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Align Technology Announces Third Quarter Fiscal 2009 Results
Oct 22, 2009 (GlobeNewswire via COMTEX News Network) --
-- Q3 net revenues of $79.3 million increase 3.9% sequentially and
5.4% from the prior year
-- Q3 record case shipments of 56.5 thousand increase 6.6%
sequentially and 7.0% from the prior year
SANTA CLARA, Calif., Oct. 22, 2009 (GLOBE NEWSWIRE) -- Align Technology, Inc. (Nasdaq:ALGN) today reported financial results for the third quarter, ended September 30, 2009.
Total net revenues for the third quarter of fiscal 2009 (Q3 09) were $79.3 million compared to $76.3 million reported in the second quarter of 2009 (Q2 09) and compared to $75.2 million reported in the third quarter of 2008 (Q3 08). Invisalign case shipments for Q3 09 were 56.5 thousand, compared to 53.0 thousand in Q2 09 and compared to 52.8 thousand in Q3 08.
Net loss for Q3 09 was $49.9 million, or $0.72 per diluted share, which includes litigation settlement costs of $69.7 million and royalties of $1.9 million, for a total of $0.85 per diluted share related to the settlement agreement with Ormco Corporation announced on August 17, 2009. This is compared to net profit of $4.5 million, or $0.07 per diluted share in Q2 09 and net profit of $5.2 million, or $0.08 per diluted share in Q3 08. Stock-based compensation expense included in Q3 09 was $4.0 million compared to $4.3 million in Q2 09 and $4.4 million in Q3 08.
To supplement our consolidated financial statements, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating margin, non-GAAP net profit and non-GAAP earnings per share. Detailed reconciliations between GAAP and non-GAAP information are contained in the tables following the financial tables of this release.
Non-GAAP net profit for Q3 09 was $8.9 million, or $0.13 per diluted share. This is compared to non-GAAP net profit of $4.8 million, or $0.07 per diluted share in Q2 09 and non-GAAP net profit of $7.3 million, or $0.11 per diluted share in Q3 08.
Commenting on Align's third quarter financial results, Thomas M. Prescott, president and CEO said, "I'm pleased to report a very good quarter with better than expected results across the board. Third quarter revenues were driven by sequential growth in the Ortho and GP channels in North America, as well as continued adoption of Invisalign Teen worldwide. Our financial performance highlights the operating leverage possible in our business when we drive sufficient volume into our more productive cost structure, and it reaffirms the tough actions we took over the last twelve months."
Q3 09 Operating Results
Key GAAP Operating Results Q3 09 Q2 09 Q3 08
--------- --------- ---------
Gross Margin 74.4% 76.0% 75.0%
Operating Expense $ 119.2M $ 51.7M $ 50.7M
Operating Margin (75.9%) 8.2% 7.6%
Net Profit (Loss) ($49.9) $ 4.5M $ 5.2M
Earnings Per Diluted Share (EPS) ($0.72) $ 0.07 $ 0.08
Key Non-GAAP Operating Results Q3 09 Q2 09 Q3 08
--------- --------- ---------
Non-GAAP Gross Margin 76.8% 76.0% 75.0%
Non-GAAP Operating Expense $ 49.5M $ 51.3M $ 48.5M
Non-GAAP Operating Margin 14.4% 8.7% 10.5%
Non-GAAP Net Profit $ 8.9M $ 4.8M $ 7.3M
Non-GAAP Earnings Per Diluted
Share (EPS) $ 0.13 $ 0.07 $ 0.11
Liquidity and Capital Resources
As of September 30, 2009, Align had $154.9 million in cash, cash equivalents, and short-term marketable securities compared to $110.2 million as of December 31, 2008.
Q309 Business Highlights
During the quarter, Align made several major announcements. For further information, please visit the investor relations section of the Company's website: http://investor.aligntech.com.
-- Align reached a settlement agreement with Ormco Corporation ending
all litigation between the two companies and formed a new strategic
relationship to jointly develop a combination orthodontic product.
As part of the settlement, Align made a cash payment of
approximately $13.1 million to Ormco and issued approximately 7.6
million shares of Align's Common Stock to Danaher Corporation,
Ormco's ultimate parent.
-- Align introduced new and enhanced product features for all
Invisalign products designed to provide improved results for
everyday clinical demands. Features include optimized attachments,
power ridges, velocity optimization selection, interproximal
reduction (IPR) improvements, and a new attachment kit. Also,
additional features have been added or enhanced in Invisalign
Assist, expanding its capabilities and giving doctors the
confidence and control necessary to treat a wider range of
patients.
-- Align announced program updates to its Invisalign Proficiency
Requirements including an additional qualification period of six
months, as well as a new Invisalign Preferred Provider designation
for doctors who achieve the proficiency requirements by the end
2009
Key Business Metrics
The following table highlights business metrics for Align's third quarter of 2009. Additional historical information is available on the Company's website at http://investor.aligntech.com.
Revenue by Channel ($M): Q3 09 % of Total Q3 09/Q2 09
Revenue % Change
-------- ----------- -----------
North American Orthodontists $ 22.7 28.7% 5.3%
North American GP Dentists $ 33.9 42.8% 6.8%
International $ 18.5 23.3% 2.2%
Non-case Revenue* $ 4.2 5.2% (15.2%)
-------- ----------- -----------
Total Revenue $ 79.3 100% 3.9%
======== =========== ===========
* includes training, ancillary products, and retainers
Cases Shipped by Channel: Q3 09 % of Total Q3 09/Q2 09
Cases % Change
-------- ----------- -----------
North American Orthodontists 18,830 33.3% 7.8%
North American GP Dentists 25,565 45.2% 8.7%
International 12,120 21.5% 0.9%
-------- ----------- -----------
Total Cases Shipped 56,515 100% 6.6%
======== =========== ===========
Cases Shipped by Product: Q3 09 % of Total Q3 09/Q2 09
Cases % Change
-------- ----------- -----------
Invisalign Full 38,705 68.5% 2.3%
Invisalign Express 8,425 14.9% 5.3%
Invisalign Teen 7,850 13.9% 32.2%
Invisalign Assist 1,535 2.7% 25.3%
-------- ----------- -----------
Total Cases Shipped 56,515 100% 6.6%
======== =========== ===========
Average Selling Price (ASP),
as billed: Q3 09
--------
Total Worldwide Blended ASP $ 1,390
International ASP $ 1,560
Number of Doctors Cases were
Shipped to: Q3 09
--------
North American Orthodontists 3,835
North American GP Dentists 11,060
International 3,470
--------
Total Doctors Cases were
Shipped to Worldwide 18,365
========
Number of Doctors Trained
Worldwide: Q3 09 Cumulative
-------- -----------
North American Orthodontists 75 8,885
North American GP Dentists 430 34,805
International 300 15,330
-------- -----------
Total Doctors Trained
Worldwide 805 59,020
======== ===========
Doctor Utilization Rates*: Q3 09 Q2 09 Q3 08
-------- ----------- -----------
North American Orthodontists 4.9 4.7 4.8
North American GP Dentists 2.3 2.2 2.4
International 3.5 3.6 3.2
-------- ----------- -----------
Total Utilization Rate 3.1 3.0 3.0
======== =========== ===========
* Utilization = # of cases shipped/# of doctors to whom cases were shipped
Total Invisalign Patients
(cases shipped): Q3 09 Cumulative
-------- -----------
Number of Patients Treated
or in Treatment (cases) 56,515 1,103,635
======== ===========
Q4 Fiscal 2009 Business Outlook
For the fourth quarter of fiscal 2009 (Q4 09), Align Technology expects net revenues to be in a range of $77.5 million to $81.0 million. GAAP earnings per diluted share for Q4 09 is expected to be in a range of $0.07 to $0.09. Non-GAAP earnings per diluted share for Q4 09 is expected to be in the range of $0.08 to $0.10. Stock-based compensation expense for Q4 09 is expected to be approximately $3.9 million.
A more comprehensive business outlook is available following the financial tables of this release.
Align Web Cast and Conference Call
Align Technology will host a conference call today, October 22, 2009 at 4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter fiscal 2009 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 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 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 333971 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. ET on November 5, 2009.
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 teens. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998. Today, the Invisalign product family includes Invisalign, Invisalign Teen, Invisalign Assist, Invisalign Express, and Vivera Retainers.
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 and our business outlook, we use the following non-GAAP financial measures: non-GAAP operating expenses, non-GAAP profit from operations, non-GAAP net profit, and non-GAAP earnings per share, which exclude, as applicable, litigation settlement costs and royalties associated with the settlement with Ormco, the effect of charges associated with restructurings, and the related tax effect. 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 "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 expenditures and other items that may not be indicative of our operating performance including 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 facilitate comparisons with prior and subsequent reporting periods.
Forward-Looking Statement
This news release, including the tables below, contains forward-looking statements, including statements regarding, certain business metrics for the fourth quarter of 2009, including anticipated revenue, gross margin, operating expense, operating income, earnings per share, case shipments and cash. 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 as well as the willingness and ability of our customers to adopt the expected baseline requirements set forth in our recently announced proficiency program and the willingness and ability of our customers to maintain and/or increase utilization to meet the new proficiency standards 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, continued customer demand for Invisalign 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 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, 2008, which was filed with the Securities and Exchange Commission on February 27, 2009. 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 Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
--------- --------- --------- ---------
Net revenues $ 79,269 $ 75,173 $225,717 $229,851
Cost of revenues 20,268 18,766 56,031 58,617
--------- --------- --------- ---------
Gross profit 59,001 56,407 169,686 171,234
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 27,687 28,214 84,649 88,737
General and administrative 16,224 14,395 46,231 45,905
Research and development 5,611 5,918 16,471 20,214
Restructuring -- 2,189 1,319 2,189
Litigation
settlement costs 69,673 -- 69,673 --
--------- --------- --------- ---------
Total operating expenses 119,195 50,716 218,343 157,045
--------- --------- --------- ---------
Profit (loss) from operations (60,194) 5,691 (48,657) 14,189
Interest and other income
(expense), net (271) 264 434 1,673
--------- --------- --------- ---------
Profit (loss) before
income taxes (60,465) 5,955 (48,223) 15,862
Provision for (benefit from)
income taxes (10,523) 798 (5,462) 1,371
--------- --------- --------- ---------
Net profit (loss) $(49,942) $ 5,157 $(42,761) $ 14,491
========= ========= ========= =========
Net profit (loss) per share
- basic $ (0.72) $ 0.08 $ (0.64) $ 0.21
========= ========= ========= =========
- diluted $ (0.72) $ 0.08 $ (0.64) $ 0.21
========= ========= ========= =========
Shares used in computing net
profit/loss per share
- basic 69,528 67,367 67,278 68,330
========= ========= ========= =========
- diluted 69,528 68,704 67,278 69,906
========= ========= ========= =========
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 30, Dec. 31,
2009 2008
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $135,961 $ 87,100
Marketable securities, short-term 18,979 23,066
Accounts receivable, net 55,035 52,362
Inventories, net 1,892 1,965
Other current assets 25,671 13,414
--------- ---------
Total current assets 237,538 177,907
Property and equipment, net 24,429 26,979
Goodwill and intangible assets, net 6,166 8,266
Deferred tax asset 61,048 61,696
Other long-term assets 1,603 4,493
--------- ---------
Total assets $330,784 $279,341
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,498 $ 5,580
Accrued liabilities 37,484 38,282
Deferred revenue 27,920 16,710
--------- ---------
Total current liabilities 72,902 60,572
Other long term liabilities 202 229
--------- ---------
Total liabilities 73,104 60,801
Total stockholders' equity 257,680 218,540
--------- ---------
Total liabilities and
stockholders' equity $330,784 $279,341
========= =========
ALIGN TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS
Reconciliation of GAAP to Non-GAAP Gross Profit
(in thousands)
Three Months Ended
------------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
---------- ---------- ----------
GAAP Gross profit $ 59,001 $ 57,978 $ 56,407
Ormco royalties 1,906 -- --
---------- ---------- ----------
Non-GAAP Gross profit $ 60,907 $ 57,978 $ 56,407
========== ========== ==========
Reconciliation of GAAP to Non-GAAP Operating Expenses
(in thousands)
Three Months Ended
------------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
---------- ---------- ----------
GAAP Operating expenses $ 119,195 $ 51,725 $ 50,716
Litigation settlement costs (69,673) -- --
Restructuring -- (409) (2,189)
---------- ---------- ----------
Non-GAAP Operating expenses $ 49,522 $ 51,316 $ 48,527
========== ========== ==========
Reconciliation of GAAP to Non-GAAP Profit from Operations
(in thousands)
Three Months Ended
------------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
---------- ---------- ----------
GAAP Profit (loss) from
Operations $ (60,194) $ 6,253 $ 5,691
Ormco royalties 1,906 -- --
Litigation settlement costs 69,673 -- --
Restructuring -- 409 2,189
---------- ---------- ----------
Non-GAAP Profit from Operations $ 11,385 $ 6,662 $ 7,880
========== ========== ==========
Reconciliation of GAAP to Non-GAAP Net Profit
(in thousands, except per share amounts)
Three Months Ended
------------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
---------- ---------- ----------
GAAP Net profit (loss) $ (49,942) $ 4,545 $ 5,157
Ormco royalties 1,906 -- --
Litigation settlement costs 69,673 -- --
Restructuring -- 409 2,189
Tax effect on non-GAAP
adjustments (12,731) (127) (86)
---------- ---------- ----------
Non-GAAP Net profit $ 8,906 $ 4,827 $ 7,260
========== ========== ==========
Diluted Net profit (loss)
per share:
GAAP $ (0.72) $ 0.07 $ 0.08
========== ========== ==========
Non-GAAP $ 0.13 $ 0.07 $ 0.11
========== ========== ==========
Shares used in computing diluted
GAAP net profit/loss per share 69,528 67,373 68,704
========== ========== ==========
Shares used in computing diluted
non-GAAP net profit per share 70,926 67,373 68,704
========== ========== ==========
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.
Financials
(in millions, except per share amounts and percentages)
Q4 2009
-------------------------------------------
Adjustment
GAAP (a) Non-GAAP
------------- ------------- -------------
Net Revenue $77.5-$81.0 $77.5 - $81.0
Gross Profit $55.1-$58.1 $3.8 $58.9 - $61.9
Gross Margin 71.1%-71.8% 4.7%-4.9% 76.0% - 76.5%
Operating Expenses $49.0-$50.0 $49.0 - $50.0
Operating Margin 7.9%-10.1% 4.7%-4.9% 12.8% - 14.8%
Net Income per
Diluted Share $0.07-$0.09 $0.01 $0.08 - $0.10
Stock Based
Compensation Expense:
Cost of Revenues $0.3 $0.3
Operating Expenses $3.5 $3.5
Total Stock Based
Compensation Expense $3.9 $3.9
(a) Ormco Royalties
Business Metrics:
Q4 2009
-------------
Case Shipments 57.0K - 59.0K
Cash $170M - $175M
DSO mid 60's
Capex $2.0M - $4.0M
Depreciation &
Amortization $2.0M - $3.0M
Diluted Shares
Outstanding 76M
Full Year 2009: FY 2009
-------------
Stock Based compensation $15.9M
Diluted Shares Outstanding 70M
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Align Technology
CONTACT: Align Technology, Inc. Investor Relations Contact Shirley Stacy (408) 470-1150 sstacy@aligntech.com Ethos Communication, Inc. Press Contact Shannon Mangum Henderson (678) 261-7803 align@ethoscommunication.com
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