April 27, 2017

Align Technology Announces Record First Quarter 2017 Results


SAN JOSE, CA -- (Marketwired) -- 04/27/17 --

  • Q1 revenues up 5.8% sequentially, up 30.0% year-over-year to a record $310.3 million
  • Q1 Invisalign case shipments up 9.5% sequentially, up 27.1% year-over-year to a record 208 thousand cases
  • Q1 International Invisalign case shipments up 41% year-over-year, North America Invisalign case shipments up 20% year-over-year
  • Q1 Invisalign case shipments to teenage patients up 11.3% sequentially, up 31.6% year-over-year

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the first quarter ended March 31, 2017. Invisalign case shipments in the first quarter of 2017 (Q1'17) were 208.1 thousand, a 27.1% increase year-over-year. For Q1'17, revenues were $310.3 million, a 30.0% increase year-over-year, and net profit was $69.4 million, or $0.85 per diluted share, up $0.35 per diluted share compared to the same period in the prior year. Q1'17 EPS included the benefit of $21.3 million, or $0.26, from excess tax benefits on stock based compensation in accordance with the new accounting guidance.

Commenting on Align's Q1 2017 results, Align Technology President and CEO Joe Hogan said, "2017 is off to a great start with first quarter revenues, volumes, gross margin and EPS above our expectations. For the quarter, net revenues were up 30% year-over-year, driven by strong Invisalign case shipments of 27% year-over-year to a record 38.9 thousand doctors shipped to during the quarter. These results reflect growth from both our North America and International regions, and higher than expected teenage cases across the board, which increased 32% year-over-year. iTero scanner revenues increased 47% year-over-year, and were down sequentially as expected."

GAAP Summary Financial Comparisons

First Quarter Fiscal 2017

    Q1'17   Q4'16   Q1'16   Q/Q Change   Y/Y Change
Invisalign Case Shipments*   208,060   190,055   163,695   +9.5%   +27.1%
Net Revenues   $310.3M   $293.2M   $238.7M   +5.8%   +30.0%
  Clear Aligner**   $282.4M   $251.5M   $219.7M   +12.3%   +28.5%
  Scanner & Services   $27.9M   $41.7M   $19.0M   (33.0)%   +46.9%
Net Profit   $69.4M   $47.6M   $40.5M   +45.8%   +71.2%
Diluted EPS   $0.85   $0.59   $0.50   +$0.26   +$0.35

Note: Changes and percentages are based on actual values and may effect totals due to rounding
* Invisalign Shipment figures does not include SmileDirectClub aligners
** Clear aligner revenue includes revenues from Invisalign clear aligners and SmileDirectClub aligners

As of March 31, 2017, Align had $644.2 million in cash, cash equivalents and marketable securities compared to $700.0 million as of December 31, 2016. In Q1'17, we purchased a new headquarters building in San Jose, California for approximately $44.1 million. We also paid $36.5M for employee taxes related to the net settlement of vesting employee stock awards during the quarter. Lastly, we repurchased approximately 0.04 million shares of stock for $3.8 million in Q1'17 under the 2014 Repurchase Program. Align has $300.0 million available for repurchase under its 2016 Repurchase Program announced on April 28, 2016.

Q2 2017 Business Outlook

For the second quarter of 2017 (Q2'17), Align provides the following guidance:

  • Invisalign case shipments in the range of 221 thousand to 224 thousand, up approximately 25% to 27% over the same period a year ago.
  • Net revenues in the range of $340 million to $345 million, up approximately 26% to 28% over the same period a year ago.
  • Diluted EPS in the range of $0.71 to $0.74, which includes $0.03 of excess tax benefit.

Regarding our tax rate: During the first quarter of 2017, we adopted accounting standards update entitled "Improvements to Employee Share-Based Payment Accounting". Under this new standard, excess tax benefits and deficiencies associated with employee share-based payments are no longer recognized as additional paid-in capital on the balance sheet but instead are recognized directly to income tax expense or benefit in the income statement for the reporting period in which they occur. Under this new standard, we expect our Q2 effective tax rate to be approximately 21%, which includes $2 to $3 million in excess tax benefits.

Align Web Cast and Conference Call

Align will host a conference call today, April 27, 2017 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter 2017 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the webcast, 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. 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 13658703 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 11, 2017.

About Align Technology, Inc.

Align Technology designs and manufactures the Invisalign® system, the most advanced clear aligner system in the world, and iTero® intraoral scanners and services. Align's products help dental professionals achieve the clinical results they expect and deliver effective, cutting-edge dental options to their patients. 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 iTero 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 2017, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, tax rate 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, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, 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, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, 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, 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 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, 2016, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2017. 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, 2017
 
March 31, 2016
         
Net revenues   $ 310,341   $ 238,720
             
Cost of net revenues     74,716     58,093
             
Gross profit     235,625     180,627
             
Operating expenses:            
  Selling, general and adminstrative     151,148     112,210
  Research and development     22,804     15,083
    Total operating expenses     173,952     127,293
             
Income from operations     61,673     53,334
             
Interest and other income (expense), net     1,645     (427)
             
Net income before provision for income taxes and equity in losses of investee     63,318     52,907
             
Provision (benefit) for income taxes     (7,223)     12,361
Equity in losses of investee, net of tax     1,121     -
             
Net income   $ 69,420   $ 40,546
             
Net income per share:            
  Basic   $ 0.87   $ 0.51
  Diluted   $ 0.85   $ 0.50
             
Shares used in computing net income per share:            
  Basic     79,904     79,831
  Diluted     81,534     81,320
               
         
ALIGN TECHNOLOGY, INC.        
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS    
(in thousands)        
         
    March 31
2017
  December 31,
2016
ASSETS        
         
Current assets:        
  Cash and cash equivalents   $ 261,027   $ 389,275
  Marketable securities, short-term     284,559     250,981
  Accounts receivable, net     267,128     247,415
  Inventories     35,174     27,131
  Prepaid expenses and other current assets     70,279     38,176
    Total current assets     918,167     952,978
             
Marketable securities, long-term     98,574     59,783
Property, plant and equipment, net     231,692     175,167
Equity method investments     43,940     45,061
Goodwill and intangible assets, net     92,447     81,998
Deferred tax assets     60,068     67,844
Other assets     14,405     13,320
             
    Total assets   $ 1,459,293   $ 1,396,151
             
                 
    LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Current liabilities:            
  Accounts payable   $ 37,028   $ 28,596
  Accrued liabilities     125,631     134,332
  Deferred revenues     202,895     191,407
    Total current liabilities     365,554     354,335
             
Income tax payable     46,322     45,133
Other long term liabilities     2,542     1,294
    Total liabilities     414,418     400,762
             
Total stockholders' equity     1,044,875     995,389
             
    Total liabilities and stockholders' equity   $ 1,459,293   $ 1,396,151
                 
                       
ALIGN TECHNOLOGY, INC.                      
INVISALIGN BUSINESS METRICS*                      
                       
                       
    Q1   Q2   Q3   Q4 Fiscal   Q1
    2016   2016   2016   2016 2016   2017
Invisalign Average Selling Price (ASP):                                  
  Worldwide ASP   $ 1,255   $ 1,285   $ 1,285   $ 1,230 $ 1,265   $ 1,270
  International ASP   $ 1,315   $ 1,345   $ 1,365   $ 1,315 $ 1,335   $ 1,325
                                   
Invisalign Cases Shipped by Geography:                                  
  North America     110,500     114,855     115,900     122,555   463,810     132,885
  International     53,195     62,140     61,855     67,500   244,690     75,175
    Total Cases Shipped     163,695     176,995     177,755     190,055   708,500     208,060
      YoY % growth     25.2%     22.4%     20.5%     18.5%   21.5%     27.1%
      QoQ % growth     2.1%     8.1%     0.4%     6.9%         9.5%
                                   
Number of Invisalign Doctors Cases Were Shipped To:                                  
  North America     22,355     22,575     22,570     23,265   34,065     23,910
  International     11,280     12,485     12,720     13,635   20,415     14,955
    Total Doctors Cases Shipped To     33,635     35,060     35,290     36,900   54,480     38,865
                                   
Invisalign Doctor Utilization Rates*:                                  
  North America     4.9     5.1     5.1     5.3   13.6     5.6
  North American Orthodontists     10.4     10.7     11.1     11.3   36.6     12.6
  North American GP Dentists     3.0     3.1     3.0     3.2   7.6     3.1
  International     4.7     5.0     4.9     5.0   12.0     5.0
    Total Utilization Rates     4.9     5.1     5.0     5.2   13.0     5.4
    * # of cases shipped/# of doctors to whom cases were shipped                                  
                                   
Number of Invisalign Doctors Trained:                                  
  North America     875     1,125     1,300     1,420   4,720     980
  International     1,605     1,760     1,315     2,280   6,960     2,280
    Total Doctors Trained Worldwide     2,480     2,885     2,615     3,700   11,680     3,260
    Total to Date Worldwide     106,270     109,155     111,770     115,470   115,470     118,730
Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals.          
*Invisalign business metrics exclude SmileDirectClub aligners.                                  
                                   
                                   
ALIGN TECHNOLOGY, INC.                                  
STOCK-BASED COMPENSATION                                  
(in thousands)                                  
                                   
      Q1     Q2     Q3     Q4   Fiscal     Q1
      2016     2016     2016     2016   2016     2017
Stock-based Compensation (SBC)                                  
  SBC included in Gross Profit   $ 961   $ 932   $ 995   $ 1,078 $ 3,966   $ 925
  SBC included in Operating Expenses     11,563     12,767     12,716     13,136   50,182     13,887
    Total SBC Expense   $ 12,524   $ 13,699   $ 13,711   $ 14,214 $ 54,148   $ 14,812
                                   
         
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)        
         
    Q2'17 Guidance    
         
    GAAP    
         
Net Revenues   $340 - $345    
         
Gross Margin   74.0% - 75.0%    
         
Operating Expenses   $180 - $184    
         
Operating Margin   21.0% - 21.7%    
         
Net Income per Diluted Share   $0.71 - $0.74   (1)
         
         
Business Metrics:   Q2'17    
         
Case Shipments   221K - 224K    
Capital Expenditure   $30M - $35M    
Depreciation & Amortization   $8M - $9M    
Diluted Shares Outstanding   81.6M   (2)
Stock Based Compensation Expense   $14.7M    
Effective Tax Rate   21%   (1)
         
(1) Includes the benefit from the adoption of the new accounting standard update for share-based compensation
(2) Excludes any stock repurchases during the quarter        
         

Investor Relations Contact
Yin Cantor
Align Technology, Inc.
(408) 470-1044
ycantor@aligntech.com

Press Contact

Shannon Mangum Henderson
Ethos Communication, Inc.
(678) 261-7803
align@ethoscommunication.com

Source: Align Technology

News Provided by Acquire Media


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