Align Technology Announces Record First Quarter 2017 Results
SAN JOSE, CA--(Marketwired - April 27, 2017) -
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. (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 | ||||||||
|
| |||||||
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, | December 31, | |||||||
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 | ||||
