the fourth quarter and fiscal year ended December 31, 2013.

Consolidated net revenues and net profit for both the fourth quarter and fiscal year were each records for the Company.

Total net revenues for the fourth quarter of 2013 (Q4'13) was a record $178.3 million. This is compared to net revenues of $164.5 million reported in the third quarter of 2013 (Q3'13) and $142.8 million in the fourth quarter of 2012 (Q4'12). Q4'13 clear aligner net revenues was $166.2 million, compared to $153.5 million in Q3'13 and $132.8 million in Q4'12. Clear aligner case shipments in Q4'13 were 111.1 thousand, compared to 106.9 thousand in Q3'13 and 90.5 thousand in Q4'12. Q4'13 scanner and CAD/CAM services net revenues was a $12.1 million, compared to $11.0 million in Q3'13 and compared to $10.0 million in Q4'12.

For fiscal 2013 (FY'13), net revenues was $660.2 million, an increase of 17.9% from $560.0 million reported for fiscal 2012 (FY'12). FY'13 clear aligner net revenues of $614.6 million increased 19.0% from $516.6 million for FY'12. FY'13 clear aligner case shipments of 422.3 thousand increased 16.2% from 363.5 thousand for FY'12. FY'13 scanner and CAD/CAM services net revenues was $45.6 million compared to $43.5 million in FY'12.

"The fourth quarter was a solid finish to the year for Align and we're pleased to have delivered better than expected revenue, operating margins and earnings, driven by strong Invisalign growth from our international doctors in Europe and Asia Pacific," said Thomas M. Prescott, Align president and CEO. "While North American Invisalign case shipments were sequentially flat, Invisalign case receipts were softer than expected in December, as many Orthodontist and GP Dentist practices had fewer days in office due to the timing of the four major holidays between Thanksgiving and New Year's Day. However, January receipts are improving and it appears that doctors and their patients are getting back to business."

Net profit for Q4'13 was $42.4 million, or $0.51 per diluted share. This is compared to net profit of $34.5 million, or $0.42 per diluted share in Q3'13, and net profit of $9.6 million, or $0.12 per diluted share in Q4'12. Q4'12 net profit included a goodwill impairment charge of $11.9 million.

Net profit for FY'13 was $64.3 million or $0.78 per diluted share. This compares to net profit for FY'12 of $58.7 million or $0.71 per diluted share. Net profit in FY'13 and FY'12 included $63.2 million and $34.7 million, respectively, of various charges, net of tax, related to the impairment of goodwill and intangible assets and other non-recurring items. Excluding these charges, non-GAAP net profit for FY'13 was $127.5 million compared with non-GAAP net profit in FY'12 of $93.4 million (see "About Non-GAAP Financial Measures").

As of December 31, 2013, the Company had $472.0 million in cash, cash equivalents, and short and long-term marketable securities compared to $356.1 million as of December 31, 2012.

To supplement our consolidated financial statements, we provide the following GAAP and non-GAAP financial measures. Detailed reconciliations between GAAP and non-GAAP information are contained in the tables following the financial tables of this release. Starting in fiscal 2013, amortization of acquired intangible assets is no longer excluded as a non-GAAP measure. This expense is included in GAAP gross profit, operating expenses, operating profit and net profit for the periods presented below and therefore is no longer a reconciling item.

Operating Results Summary ($M except for per share amounts and percentages)

                               
                               
Key GAAP Operating Results   Q4'13     Q3'13     Q4'12     FY'13     FY'12  
Net Revenues   $ 178.3     $ 164.5     $ 142.8     $ 660.2     $ 560.0  
  - Clear Aligner   $ 166.2     $ 153.5     $ 132.8     $ 614.6     $ 516.6  
  - Scanner and CAD/CAM Services   $ 12.1     $ 11.0     $ 10.0     $ 45.6     $ 43.4  
                                         
Gross Margin     76.5 %     76.0 %     74.5 %     75.4 %     74.3 %
  - Clear Aligner     79.8 %     79.9 %     78.8 %     78.9 %     78.6 %
  - Scanner and CAD/CAM Services     31.1 %     22.2 %     18.5 %     29.1 %     24.0 %
                                         
Operating Expenses   $ 83.6     $ 83.6     $ 89.4     $ 403.9     $ 330.8  
Operating Margin     29.7 %     25.2 %     12.0 %     14.3 %     15.3 %
Net Profit   $ 42.2     $ 34.5     $ 9.6     $ 64.3     $ 58.7  
EPS   $ 0.51     $ 0.42     $ 0.12     $ 0.78     $ 0.71  
                                         
Key Non-GAAP Operating Results     Q4'13       Q3'13       Q4'12       FY'13       FY'12  
Non-GAAP Gross Margin     76.5 %     76.0 %     74.5 %     75.4 %     74.5 %
  - Non-GAAP Clear Aligner     79.8 %     79.9 %     78.8 %     78.9 %     78.6 %
  - Non-GAAP Scanner and CAD/CAM Services     31.1 %     22.2 %     18.5 %     29.1 %     25.7 %
                                         
Non-GAAP Operating Expenses   $ 83.6     $ 83.6     $ 77.5     $ 336.9     $ 292.9  
Non-GAAP Operating Margin     29.7 %     25.2 %     20.3 %     24.4 %     22.2 %
Non-GAAP Net Profit   $ 42.2     $ 34.5     $ 21.5     $ 127.5     $ 93.4  
Non-GAAP EPS   $ 0.51     $ 0.42     $ 0.26     $ 1.54     $ 1.13  
EBITDA   $ 56.9     $ 45.8     $ 21.7     $ 110.0     $ 102.1  
Adjusted EBITDA   $ 56.9     $ 45.8     $ 33.6     $ 177.0     $ 140.7  
                                         
Stock-based Compensation (SBC)     Q4'13       Q3'13       Q4'12       FY'13       FY'12  
Total SBC Expense   $ 5.2     $ 7.6     $ 6.0     $ 26.5     $ 21.4  
  - SBC included in Gross Margin   $ 0.7     $ 0.7     $ 0.5     $ 2.6     $ 1.8  
  - SBC included in Operating Expenses   $ 4.5     $ 6.9     $ 5.5     $ 23.9     $ 19.6  
                                         
                                         

Business Highlights
The following list highlights the Company's key strategic announcements over the past year:

  • Align announced the new iTero imaging system available as a single hardware platform with software options for restorative or orthodontic procedures.
  • Align announced the commercial availability of the Invisalign Outcome Simulator, the Company's first chair-side application designed to preview an Invisalign treatment after creating a digital impression with an iTero scanner.
  • Align announced the commercial availability of SmartTrack™, the next generation of Invisalign clear aligner material. SmartTrack is a highly elastic, proprietary new aligner material that delivers a gentle, more constant force to improve control of tooth movements with Invisalign clear aligner treatment.
  • Align announced the acquisition of its distributor for Invisalign products in the Asia Pacific region, marking the transitioning of Australia, New Zealand, Hong Kong, Singapore, Macau and Malaysia to a direct sales region.
  • Align and Henry Schein Dental announced the introduction of Realine™, an entry level, five-stage clear aligner product designed for very minor crowding and spacing issues.
  • Align announced the upcoming release of Invisalign G5 innovations, specifically designed for the treatment of deep bite malocclusions.

Q1 Fiscal 2014 Business Outlook
For the first quarter of 2014 (Q1'14), Align Technology provides the following guidance:

  • Net revenues in a range of $175.2 million to $179.6 million, which reflects a year-over-year increase of 14% to 17%.
  • Clear aligner case shipments in a range of 110.1 to 113.1 thousand cases.
  • EPS in a range of $0.32 to $0.34.

Align Web Cast and Conference Call
Align Technology will host a conference call today, January 30, 2014 at 4:30 p.m. ET, 1:30 p.m. PT, to review its fourth quarter 2013 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 Technology'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 13573937 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 7, 2014.

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. The Company also offers the iTero 3D digital scanning system and services for orthodontic and restorative dentistry. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998. Visit www.aligntech.com for more information.

For additional information about Invisalign or to find an Invisalign provider in your area, please visit www.invisalign.com. For additional information about iTero, please visit www.itero.com

About Non-GAAP Financial Measures
To supplement our consolidated financial statements and our business outlook, we may use from time to time the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating profit, non-GAAP net profit and non-GAAP earnings per share, which exclude, as applicable, acquisition and integration related costs, severance and benefit costs, impairment of goodwill, impairment of long-lived assets and any related income tax adjustments, and EBITDA and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our "core operating performance." Management believes that "core operating performance" represents Align's performance in the ordinary, on-going and customary course of its operations. Accordingly, management excludes from "core operating performance" certain expenditures and other items that may not be indicative of our operating performance including discrete cash and non-cash charges that are infrequent, or one-time in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making, and (2) they are provided to and used by our institutional investors and the analyst community to facilitate comparisons with prior and subsequent reporting periods. A reconciliation of the GAAP and non-GAAP financial measures for the quarter and year and a more detailed explanation of each non-GAAP financial measure and its uses are provided in the footnotes to the table captioned "Reconciliation of GAAP to non-GAAP Key Financial Metrics" and "Business Outlook Summary" included at the end of this release.

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 2014, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, case shipments and cash, cash equivalents and short-term and long-term investments. 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 the CAD/CAM 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, the loss of key personnel and impairments in the book value of goodwill or other intangible assets. 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 fiscal year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 1, 2013. 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,
2013
    December 31,
2012
    December 31,
2013
    December 31,
2012
 
                               
Net revenues   $ 178,292     $ 142,840     $ 660,206     $ 560,041  
                                 
Cost of net revenues     41,816       36,362       162,100       143,653  
                                 
Gross profit     136,476       106,478       498,106       416,388  
                                 
Operating expenses:                                
  Sales and marketing     44,694       37,769       180,046       152,041  
  General and administrative     27,889       28,001       112,752       99,295  
  Research and development     10,970       11,711       44,082       42,869  
  Impairment of goodwill     -       11,926       40,694       36,591  
  Impairment of long-lived assets     -       -       26,320       -  
Total operating expenses     83,553       89,407       403,894       330,796  
                                 
Operating profit     52,923       17,071       94,212       85,592  
                                 
Interest and other income (expense), net     (199 )     (672 )     (1,073 )     (1,296 )
                                 
Profit before income taxes     52,724       16,399       93,139       84,296  
                                 
Provision for income taxes     10,302       6,840       28,844       25,605  
                                 
Net profit   $ 42,422     $ 9,559     $ 64,295     $ 58,691  
                                 
Net profit per share                                
  - basic   $ 0.53     $ 0.12     $ 0.80     $ 0.73  
  - diluted   $ 0.51     $ 0.12     $ 0.78     $ 0.71  
                                 
Shares used in computing net profit per share                                
  - basic     80,432       81,043       80,551       80,529  
  - diluted     82,438       82,981       82,589       83,040  
                                   
                                   
 
 
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
         
    December 31,
2013
  December 31,
2012
ASSETS            
             
Current assets:            
  Cash and cash equivalents   $ 242,953   $ 306,386
  Marketable securities, short-term     127,040     28,485
  Accounts receivable, net     113,250     98,992
  Inventories     13,968     15,122
  Other current assets     47,464     36,808
    Total current assets     544,675     485,793
             
Marketable securities, long-term     101,978     21,252
Property and equipment, net     75,743     79,191
Goodwill and intangible assets, net     85,363     145,013
Deferred tax assets     15,766     21,609
Other long-term assets     8,622     3,454
             
    Total assets   $ 832,147   $ 756,312
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 17,718   $ 19,549
  Accrued liabilities     80,345     74,247
  Deferred revenue     77,275     61,975
    Total current liabilities     175,338     155,771
             
Other long term liabilities     22,839     19,224
             
    Total liabilities     198,177     174,995
             
Total stockholders' equity     633,970     581,317
             
    Total liabilities and stockholders' equity   $ 832,147   $ 756,312
                 
                 
   
   
ALIGN TECHNOLOGY, INC.  
RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS  
   
   
Reconciliation of GAAP to Non-GAAP Operating Expenses  
(in thousands)   Three Months Ended  
    December 31,
2013
  September 31, 2013   December 31, 2012  
                     
GAAP Operating expenses   $ 83,553   $ 83,626   $ 89,407  
  Impairment of goodwill (3)     -     -     (11,926 )
Non-GAAP Operating expenses   $ 83,553   $ 83,626   $ 77,481  
                     
                     
Reconciliation of GAAP to Non-GAAP Operating Profit                    
(in thousands)   Three Months Ended  
    December 31,
2013
  September 31, 2013   December 31, 2012  
                     
GAAP Operating profit   $ 52,923   $ 41,464   $ 17,071  
  Impairment of goodwill (3)     -     -     11,926  
Non-GAAP Operating profit   $ 52,923   $ 41,464   $ 28,997  
                     
                     
Reconciliation of GAAP to Non-GAAP Net Profit                    
(in thousands, except per share amounts)   Three Months Ended  
    December 31,
2013
  September 31, 2013   December 31, 2012  
                     
GAAP Net profit   $ 42,422   $ 34,537   $ 9,559  
  Impairment of goodwill (3)     -     -     11,926  
  Income tax-related adjustments (5)     -     -     42  
Non-GAAP Net profit   $ 42,422   $ 34,537   $ 21,527  
                     
Diluted Net profit per share:                    
  GAAP   $ 0.51   $ 0.42   $ 0.12  
  Non-GAAP   $ 0.51   $ 0.42   $ 0.26  
                     
Shares used in computing diluted GAAP Net profit per share     82,438     81,848     82,981  
Shares used in computing diluted Non-GAAP Net profit per share     82,438     81,848     82,981  
                     
                     
Reconciliation of GAAP Net Profit to EBITDA and Adjusted EBITDA                    
(in thousands)   Three Months Ended  
    December 31,
2013
  September 31, 2013   December 31, 2012  
                     
GAAP Net profit   $ 42,422   $ 34,537   $ 9,559  
Provision for income taxes     10,302     7,376     6,840  
Depreciation and amortization     4,178     3,858     5,278  
EBITDA (6)   $ 56,902   $ 45,771   $ 21,677  
                     
Adjustments or charges:                    
  Impairment of goodwill (3)     -     -     11,926  
EBITDA after adjustments (6)   $ 56,902   $ 45,771   $ 33,603  
                     
                     
   
   
ALIGN TECHNOLOGY, INC.  
RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS  
             
             
Reconciliation of GAAP to Non-GAAP Gross Profit            
(in thousands)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Gross profit   $ 498,106     $ 416,388  
  Acquisition and integration costs related to cost of revenues (1)     -       261  
  Severance and benefit costs related to cost of revenues (2)     -       474  
Non-GAAP Gross profit   $ 498,106     $ 417,123  
                 
                 
                 
Reconciliation of GAAP to Non-GAAP Gross Profit Scanner and CAD/CAM Services                
(in thousands)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Scanner and CAD/CAM Services gross profit   $ 13,271     $ 10,418  
  Acquisition and integration costs related to cost of revenues (1)     -       261  
  Severance and benefit costs related to cost of revenues (2)     -       474  
Non-GAAP Gross profit   $ 13,271     $ 11,153  
                 
                 
                 
Reconciliation of GAAP to Non-GAAP Operating Expenses                
(in thousands)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Operating expenses   $ 403,894     $ 330,796  
  Acquisition and integration costs related to operating expenses (1)     -       (1,010 )
  Severance and benefit costs related to operating expenses (2)     -       (306 )
  Impairment of goodwill (3)     (40,694 )     (36,591 )
  Impairment of long-lived assets (4)     (26,320 )     -  
Non-GAAP Operating expenses   $ 336,880     $ 292,889  
                 
                 
                 
Reconciliation of GAAP to Non-GAAP Operating Profit                
(in thousands)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Operating profit   $ 94,212     $ 85,592  
  Acquisition and integration costs (1)     -       1,271  
  Severance and benefit costs (2)     -       780  
  Impairment of goodwill (3)     40,694       36,591  
  Impairment of long-lived assets (4)     26,320       -  
Non-GAAP Operating profit   $ 161,226     $ 124,234  
                 
                 
                 
Reconciliation of GAAP to Non-GAAP Net Profit                
(in thousands, except per share amounts)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Net profit   $ 64,295     $ 58,691  
  Acquisition and integration costs (1)     -       1,271  
  Severance and benefit costs (2)     -       780  
  Impairment of goodwill (3)     40,694       36,591  
  Impairment of long-lived assets (4)     26,320       -  
  Income tax-related adjustments (5)     (3,788 )     (3,900 )
Non-GAAP Net profit   $ 127,521     $ 93,433  
                 
Diluted Net profit per share:                
    GAAP   $ 0.78     $ 0.71  
    Non-GAAP   $ 1.54     $ 1.13  
                 
Shares used in computing diluted GAAP Net profit per share     82,589       83,040  
Shares used in computing diluted Non-GAAP Net profit per share     82,589       83,040  
                 
                 
                 
Reconciliation of GAAP Net Profit to EBITDA and Adjusted EBITDA                
(in thousands)   Year Ended  
    December 31,
2013
    December 31, 2012  
                 
GAAP Net profit   $ 64,295     $ 58,691  
Provision for income taxes     28,844       25,605  
Depreciation and amortization     16,825       17,811  
EBITDA (6)     109,964       102,107  
                 
Adjustments or charges:                
  Acquisition and integration related costs (1)     -       1,271  
  Severance and benefit costs (2)     -       780  
  Impairment of goodwill (3)     40,694       36,591  
  Impairment of long-lived assets (4)     26,320       -  
EBITDA after adjustments (6)   $ 176,978     $ 140,749  
                 
                 

Notes:

(1) Acquisition costs and integration related. We have incurred acquisition-related and other expenses which include legal, banker, accounting and other advisory fees of third parties, retention bonuses, integration and professional fees. We do not engage in acquisitions in the ordinary course of business. We believe that it is important to understand these charges; however, we do not believe that these charges are indicative of future operating results. We believe that eliminating these expenses from our non-GAAP measures is useful because we generally would not have otherwise incurred such expenses in the periods presented as part of our continuing operations.

(2) Severance and benefits costs. These costs are related to the closure of our New Jersey operations and were realized through the first three quarters of 2012. This closure resulted in us incurring various restructuring and exit activities in 2011 and costs associated with severance and benefits. Such activity was a discrete event based on a unique set of business objectives or circumstances, and each has differed from the others in terms of its operational implementation, business impact and scope. We do not engage in restructuring and/or exit activities in the ordinary course of business. We believe that it is important to understand significant severance and benefits costs from restructuring and exit activities and believe that investors benefit from excluding these charges from our operating results to facilitate a more meaningful evaluation of current operating performance and comparisons to past operating performance.

(3) Impairment of goodwill. These costs represents non-cash write-downs of our goodwill generally related to negative trends in market and economic conditions, termination of relationships with distributors, or the increase in competitive environment related to our Scanner and CAD/CAM Services reporting unit. We remove the impact of these charges to our operating performance to assist in assessing our ability to generate cash from operations. We believe this may be useful information to users of our financial statements; therefore, we have excluded these charges for purposes of calculating these non-GAAP measures to facilitate an evaluation of our current operating performance, particularly in terms of liquidity.

(4) Impairment of long-lived assets. These costs represents non-cash write-downs of our long-lived assets generally related to the increase in competitive environment related to our Scanner and CAD/CAM Services reporting unit. As a result of these conditions, we have assessed that our asset group within the reporting unit was not recoverable and therefore recorded an impairment charge. We remove the impact of these charges to our operating performance to assist in assessing our ability to generate cash from operations. We believe this may be useful information to users of our financial statements; therefore, we have excluded these charges for purposes of calculating these non-GAAP measures to facilitate an evaluation of our current operating performance, particularly in terms of liquidity.

(5) Income tax-related adjustments. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for discrete tax items and items excluded from GAAP income in calculating the non-GAAP financial measures presented above. Our estimated tax rate on non-GAAP income is determined annually and may be re-calculated during the year to take into account events or trends that we believe materially impact the estimated annual rate.

(6) EBITDA and adjusted EBITDA. We use EBITDA as a performance measure for benchmarking against our peers and competitors. We believe EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the medical technology industry. We also use adjusted EBITDA which excludes certain special or non-recurring expenses, net of certain special or non-recurring benefits, detailed in the reconciliation tables that accompany this release, as an internal measure of business operating performance. We believe such financial measures provide a meaningful perspective of the underlying operating performance to our current business. EBITDA and adjusted EBITDA are not recognized terms under GAAP. Because all companies do not calculate EBITDA and similarly titled financial measures in the same way, those measures as used by other companies may not be consistent with the way we calculate such measures and should not be considered as alternative measures of operating or net profit.

 
 
ALIGN TECHNOLOGY
Q4 and FISCAL 2013 EARNINGS RELEASE ADDITIONAL DATA
REVENUE PERFORMANCE AND CLEAR ALIGNER METRICS
(in thousands except per share data)
                                           
    Q4     FISCAL     Q1     Q2     Q3     Q4     FISCAL  
    2012     2012     2013     2013     2013     2013     2013  
Invisalign Clear Aligner Net Revenues by Geography:                                                        
  North America   $ 91,686     $ 361,122     $ 97,045     $ 102,217     $ 103,888     $ 105,059     $ 408,209  
    North American Orthodontists     43,812       172,532       48,859       50,476       52,504       52,104       203,943  
    North American GP Dentists     47,874       188,590       48,186       51,741       51,384       52,955       204,266  
  International     32,513       124,796       31,818       40,320       38,983       50,595       161,716  
  Non-case*     8,660       30,663       12,709       10,766       10,679       10,570       44,724  
    Total Clear Aligner Net Revenues   $ 132,859     $ 516,581     $ 141,572     $ 153,303     $ 153,550     $ 166,224     $ 614,649  
  *includes Invisalign training, ancillary products, and retainers                                                        
Invisalign Clear Aligner Net Revenues by Product:                                                        
  Invisalign Full   $ 87,265     $ 338,600     $ 85,914     $ 95,762     $ 93,945     $ 106,433     $ 382,054  
  Invisalign Express/Lite     13,269       51,486       16,083       19,158       17,702       19,475       72,418  
  Invisalign Teen     16,455       67,127       18,573       19,937       23,779       22,561       84,850  
  Invisalign Assist     7,210       28,705       8,293       7,680       7,445       7,185       30,603  
  Non-case*     8,660       30,663       12,709       10,766       10,679       10,570       44,724  
    Total Clear Aligner Net Revenues   $ 132,859     $ 516,581     $ 141,572     $ 153,303     $ 153,550     $ 166,224     $ 614,649  
                                                         
Average Invisalign Selling Price (ASP):                                                        
  Worldwide ASP (1)   $ 1,375     $ 1,340     $ 1,315     $ 1,345     $ 1,335     $ 1,400     $ 1,350  
  Worldwide ASP, adjusted (2)   $ 1,320     $ 1,325     $ 1,340     $ 1,355     $ 1,335     $ 1,400     $ 1,360  
  International ASP   $ 1,455     $ 1,435     $ 1,355     $ 1,480     $ 1,455     $ 1,630     $ 1,490  
  (1) Invisalign case net revenues / Invisalign case shipments                                                        
  (2) Adjusted for one-time adjustments (eg. Q4'12 refinement release and Q1'13 and Q2'13 grandfathered mid-course correction deferrals)                                                        
                                                         
Invisalign Clear Aligner Cases Shipped by Geography:                                                        
  North America     68,140       276,715       74,730       78,865       80,130       80,120       313,845  
    North American Orthodontists     33,505       137,045       38,000       39,545       41,610       40,420       159,575  
    North American GP Dentists     34,635       139,670       36,730       39,320       38,520       39,700       154,270  
  International     22,340       86,825       23,445       27,270       26,770       31,010       108,495  
    Total Cases Shipped     90,480       363,540       98,175       106,135       106,900       111,130       422,340  
                                                         
Invisalign Clear Aligner Cases Shipped by Product:                                                        
  Invisalign Full     57,920       234,975       61,245       65,525       64,600       70,985       262,355  
  Invisalign Express/Lite     15,940       58,705       18,940       21,285       19,230       19,525       78,980  
  Invisalign Teen     11,255       48,315       12,580       13,920       17,740       15,350       59,590  
  Invisalign Assist     5,365       21,545       5,410       5,405       5,330       5,270       21,415  
    Total Cases Shipped     90,480       363,540       98,175       106,135       106,900       111,130       422,340  
                                                         
Number of Invisalign Doctors Cases Shipped To:                                                        
  North American Orthodontists     4,615       5,665       4,760       4,940       4,970       5,060       6,040  
  North American GP Dentists     11,685       19,285       12,520       13,130       13,170       13,435       21,290  
  International     5,715       9,285       5,840       6,355       6,510       6,925       10,800  
    Total Doctors Cases Shipped To     22,015       34,235       23,120       24,425       24,650       25,420       38,130  
                                                         
Invisalign Doctor Utilization Rates*:                                                        
  North American Orthodontists     7.3       24.2       8.0       8.0       8.4       8.0       26.4  
  North American GP Dentists     3.0       7.2       2.9       3.0       2.9       3.0       7.3  
  International     3.9       9.4       4.0       4.3       4.1       4.5       10.0  
    Total Utilization Rates     4.1       10.6       4.3       4.4       4.3       4.4       11.1  
  * # of cases shipped/# of doctors to whom cases were shipped                                                        
Number of Invisalign Doctors Trained:                                                        
  North American Orthodontists     75       385       65       115       90       105       375  
  North American GP Dentists     920       3,310       690       1,015       705       1,355       3,765  
  International     780       3,145       970       1,020       875       1,060       3,925  
    Total Doctors Trained Worldwide     1,775       6,840       1,725       2,150       1,670       2,520       8,065  
    Total to Date Worldwide     76,495       76,495       78,220       80,370       82,040       84,560       84,560  
                                                         
Scanner and CAD/CAM Services Net Revenues:                                                        
  North America Scanner and CAD/CAM Services   $ 9,940     $ 42,251     $ 11,952     $ 10,454     $ 10,875     $ 11,980     $ 45,261  
  International Scanner and CAD/CAM Services     41       1,209       56       71       81       88       296  
    Total Scanner and CAD/CAM Net Revenues   $ 9,981     $ 43,460     $ 12,008     $ 10,525     $ 10,956     $ 12,068     $ 45,557  
                                                         
  Scanner Net Revenues   $ 4,643     $ 20,059     $ 6,625     $ 5,027     $ 5,538     $ 6,508     $ 23,698  
  CAD/CAM Services Net Revenues     5,338       23,401       5,383       5,498       5,418       5,560       21,859  
    Total Scanner and CAD/CAM Services Net Revenues   $ 9,981     $ 43,460     $ 12,008     $ 10,525     $ 10,956     $ 12,068     $ 45,557  
                                                         
Total Net Revenues by Geography:                                                        
  Total North America Net Revenues   $ 101,626     $ 403,373     $ 108,997     $ 112,671     $ 114,763     $ 117,039     $ 453,470  
  Total International Net Revenues     32,554       126,005       31,874       40,391       39,064       50,683       162,012  
  Total Non-case Net Revenues     8,660       30,663       12,709       10,766       10,679       10,570       44,724  
    Total Worldwide Net Revenues   $ 142,840     $ 560,041     $ 153,580     $ 163,828     $ 164,506     $ 178,292     $ 660,206  
      YoY % growth     10.8 %     16.7 %     13.7 %     12.5 %     20.5 %     24.8 %     17.9 %
      QoQ % growth     4.6 %             7.5 %     6.7 %     0.4 %     8.4 %        
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)  
   
  Q1'14 Guidance
   
  GAAP
   
Net Revenues $175.2 - $179.6
   
Gross Margin 73.9% - 74.5%
   
Operating Expenses $94.5 - $96.9
   
Operating Margin approximately 20.5%
   
Net Income per Diluted Share $0.32 - $0.34
   
Stock Based Compensation Expense:  
Cost of Net Revenues $0.9
Operating Expenses $8.9
Total Stock Based Compensation Expense $9.8
   
   
   
Business Metrics: Q1'14
   
Case Shipments 110.1K - 113.1K
Cash, Cash Equivalents, and Marketable Securities $488M - $498M
Capex $6.1M - $7.6M
Depreciation & Amortization $4.3M - $4.8M
Diluted Shares Outstanding 82.8M