Align Technology Announces Fourth Quarter and Year Ended 2016 Results
SAN JOSE, CA -- (Marketwired) -- 01/31/17 -- Align Technology, Inc. (NASDAQ: ALGN)
- Record 2016 revenues of $1.1 billion, up 27.7% year-over-year, and diluted EPS of $2.33
- 2016 Invisalign case shipments of 708.5 thousand cases, up 21.5% year-over-year
- Q4 revenues up 27.3% year-over-year to $293.2 million
- Q4 Clear Aligner** revenues up 17.5% and Scanner revenues up 156.8% year-over-year
- Q4 Invisalign case shipments up 18.5% year-over-year to 190.1 thousand cases, international Invisalign case shipments up 25.0% year-over-year
- Q4 diluted EPS $0.59, down $0.01 year-over-year
Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the fourth quarter and year ended December 31, 2016. Invisalign case shipments in the fourth quarter of 2016 (Q4'16) were 190.1 thousand, a 18.5% increase year-over-year. For Q4'16, revenues were $293.2 million, a 27.3% increase year-over-year, and net profit was $47.6 million, or $0.59 per diluted share, down $0.01 per diluted share compared to the same period in the prior year. Q4'16 EPS was unfavorably impacted by a stronger U.S. dollar, which amounted to approximately $0.08 per diluted share due to net foreign exchange losses related to the revaluation of certain balance sheet accounts.
For 2016, Invisalign case shipments were 708.5 thousand cases and iTero scanner shipments were 3,970 units, an increase of 21.5% and 229.6%, respectively. For 2016, revenues were $1.1 billion, a 27.7% increase year-over-year and net profit was $189.7 million, or $2.33 per diluted share, up $0.56 per diluted share compared to the prior year.
Commenting on Align's Q4 and 2016 results, Align Technology President and CEO Joe Hogan said, "Q4 was another record quarter for Align, reflecting continued strong growth across all geographies and customer channels compared to the prior quarter last year. These results helped us to exceed $1 billion in annual revenue for the first time in our history. In addition, more than 700 thousand patients started orthodontic treatment with Invisalign clear aligners in 2016, helping us to surpass our 4 millionth Invisalign patient. We also saw strong adoption of our new iTero Element scanner this year, which more than tripled our scanner shipments over the prior year."
GAAP Summary Financial Comparisons
Fourth Quarter Fiscal 2016
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Q/Q Y/Y
Q4'16 Q3'16 Q4'15 Change Change
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Invisalign Case
Shipments* 190,055 177,755 160,400 +6.9% +18.5%
Net Revenues $ 293.2M $ 278.6M $ 230.3M +5.2% +27.3%
Clear Aligner** $ 251.5M $ 243.7M $ 214.0M +3.2% +17.5%
Scanner & Services $ 41.7M $ 34.9M $ 16.2M +19.3% +156.8%
Net Profit $ 47.6M $ 51.4M $ 48.9M (7.3)% (2.6)%
Diluted EPS $ 0.59 $ 0.63 $ 0.60 $ (0.04) $ (0.01)
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Fiscal 2016
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2016 2015 Y/Y Change
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Invisalign Case Shipments* 708,500 583,235 +21.5%
Net Revenues $ 1,079.9M $ 845.5M +27.7%
Clear Aligner** $ 958.3M $ 800.2M +19.8%
Scanner & Services $ 121.5M $ 45.3M +168.3%
Net Profit $ 189.7M $ 144.0M +31.7%
Diluted EPS $ 2.33 $ 1.77 $ 0.56
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Note: Changes and percentages are based on actual values and may effect
totals due to rounding
* Invisalign Shipment figures exclude SmileDirectClub aligners
** Clear aligner revenue includes revenues from Invisalign clear aligners
and SmileDirectClub aligners
As of December 31, 2016, Align had $700.0 million in cash, cash equivalents and marketable securities compared to $678.7 million as of December 31, 2015. We repurchased approximately 0.4 million shares of stock for $38.0 million in Q4'16 under the April 2014 Repurchase Program. Subsequent to year-end, the Company purchased the remaining shares under this plan for $3.8 million completing the Align 2014 Repurchase Plan. Align has $300.0 million available for repurchase under its 2016 Repurchase Plan announced on April 28, 2016.
2016 Business Highlights
The following list highlights Align's key announcements over the past year:
- Launched iTero Element 1.4 software and Invisalign Outcome Simulator 4.0 application: Align announced the iTero Element 1.4 new software upgrade which includes color scanning, restorative pre-treatment scanning and optimized orthodontic scanning. In addition, the iTero scanners include the enhanced Invisalign Outcome Simulator 4.0 application now with Invisalign 3D Progress Tracking and Patient Simulation Sharing.
- Launched Invisalign G7: Align announced Invisalign G7, a new set of features designed to deliver greater control of tooth movements and improved treatment outcomes. Invisalign G7 builds on earlier Invisalign G-series releases with new features to fine-tune certain tooth movements and deliver treatment outcome quality that Invisalign providers expect, particularly with teenage patients.
- Weekly Aligner Wear Recommendation: Align announced one-week aligner wear recommendation for all Invisalign Full, Teen and Assist products instead of two-week aligner wear for each stage of Invisalign treatment. Continued Invisalign product innovation including "G-Series" features, SmartTrack aligner material, and clinically proven treatment predictability, allowed the company to confidently recommend one-week wear.
- Launched ClinCheck Pro 5.0: Align announced ClinCheck Pro 5.0, the next generation Invisalign treatment software, with ability to view side-by-side treatment plans, a more realistic 3D visual model, and a new configurable toolbar for even greater flexibility.
- 4 Million Patients Milestone: Align announced that 4 million patients started treatment with Invisalign clear aligners. This is a significant accomplishment for the company and the 100,000 Invisalign-trained doctors around the world, demonstrating increased global acceptance of Invisalign treatment as a preferred choice for straightening teeth.
- SmileDirectClub Supplier Agreement: Align announced a supply agreement with SmileDirectClub to manufacture non-Invisalign clear aligners for SmileDirectClub's doctor-directed, at-home program for affordable, cosmetic teeth straightening. SmileDirectClub aligners will include up to 20 stages without attachments or interproximal reduction (IPR), and will be manufactured by Align per SmileDirectClub's specifications for minor tooth movement.
- Research Awards Program for 2016 and 2017: Align announced the Research Awards Program for 2017. This is an ongoing annually funded program established in 2010 and designed to promote clinical and scientific dental research in universities across the globe. Align also announced that fourteen research awards totaling $310,000 were awarded to four universities in North America and eight International universities under its 2016 program.
- 3Shape Trios Scanner Interoperability: Align announced that 3Shape's TRIOS® Standard, TRIOS Color and TRIOS 3 scanners were qualified in Q4'16 for Invisalign case submission. Align and 3Shape also announced a collaborative agreement to enhance the existing STL export workflow with iTero® scanners and laboratory partners using 3Shape Dental System™ Software which will enable improved consistency for customers using the workflow.
- Invisalign Commercially Available in India: Align announced commercial availability of the Invisalign system in India in February 2016. Align is offering a comprehensive range of products including Invisalign Full, Invisalign Teen, Invisalign Lite clear aligners, and Vivera Retainers. Align began training doctors in Delhi, Mumbai, Pune, Chandigarh, Chennai, and expanded into Bangalore, Ahmedabad, Hyderabad, Calcutta, and Cochin over the year. Align also launched a consumer marketing campaign.
- ERP System Implementation: Align implemented a new ERP system in July, which provides a foundation that enables new capabilities, improves speed of execution, and will be used to improve Align's customers' experience.
Q1 2017 Business Outlook
For the first quarter of 2017 (Q1'17), Align provides the following guidance:
- Invisalign case shipments in the range of 200 thousand to 203 thousand, up approximately 22% to 24% over the same period a year ago.
- Net revenues in the range of $295 million to $298 million.
- Diluted EPS in the range of $0.64 to $0.67, which includes $0.14 of excess tax benefits.
Regarding our tax rate: At the start of 2017, we adopted accounting standards update entitled Improvements to Employee Share-Based Payment Accounting. Under this new standard, excess tax benefits and deficiencies associated with employee share-based payments are no longer recognized as additional paid-in capital on the balance sheet but instead recognized directly to income tax expense or benefit in the income statement for the reporting period in which they occur. Under this new standard, we expect our Q1 effective tax rate to be approximately 1% to 2%, which includes $12 million in excess tax benefits.
Align Web Cast and Conference Call
Align will host a conference call today, January 31, 2017 at 4:30 p.m. ET, 1:30 p.m. PT, to review its fourth quarter and year end 2016 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the webcast, go to the "Events & Presentations" section under Company Information on Align's Investor Relations web site at http://investor.aligntech.com. To access the conference call, please dial 201-689-8261. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13652166 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 14, 2017.
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 certain business metrics for the first quarter of 2017, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, tax rate and case shipments. Forward-looking statements contained in this news release and the tables below relating to expectations about future events or results are based upon information available to Align as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, actual results may differ materially and adversely from those expressed in any forward-looking statement. Factors that might cause such a difference include, but are not limited to, difficulties predicting customer and consumer purchasing behavior, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, 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 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, 2015, which was filed with the Securities and Exchange Commission (SEC) on February 25, 2016, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which was filed with the SEC on November 8, 2016. 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 Year Ended
December 31 December 31
----------------------- -----------------------
2016 2015 2016 2015
----------- ----------- ----------- -----------
Net revenues $ 293,203 $ 230,276 $ 1,079,874 $ 845,486
Cost of net revenues 72,954 57,466 264,580 205,376
----------- ----------- ----------- -----------
Gross profit 220,249 172,810 815,294 640,110
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and
administrative 130,268 99,582 490,653 390,239
Research and development 21,609 13,889 75,720 61,237
----------- ----------- ----------- -----------
Total operating expenses 151,877 113,471 566,373 451,476
Income from operations 68,372 59,339 248,921 188,634
Interest and other income
(expense), net (7,516) 313 (6,355) (2,533)
----------- ----------- ----------- -----------
Net income before provision
for income taxes and equity
in losses of investee 60,856 59,652 242,566 186,101
Provision for income taxes 12,028 10,775 51,200 42,081
Equity in losses of
investee, net of tax 1,207 - 1,684 -
----------- ----------- ----------- -----------
Net income $ 47,621 $ 48,877 $ 189,682 $ 144,020
=========== =========== =========== ===========
Net income per share:
Basic $ 0.60 $ 0.61 $ 2.38 $ 1.80
=========== =========== =========== ===========
Diluted $ 0.59 $ 0.60 $ 2.33 $ 1.77
=========== =========== =========== ===========
Shares used in computing net
income per share:
Basic 79,667 79,481 79,856 79,998
=========== =========== =========== ===========
Diluted 81,248 81,051 81,484 81,521
=========== =========== =========== ===========
ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31 December 31,
2016 2015
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 389,275 $ 167,714
Marketable securities, short-term 250,981 359,581
Accounts receivable, net 247,415 158,550
Inventories 27,131 19,465
Prepaid expenses and other current assets 38,176 26,700
------------- --------------
Total current assets 952,978 732,010
Marketable securities, long-term 59,783 151,370
Property, plant and equipment, net 175,167 136,473
Equity method investments 45,061 -
Goodwill and intangible assets, net 81,998 79,162
Deferred tax assets 67,844 51,416
Other assets 13,320 8,202
------------- --------------
Total assets $ 1,396,151 $ 1,158,633
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 28,596 $ 34,354
Accrued liabilities 134,332 107,765
Deferred revenues 191,407 129,553
------------- --------------
Total current liabilities 354,335 271,672
Income tax payable 45,133 37,512
Other long term liabilities 1,294 1,523
------------- --------------
Total liabilities 400,762 310,707
Total stockholders' equity 995,389 847,926
------------- --------------
Total liabilities and stockholders' equity $ 1,396,151 $ 1,158,633
============= ==============
ALIGN TECHNOLOGY, INC.
INVISALIGN BUSINESS METRICS*
--------
Q4 Fiscal Q1 Q2
2015 2015 2016 2016
Invisalign Average Selling Price (ASP):
Worldwide ASP $ 1,250 $ 1,285 $ 1,255 $ 1,285
International ASP $ 1,315 $ 1,355 $ 1,315 $ 1,345
Invisalign Cases Shipped by Geography:
North America 106,390 398,390 110,500 114,855
International 54,010 184,845 53,195 62,140
-------- -------- -------- --------
Total Cases Shipped 160,400 583,235 163,695 176,995
======== ======== ======== ========
YoY% growth 26.4% 22.0% 25.2% 22.4%
QoQ% growth 8.8% 2.1% 8.1% 0.4%
Number of Invisalign Doctors Cases Were
Shipped To:
North America 21,835 31,710 22,355 22,575
International 10,865 16,460 11,280 12,485
-------- -------- -------- --------
Total Doctors Cases Shipped To 32,700 48,170 33,635 35,060
======== ======== ======== ========
Invisalign Doctor Utilization Rates*:
North America 4.9 12.6 4.9 5.1
North American Orthodontists 9.9 31.8 10.4 10.7
North American GP Dentists 3.1 7.4 3.0 3.1
International 5.0 11.2 4.7 5.0
Total Utilization Rates 4.9 12.1 4.9 5.1
* # of cases shipped/# of doctors
to whom cases were shipped
Number of Invisalign Doctors Trained:
North America 1,270 4,320 875 1,125
International 1,400 5,475 1,605 1,760
-------- -------- -------- --------
Total Doctors Trained Worldwide 2,670 9,795 2,480 2,885
======== ======== ======== ========
Total to Date Worldwide 103,790 103,790 106,270 109,155
======== ======== ======== ========
--------
Q3 Q4 Fiscal
2016 2016 2016
Invisalign Average Selling Price (ASP):
Worldwide ASP $ 1,285 $ 1,230 $ 1,265
International ASP $ 1,365 $ 1,315 $ 1,335
Invisalign Cases Shipped by Geography:
North America 115,900 122,555 463,810
International 61,855 67,500 244,690
-------- -------- --------
Total Cases Shipped 177,755 190,055 708,500
======== ======== ========
YoY% growth 20.5% 18.5% 21.5%
QoQ% growth 6.9%
Number of Invisalign Doctors Cases Were
Shipped To:
North America 22,570 23,265 34,065
International 12,720 13,635 20,415
-------- -------- --------
Total Doctors Cases Shipped To 35,290 36,900 54,480
======== ======== ========
Invisalign Doctor Utilization Rates*:
North America 5.1 5.3 13.6
North American Orthodontists 11.1 11.3 36.6
North American GP Dentists 3.0 3.2 7.6
International 4.9 5.0 12.0
Total Utilization Rates 5.0 5.2 13.0
* # of cases shipped/# of doctors
to whom cases were shipped
Number of Invisalign Doctors Trained:
North America 1,300 1,420 4,720
International 1,315 2,280 6,960
-------- -------- --------
Total Doctors Trained Worldwide 2,615 3,700 11,680
======== ======== ========
Total to Date Worldwide 111,770 115,470 115,470
======== ======== ========
Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals. *Invisalign business metrics exclude SmileDirectClub aligners.
ALIGN TECHNOLOGY, INC.
STOCK-BASED COMPENSATION
(in thousands)
-------
Q4 Fiscal Q1 Q2
2015 2015 2016 2016
Stock-based Compensation (SBC)
SBC included in Gross Profit $ 1,008 $ 3,942 $ 961 $ 932
SBC included in Operating Expenses 12,799 49,006 11,563 12,767
------- ------- ------- -------
Total SBC Expense $13,807 $52,948 $12,524 $13,699
======= ======= ======= =======
---------
Q3 Q4 Fiscal
2016 2016 2016
Stock-based Compensation (SBC)
SBC included in Gross Profit $ 995 $ 1,078 $ 3,966
SBC included in Operating Expenses 12,716 13,136 50,182
---------- ---------- ---------
Total SBC Expense $ 13,711 $ 14,214 $ 54,148
========== ========== =========
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)
Q1'17 Guidance
----------------
GAAP
----------------
Net Revenues $295.0 - $298.0
Gross Margin 74.2% - 74.5%
Operating Expenses $162.5 - $164.5
Operating Margin 19.1% - 19.3%
Net Income per Diluted Share $0.64 - $0.67 (1)
Business Metrics: Q1'17
----------------
Case Shipments 200.0K - 203.0K
Capital Expenditure $70M - $75M
Depreciation & Amortization $8.0M - $8.5M
Diluted Shares Outstanding 81.3M (2)
Stock Based Compensation Expense $14.6M
Tax Rate 1% - 2% (1)
(1) Includes the benefit from the adoption of the new accounting standard
update for share-based compensation
(2) Excludes any stock repurchases during the quarter
Investor Relations ContactShirley StacyAlign Technology, Inc.(408) 470-1150Email contactPress Contact Shannon Mangum HendersonEthos Communication, Inc.(678) 261-7803Email contact
Source: Align Technology