Align Technology Announces Fourth Quarter and Fiscal 2019 Financial Results

Wednesday, 29. January 2020 22:00
  • 2019 revenues up 22.4% to a record $2.4 billion, clear aligner revenues a record $2 billion
  • 2019 diluted EPS of $5.53
  • 2019 Invisalign volume up 24.2% to a record of 1.5 million cases
  • 2019 iTero scanner and services revenues up 38.5% to a record $381.0 million
  • Q4 total revenues up 21.7% year-over-year to $649.8 million, and diluted EPS of $1.53
  • Q4 Invisalign volume up 23.9% year-over-year to 413.7 thousand cases
  • Q4 scanner and services revenues up 20.2% year-over-year to $106.2 million
  • Q4 operating income up 25.5% year-over-year to $151.2 million and operating margin of 23.3%

SAN JOSE, Calif., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Align Technology, Inc. (Nasdaq: ALGN) today reported financial results for the fourth quarter (Q4’19) and year ended December 31, 2019 (2019). Q4’19 total revenues were $649.8 million, up 21.7% year-over-year. Q4’19 clear aligner revenues were $543.6 million, up 22.0% year-over-year and Q4’19 scanner and services revenues were $106.2 million, up 20.2% year-over-year. Q4’19 Invisalign volume was 413.7 thousand cases, up 23.9% year-over-year. For the Americas and International regions, Q4’19 Invisalign volume was up 19.3% and 30.1% year-over-year, respectively. Q4’19 Invisalign volume for teenage patients was 116 thousand cases, up 33.1% year-over-year. Q4’19 operating income of $151.2 million was up 25.5% year-over-year resulting in an operating margin of 23.3%. Q4’19 net income was $121.3 million, or $1.53 per diluted share.

For 2019, total revenues were a record $2.4 billion, up 22.4% year-over-year.  Record 2019 clear aligner revenues were $2.0 billion, up 19.8% year-over-year and Invisalign case shipments were 1.5 million, up 24.2% year-over-year. Record 2019 iTero scanner and services revenue were $381.0 million, up 38.5% year-over-year with record volume, up 29.7% year-over-year. 2019 Invisalign cases for teenage patients were 446.7 thousand, up 34.1% year-over-year.  2019 net profit was $442.8 million, or $5.53 per diluted share.

Commenting on Align’s Q4’19 and 2019 results, Align Technology President and CEO Joe Hogan said, “Our fourth quarter was a strong finish to a great year with record revenues and volumes. Q4’19 Invisalign shipments increased 23.9% year-over-year and marked another major milestone with our 8 millionth Invisalign patient who started treatment in December. Q4’19 iTero scanner and services revenues increased 20.2% year-over-year with strong growth especially from international doctors. For the full year, revenues of $2.4 billion reflect record revenues and volumes for both Invisalign clear aligners and iTero scanners. During the year, over 1.5 million people started treatment with Invisalign clear aligners, including 447 thousand teens and younger patients which increased 34.1%.”

GAAP Summary Financial Comparisons
Fourth Quarter Fiscal 2019

 Q4’19Q3’19Q4’18 Q/Q Change Y/Y Change
Invisalign Case Shipments 1 413,725 385,360 333,800 7.4% 23.9%
Net Revenues$649.8M$607.3M$534.0M 7.0% 21.7%
Clear Aligner 2$543.6M$516.3M$445.6M 5.3% 22.0%
Scanner & Services$106.2M$91.1M$88.4M 16.6% 20.2%
Net Profit$121.3M$102.5M$97.4M 18.3% 24.5%
Diluted EPS $1.53 $1.28 $1.20 +$0.25 +$0.33

Fiscal 2019

    2019 2018 Y/Y Change
Invisalign Case Shipments 1   1,525,415 1,228,065 24.2%
Net Revenues  $2,406.8M$1,966.5M 22.4%
Clear Aligner 2  $2,025.8M$1,691.5M 19.8%
Scanner & Services  $381.0M$275.0M 38.5%
Net Profit 3  $442.8M$400.2M 10.6%
Diluted EPS3   $5.53 $4.92 +$0.61

Note: Changes and percentages are based on actual values and may affect totals due to rounding
1 Invisalign shipments do not include SmileDirectClub (“SDC“) aligners.
2 Clear aligner revenues include Invisalign clear aligners and SDC aligners.  The supply agreement with SDC terminated December 31, 2019 and was not renewed.  In 2019, the overwhelming majority of aligners declared by SDC were not manufactured by Align.
3 2019 results before tax include a $51.0 million gain from the settlement of the Straumann litigation ($45.7M net of tax or approximately $0.57 EPS benefit), impairments of $23.0 million ($17.2M net of tax or approximately $0.21 EPS impact) related to closing Invisalign Stores as a result of the arbitrator’s decision regarding SDC announced March 5, 2019, and other gains of $15.8M ($10.7M net of tax or approximately $0.13 EPS benefit) from the sale of our investment in SDC.

As of December 31, 2019, Align had $868.6 million in cash, cash equivalents and marketable securities compared to $744.5 million as of December 31, 2018. In Q4’19, we repurchased approximately 389K shares of our common stock at an average price of $258.67 per share and have $100.0 million remaining available for repurchase under the May 2018 Repurchase Program.

Align 2019 Highlights:

Corporate

  • Announced co-marketing relationships with the San Francisco 49ers, Carolina Hurricanes, Super Bowl winning New England Patriots, and the 2019 NBA Champions the Toronto Raptors, making the Invisalign brand the official smile partner for each of these winning teams.
  • Announced that it is a national sponsor for the premier healthy lifestyle brand Life Time as part of Align’s $120 million annual commitment to raise consumer awareness of doctor directed Invisalign clear aligner treatment for better smiles. 
  • Align awarded ten research grants totaling $250,000 as part of its ongoing annual research awards program to universities worldwide. 
  • Entered into a distribution agreement with Benco Dental, the largest privately-owned dental distributor in the U.S., for Align’s family of iTero Element intraoral scanners.
  • Entered into an agreement with Digital Smile Design (DSD), a leader in holistic, digital and emotional dentistry solutions, to incorporate DSD into Align’s end-to-end digital workflow, including iTero scanning technology.
  • Opened Align University Training Institute in Shanghai, China, Align’s second training facility in China. 

Product

  • Announced a global distribution agreement for the award-winning iTero Element family of intraoral scanners with Zimmer Biomet Dental, a global dental industry leader and provider of implant and restorative solutions and continuing education for dental professionals.
  • Announced commercial availability of the iTero Element 2 scanner in China at the 2019 International Orthodontic Conference and the 18th Annual Meeting of the Chinese Orthodontic Society in Nanjing, China.
  • Launched the new iTero Element Foundation intraoral scanner with restorative software, extending Align’s portfolio of intraoral scanners with powerful 3D visualization to better meet the needs of doctors, labs and patients.
  • Launched the new iTero Element 5D Imaging System for comprehensive, preventative and restorative oral care.  The iTero Element 5D Imaging System provides a new comprehensive approach to clinical applications, workflows and user experience that expands the suite of existing high-precision, full-color imaging and fast scan times of the iTero Element portfolio.
  • Launched SmileView, an online tool designed to help prospective Invisalign patients visualize a new, straighter smile before they opt for Invisalign treatment.

Q1 2020 (Q1’20) Business Outlook
As a result of the corporate structure reorganization to relocate our European headquarters from the Netherlands to Switzerland in Q1’20, our Q1’20 GAAP tax rate will reflect a significant one-time tax benefit associated with the recognition of a deferred tax asset related to the intra-entity sale of certain intellectual property rights. This deferred tax benefit will be amortized starting in 2020 and continue into subsequent quarters and years. The period over which this tax benefit will be recognized depends on the profitability of our Swiss headquarters and therefore is uncertain at this time.  Management ordinarily assesses the health of our business without regard to these types of one-time events and believes this reorganization will make it difficult for investors to assess our core underlying financial performance were we to report solely based on GAAP. Therefore, we will supplement our GAAP information with non-GAAP measures going forward. Beginning in Q1’20, in addition to our GAAP results we will present non-GAAP measures that exclude the aforementioned tax impact, along with certain other items that may not be indicative of our fundamental operating performance including discrete cash and non-cash charges in order to present investors with greater transparency into our core business operations.  A reconciliation of GAAP to non-GAAP outlook is provided at the end of this release.

The following statements are forward-looking statements based on current expectations and assumptions, and involve risk and uncertainties, some of which are set forth below under “Forward-Looking Statements.”

Novel Coronavirus in China
As reported by news agencies worldwide, the recent outbreak of the novel coronavirus in Wuhan, the capital of the Hubei Province in China, is a serious situation.  China is one of our largest country markets and represents roughly 8% of our total revenues. The situation in China is very fluid and we are closely monitoring it. We are in contact with various relevant agencies globally. Thus far, the Chinese government has implemented travel bans and has essentially shutdown public transportation in Wuhan.  It has also issued public warnings to avoid all non-essential medical and dental procedures for the time-being.

While we do not believe there are any concerns regarding the safety of our products due to the stringent health and safety procedures of our manufacturing processes, we are taking additional precautions across China to minimize the risk of spreading illness to our internal teams, including additional protections and health screening procedures as well as travel bans/restrictions.

Given this increased uncertainty and disruption to our employees, customers/doctors’ practices, their patients and consumers, we believe it is prudent to reduce our outlook for Q1’20. Therefore, for Q1’20, our outlook reflects approximately 20,000 to 25,000 fewer Invisalign case shipments and approximately $30.0 million to $35.0 million less revenues for Invisalign and iTero products sold in China. In addition, we are also absorbing $3.0 million to $4.0 million in idle China plant capacity costs which we expect will result in approximately a 0.5% gross margin impact.

Commenting on Align’s first quarter outlook, Hogan continued, “As we kick off 2020, we are very concerned for the safety and health of our employees, customers/doctors and their patients in China.  Their wellbeing is our top priority and we are doing everything we can to ensure that they are in good hands. We are working with our local team to donate medical supplies and provide funding to help combat the outbreak. While we are mindful of the increased uncertainty in China and its impact on our first quarter outlook, it’s important to take a step back and remember that our business is broad and deep. We have strong growth in other regions, and are seeing strong momentum in the Americas, across EMEA and in all other countries in APAC especially Japan, Australia/New Zealand, Southeast Asia, Taiwan and Korea.”

For Q1’20, Align provides the following guidance:

  • Net revenues in the range of $615.0 million to $630.0 million, up approximately 12% to 15% over the same period a year ago, which reflects $30.0 million to $35.0 million less revenues for Invisalign and iTero products sold in China.
  • Invisalign case shipments in the range of 396 thousand to 406 thousand, up approximately 13% to 16% over the same period a year ago, which reflects approximately 20,000 to 25,000 fewer Invisalign case shipments from China.
  • GAAP operating margin in the range of 15.4% to 16.5%.
      • Non-GAAP operating margin in the range of 19.5% to 20.5%.
  • GAAP effective tax rate in the range of (1,440%) to (1,302%)
      • Non-GAAP effective tax rate in the range of 22% to 23%.
  • GAAP diluted EPS in the range of $18.65 to $18.74.
      • Non-GAAP diluted EPS in the range of $1.19 to $1.28.

Align Web Cast and Conference Call
Align will host a conference call today, January 29, 2020 at 4:30 p.m. ET, 1:30 p.m. PT, to review its fourth quarter and fiscal 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 one month. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13697560 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 February 12, 2020.

About Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we intend to provide investors with certain non-GAAP financial measures beginning in Q1’20 including, non-GAAP gross profit, gross margin, operating expenses, income from operations, operating margin, effective tax rate, net income and diluted EPS, which exclude certain items that may not be indicative of our fundamental operating performance including discrete cash and non-cash charges or gains that are included in the most directly comparable GAAP measure. Non-GAAP measures will exclude the effects of stock-based compensation, non-cash deferred tax assets and associated amortization related to intra-entity transfer of non-inventory assets, impairments and other (gains) charges, and litigation settlement gains, and, if applicable, any associated tax impacts.

We use 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 recurring core operating performance. 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 will be provided to and used by our institutional investors and the analyst community to help them analyze the performance of our business.

There are limitations to using non-GAAP financial measures, though, because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which charges are excluded from the non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a GAAP as well as a non-GAAP basis and also by providing GAAP measures in our public disclosures. The presentation of non-GAAP financial information is meant to be considered in addition to, not as a substitute for or in isolation from, the directly comparable financial measures prepared in accordance with GAAP. We urge investors to review the reconciliation of our GAAP financial measures to the comparable Non-GAAP financial measures included in this presentation, and not to rely on any single financial measure to evaluate our business. For more information on these non-GAAP financial measures, please see the tables captioned "Q1’20 Reconciliation of GAAP to Non-GAAP" and "Business Outlook Summary" included at the end of this release.

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 Statements
This news release, including the tables below, contains forward-looking statements, including quotations from management, statements in the paragraphs under Q1 2020 (Q1’20) Business Outlook and Novel Coronavirus in China regarding certain business metrics on either or both a GAAP or non-GAAP basis for the first quarter of 2020, including, but not limited to, anticipated net revenues, operating margin, tax rates, benefits and amortization, case shipments, and expected declines in Invisalign case shipments, Invisalign and iTero revenues, idle operations and gross margins from the effects of the novel coronavirus in China as well as the strength of our business, its growth and momentum in regions outside China. 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, adverse impacts to our operations in China stemming from measures we may take to ensure the health and safety of our employees, consumers, contractors, suppliers and their families from viral outbreaks in China on top of governmental efforts to minimize the spread of illness, a tougher consumer demand environment in China generally, especially for manufacturers and service providers whose headquarters or primarily operations are not based in China, expectations regarding the continued growth of our international markets, increasing competition from existing and new competitors, rapidly evolving and groundbreaking advances that are fundamentally changing the dental industry and the way new and existing participants market and provide products and services to consumers, the ability to protect our intellectual property rights, continued compliance with regulatory requirements, our expectations regarding sales growth of our intra-oral scanner sales in international markets, our belief that technology features and functionality of the iTero scanners will increase adoption of Invisalign and increase sales of our intra-oral scanners, our expectations regarding the financial and strategic benefits of establishing regional order acquisition, treatment planning and manufacturing facilities, 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 or enhancements to existing products do not proceed in accordance with the anticipated timeline or may themselves contain bugs or errors requiring remediation, the possibility that the market for the sale of these new or enhanced products may not develop as expected, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, our expectations concerning additional costs related to the corporate structure reorganization, including the relocation of our European headquarters from the Netherlands to Switzerland, the risks relating to our ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, the expected impact additional sales representatives will have on our sales, growth related risks, including excess or constrained capacity at our manufacturing and treat operations facilities and pressure on our internal systems and personnel, the compromise of customer and/or patient data for any reason, and system integration and implementation issues, 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 our international manufacturing operations, our ability to develop and successfully introduce new products and product enhancements and the loss of key personnel.

The foregoing and other risks are detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our 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 and our latest Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which was filed with the SEC on October 31, 2019. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Align TechnologyZeno Group
Madelyn HomickSarah Johnson
(408) 470-1180(828) 551-4201
mhomick@aligntech.comsarah.johnson@zenogroup.com


ALIGN TECHNOLOGY, INC.  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
          
  Three Months Ended
December 31,
 Year Ended
December 31,
 
   2019  2018   2019   2018  
          
Net revenues $649,787 $534,020  $2,406,796  $1,966,492  
          
Cost of net revenues  177,829  150,924   662,899   518,625  
          
Gross profit  471,958  383,096   1,743,897   1,447,867  
          
Operating expenses:         
Selling, general and administrative  279,481  226,819   1,072,053   852,404  
Research and development  41,327  35,804   157,361   128,899  
Impairments and other (gains) charges  -  -   22,990   -  
Litigation settlement gain  -  -   (51,000)  -  
Total operating expenses  320,808  262,623   1,201,404   981,303  
          
Income from operations  151,150  120,473   542,493   466,564  
          
Interest income  2,906  2,249   12,482   8,576  
Other income (expense), net  1,741  (730)  7,676   (8,489) 
          
Net income before provision for income taxes and equity in losses of investee  155,797  121,992   562,651   466,651  
          
Provision for income taxes  34,535  22,517   112,347   57,723  
Equity in losses of investee, net of tax  -  2,083   7,528   8,693  
          
Net income $121,262 $97,392  $442,776  $400,235  
          
Net income per share:         
Basic $1.54 $1.22  $5.57  $5.00  
Diluted $1.53 $1.20  $5.53  $4.92  
          
Shares used in computing net income per share:         
Basic  78,578  79,891   79,424   80,064  
Diluted  79,137  80,943   80,100   81,357  
          


ALIGN TECHNOLOGY, INC.  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS   
(in thousands)     
      
  December 31,
2019
 December 31,
2018
 
ASSETS     
      
Current assets:     
Cash and cash equivalents $550,425 $636,899 
Marketable securities, short-term  318,202  98,460 
Accounts receivable, net  550,291  439,009 
Inventories  112,051  55,641 
Prepaid expenses and other current assets  102,450  72,470 
Total current assets  1,633,419  1,302,479 
      
Marketable securities, long-term  -  9,112 
Property, plant and equipment, net  631,730  521,329 
Operating lease right-of-use assets, net  56,244  - 
Equity method investments  -  45,913 
Goodwill and intangible assets, net  75,692  81,949 
Deferred tax assets  64,007  64,689 
Other assets  39,610  26,987 
      
Total assets $2,500,702 $2,052,458 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
      
Current liabilities:     
Accounts payable $87,250 $64,256 
Accrued liabilities  319,958  234,679 
Deferred revenues  563,762  393,138 
Total current liabilities  970,970  692,073 
      
Income tax payable  102,794  78,008 
Operating lease liabilities  43,463  - 
Other long-term liabilities  37,306  29,486 
Total liabilities  1,154,533  799,567 
      
Total stockholders' equity  1,346,169  1,252,891 
      
Total liabilities and stockholders' equity $2,500,702 $2,052,458 
      


ALIGN TECHNOLOGY, INC. 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands)    
     
  Year Ended
December 31,
   2019   2018 
     
CASH FLOWS FROM OPERATING ACTIVITIES    
Net cash provided by operating activities $747,270  $554,681 
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Net cash provided by (used in) investing activities  (350,444)  6,927 
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Net cash used in financing activities  (485,540)  (369,434)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash  2,282   (4,733)
Net increase in cash, cash equivalents, and restricted cash  (86,432)  187,441 
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 $551,134  $637,566 
     



ALIGN TECHNOLOGY, INC.  
INVISALIGN BUSINESS METRICS*  
                       
                       
   Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal 
    2018   2018   2018   2018   2018   2019   2019   2019   2019   2019  
Invisalign Average Selling Price (ASP):                     
 Worldwide ASP $1,310  $1,315  $1,230  $1,235  $1,270  $1,245  $1,230  $1,260  $1,240  $1,245  
 International ASP $1,435  $1,425  $1,340  $1,295  $1,370  $1,330  $1,305  $1,330  $1,300  $1,315  
                       
Invisalign Cases Shipped by Geography:                     
 Americas  166,665   181,425   190,615   189,410   728,115   202,935   211,360   215,355   225,925   855,575  
 International  105,570   121,260   128,730   144,390   499,950   146,260   165,785   170,005   187,790   669,840  
 Total Cases Shipped  272,235   302,685   319,345   333,800   1,228,065   349,195   377,145   385,360   413,715   1,525,415  
 YoY % growth  30.8%  30.5%  35.3%  30.9%  31.9%  28.3%  24.6%  20.7%  23.9%  24.2% 
 QoQ % growth  6.7%  11.2%  5.5%  4.5%    4.6%  8.0%  2.2%  7.4%   
                       
Number of Invisalign Doctors Cases Were Shipped To:                     
 Americas  27,105   28,280   28,890   29,215   42,000   30,200   31,445   31,975   33,130   47,130  
 International  19,700   21,805   23,270   25,475   36,040   26,510   28,970   30,980   33,720   48,650  
 Total Doctors Cases Shipped To  46,805   50,085   52,160   54,690   78,040   56,710   60,415   62,955   66,850   95,780  
                       
Invisalign Doctor Utilization Rates**:                     
 North America  6.3   6.6   6.9   6.7   18.2   7.0   7.0   7.0   7.2   19.4  
 North American Orthodontists  15.3   16.4   17.4   16.5   56.7   18.3   18.9   19.1   19.3   65.0  
 North American GP Dentists  3.4   3.6   3.5   3.6   9.1   3.6   3.6   3.5   3.8   9.5  
 International  5.4   5.6   5.5   5.7   13.9   5.5   5.7   5.5   5.6   13.8  
 Total Utilization Rates  5.8   6.0   6.1   6.1   15.7   6.2   6.2   6.1   6.2   15.9  
                       
Number of Invisalign Doctors Trained:                     
 Americas  1,630   1,880   2,085   2,290   7,885   1,840   3,070   2,760   2,095   9,765  
 International  2,645   3,300   2,845   2,980   11,770   2,410   3,520   3,135   3,445   12,510  
 Total Doctors Trained Worldwide  4,275   5,180   4,930   5,270   19,655   4,250   6,590   5,895   5,540   22,275  
 Total to Date Worldwide  136,575   141,755   146,685   151,955   151,955   156,205   162,795   168,690   174,230   174,230  
                       
                       
* 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. 
                       
                       
                       
ALIGN TECHNOLOGY, INC.  
STOCK-BASED COMPENSATION  
(in thousands)  
                       
   Q1 Q2 Q3 Q4 Fiscal Q1 Q2 Q3 Q4 Fiscal 
    2018   2018   2018   2018   2018   2019   2019   2019   2019   2019  
Stock-based Compensation (SBC)                     
 SBC included in Gross Profit $881  $900  $966  $948  $3,695  $1,112  $1,278  $1,354  $1,410  $5,154  
 SBC included in Operating Expenses  14,949   15,990   18,232   17,897   67,068   19,932   21,189   22,822   19,087   83,030  
 Total SBC $15,830  $16,890  $19,198  $18,845  $70,763  $21,044  $22,467  $24,176  $20,497  $88,184  
                       


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 Statements” above in this press release. Please refer below for GAAP to Non-GAAP Reconciliation.
     
Q1 2020 Financial Outlook    
(in millions, except per share amounts and percentages)  
     
     
  GAAP  Non-GAAP
     
Net Revenues $615 - $630  
     
Gross Margin 71.5% - 72.0% 71.7% - 72.2%
     
Operating Expenses $345 - $350 $321 - $326
     
Operating Margin 15.4% - 16.5% 19.5% - 20.5%
     
Net Income per Diluted Share $18.65 - $18.74 $1.19 - $1.28
Effective Tax Rate approx (1,440%) - (1,302%) approx 22% - 23%
     
Business Metrics:    
     
Case Shipments 396K - 406K  
Capital Expenditures $95M - $100M  
Depreciation & Amortization $23M - $25M  
Diluted Shares Outstanding(1) 79.1M  
Stock Based Compensation approx $25M  
     
     
(1) Excludes any stock repurchases during the quarter  
  


     
 Q1'20 Reconciliation of GAAP to Non-GAAP   
     
 in millions, except per share amounts and percentages Q1'20 Guidance 
 GAAP Gross Margin 71.5% - 72.0% 
 Stock Based Compensation 0.2% 
 Non-GAAP Gross Margin 71.7% - 72.2% 
     
 GAAP Operating Expenses $345 - $350 
 Stock Based Compensation ($24) 
 Non-GAAP Operating Expenses $321 - $326 
     
 GAAP Operating Margin 15.4% - 16.5% 
 Stock Based Compensation 4.0% 
 Non-GAAP Operating Margin 19.5% - 20.5% 
     
 GAAP Effective Tax Rate* (1,440%) - (1,302%) 
 Stock Based Compensation 6.1% 
 Tax Impact of Non-GAAP Items* 1,461% - 1,325% 
 Non-GAAP Effective Tax Rate 22% - 23% 
     
 GAAP Diluted EPS $18.65 - $18.74 
 Stock Based Compensation $0.24 
 Tax Impact of Non-GAAP Items ($17.70) 
 Non-GAAP Diluted EPS $1.19 - $1.28 
     
 *Tax rate reflects a significant one-time tax benefit associated with the recognition of a deferred tax asset related to the intra-entity sale of certain intellectual property rights. This deferred tax benefit will be amortized starting in 2020 and continue into subsequent quarters and years. 

 

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