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Globe Newswire 24-Apr-2019 4:00 PM
SAN JOSE, Calif., April 24, 2019 (GLOBE NEWSWIRE) -- Align Technology, Inc. (NASDAQ:ALGN) today reported financial results for the first quarter ended March 31, 2019. Q1'19 Invisalign volume was 349.2 thousand cases, up 28.3% year-over-year. For the Americas and International regions, Q1'19 Invisalign volume was up 21.8% and 38.5% year-over-year, respectively. Q1'19 Invisalign volume for teenage patients was 97.4 thousand cases, up 41.1% year-over-year. Q1'19 total revenues were $549.0 million, up 25.6% year-over-year, and Q1'19 scanner and services revenues were $79.8 million, up 55.1% year-over-year.
Q1'19 operating income of $87.7 million was down 10.7% year-over-year resulting in an operating margin of 16.0%. As a result of the arbitrator's decision regarding SmileDirectClub (SDC) announced on March 5, 2019, Q1'19 operating income included impairments and other charges related to the U.S. Invisalign Store closures of $29.8 million which reduced operating margin by 5.4%. Q1'19 net profit was $71.8 million, or $0.89 per diluted EPS which reflected the Invisalign Store closure charges of $22.2 million, net of tax effects of $7.5 million, or $0.28 per diluted EPS.
Commenting on Align's Q1 2019 results, Align Technology President and CEO Joe Hogan said, "Our first quarter was a very good start to the year with revenues, volumes, gross margin, and EPS above our guidance. Record Q1 revenues and Invisalign volumes were up 25.6% and 28.3% year-over-year, respectively, reflecting continued strong growth across all geographies and customer channels, as well as strong iTero scanner and services revenues, which were up 55.1% year-over-year. Q1 sequential growth was driven primarily by North America and the EMEA region, reflecting strength across the Invisalign product portfolio. We also saw a nice uptick in adoption of Invisalign treatment with record utilization overall, as well as expansion of our customer base which totaled 57,000 active doctors worldwide in Q1."
GAAP Summary Financial Comparisons
First Quarter Fiscal 2019
Q1'19 | Q4'18 | Q1'18 | Q/Q Change | Y/Y Change | ||||||||
Invisalign Case Shipments1 | 349,195 | 333,800 | 272,235 | +4.6% | +28.3% | |||||||
Net Revenues | $549.0M | $534.0M | $436.9M | +2.8% | +25.6% | |||||||
Clear Aligner2 | $469.2M | $445.6M | $385.5M | +5.3% | +21.7% | |||||||
Scanner & Services | $79.8M | $88.4M | $51.4M | (9.8)% | +55.1% | |||||||
Net Profit3 | $71.8M | $97.4M | $95.9M | (26.2)% | (25.1)% | |||||||
Diluted EPS3 | $0.89 | $1.20 | $1.17 | $(0.31) | $(0.28) |
Note: Changes and percentages are based on actual values and may affect 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 Q1'19 results include impairments and other charges related to closing Invisalign Stores in the U.S. as a result of the arbitrator's decision regarding SmileDirectClub (SDC) announced March 5, 2019.
As of March 31, 2019, Align had $732.5 million in cash, cash equivalents and marketable securities compared to $744.5 million as of December 31, 2018. In February 2019, we purchased on the open market approximately 0.2 million shares of our common stock at an average price of $243.42 per share, including commission for an aggregate purchase price of approximately of $50.0 million. We have $450.0 million remaining available for repurchase under the May 2018 Repurchase Program.
Announcements and Highlights
The following list highlights Align's key announcements over the past quarter:
Invisalign and iTero Intraoral Scanner
Corporate
Q2 2019 Business Outlook
For the second quarter of 2019 (Q2'19), Align provides the following guidance:
Align Web Cast and Conference Call
Align will host a conference call today, April 24, 2019 at 4:30 p.m. ET, 1:30 p.m. PT, to review its first quarter 2019 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 13689188 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 8, 2019.
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 doctor 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 2019, 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 excess or constrained capacity at our manufacturing and treat operations facilities 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 as well as an increased manufacturing costs per case, 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, 2018, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2019. 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, |
||||||||
2019 | 2018 | |||||||
Net revenues | $ | 548,971 | $ | 436,924 | ||||
Cost of net revenues | 146,875 | 109,516 | ||||||
Gross profit | 402,096 | 327,408 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 247,110 | 199,625 | ||||||
Research and development | 37,503 | 29,591 | ||||||
Impairments and other charges | 29,782 | - | ||||||
Total operating expenses | 314,395 | 229,216 | ||||||
Income from operations | 87,701 | 98,192 | ||||||
Interest income | 2,633 | 2,176 | ||||||
Other income (expense), net | (5,746 | ) | 177 | |||||
Net income before provision for income taxes and equity in losses of investee | 84,588 | 100,545 | ||||||
Provision for income taxes | 8,796 | 2,902 | ||||||
Equity in losses of investee, net of tax | 3,944 | 1,777 | ||||||
Net income | $ | 71,848 | $ | 95,866 | ||||
Net income per share: | ||||||||
Basic | $ | 0.90 | $ | 1.20 | ||||
Diluted | $ | 0.89 | $ | 1.17 | ||||
Shares used in computing net income per share: | ||||||||
Basic | 79,860 | 80,036 | ||||||
Diluted | 80,687 | 81,628 | ||||||
ALIGN TECHNOLOGY, INC. | |||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands) | |||||||
March 31, 2019 |
December 31, 2018 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 588,001 | $ | 636,899 | |||
Marketable securities, short-term | 144,540 | 98,460 | |||||
Equity method investments | 41,969 | - | |||||
Accounts receivable, net | 479,281 | 439,009 | |||||
Inventories | 68,489 | 55,641 | |||||
Prepaid expenses and other current assets | 116,833 | 72,470 | |||||
Total current assets | 1,439,113 | 1,302,479 | |||||
Marketable securities, long-term | - | 9,112 | |||||
Property, plant and equipment, net | 575,267 | 521,329 | |||||
Operating lease right-of-use assets | 56,384 | - | |||||
Equity method investments | - | 45,913 | |||||
Goodwill and intangible assets, net | 80,329 | 81,949 | |||||
Deferred tax assets | 57,151 | 64,689 | |||||
Other assets | 26,186 | 26,987 | |||||
Total assets | $ | 2,234,430 | $ | 2,052,458 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 62,512 | $ | 64,256 | |||
Accrued liabilities | 252,754 | 234,679 | |||||
Finance lease liabilities | 56,100 | - | |||||
Deferred revenues | 433,518 | 393,138 | |||||
Total current liabilities | 804,884 | 692,073 | |||||
Income tax payable | 93,463 | 78,008 | |||||
Operating lease liabilities | 59,307 | - | |||||
Other long-term liabilities | 21,072 | 29,486 | |||||
Total liabilities | 978,726 | 799,567 | |||||
Total stockholders' equity | 1,255,704 | 1,252,891 | |||||
Total liabilities and stockholders' equity | $ | 2,234,430 | $ | 2,052,458 | |||
ALIGN TECHNOLOGY, INC. | |||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(in thousands) | |||||||||
Three Months Ended March 31, |
|||||||||
2019 | 2018 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net cash provided by operating activities | $ | 117,207 | $ | 77,332 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Net cash (used in) provided by investing activities | (74,418 | ) | 109,269 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Net cash used in financing activities | (92,762 | ) | (139,822 | ) | |||||
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | 1,089 | 1,715 | |||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (48,884 | ) | 48,494 | ||||||
Cash, cash equivalents, and restricted cash at beginning of the period | 637,566 | 450,125 | |||||||
Cash, cash equivalents, and restricted cash at end of the period | $ | 588,682 | $ | 498,619 | |||||
ALIGN TECHNOLOGY, INC. | ||||||||||||||||||||||||||||
INVISALIGN BUSINESS METRICS* | ||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Fiscal | Q1 | |||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | 2019 | |||||||||||||||||||||||
Invisalign Average Selling Price (ASP): | ||||||||||||||||||||||||||||
Worldwide ASP | $ | 1,310 | $ | 1,315 | $ | 1,230 | $ | 1,235 | $ | 1,270 | $ | 1,245 | ||||||||||||||||
International ASP | $ | 1,435 | $ | 1,425 | $ | 1,340 | $ | 1,295 | $ | 1,370 | $ | 1,330 | ||||||||||||||||
Invisalign Cases Shipped by Geography: | ||||||||||||||||||||||||||||
Americas | 166,665 | 181,425 | 190,615 | 189,410 | 728,115 | 202,935 | ||||||||||||||||||||||
International | 105,570 | 121,260 | 128,730 | 144,390 | 499,950 | 146,260 | ||||||||||||||||||||||
Total Cases Shipped | 272,235 | 302,685 | 319,345 | 333,800 | 1,228,065 | 349,195 | ||||||||||||||||||||||
YoY % growth | 30.8 | % | 30.5 | % | 35.3 | % | 30.9 | % | 31.9 | % | 28.3 | % | ||||||||||||||||
QoQ % growth | 6.7 | % | 11.2 | % | 5.5 | % | 4.5 | % | 4.6 | % | ||||||||||||||||||
Number of Invisalign Doctors Cases Were Shipped To: | ||||||||||||||||||||||||||||
Americas | 27,105 | 28,280 | 28,890 | 29,215 | 42,000 | 30,200 | ||||||||||||||||||||||
International | 19,700 | 21,805 | 23,270 | 25,475 | 36,040 | 26,510 | ||||||||||||||||||||||
Total Doctors Cases Shipped To | 46,805 | 50,085 | 52,160 | 54,690 | 78,040 | 56,710 | ||||||||||||||||||||||
Invisalign Doctor Utilization Rates**: | ||||||||||||||||||||||||||||
North America | 6.3 | 6.6 | 6.9 | 6.7 | 18.2 | 7.0 | ||||||||||||||||||||||
North American Orthodontists | 15.3 | 16.4 | 17.4 | 16.5 | 56.7 | 18.3 | ||||||||||||||||||||||
North American GP Dentists | 3.4 | 3.6 | 3.5 | 3.6 | 9.1 | 3.6 | ||||||||||||||||||||||
International | 5.4 | 5.6 | 5.5 | 5.7 | 13.9 | 5.5 | ||||||||||||||||||||||
Total Utilization Rates | 5.8 | 6.0 | 6.1 | 6.1 | 15.7 | 6.2 | ||||||||||||||||||||||
Number of Invisalign Doctors Trained***: | ||||||||||||||||||||||||||||
Americas | 1,630 | 1,880 | 2,085 | 2,290 | 7,885 | 1,725 | ||||||||||||||||||||||
International | 2,645 | 3,300 | 2,845 | 2,980 | 11,770 | 2,410 | ||||||||||||||||||||||
Total Doctors Trained Worldwide | 4,275 | 5,180 | 4,930 | 5,270 | 19,655 | 4,135 | ||||||||||||||||||||||
Total to Date Worldwide | 136,575 | 141,755 | 146,685 | 151,955 | 151,955 | 156,090 | ||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||
***2018 adjusted to reflect Americas doctors trained for Invisalign iGo | ||||||||||||||||||||||||||||
ALIGN TECHNOLOGY, INC. | ||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Fiscal | Q1 | |||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2018 | 2019 | |||||||||||||||||||||||
Stock-based Compensation (SBC) | ||||||||||||||||||||||||||||
SBC included in Gross Profit | $ | 881 | $ | 900 | $ | 966 | $ | 948 | $ | 3,695 | $ | 1,112 | ||||||||||||||||
SBC included in Operating Expenses | 14,949 | 15,990 | 18,232 | 17,897 | 67,068 | 19,932 | ||||||||||||||||||||||
Total SBC Expense | $ | 15,830 | $ | 16,890 | $ | 19,198 | $ | 18,845 | $ | 70,763 | $ | 21,044 | ||||||||||||||||
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) | |||||||||||
Q2'19 Guidance | |||||||||||
GAAP | |||||||||||
Net Revenues | $590.0 - $600.0 | ||||||||||
Gross Margin | 71.5% - 72.5% | ||||||||||
Operating Expenses | $277.0 - $282.0 | ||||||||||
Operating Margin | 24.5% - 25.4% | ||||||||||
Net Income per Diluted Share | $1.47 - $1.54 | ||||||||||
Business Metrics: | Q2'19 | ||||||||||
Case Shipments | 380.0K - 385.0K | ||||||||||
Capital Expenditure | $85M-$90M | ||||||||||
Depreciation & Amortization | $20M-22M | ||||||||||
Diluted Shares Outstanding | 80.6 | (2 | ) | ||||||||
Stock Based Compensation Expense | $23M | ||||||||||
Effective Tax Rate | ~24% | (1 | ) | ||||||||
(1) Includes excess tax benefits related to share-based compensation expense pursuant to ASU 2016-09 | |||||||||||
(2) Excludes any stock repurchases during the quarter | |||||||||||
Align Technology
Madelyn Homick
(408) 470-1180
mhomick@aligntech.com
Zeno Group:
Sarah Johnson
(828) 551-4201
sarah.johnson@zenogroup.com