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