April 23, 2015

Align Technology Announces First Quarter 2015 Results


SAN JOSE, CA -- (Marketwired) -- 04/23/15 -- 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

Source: Align Technology

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