SAN JOSE, CA--(Marketwired - October 17, 2013) -
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Align Technology, Inc. (NASDAQ: ALGN)
- Net revenues of $164.5 million were up 20.5% year-over-year
- Invisalign clear aligner net revenues of $153.5 million were up 21.2% year-over-year
- Invisalign clear aligner shipments of 106.9 thousand were up 15.5% year-over-year
- GAAP earnings per diluted share (EPS) of $0.42
Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the third quarter ended September 30, 2013.
Total net revenues for the third quarter of 2013 (Q3'13) were $164.5 million. This is compared to net revenues of $163.8 million reported in the second quarter of 2013 (Q2'13) and $136.5 million in the third quarter of 2012 (Q3'12). Q3'13 clear aligner net revenues were $153.5 million, compared to $153.3 million in Q2'13 and $126.7 million in Q3'12. Clear aligner case shipments in the third quarter of 2013 were 106.9 thousand, compared to 106.1 thousand in Q2'13 and 92.5 thousand in Q3'12. Q3'13 scanner and CAD/CAM services net revenues were $11.0 million, compared to $10.5 million in Q2'13 and compared to $9.8 million in Q3'12.
“I’m pleased to report another very good quarter for Align with net revenues, gross margin, and EPS higher than our outlook. Further we achieved record levels of net revenues, Invisalign case volume, and North American iTero scanner volume, enabling us to reach the low end of our long term model for operating margin, while generating strong operating cash flow,” said Thomas M. Prescott, Align president and CEO. “The third quarter includes a seasonally slower period in Europe and in North America for our GP dentists, along with the peak of the summer season for teenage orthodontic case starts. We’re pleased that patient traffic appears to have remained solid for our North American Orthodontist customers this summer, which resulted in strong sequential and year over year growth for Invisalign volume, especially in the important teenage segment.”
Net profit for the third quarter of 2013 was $34.5 million, or $0.42 per diluted share, which includes $1.3 million, or $0.02 per diluted share, for a one-time tax benefit related to our fiscal 2012 U.S. federal income taxes. This is compared to net profit of $29.3 million, or $0.36 per diluted share, in Q2'13 and net loss of $0.3 million, or $0.00 per diluted share in Q3'12. In the third quarter last year, net loss included a pre-tax goodwill impairment charge of $24.7 million, as well as other pre-tax acquisition and integration related costs of $0.4 million.
As of September 30, 2013, the Company had $400.4 million in cash, cash equivalents, and short and long-term marketable securities compared to $356.1 million as of December 31, 2012.
To supplement our consolidated financial statements, we provide the following GAAP and non-GAAP financial measures. Detailed reconciliations between GAAP and non-GAAP information are contained in the tables following the financial tables of this release. Starting in fiscal 2013, amortization of acquired intangible assets is no longer excluded as a non-GAAP measure. This expense is included in GAAP gross profit, operating expenses, operating profit and net profit (loss) for the periods presented below and therefore is no longer a reconciling item.
Q3'13 Operating Results ($M except for per share amounts and percentages) ============================================================================ Key GAAP Operating Results Q3'13 Q2'13 Q3'12 ------ ------ ------- Net Revenues $164.5 $163.8 $136.5 - Clear Aligner $153.5 $153.3 $126.7 - Scanner and CAD/CAM Services $11.0 $10.5 $9.8 Gross Margin 76.0% 75.5% 73.5% - Clear Aligner 79.9% 78.4% 77.6% - Scanner and CAD/CAM Services 22.2% 33.9% 20.6% Operating Expenses $83.6 $85.8 $95.8 Operating Margin 25.2% 23.1% 3.3% Net Profit (Loss) $34.5 $29.3 ($0.3) Earnings (Loss) Per Diluted Share (EPS) $0.42 $0.36 ($0.00) Key Non-GAAP Operating Results Q3'13 Q2'13 Q3'12 ------ ------ ------- Non-GAAP Gross Margin 76.0% 75.5% 73.6% - Non-GAAP Clear Aligner 79.9% 78.4% 77.6% - Non-GAAP Scanner & CAD/CAM Services 22.2% 33.9% 21.6% Non-GAAP Operating Expenses $83.6 $85.8 $70.9 Non-GAAP Operating Margin 25.2% 23.1% 21.6% Non-GAAP Net Profit $34.5 $29.3 $22.2 Non-GAAP Earnings Per Diluted Share (EPS) $0.42 $0.36 $0.26 EBITDA $45.8 $41.4 $8.5 Adjusted EBITDA $45.8 $41.4 $33.6 Stock-based Compensation (SBC) Q3'13 Q2'13 Q3'12 ------ ------ ------- Total SBC Expense $7.6 $7.3 $5.4 - SBC included in Gross Margin $0.7 $0.6 $0.5 - SBC included in Operating Expenses $6.9 $6.7 $4.9
Q4 Fiscal 2013 Business Outlook
For the fourth quarter of 2013 (Q4'13), Align Technology provides the following guidance:
- Clear aligner case shipments in a range of 109.7 to 112.1 thousand cases, which reflects a year-over-year increase of 21.2% to 23.9%
- Net revenues in a range of $169.1 million to $173.1 million
- Earnings per diluted share in a range of $0.41 to $0.43
Align Web Cast and Conference Call
Align Technology will host a conference call today, October 17, 2013 at 4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter 2013 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 Technology’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 421424 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 25, 2013.
About Align Technology, Inc.
Align Technology designs, manufactures and markets Invisalign, a proprietary method for treating malocclusion, or the misalignment of teeth. Invisalign corrects malocclusion using a series of clear, nearly invisible, removable appliances that gently move teeth to a desired final position. Because it does not rely on the use of metal or ceramic brackets and wires, Invisalign significantly reduces the aesthetic and other limitations associated with braces. Invisalign is appropriate for treating adults and teens. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998.The Invisalign product family includes Invisalign, Invisalign Teen, Invisalign Assist, Invisalign Express 10, Invisalign Express 5, Invisalign Lite, and Vivera Retainers. To learn more about Invisalign or to find an Invisalign trained doctor in your area, please visit www.invisalign.com.
Cadent Holdings, Inc. is a subsidiary of Align Technology and is a leading provider of 3D digital scanning solutions for orthodontics and dentistry. The Cadent family of products includes the iTero scanning systems, OrthoCAD iCast and OrthoCAD iRecord. For additional information, please visit www.cadentinc.com.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements and our business outlook, we may use from time to time the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating profit, non-GAAP net profit and non-GAAP earnings per share, which exclude, as applicable, acquisition and integration related costs, severance and benefit costs, impairment of goodwill, impairment of long-lived assets and any related income tax-related adjustments, and EBITDA and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our “core operating performance.” Management believes that “core operating performance” represents Align’s performance in the ordinary, on-going and customary course of its operations. Accordingly, management excludes from “core operating performance” certain expenditures and other items that may not be indicative of our operating performance including discrete cash and non-cash charges that are infrequent, or one-time in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making, and (2) they are provided to and used by our institutional investors and the analyst community to facilitate comparisons with prior and subsequent reporting periods. A reconciliation of the GAAP and non-GAAP financial measures for the quarter and year and a more detailed explanation of each non-GAAP financial measure and its uses are provided in the footnotes to the table captioned “Reconciliation of GAAP to non-GAAP Key Financial Metrics” and “Business Outlook Summary” included at the end of this release.
Forward-Looking Statement
This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the fourth quarter of 2013, including anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, case shipments and cash, cash equivalents and short-term and long-term investments. 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 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 the CAD/CAM 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, the loss of key personnel and impairments in the book value of goodwill or other intangible assets. 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 fiscal year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 1, 2013. 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, September 30, September 30, September 30, 2013 2012 2013 2012 ------------- ------------- ------------- ------------- Net revenues $ 164,506 136,496 $ 481,914 417,201 Cost of net revenues 39,416 36,146 120,284 107,291 ------------- ------------- ------------- ------------- Gross profit 125,090 100,350 361,630 309,910 ------------- ------------- ------------- ------------- Operating expenses: Sales and marketing 45,224 36,468 135,352 114,272 General and administrative 27,487 24,762 84,862 71,294 Research and development 10,915 9,952 33,113 31,158 Impairment of goodwill - 24,665 40,693 24,665 Impairment of long-lived assets - - 26,320 - ------------- ------------- ------------- ------------- Total operating expenses 83,626 95,847 320,340 241,389 Operating profit 41,464 4,503 41,290 68,521 Interest and other income (expense), net 449 (353) (874) (624) ------------- ------------- ------------- ------------- Profit before income taxes 41,913 4,150 40,416 67,897 Provision for income taxes 7,376 4,494 18,542 18,765 ------------- ------------- ------------- ------------- Net profit (loss) $ 34,537 $ (344) $ 21,874 $ 49,132 ============= ============= ============= ============= Net profit (loss) per share - basic $ 0.43 $ (0.00) $ 0.27 $ 0.61 ============= ============= ============= ============= - diluted $ 0.42 $ (0.00) $ 0.26 $ 0.59 ============= ============= ============= ============= Shares used in computing net profit (loss) per share - basic 79,967 81,437 80,592 80,356 ============= ============= ============= ============= - diluted 81,848 81,437 82,549 83,016 ============= ============= ============= ============= ALIGN TECHNOLOGY, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2013 2012 --------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 175,839 $ 306,386 Marketable securities, short-term 147,740 28,485 Accounts receivable, net 109,179 98,992 Inventories 14,662 15,122 Other current assets 34,839 36,808 --------------- --------------- Total current assets 482,259 485,793 Marketable securities, long-term 76,836 21,252 Property and equipment, net 76,552 79,191 Goodwill and intangible assets, net 86,107 145,013 Deferred tax assets 28,822 21,609 Other long-term assets 8,630 3,454 --------------- --------------- Total assets $ 759,206 $ 756,312 =============== =============== LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 19,157 $ 19,549 Accrued liabilities 73,714 74,247 Deferred revenue 70,397 61,975 --------------- --------------- Total current liabilities 163,268 155,771 Other long term liabilities 20,254 19,224 --------------- --------------- Total liabilities 183,522 174,995 Total stockholders’ equity 575,684 581,317 --------------- --------------- Total liabilities and stockholders’ equity $ 759,206 $ 756,312 =============== =============== ALIGN TECHNOLOGY, INC. RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS Reconciliation of GAAP to Non-GAAP Gross Profit (in thousands) Three Months Ended ------------------------------------- September 30, June 30, September 30, 2013 2013 2012 ------------- --------- ------------- GAAP Gross profit $ 125,090 $ 123,691 $ 100,350 Acquisition and integration costs related to cost of revenues (1) - - 55 Severance and benefit costs related to cost of revenues (2) - - 39 ------------- --------- ------------- Non-GAAP Gross profit $ 125,090 $ 123,691 $ 100,444 ============= ========= ============= Reconciliation of GAAP to Non-GAAP Gross Profit Scanner and CAD/CAM Services (in thousands) Three Months Ended ------------------------------------- September 30, June 30, September 30, 2013 2013 2012 ------------- --------- ------------- GAAP Scanner and CAD/CAM Services gross profit $ 2,427 $ 3,567 $ 2,016 Acquisition and integration costs related to cost of revenues (1) - - 55 Severance and benefit costs related to cost of revenues (2) - - 39 ------------- --------- ------------- Non-GAAP Gross profit $ 2,427 $ 3,567 $ 2,110 ============= ========= ============= Reconciliation of GAAP to Non-GAAP Operating Expenses (in thousands) Three Months Ended ------------------------------------- September 30, June 30, September 30, 2013 2013 2012 ------------- --------- ------------- GAAP Operating expenses $ 83,626 $ 85,790 $ 95,847 Acquisition and integration costs related to operating expenses (1) - - (179) Severance and benefit costs related to operating expenses (2) - - (105) Impairment of goodwill (3) - - (24,665) Impairment of long-lived assets (4) - - - ------------- --------- ------------- Non-GAAP Operating expenses $ 83,626 $ 85,790 $ 70,898 ============= ========= ============= Reconciliation of GAAP to Non-GAAP Operating Profit (in thousands) Three Months Ended ------------------------------------- September 30, June 30, September 30, 2013 2013 2012 ------------- --------- ------------- GAAP Operating profit $ 41,464 $ 37,901 $ 4,503 Acquisition and integration costs (1) - - 234 Severance and benefit costs (2) - - 144 Impairment of goodwill (3) - - 24,665 Impairment of long-lived assets (4) - - - ------------- --------- ------------- Non-GAAP Operating profit $ 41,464 $ 37,901 $ 29,546 ====
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