SAN JOSE, CA -- (Marketwired) -- 07/28/16 -- Align Technology, Inc. (NASDAQ: ALGN) -

• Q2 revenues up 28.6% year-over-year to $269.4 million
• Q2 results driven by Clear aligner revenues up 21.2% year-over-year and Scanner revenues up almost 200% year-over-year
• Q2 Clear Aligner shipments up 22.4% year-over-year to 177 thousand cases, international shipments up 38.3% year-over-year
• Diluted EPS $0.62, up $0.23 year-over-year

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the second quarter ended June 30, 2016. Clear Aligner case shipments in the second quarter of 2016 (Q2'16) were 177 thousand, a 22.4% increase year-over-year. For Q2'16, revenues were $269.4 million, a 28.6% increase year-over-year, and net profit was $50.1 million, or $0.62 per diluted share, up $0.23 per diluted share compared to the same period in the prior year.

"Q2 was driven by better than expected revenue due to continued strong year-over-year Invisalign volume across our customer base and record utilization, with international case volume up 38.3%, and North America up 15.3%," said Joe Hogan, Align Technology President and CEO. "We also had continued strong demand for our iTero Element with record shipments this quarter resulting in revenue growth of almost 200% year-over-year."

GAAP Summary Financial Comparisons

Second Quarter Fiscal 2016

				Q2'16			Q1'16			Q2'15			Q/Q Change				Y/Y Change
	Clear Aligner Shipments				176,995			163,695			144,570			+8.1	%		+22.4	%
	Net Revenues			$	269.4M		$	238.7M		$	209.5M			+12.8	%		+28.6	%
		Clear Aligner		$	243.4M		$	219.7M		$	200.8M			+10.8	%		+21.2	%
		Scanner & Services		$	26.0M		$	19.0M		$	8.7M			+36.3	%		+199.0	%
	Net Profit			$	50.1M		$	40.5M		$	31.4M			+23.7	%		+60.0	%
	Diluted EPS			$	0.62		$	0.50		$	0.39		$	0.12			+$0.23

Note: Changes and percentages are based on actual values and may effect totals due to rounding

As of June 30, 2016, Align had $685.0 million in cash, cash equivalents and marketable securities compared to $678.7 million as of December 31, 2015. On May 3, 2016, as part of our $300.0 million April 2014 stock repurchase program, we entered into an Accelerated Stock Repurchase agreement and funded the repurchase of $50.0 million of our common stock. On that date we received an initial delivery of approximately 0.5 million shares based on current market prices. The final number of shares to be repurchased will be based on our volume-weighted average stock price during the term of the agreement, less an agreed upon discount. Upon completion of this agreement, we will commence repurchasing an additional $50.0 million of our common stock on the open market. These two actions will complete the April 2014 stock repurchase program. During the quarter the Company also announced a new plan to repurchase up to an additional $300.0 million of the Company's stock, all of which remains available for repurchase as of June 30, 2016.

Additional Aligners at No Charge Effective July 18, 2015

Align implemented its new Additional Aligners policy on July 18, 2015 in which the Company no longer distinguishes between mid-course corrections and case refinements providing doctors the ability to order additional aligners to address either treatment need at no charge, subject to certain requirements. These changes were effective for all new Invisalign Full, Teen, and Assist treatments shipped worldwide after July 18, 2015, as well as any cases that were open as of this date. While this policy change was largely immaterial to the Company's cash flows, it did impact the timing at which the Company recognizes revenue. The Company estimates Q2'16 revenues and pre-tax income were lower by approximately $8.3 million due to this change.

Q3 2016 Business Outlook

For the third quarter of 2016 (Q3'16), Align provides the following guidance:

• Clear Aligner case shipments in the range of 174.2 thousand to 176.9 thousand, up approximately 18.1% to 19.9% over the same period a year ago.
• Net revenues in the range of $267.2 million to $273.5 million.
• Diluted EPS in the range of $0.49 to $0.52.

Align Technology to Supply Non-Invisalign Clear Aligners to SmileDirect Club in North America

In a separate press release today, Align announced a supply agreement with SmileDirectClub to manufacture non-Invisalign clear aligners for SmileDirectClub's doctor-directed, at-home program for affordable, cosmetic teeth straightening.

Align Web Cast and Conference Call

Align will host a conference call today, July 28, 2016 at 4:30 p.m. ET, 1:30 p.m. PT, to review its second quarter 2016 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. 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 13640324 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 August 11, 2016.

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 third quarter of 2016, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, 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, 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, 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, 2015, which was filed with the Securities and Exchange Commission (SEC) on February 25, 2016, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which was filed with the SEC on May 5, 2016. 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						Six Months Ended
			June 30,						June 30,
			2016			2015			2016			2015
Net revenues			$	269,362		$	209,488		$	508,082		$	407,574
Cost of net revenues				64,146			50,854			122,239			97,850
Gross profit				205,216			158,634			385,843			309,724
Operating expenses:
	Selling, general and adminstrative			121,467			100,625			233,677			188,906
	Research and development			18,613			15,684			33,696			29,569
Total operating expenses				140,080			116,309			267,373			218,475
Income fom operations				65,136			42,325			118,470			91,249
Interest and other income (expense), net				125			174			(302)			(1,278)
Net income before provision for income taxes				65,261			42,499			118,168			89,971
Provision for income taxes				15,113			11,149			27,474			22,444
Net income			$	50,148		$	31,350		$	90,694		$	67,527
Net income per share
	Basic		$	0.63		$	0.39		$	1.14		$	0.84
	Diluted		$	0.62		$	0.39		$	1.11		$	0.83
Shares used in computing net income per share
	Basic			79,951			80,257			79,891			80,358
	Diluted			81,281			81,394			81,440			81,729

ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
				June 30, 2016			December 31, 2015
ASSETS
Current assets:
	Cash and cash equivalents			$	167,706		$	167,714
	Marketable securities, short-term				404,107			359,581
	Accounts receivable, net				192,660			158,550
	Inventories				22,992			19,465
	Prepaid expenses and other current assets				37,942			26,700
		Total current assets			825,407			732,010
	Marketable securities, long-term				113,158			151,370
	Property, plant and equipment, net				161,685			136,473
	Goodwill and intangible assets, net				83,749			79,162
	Deferred tax assets				60,051			51,416
	Other assets				7,223			8,202
		Total assets		$	1,251,273		$	1,158,633
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	30,927		$	34,354
	Accrued liabilities				107,505			107,765
	Deferred revenues				160,557			129,553
		Total current liabilities			298,989			271,672
Income tax payable					41,244			37,512
Other long term liabilities					1,182			1,523
		Total liabilities			341,415			310,707
Total stockholders' equity					909,858			847,926
		Total liabilities and stockholders' equity		$	1,251,273		$	1,158,633

ALIGN TECHNOLOGY, INC.

Q2 2016 FINANCIAL AND BUSINESS METRICS

(in thousands except average selling price, utilization and doctors trained)

					Q1			Q2			Q3			Q4			Fiscal			Q1			Q2
					2015			2015			2015			2015			2015			2016			2016
Invisalign Clear Aligner Net Revenues by Geography:
	North America				$	118,844		$	126,137		$	124,085		$	129,663		$	498,729		$	135,699		$	143,909
	International					55,920			61,896			61,265			70,980			250,061			69,850			83,703
	Non-case*					12,265			12,784			12,942			13,405			51,396			14,149			15,824
		Total Clear Aligner Net Revenues			$	187,029		$	200,817		$	198,292		$	214,048		$	800,186		$	219,698		$	243,436
			YoY % growth			11.2%			11.7%			11.3%			14.8%			12.3%			17.5%			21.2%
			QoQ % growth			0.3%			7.4%			-1.3%			7.9%						2.6%			10.8%
	*includes Invisalign training, ancillary products, and retainers
Average Invisalign Selling Price (ASP):
	Worldwide ASP				$	1,335		$	1,300		$	1,255		$	1,250		$	1,285		$	1,255		$	1,285
	International ASP				$	1,410		$	1,380		$	1,325		$	1,315		$	1,355		$	1,315		$	1,345
Invisalign Clear Aligner Cases Shipped by Geography:
	North America					91,110			99,630			101,260			106,390			398,390			110,500			114,855
	International					39,670			44,940			46,225			54,010			184,845			53,195			62,140
		Total Cases Shipped				130,780			144,570			147,485			160,400			583,235			163,695			176,995
			YoY % growth			16.6%			28.9%			23.6%			26.4%			22.0%			25.2%			22.4%
			QoQ % growth			3.1%			10.5%			2.0%			8.8%						2.1%			8.1%
Number of Invisalign Doctors Cases Shipped To:
	North America					20,165			21,335			21,160			21,835			31,710			22,355			22,575
	International					9,050			9,790			10,150			10,865			16,460			11,280			12,485
		Total Doctors Cases Shipped To				29,215			31,125			31,310			32,700			48,170			33,635			35,060
Invisalign Doctor Utilization Rates*:
	North America					4.5			4.7			4.8			4.9			12.6			4.9			5.1
		North American Orthodontists				9.0			9.5			9.9			9.9			31.8			10.4			10.7
		North American GP Dentists				2.9			3.0			2.9			3.1			7.4			3.0			3.1
	International					4.4			4.6			4.6			5.0			11.2			4.7			5.0
		Total Utilization Rates				4.5			4.6			4.7			4.9			12.1			4.9			5.1
	* # of cases shipped/# of doctors to whom cases were shipped
Number of Invisalign Doctors Trained:
	North America					870			1,120			1,060			1,270			4,320			875			1,125
	International					1,540			1,335			1,200			1,400			5,475			1,605			1,760
		Total Doctors Trained Worldwide				2,410			2,455			2,260			2,670			9,795			2,480			2,885
		Total to Date Worldwide				96,405			98,860			101,120			103,790			103,790			106,270			109,155
Total Net Revenues:
	Clear Aligner Net Revenues				$	187,029		$	200,817		$	198,292		$	214,048		$	800,186		$	219,698		$	243,436
	Scanner & Services Net Revenues					11,057			8,671			9,344			16,228			45,300			19,022			25,926
		Total Worldwide Net Revenues			$	198,086		$	209,488		$	207,636		$	230,276		$	845,486		$	238,720		$	269,362
			YoY % growth			9.7%			8.8%			9.4%			15.9%			11.0%			20.5%			28.6%
			QoQ % growth			-0.3%			5.8%			-0.9%			10.9%						3.7%			12.8%
Stock-based Compensation (SBC)
	SBC included in Gross Profit				$	980		$	970		$	984		$	1,008		$	3,942		$	961		$	932
	SBC included in Operating Expenses					10,670			11,860			13,677			12,799			49,006			11,563			12,767
		Total SBC Expense			$	11,650		$	12,830		$	14,661		$	13,807		$	52,948		$	12,524		$	13,699

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 appropriate 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 the press release.
Financial Outlook
(in millions, except per share amounts and percentages)
		Q3'16 Guidance
		GAAP
Net Revenues		$267.2 - $273.5
Gross Margin		74.4% - 74.8%
Operating Expenses		$147.1 - $148.1
Operating Margin		19.3% - 20.6%
Net Income per Diluted Share		$0.49 - $0.52
Business Metrics:		Q3'16
Case Shipments		174.2K - 176.9K
Capital Expenditure		$20M - $25M
Depreciation & Amortization		$7.0M - $7.5M
Diluted Shares Outstanding		81.4M*
Stock Based Compensation Expense		$14.4M
Tax Rate		24.5%
* Excludes any stock repurchases during the quarter

Source: Align Technology

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