EX-99.1 2 exh99_1.htm EXHIBIT 99.1
 

Exhibit 99.1
 
 
 
Investor Relations Contact
Press Contact
Shirley Stacy 
Shannon Mangum Henderson
Align Technology, Inc. 
Ethos Communication, Inc.
(408) 470-1150 
(678) 261-7803
sstacy@aligntech.com 
align@ethoscommunication.com
 
 
ALIGN TECHNOLOGY ANNOUNCES THIRD QUARTER 2015 RESULTS

· Q3 worldwide Clear Aligner shipments of 147.5 thousand, up 23.3% year-over-year, with North America up 18.6% and International up 35.1%
· Q3 Clear Aligner teenage shipments of 40.6 thousand, up 22.3% year-over-year
· Q3 revenues of $207.6 million, up 9.4% year-over-year, and diluted EPS of $0.34

SAN JOSE, Calif., October 22, 2015 -- Align Technology, Inc. (Nasdaq: ALGN) today reported financial results for the third quarter ended September 30, 2015. Clear Aligner shipments for the third quarter of 2015 (Q3'15) were 147.5 thousand, a 23.3% increase year-over-year. Net revenues for Q3'15 were $207.6 million, a 9.4% increase year-over-year from $189.9 million in the third quarter of 2014 (Q3'14). Net profit for Q3'15 was $27.6 million, or $0.34 per diluted share, compared to $38.2 million, or $0.47 per diluted share in Q3'14. Q3'15 reported revenue was lower by approximately $7.0 million, or approximately $0.06 per diluted share, due to Align's new Additional Aligners at No Charge policy that launched on July 18, 2015.  As a result of this new policy, which provides free additional aligners for eligible Invisalign treatments, the Company now defers more revenue per treatment and will recognize this revenue in a future period as the additional aligners are shipped.

"Q3 was another good quarter, with revenues and EPS above the high-end of our guidance," said Joe Hogan, Align Technology President and CEO. "Our results were driven by strong Invisalign case volume, with growth across all customer channels and geographies, reflecting our highest year-over-year growth in North America in three years with continued strength coming from EMEA and APAC, expansion in low-stage product segment and seasonally strong uptake by teenage patients, which account for 75% of the Orthodontic market."
 
Summary Financial Comparisons
(In millions except for shipments and per share amounts)
 
     
Q3'15
     
Q2'15
     
Q3'14
     
Q/
Q
   
Y/
Y
GAAP
                                       
Clear Aligner shipments
   
147,485
     
144,570
     
119,615
     
2.0
%
   
23.3
%
Net revenues
 
$
207.6
   
$
209.5
   
$
189.9
     
(0.9
)%
   
9.4
%
    Clear Aligner
 
$
198.3
   
$
200.8
   
$
178.1
     
(1.3
)%
   
11.3
%
    Scanner & Services
 
$
9.3
   
$
8.7
   
$
11.7
     
7.8
%
   
(20.4
)%
Net profit
 
$
27.6
   
$
31.4
   
$
38.2
     
(11.9
)%
   
(27.8
)%
Net profit per share
 
$
0.34
   
$
0.39
   
$
0.47
   
$
(0.05
)
 
$
(0.13
)

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

 
As of September 30, 2015, Align had $630.0 million in cash, cash equivalents and marketable securities compared to $602.6 million as of December 31, 2014. During Q3'15, Align repurchased 662,000 shares of stock, including the final delivery of 332,000 shares related to the completion of our previously announced $70 million accelerated stock repurchase (ASR) and 330,000 shares amounting to $18.8 million in open market repurchases. There remains approximately $111.2 million available for repurchases under the existing stock repurchase authorization. These repurchases were collectively part of a three-year, $300 million stock repurchase program announced on April 23, 2014 of which the second $100 million was authorized to be purchased through April 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 does influence the rate at which the Company recognizes revenue.

Q4 2015 Business Outlook
For the fourth quarter of 2015 (Q4'15), Align provides the following guidance:
Clear Aligner case shipments in the range of 154.9 thousand to 157.4 thousand, up approximately 22% to 24% over the same period a year-ago.
Net revenues in the range of $223.0 million to $227.9 million.
Diluted EPS in the range of $0.50 to $0.53.
 
Q4'15 net revenues include the expected impact of approximately $7.0 million to $8.0 million, or approximately $0.06 to $0.07 per diluted share, due to the impact on deferred revenues from Align's new Additional Aligners at No Charge policy that launched on July 18, 2015. 
 
Align Announces Patent Infringement and False Advertising Lawsuit Against SmileCareClub, Sharper Image, and Brookstone
In a separate press release today, Align announced that it has filed a lawsuit in the United States District Court for the Northern District of California against SmileCareClub LLC ("SmileCareClub"), Camelot SI, LLC d/b/a SharperImage.com ("Sharper Image"), and Brookstone, Inc. ("Brookstone") for patent infringement, false advertising, and unfair competition.


On October 21, 2015 Align and ClearCorrect agreed to mutually dismiss the claims and cross-claims in the California Superior Court action. This litigation is unrelated to Align's pending patent infringement case against ClearCorrect.

Align Web Cast and Conference Call
 
Align will host a conference call today, October 22, 2015 at 4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter 2015 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 approximately fifteen minutes prior to the start of the call. 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 13621393 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 October 29, 2015.


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 the expected impact that the "Additional Aligners at No Charge" policy will have on net revenues in the fourth quarter of 2015, in addition to certain other business metrics for the fourth quarter of 2015, including, but not limited to, anticipated net revenues, deferrals, 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, 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, 2014, which was filed with the Securities and Exchange Commission on February 26, 2015. 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
 
   
September 30,
2015
   
September 30,
2014
   
September 30,
2015
   
September 30,
2014
 
                 
Net revenues
 
$
207,636
   
$
189,876
   
$
615,210
   
$
563,053
 
                                 
Cost of revenues
   
50,060
     
44,822
     
147,910
     
135,272
 
                                 
Gross profit
   
157,576
     
145,054
     
467,300
     
427,781
 
                                 
Operating expenses:
                               
Selling, general and adminstrative
   
101,751
     
80,653
     
290,657
     
246,175
 
Research and development
   
17,779
     
12,854
     
47,348
     
39,523
 
Total operating expenses
   
119,530
     
93,507
     
338,005
     
285,698
 
                                 
Operating profit
   
38,046
     
51,547
     
129,295
     
142,083
 
                                 
Interest and other income (expense), net
   
(1,568
)
   
(1,999
)
   
(2,846
)
   
(1,491
)
                                 
Profit before income taxes
   
36,478
     
49,548
     
126,449
     
140,592
 
                                 
Provision for income taxes
   
8,862
     
11,301
     
31,306
     
34,301
 
                                 
Net profit
 
$
27,616
   
$
38,247
   
$
95,143
   
$
106,291
 
                                 
Net profit per share
                               
     - basic
 
$
0.35
   
$
0.47
   
$
1.19
   
$
1.31
 
     - diluted
 
$
0.34
   
$
0.47
   
$
1.17
   
$
1.29
 
                                 
Shares used in computing net profit per share
                         
     - basic
   
79,808
     
80,629
     
80,173
     
80,924
 
     - diluted
   
81,092
     
82,014
     
81,576
     
82,443
 

 
ALIGN TECHNOLOGY, INC.
       
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
     
(in thousands)
       
         
   
September 30,
2015
   
December 31,
2014
 
ASSETS
       
         
Current assets:
       
Cash and cash equivalents
 
$
174,040
   
$
199,871
 
Marketable securities, short-term
   
310,715
     
254,787
 
Accounts receivable, net
   
148,395
     
129,751
 
Inventories
   
18,939
     
15,928
 
Prepaid expenses and other current assets
   
59,644
     
56,823
 
   Total current assets
   
711,733
     
657,160
 
                 
Marketable securities, long-term
   
145,246
     
147,892
 
Property, plant and equipment, net
   
120,738
     
90,125
 
Goodwill and intangible assets, net
   
79,715
     
82,056
 
Deferred tax assets
   
14,542
     
3,099
 
Other assets
   
7,588
     
7,665
 
                 
     Total assets
 
$
1,079,562
   
$
987,997
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable
 
$
32,599
   
$
23,247
 
Accrued liabilities
   
95,914
     
87,880
 
Deferred revenues
   
115,998
     
90,684
 
   Total current liabilities
   
244,511
     
201,811
 
                 
Other long term liabilities
   
36,792
     
33,415
 
                 
    Total liabilities
   
281,303
     
235,226
 
                 
Total stockholders' equity
   
798,259
     
752,771
 
                 
      Total liabilities and stockholders' equity
 
$
1,079,562
   
$
987,997
 
 
 

 
ALIGN TECHNOLOGY, INC.
                               
Q3 2015 FINANCIAL AND BUSINESS METRICS
 
(in thousands except average selling price, utilization and doctors trained)
 
                                 
     
Q1
     
Q2
     
Q3
     
Q4
   
Fiscal
     
Q1
     
Q2
     
Q3
 
     
2014
     
2014
     
2014
     
2014
     
2014
     
2015
     
2015
     
2015
 
   
Invisalign Clear Aligner Net Revenues by Geography:
 
North America
 
$
107,910
   
$
111,648
   
$
113,349
   
$
113,670
   
$
446,577
   
$
118,844
   
$
126,137
   
$
124,085
 
International
   
49,848
     
55,988
     
53,439
     
60,467
     
219,742
     
55,920
     
61,896
     
61,265
 
Non-case*
   
10,481
     
12,099
     
11,350
     
12,300
     
46,230
     
12,265
     
12,784
     
12,942
 
Total Clear Aligner Net Revenues
 
$
168,239
   
$
179,735
   
$
178,138
   
$
186,437
   
$
712,549
   
$
187,029
   
$
200,817
   
$
198,292
 
YoY % growth
   
18.8
%
   
17.2
%
   
16.0
%
   
12.2
%
   
15.9
%
   
11.2
%
   
11.7
%
   
11.3
%
QoQ % growth
   
1.2
%
   
6.8
%
   
-0.9
%
   
4.7
%
           
0.3
%
   
7.4
%
   
-1.3
%
*includes Invisalign training, ancillary products, and retainers
 
                                                             
-
 
Average Invisalign Selling Price (ASP):
                                                               
Worldwide ASP
 
$
1,405
   
$
1,405
   
$
1,395
   
$
1,370
   
$
1,395
   
$
1,335
   
$
1,300
   
$
1,255
 
International ASP
 
$
1,620
   
$
1,625
   
$
1,560
   
$
1,510
   
$
1,575
   
$
1,410
   
$
1,380
   
$
1,325
 
                                                                 
                                                                 
Invisalign Clear Aligner Cases Shipped by Geography:
 
North America
   
81,420
     
84,850
     
85,405
     
86,855
     
338,530
     
91,110
     
99,630
     
101,260
 
International
   
30,760
     
34,450
     
34,210
     
40,050
     
139,470
     
39,670
     
44,940
     
46,225
 
Total Cases Shipped
   
112,180
     
119,300
     
119,615
     
126,905
     
478,000
     
130,780
     
144,570
     
147,485
 
                                                                 
Number of Invisalign Doctors Cases Shipped To:
 
North America
   
19,015
     
19,505
     
19,550
     
19,745
     
29,890
     
20,165
     
21,335
     
21,160
 
International
   
7,185
     
7,685
     
7,950
     
8,945
     
13,450
     
9,050
     
9,790
     
10,150
 
Total Doctors Cases Shipped To
    26,200       27,190       27,500       28,690       43,340       29,215       31,125       31,310  
                                                                 
Invisalign Doctor Utilization Rates*:
 
North America
   
4.3
     
4.4
     
4.4
     
4.4
     
11.3
     
4.5
     
4.7
     
4.8
 
North American Orthodontists
    8.1       8.4       8.8       8.6        27.7        9.0        9.5        9.9  
North American GP Dentists
   
2.9
     
2.9
     
2.8
     
2.9
     
6.9
     
2.9
     
3.0
     
2.9
 
International
   
4.3
     
4.5
     
4.3
     
4.5
     
10.4
     
4.4
     
4.6
     
4.6
 
Total Utilization Rates
   
4.3
     
4.4
     
4.4
     
4.4
     
11.0
     
4.5
     
4.6
     
4.7
 
   * # of cases shipped/# of doctors to whom cases were shipped
 
                                                                 
Number of Invisalign Doctors Trained:
 
North America
   
700
     
1,150
     
1,125
     
1,170
     
4,145
     
870
     
1,120
     
1,060
 
International
   
1,255
     
1,380
     
1,400
     
1,255
     
5,290
     
1,540
     
1,335
     
1,200
 
Total Doctors Trained Worldwide
    1,955       2,530       2,525       2,425       9,435       2,410       2,455       2,260  
Total to Date Worldwide
   
86,515
     
89,045
     
91,570
     
93,995
     
93,995
     
96,405
     
98,860
     
101,120
 
                                                                 
Total Net Revenues:
                                                               
Clear Aligner Net Revenues
 
$
168,239
   
$
179,735
   
$
178,138
   
$
186,437
   
$
712,549
   
$
187,029
   
$
200,817
   
$
198,292
 
Scanner & Services Net Revenues     12,407       12,796       11,738       12,163       49,104       11,057       8,671       9,344  
Total Worldwide Net Revenues
  $ 180,646     $ 192,531     $ 189,876     $ 198,600     $ 761,653     $ 198,086     $ 209,488     $ 207,636  
YoY % growth
   
17.6
%
   
17.5
%
   
15.4
%
   
11.4
%
   
15.4
%
   
9.7
%
   
8.8
%
   
9.4
%
QoQ % growth
   
1.3
%
   
6.6
%
   
-1.4
%
   
4.6
%
           
-0.3
%
   
5.8
%
   
-0.9
%
                                                                 
Stock-based Compensation (SBC)
 
SBC included in Gross Profit
 
$
800
   
$
940
   
$
865
   
$
965
   
$
3,570
   
$
980
   
$
970
   
$
984
 
SBC included in Operating Expenses     8,300       9,370        9,045       9,510       36,225       10,670       11,860       13,677  
Total SBC Expense
 
$
9,100
   
$
10,310
   
$
9,910
   
$
10,475
   
$
39,795
   
$
11,650
   
$
12,830
   
$
14,661
 
 
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 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)
   
   
Q4'15 Guidance
   
   
GAAP
   
Net Revenues
 
$223.0 - $227.9
     
Gross Margin
 
75.7% - 76.2%
     
Operating Expenses
 
$114.7 - $116.3
     
Operating Margin
 
24.3% - 25.1%
     
Net Income per Diluted Share
 
$0.50 - $0.53
     
Q4'15 net revenues include the expected impact of approximately $7.0 million to $8.0 million, or approximately $0.06 to $0.07 per diluted share, due to the impact on deferred revenues from Align's new Additional Aligners at No Charge policy that launched on July 18, 2015.
     
Business Metrics:
 
Q4'15
     
Case Shipments
  154.9K - 157.4K
Capital Expenditure
 
$20M - $25M
Depreciation & Amortization
 
$5.0M - $5.5M
Diluted Shares Outstanding
   81.4M*
Stock Based Compensation Expense
 
$14.2M
Tax Rate
   24.5%
 
* Excludes any stock repurchases during the quarter