• Q1 revenues up 40.8% year-over-year to a record $436.9 million, and diluted EPS of $1.17
  • Q1 operating income up 59.2% year-over-year to $98.2 million or operating margin of 22.5%
  • Q1 total Invisalign case shipments up 30.8% year-over-year to 272.2 thousand
  • Q1 Invisalign cases for teenage patients up 40.9% year-over-year to 69.1 thousand
  • Q1 scanner and services revenues up 84.0% year-over-year to $51.4 million

SAN JOSE, Calif., April 25, 2018 (GLOBE NEWSWIRE) -- Align Technology, Inc. (Nasdaq:ALGN) today reported financial results for the first quarter ended March 31, 2018. Invisalign case shipments in the first quarter of 2018 (Q1’18) were 272.2 thousand, up 30.8% year-over-year. Americas and International region case shipments were up year-over-year 24.0% and 43.4%, respectively. Beginning Q1'18, Americas region includes North America and LATAM and the International region includes EMEA and APAC. Q1’18 Invisalign cases for teenage patients were 69.1 thousand, up 40.9% year-over-year. Q1’18 revenues were $436.9 million, up 40.8% year-over-year with Q1’18 operating income $98.2 million, up 59.2% year-over-year resulting in an operating margin of 22.5%.  Net profit was $95.9 million, or $1.17 per diluted share, up $0.32 over the prior year.

Commenting on Align’s Q1 2018 results, Align Technology President and CEO Joe Hogan said, “I’m pleased to report better than expected first quarter results and a strong start to the year for Align, with revenues, volumes and EPS above our guidance. Record Q1 revenues were up 41% year-over-year reflecting continued strong Invisalign volume across all geographies and customer channels, as well as iTero scanner sales which were up 84% year-over-year. Q1 Invisalign volume growth of 31% year-over-year was driven by increased utilization including strong teen case growth globally, and expansion of our customer base, which included over 4,200 new Invisalign-trained doctors worldwide.”

GAAP Summary Financial Comparisons
First Quarter Fiscal 2018

 Q1’18Q4’17Q1’17 Q/Q Change Y/Y Change
Invisalign Case Shipments1 272,235 255,030 208,060 +6.7% +30.8%
Net Revenues$436.9M$421.3M$310.3M +3.7% +40.8%
Clear Aligner2$385.5M$364.2M$282.4M +5.8% +36.5%
Scanner & Services$51.4M$57.1M$27.9M (10.0)% +84.0%
Net Profit3$95.9M$10.3M$69.4M 834.0% 38.1%
Diluted EPS3$1.17$0.13$0.85 $1.04 $0.32

Note: Changes and percentages are based on actual values and may effect totals due to rounding
1 Invisalign Shipment figures do not include SmileDirectClub aligners
2 Clear aligner revenue includes revenues from Invisalign clear aligners and SmileDirectClub aligners
3 Q4’17 net profit and diluted EPS includes $86.6 million tax expense, or $1.06 per diluted share negative impact due to the U.S. Tax Cut and Jobs Act

As of March 31, 2018, Align had $673.0 million in cash, cash equivalents and marketable securities compared to $761.5 million as of December 31, 2017. We repurchased approximately 0.4 million shares of stock for $100.0 million in Q1’18 under the April 2016 Repurchase Program. We have $100.0 million remaining available for repurchases under the existing stock repurchase authorization.      

Announcements and Highlights

Today, Align issued the following press releases entitled:

  • Align Introduces New Invisalign Go Clear Aligner System Integrated with iTero Scanner for Mild to Moderate Cases
  • Align Technology To Introduce Two New iTero Scanners Featuring Greater Power and Portability
  • Align Announces China Food and Drug Administration Approval for the iTero Element Scanner

Additional highlights in 2018 include:

  • Announced a new expanded Invisalign product portfolio that includes new options and greater flexibility to treat a broader range of patients.  The new Invisalign product portfolio offers doctors more choices by extending desirable features across the entire portfolio and creating new Invisalign Treatment Packages, as well as new options to treat young patients with early mixed dentition.
  • Announced it is extending the Invisalign product family with Invisalign First clear aligners, designed with features specifically for younger patients with early mixed dentition (with a mixture of primary/baby and permanent teeth).
  • Announced the commercial availability of Vivera Retainers with Precision Bite Ramps, the first retainers in the market that can be customized to provide additional support after deep bite correction.

Q2 2018 Business Outlook

For the second quarter of 2018 (Q2’18), Align provides the following guidance:

  • Net revenues in the range of $460 million to $470 million, up approximately 29% to 32% over the same period a year ago.
  • Invisalign case shipments in the range of 296 thousand to 301 thousand, up approximately 28% to 30% over the same period a year ago.
  • Operating margin in the range of 21.0% to 21.8%
  • Diluted EPS in the range of $1.02 to $1.06

Align Web Cast and Conference Call

Align will host a conference call today, April 25, 2018 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter 2018 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 13678038 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 9, 2018.

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 2018, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, tax rate including the financial impact of recent U.S. Tax Cuts and Jobs Act 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, the security of customer and/or patient data is compromised for any reason, 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, changes to our interpretation of the U.S. Tax Cuts and Jobs Act which may change as we receive additional clarification and implementation guidance, possibly materially, 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, 2017, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2018. 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,
 
  2018 2017
 
       
Net revenues $436,924 $310,341  
      
Cost of net revenues  109,516  74,716  
      
Gross profit  327,408  235,625  
      
Operating expenses:     
Selling, general and administrative  199,625  151,148  
Research and development  29,591  22,804  
Total operating expenses  229,216  173,952  
      
Income from operations  98,192  61,673  
      
Interest income  2,176  1,195  
Other income (expense), net  177  450  
      
Net income before provision for (benefit from) income taxes and equity in losses of investee  100,545  63,318  
      
Provision for (benefit from) income taxes  2,902  (7,223) 
Equity in losses of investee, net of tax  1,777  1,121  
      
Net income $95,866 $69,420  
      
Net income per share:     
Basic $1.20 $0.87  
Diluted $1.17 $0.85  
      
Shares used in computing net income per share:     
Basic  80,036  79,904  
Diluted  81,628  81,534  
      
      
* During Q1'18, we adopted the ASC 606, "Revenues from Contracts with Customers" using the full retrospective method. The adoption of ASC 606 did not have a material impact on our Condensed Consolidated Statements of Operations presented herein.
 
         


      
ALIGN TECHNOLOGY, INC. 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS* 
(in thousands) 
      
  March 31,
2018
 December 31,
2017
 
ASSETS     
      
Current assets:     
Cash and cash equivalents $498,003 $449,511 
Marketable securities, short-term  164,740  272,031 
Accounts receivable, net  361,459  324,189 
Inventories  35,866  31,688 
Prepaid expenses and other current assets  108,708  80,948 
Total current assets  1,168,776  1,158,367 
      
Marketable securities, long-term  10,212  39,948 
Property, plant and equipment, net  400,528  348,793 
Equity method investments  52,829  54,606 
Goodwill and intangible assets, net  87,629  89,068 
Deferred tax assets  45,524  49,334 
Other assets  17,233  43,893 
      
Total assets $1,782,731 $1,784,009 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
      
Current liabilities:     
Accounts payable $41,881 $36,776 
Accrued liabilities  180,093  195,562 
Deferred revenues  296,011  267,713 
Total current liabilities  517,985  500,051 
      
Income tax payable  119,349  114,091 
Other long-term liabilities  17,937  15,579 
Total liabilities  655,271  629,721 
      
Total stockholders' equity  1,127,460  1,154,288 
      
Total liabilities and stockholders' equity $1,782,731 $1,784,009 
      
      
* During Q1'18, we adopted the ASC 606, "Revenues from Contracts with Customers" using the full retrospective method. Condensed Consolidated Balance Sheet as of December 31, 2017 has been recasted to comply with the adoption. 
      


      
ALIGN TECHNOLOGY, INC.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS*
 
(in thousands)
 
      
  Three Months Ended
March 31,
 
  2018
 2017
 
      
CASH FLOWS FROM OPERATING ACTIVITIES     
Net income $95,866  $69,420  
Net cash provided by operating activities  77,332   47,621  
      
CASH FLOWS FROM INVESTING ACTIVITIES     
Net cash provided by (used in) investing activities  109,269   (148,462) 
      
CASH FLOWS FROM FINANCING ACTIVITIES     
Net cash used in financing activities  (139,822)  (33,001) 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash  1,715   2,430  
Net increase (decrease) in cash, cash equivalents, and restricted cash  48,494   (131,412) 
Cash, cash equivalents, and restricted cash at beginning of the period  450,125   393,019  
Cash, cash equivalents, and restricted cash at end of the period $498,619  $261,607  
      
      
*During Q1'18, we adopted ASU 2016-18, "Statement of Cash Flows - Restricted Cash" on a retrospective basis. Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017 has been recasted to comply with the adoption. 


                
ALIGN TECHNOLOGY, INC.  
INVISALIGN BUSINESS METRICS*  
               
               
   Q1 Q2 Q3 Q4 Fiscal Q1  
   2017
 2017
 2017
 2017
 2017
 2018
  
Invisalign Average Selling Price (ASP):               
Worldwide ASP  $1,270  $1,285  $1,310  $1,305  $1,295  $1,310   
International ASP  $1,345  $1,340  $1,395  $1,400  $1,375  $1,435   
                
Invisalign Cases Shipped by Geography:               
Americas   134,450   148,470   147,660   155,625   586,205   166,665   
International   73,610   83,420   88,405   99,405   344,840   105,570   
Total Cases Shipped   208,060   231,890   236,065   255,030   931,045   272,235   
 YoY % growth   27.1%   31.0%   32.8%   34.2%   31.4%   30.8%   
 QoQ % growth   9.5%   11.5%   1.8%   8.0%     6.7%   
                
Number of Invisalign Doctors Cases Were Shipped To:              
Americas   24,595   25,570   25,865   26,480   38,230   27,105   
International   14,270   15,695   16,740   18,505   26,175   19,700   
Total Doctors Cases Shipped To   38,865   41,265   42,605   44,985   64,405   46,805   
                
Invisalign Doctor Utilization Rates**:               
North America   5.6   5.9   5.8   6.0   15.8   6.3   
North American Orthodontists   12.6   13.6   13.8   14.0   46.6   15.3   
North American GP Dentists   3.1   3.3   3.1   3.3   8.2   3.4   
International   5.2   5.3   5.3   5.4   13.2   5.4   
Total Utilization Rates   5.4   5.6   5.5   5.7   14.5   5.8   
                
Number of Invisalign Doctors Trained:               
Americas   1,040   1,820   1,740   1,685   6,285   1,605   
International   2,220   3,055   2,540   2,400   10,215   2,645   
Total Doctors Trained Worldwide   3,260   4,875   4,280   4,085   16,500   4,250   
Total to Date Worldwide   118,730   123,605   127,885   131,970   131,970   136,220   
                
                
Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals. Effective Q1'18, Americas region includes North America and LATAM. International region includes EMEA and APAC. We have recasted historical data to reflect the change.
  
* Invisalign business metrics exclude SmileDirectClub aligners. 
  
** # of cases shipped / # of doctors to whom cases were shipped. LATAM utilization rate is not separately disclosed, but included in the total utilization rates. 
  
                
                
ALIGN TECHNOLOGY, INC.  
STOCK-BASED COMPENSATION  
(in thousands)  
                
   Q1 Q2 Q3 Q4 Fiscal Q1  
   2017
 2017
 2017
 2017
 2017
 2018
  
Stock-based Compensation (SBC)               
SBC included in Gross Profit  $925  $768  $833  $804  $3,330  $881   
SBC included in Operating Expenses   13,887   13,477   14,134   14,026   55,524   14,949   
Total SBC Expense  $14,812  $14,245  $14,967  $14,830  $58,854  $15,830   
                
                

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) 
     
  Q2'18 Guidance  
     
  GAAP  
     
Net Revenues $460.0 - $470.0  
     
Gross Margin 74.2% - 75.0%  
     
Operating Expenses $245.0 - $250.0  
     
Operating Margin 21.0% - 21.8%  
     
Net Income per Diluted Share $1.02 - $1.06(1) 
     
     
Business Metrics: Q2'18  
     
Case Shipments 296K - 301K  
Capital Expenditure $65M - $70M  
Depreciation & Amortization $10M - $11M  
Diluted Shares Outstanding 81.6M(2) 
Stock Based Compensation Expense $18.3M  
Effective Tax Rate 13.0%(1) 
     
(1) Includes the benefit from the adoption of the accounting standard update 2016-09 related to share-based compensation expense 
(2) Excludes any stock repurchases during the quarter  
     

Align Technology
Madelyn Homick
(408) 470-1180
mhomick@aligntech.com

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