Invisalign Itero

Press Release

Apr 29, 2008

Align Technology Announces First Quarter Fiscal 2008 Results; Board Authorizes $50 Million Stock Repurchase Program

SANTA CLARA, Calif., April 29, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Align Technology, Inc. (Nasdaq: ALGN) today reported financial results for the first quarter of fiscal 2008, ended March 31, 2008.

Total net revenues for the first quarter of fiscal 2008 (Q1 08) were $74.8 million. This reflects a year-over-year increase of 17 percent compared to $63.8 million in the first quarter of 2007 (Q1 07). On a sequential basis, net revenues increased 3 percent from $72.5 million in the fourth quarter of 2007 (Q4 07).

"I'm pleased to report another good quarter for Align and a solid start to fiscal 2008. Our better than expected Q1 results were driven primarily by higher ASPs and expense management," said Thomas M. Prescott, president and CEO of Align Technology.

Net profit for Q1 08 was $5.3 million, or $0.07 per diluted share. This is compared to net profit of $7.0 million, or $0.10 per diluted share in Q1 07, and net profit of $5.7 million, or $0.08 per diluted share in Q4 07. Stock-based compensation expense included in net profit in Q1 08 was $4.0 million, compared to $2.5 million in Q1 07, and $3.4 million in Q4 07.

    Q1 08 Operating Results

    Key GAAP Operating Results                 Q1 08     Q4 07     Q1 07
    Gross Margin                               73.8%     73.6%     72.5%
    Operating Expense                         $50.5M    $48.4M    $39.2M
    Operating Margin                            6.2%      6.9%     11.0%
    Net Profit                                 $5.3M     $5.7M     $7.0M
    Earnings Per Diluted Share (EPS)           $0.07     $0.08     $0.10

Liquidity and Capital Resources

As of March 31, 2008, Align had $132.4 million in cash, cash equivalents, marketable securities and restricted cash, compared to $127.9 million as of December 31, 2007.

Key Business Metrics

The following table highlights business metrics for Align's first quarter of 2008. Additional historical information is available on the Company's website at

    Revenue by Channel:                Q1 08     Q1'08/Q4'07    Q1'08/Q1'07
                                                  % Change       % Change
    U.S. Orthodontists                $22.8M         6.3%          6.0%
    U.S. GP Dentists                  $34.8M         3.9%         16.7%
    International                     $14.2M           0%         54.7%
    Training and Other                $ 3.0M       (11.8%)        (8.2%)
    Total Revenue                     $74.8M         3.1%         17.3%

    Average Selling Price (ASP):       Q1 08     Q1'08/Q4'07    Q1'08/Q1'07
                                                  % Change       % Change
    Total Worldwide Blended ASP       $1,380         1.5%          3.0%
    Total Worldwide ASP excluding
    Invisalign Express                $1,500         2.0%          3.4%
    U.S. Orthodontists Blended ASP    $1,290         4.0%          1.6%
    U.S. GP Dentists Blended ASP      $1,340         1.5%          0.8%
    International                     $1,700        (3.4%)         3.0%

    Number of Cases Shipped:           Q1 08     Q1'08/Q4'07    Q1'08/Q1'07
                                                  % Change       % Change
    U.S. Orthodontists - Full
     Invisalign                       14,500         1.6%          2.1%
    U.S. Orthodontists -
     Invisalign Express                3,090         1.0%         10.0%
    U.S. GP Dentists -
     Full Invisalign                  20,900         0.5%         12.3%
    U.S. GP Dentists - Invisalign
     Express                           4,950         6.9%         28.9%
    International- Full Invisalign     8,200         3.1%         50.5%
    International- Invisalign Express    130         8.3%         18.2%
    Total Cases Shipped               51,770         1.8%         15.0%

    Number of Doctors Cases were       Q1 08
     Shipped to:
    U.S. Orthodontists                 3,680
    U.S. GP Dentists                  10,640
    International                      2,630
    Total Doctors Cases were Shipped  16,950
     to Worldwide

    Number of Doctors Trained          Q1 08     Cumulative
    U.S. Orthodontists                   100        8,410
    U.S. GP Dentists                   1,150       28,630
    International                        400       12,740
    Total Doctors Trained Worldwide    1,650       49,780

    Multiple Case Doctors              Q1 08
     (Cumulative as of):
    U.S. Orthodontists                 90.0%
    U.S. GP Dentists                   86.8%
    International                      76.6%

    Doctors Starting Invisalign        Q1 08
     Treatment (Cumulative as of):
    U.S. Orthodontists                 6,830
    U.S. GP Dentists                  22,740
    International                      6,960
    Total Doctors Starting
     Invisalign Treatment             36,530

    Doctor Utilization Rates*:         Q1 08        Q4 07         Q1 07
    U.S. Orthodontists                   4.8         4.8           4.8
    U.S. GP Dentists                     2.4         2.5           2.6
    International                        3.2         3.2           2.8
    Total Utilization Rate               3.1         3.1           3.2
    *Utilization = # of cases/# of
     doctors to whom cases were shipped

Business Outlook

For the second quarter 2008 (Q2 08), Align Technology expects net revenues to be in a range of $78.5 million to $81.5 million. Earnings per diluted share for Q2 08 is expected to be in a range of $0.04 to $0.06. Stock-based stock compensation expense for Q2 08 is expected to be approximately $4.9 million.

For fiscal 2008, the Company remains comfortable with its prior outlook. The increase in deferred revenue for fiscal 2008 is expected to be in the range of $6 million to $9 million primarily associated with new products, which will be recognized in future periods, bringing the Company's total deferred revenue balance at the end of 2008 to a range of $18 million to $22 million.

A more comprehensive business outlook is available following the financial tables of this release.

Stock Repurchase Program

In a separate announcement today Align also announced that its board of directors has authorized a stock repurchase program of up to $50 million, effective immediately. For more information, please see Align's press release titled, "Align Technology Announces $50 Million Stock Repurchase Program."

Align Web Cast and Conference Call

Align Technology will host a conference call today, April 29, 2008 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter fiscal 2008 results, discuss future operating trends and 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 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 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 account number 292 followed by # and conference number 280015 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 4:30 p.m. ET on May 14, 2008.

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 or call 1-800-INVISIBLE.

Forward-Looking Statement

This news release, including the tables below, contains forward-looking statements, including statements regarding Align's anticipated financial results and certain business metrics for the second quarter and full year of 2008, including anticipated revenue and deferred revenue, gross profit, gross margin, operating expense, net profit, 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, 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, continued customer demand for Invisalign and new products, the timing of case submissions from our doctors within a 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. 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, 2007, which was filed with the Securities and Exchange Commission on February 26, 2008. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

     Investor Relations Contact                Press Contact
     Shirley Stacy                             Shannon Mangum Henderson
     Align Technology, Inc.                    Ethos Communication, Inc.
     (408) 470-1150                            (678) 540-9222            

    (in thousands, except per share data)

                                                       Three Months Ended
                                                  March 31,         March 31,
                                                    2008              2007

    Net revenues                                   $74,776           $63,761

    Cost of revenues                                19,608            17,529

    Gross profit                                    55,168            46,232

    Operating expenses:
      Sales and marketing                           28,059            23,150
      General and administrative                    15,188            12,185
      Research and development                       7,295             5,693
      Patients First Program                             -            (1,796)

    Total operating expenses                        50,542            39,232

    Profit from operations                           4,626             7,000

    Interest and other income, net                     966               455

    Profit before income taxes                       5,592             7,455

    Provision for income taxes                        (288)             (477)

    Net profit                                      $5,304            $6,978

    Net profit per share
      - basic                                        $0.08             $0.11
      - diluted                                      $0.07             $0.10

    Shares used in computing net profit per share
      - basic                                       69,053            65,433
      - diluted                                     70,860            69,331

    (in thousands)

                                                  March 31,      December 31,
                                                    2008            2007

    Current assets:
      Cash, cash equivalents and
       restricted cash                            $113,680           $89,140
      Marketable securities, short-term             18,683            38,771
      Accounts receivable, net                      47,475            44,850
      Inventories, net                               3,010             2,910
      Other current assets                           8,302             8,846
        Total current assets                       191,150           184,517

    Property and equipment, net                     27,762            25,320
    Goodwill and intangible assets, net             10,384            11,093
    Other long-term assets                           1,754             1,831

         Total assets                             $231,050          $222,761


    Current liabilities:
      Accounts payable                             $10,100            $9,222
      Accrued liabilities                           30,563            39,875
      Deferred revenue                              13,295            12,362
         Total current liabilities                  53,958            61,459

    Other long term liabilities                        159               148

         Total liabilities                          54,117            61,607

    Total stockholders' equity                     176,933           161,154

         Total liabilities and
          stockholders' equity                    $231,050          $222,761


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. This outlook excludes the effects of any stock repurchases.

    (in millions, except per share amounts and percentages)

                                              Q2 2008            FY 2008

    Net Revenue                            $78.5 - $81.5     $320.0 - $330.0

    Gross Margin                           73.0% - 73.7%      74.2% - 75.1%

    Operating Expenses                     $55.8 - $57.0     $210.8 - $218.8

    Net Profit %                              3% - 5%            9% - 10%

    Net Profit per Diluted Share           $0.04 - $0.06      $0.40 - $0.45

    Increase in Deferred Revenue                               $6.0 - $9.0

    Total Deferred Revenue Balance                            $18.0 - $22.0

    Stock Based Compensation Expense:
    Cost of Revenues                           $0.4               $1.2
    Operating Expenses                         $4.5              $16.8
    Total Stock Based Compensation
     Expense                                   $4.9              $18.0

    Business Metrics:
                                                 Q2 2008            FY 2008
    Case Shipments                            54.0K - 56.0K    226.7K - 237.2K
    Cash                                      $130M - $135M      $160M - $170M
    DSO                                            ~56 days           ~56 days
    Capex                                     $5.0M - $7.0M    $15.0M - $20.0M
    Depreciation & Amortization               $2.0M - $3.0M    $13.0M - $14.0M
    Diluted Shares Outstanding                        71.4M              73.2M

SOURCE Align Technology, Inc.

Copyright (C) 2008 PR Newswire. All rights reserved

News Provided by COMTEX


Data Provided by Refinitiv. Minimum 15 minutes delayed.