Santa Clara, Calif. - July 25, 2007 - Align Technology, Inc. (Nasdaq: ALGN), the inventor of Invisalign®, a proprietary method of straightening teeth without wires and brackets, today reported financial results for the second quarter of 2007, ended June 30, 2007. Total revenues for the second quarter of 2007 (Q2 07) were a record $76.6 million, a sequential increase of 20 percent compared to $63.8 million in the first quarter of 2007 (Q1 07) and a year-over-year increase of 44 percent compared to $53.2 million in the second quarter of 2006 (Q2 06).
"Our second quarter results were outstanding by any measure and we are very pleased to deliver our second consecutive record quarter," said Thomas M. Prescott, President and CEO of Align Technology. "Consumer demand and physician interest in the Invisalign system continue to expand, enabling case and revenue growth and increased profitability. Beyond our financial results, we continue to make progress on new product and technology development, and other key strategic objectives."
On a generally accepted accounting principles (GAAP) basis, net profit for Q2 07 was $13.6 million, or $0.19 per share diluted. This reflects an increase in GAAP net profit of 94 percent from $7.0 million, or $0.10 per share diluted in Q1 07, and an increase from a GAAP net loss of $2.6 million, or $0.04 loss per share diluted in Q2 06.
Non-GAAP net profit for Q2 07 was $16.5 million, or $0.23 per share diluted. This reflects an increase in non-GAAP net profit of 116 percent from $7.6 million, or $0.11 per share diluted in Q1 07, and an increase from a non-GAAP net loss of $0.3 million, or $0.01 loss per share diluted in Q2 06. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.
Q2 07 Operating Results
Operating results reflect stock-based compensation expense of $2.9 million for Q2 07, and includes a one-time $1.6 million credit for an insurance reimbursement of legal costs associated with OrthoClear litigation.
Liquidity and Capital Resources
As of June 30, 2007, Align had $82.0 million in cash, cash equivalents, marketable securities and restricted cash, compared to $64.1 million as of December 31, 2006. During the second quarter the Company paid off the remaining $8 million of its credit facility and has no outstanding balance, under the credit facility, as of June 30, 2007.
Key Business Metrics
The following table highlights business metrics for Align's second quarter of 2007. Additional historical information is available on the Company's website at investor.aligntech.com.
Patients First Program Update
During Q2 07, the Patients First Program (PFP) was completed and Align shipped virtually all of the 24,200 cases that were registered and received, net of approximately 500 case cancellations. There are approximately 200 cases pending ClinCheck approval by doctors. Once the Company completes these shipments, it will have fulfilled its commitment to deliver all PFP cases.
Business Outlook for the Third Quarter 2007 and Full Year 2007
For the third quarter 2007 (Q3 07), Align Technology expects revenues between $70.3 and $72.2 million and GAAP diluted EPS between $0.07 and $0.09. Non-GAAP diluted EPS is expected to be between $0.11 and $0.13.
For the full year 2007, Align Technology expects revenues between $281.6 and $286.8 million and GAAP diluted EPS between $0.43 and $0.49. Non-GAAP diluted EPS for full year 2007 is expected to be between $0.57 and $0.63.
A more comprehensive business outlook, including a reconciliation of GAAP to Non-GAAP financial measures, is available following the financial tables of this release.
Align Web cast and Conference Call
Align Technology will host a conference call today, July 25, 2007 at 8:30 a.m. ET, 5:30 a.m. PT, to review its second quarter 2007 results, discuss future operating trends and business outlook. The conference call will also be webcast live via the Internet. To access the webcast, 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 201-689-8341 approximately fifteen minutes prior to the start of the call. If you are unable to listen to the call, an archived webcast will be available beginning approximately one hour after the call's conclusion and will remain available through July 24, 2008. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with account number 292 followed by # and conference number 227478 followed by #. The replay must be accessed from international locations by dialing 201-612-7415 and using the same account and conference numbers referenced above. The telephonic replay will be available through 5:30 p.m. EDT on August 8, 2007.
About Align Technology, Inc.
Align Technology designs, manufactures and markets Invisalign, a proprietary method for treating malocclusion, or the misalignment of teeth. Invisalign corrects malocclusion using a series of clear, nearly invisible, removable appliances that gently move teeth to a desired final position. Because it does not rely on the use of metal or ceramic brackets and wires, Invisalign significantly reduces the aesthetic and other limitations associated with braces. Invisalign is appropriate for treating adults and older teens. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998.
To learn more about Invisalign or to find a certified Invisalign doctor in your area, please visit www.invisalign.com or call 1-800-INVISIBLE.
About non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principals (GAAP), we use the following non-GAAP financial measures: non-GAAP gross profit, gross margin, profit (loss) from operations, net profit (loss), earnings (loss) per share, and certain expenses (including sales and marketing, general and administrative and research and development), which exclude stock-based compensation and the Patients First Program charge. 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. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations" and "Business Outlook Summary" included at the end of this release.
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, ongoing and customary course of its operations. Accordingly, management excludes from "core operating performance" certain expenses and expenditures that may not be indicative of our operating performance including not only non-cash charges, such as stock-based compensation, but also discrete 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 help them analyze the health of our business.
This news release, including the tables below, contain forward-looking statements, including statements regarding Align's anticipated financial results and certain business metrics for the third quarter and full year of 2007, including anticipated revenue, operating expense, earnings per share, percentage of revenue by channel, case shipments and average selling prices. 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, risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, continued customer demand for Invisalign, including during the summer vacation periods in the United States and Europe in the third quarter, acceptance of Invisalign by consumers and dental professionals, Align's third party manufacturing processes and personnel, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to protect its intellectual property rights, competition from manufacturers of traditional braces and new competitors, Align's ability to develop and successfully introduce new products and product enhancements, and the loss of key personnel, including members of its direct sales force. 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, 2006, which was filed with the Securities and Exchange Commission on March 12, 2007, and its Quarterly Reports on Form 10-Q. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.