Exhibit 99.1
Align Technology Announces Preliminary Third Quarter Fiscal Year 2012 Results
SAN JOSE, CA--(Marketwire - October 17, 2012) - Align Technology, Inc. (NASDAQ: ALGN)
| • | Q3 net revenues of $136.5 million increased 8.4% year-over-year |
| • | Q3 Invisalign clear aligner revenue of $126.7 million increased 10.9% year-over-year |
| • | Q3 Invisalign case shipments of 92.5 thousand increased 16.6% year-over-year |
| • | Q3 Invisalign teenager case shipments of 24.5 thousand increased 21.5% year-over-year |
| • | Q3 scanner and CAD/CAM services revenue of $9.8 million decreased 15.9% year-over-year |
| • | Preliminary Q3 diluted GAAP EPS was $0.29, non-GAAP was $0.28 |
| • | Company Evaluating Possible Goodwill Impairment Charge |
Align Technology, Inc. (NASDAQ: ALGN) today reported preliminary financial results for the third quarter of fiscal 2012 ended September 30, 2012. The preliminary results are subject to change based upon the conclusion of goodwill impairment testing being undertaken by the Company.
Total net revenues for the third quarter of fiscal 2012 (Q3 12) were $136.5 million. This is compared to $145.6 million reported in the second quarter of 2012 (Q2 12) and compared to $125.9 million reported in the third quarter of 2011 (Q3 11). Q3 12 Invisalign clear aligner revenue was $126.7 million, compared to $133.7 million in Q2 12 and $114.3 million in Q3 11. Q3 12 Invisalign clear aligner case shipments were 92.5 thousand, compared to 95.3 thousand in Q2 12 and 79.4 thousand in Q3 11, and included Align's 2 millionth case milestone. Q3 12 scanner and CAD/CAM services revenue was $9.8 million, compared to $11.9 million in Q2 12 and compared to $11.6 million in Q3 11.
The discontinuation of Align's distribution relationship with Straumann in Europe and North America, announced in a separate press release today, and the decline in results of operations of the Company's Scanner and CAD/CAM Services reporting unit triggers the risk of impairment of goodwill associated with the acquisition of Cadent. As a result, Align is in the process of conducting step one of a goodwill impairment test as prescribed by GAAP. This test is currently in progress and the Company has not concluded as to whether goodwill, which had a carrying value of $135.3 million as of September 30, 2012, is impaired and for this reason the Company's results are preliminary. Prior to filing its Form 10-Q for the third quarter of 2012, the Company expects to complete the step one impairment test. If the result of the step one analysis indicates an impairment, the Company will conduct a step two evaluation to determine the amount of the non-cash impairment charge, if any. If step two cannot be completed prior to filing of the Form 10-Q for the third quarter, the Company may estimate a range of potential impairment and may record an estimated non-cash charge in the third quarter of 2012 results. Any difference between an estimate and the final step two evaluation, would be recorded in the fourth quarter 2012. The Company's evaluation could result in a non-cash impairment charge for a substantial portion of the $135.3 million book value of goodwill which would negatively affect net income although revenue and cash flow from operations would not be impacted.
"Despite a strong summer season for Invisalign teenager cases, which increased 21% sequentially and year-over-year, our third quarter revenue was slightly lower than our outlook," said Thomas M. Prescott, Align president and CEO. "Q3 is historically a slower period for North American GP Dentists and International doctors due to summer vacations. This year summer seasonality was more pronounced in North America and as a result, we did not see the expected ramp in Invisalign cases for GP Dentists and Orthodontists. This softness has continued through October and is reflected in our Q4 guidance, which despite that slowdown, still projects a healthy annual growth rate for the company overall, with volume growth of at least 16%."
Preliminary net profit for Q3 12 was $24.3 million, or $0.29 per diluted share. This is compared to net profit of $28.5 million, or $0.34 per diluted share in Q2 12 and net profit of $19.3 million, or $0.24 per diluted share in Q3 11. Preliminary net profit for Q3 12 includes pre-tax acquisition and integration related costs of $0.2 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.1 million with a total income tax-related adjustment of $2.1 million. Net profit for Q2 12 includes pre-tax acquisition and integration related costs of $0.3 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.2 million with a total income tax-related adjustment of $1.5 million. Net profit for Q3 11 includes pre-tax acquisition and integration related costs of $1.5 million, pre-tax amortization of acquired intangible assets of $1.1 million, pre-tax severance and benefit costs of $0.2 million with a total income tax-related adjustment of $0.2 million.
To supplement our consolidated financial statements, we use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating margin, non-GAAP net profit, non-GAAP earnings per diluted share, EBITDA and adjusted EBITDA. Detailed reconciliations between GAAP and non-GAAP information are contained in the tables following the financial tables of this release.
Non-GAAP net profit for Q3 12 was $23.7 million, or $0.28 per diluted share. This is compared to non-GAAP net profit of $28.6 million, or $0.34 per diluted share in Q2 12 and non-GAAP net profit of $21.9 million, or $0.27 per diluted share in Q3 11.
12 Operating Results ($M)
Key GAAP Operating Results | Preliminary Q3 12 | Q2 12 | Q3 11 | |||||||||
Revenue | $ | 136.5 | $ | 145.6 | $ | 125.9 | ||||||
- Clear Aligner | $ | 126.7 | $ | 133.7 | $ | 114.3 | ||||||
- Scanner and CAD/CAM Services | $ | 9.8 | $ | 11.9 | $ | 11.6 | ||||||
Gross Margin | 73.5 | % | 74.7 | % | 73.4 | % | ||||||
- Clear Aligner | 77.6 | % | 79.0 | % | 78.6 | % | ||||||
- Scanner and CAD/CAM Services | 20.6 | % | 26.6 | % | 21.5 | % | ||||||
Operating Expense | $ | 71.2 | $ | 72.8 | $ | 66.1 | ||||||
Operating Margin | 21.4 | % | 24.7 | % | 20.9 | % | ||||||
Net Profit | $ | 24.3 | $ | 28.5 | $ | 19.3 | ||||||
Earnings Per Diluted Share (EPS) | $ | 0.29 | $ | 0.34 | $ | 0.24 | ||||||
Key Non-GAAP Operating Results | Q3 12 | Q2 12 | Q3 11 | |||||||||
Non-GAAP Gross Margin | 73.7 | % | 75.0 | % | 73.9 | % | ||||||
- Non-GAAP Clear Aligner | 77.6 | % | 79.0 | % | 78.6 | % | ||||||
- Non-GAAP Scanner & CAD/CAM Services | 23.8 | % | 30.3 | % | 27.1 | % | ||||||
Non-GAAP Operating Expense | $ | 70.0 | $ | 71.6 | $ | 63.8 | ||||||
Non-GAAP Operating Margin | 22.4 | % | 25.8 | % | 23.2 | % | ||||||
Non-GAAP Net Profit | $ | 23.7 | $ | 28.6 | $ | 21.9 | ||||||
Non-GAAP Earnings Per Diluted Share (EPS) | $ | 0.28 | $ | 0.34 | $ | 0.27 | ||||||
EBITDA | $ | 33.2 | $ | 40.8 | $ | 31.0 | ||||||
Adjusted EBITDA | $ | 33.6 | $ | 41.3 | $ | 32.8 | ||||||
Total stock-based compensation expense included in Q3 12 was $5.4 million compared to $5.3 million in Q2 12 and $5.0 million in Q3 11. Stock based compensation expense included in GAAP gross margin in Q3 12, Q2 12 and Q3 11 was $0.5 million. Stock-based compensation expense included in GAAP operating expense in Q3 12 was $4.9 million compared to $4.8 million in Q2 12 and $4.5 million in Q3 11.
Liquidity and Capital Resources
As of September 30, 2012, Align Technology had $348.9 million in cash, cash equivalents, and marketable securities compared to $248.1 million as of December 31, 2011. During Q3 12, we purchased approximately 213,000 shares of our common stock at an average price of $34.15 per share for a total of approximately $7.3 million. There remains approximately $132.5 million available under the Company's existing stock repurchase authorization.
Q4 Fiscal 2012 Business Outlook
For the fourth quarter of fiscal 2012 (Q4 12), Align Technology expects net revenues to be in a range of $134.2 million to $137.8 million. Invisalign clear aligner case shipments for Q4 12 are expected to be in a range of 90.0 to 93.0 thousand cases, which reflect a year-over-year increase of 9.0% to 12.6%. GAAP earnings per diluted share for Q4 12 is expected to be in a range of $0.21 to $0.23, excluding any potential impairment charge. Non-GAAP earnings per diluted share for Q4 12 is expected to be in a range of $0.21 to $0.23. A more comprehensive business outlook is available following the financial tables of this release.
Align Announces SmartTrack™, Next Generation Invisalign Aligner Material
In a separate press release today, Align announced SmartTrack™, the next generation of Invisalign clear aligner material. SmartTrack is a proprietary, custom-engineered material that delivers gentle, more constant force considered ideal for orthodontic tooth movements. SmartTrack will become the standard Invisalign aligner material in the first quarter of 2013 for Invisalign clear aligner products in North America and Europe, as well as other international markets where regulatory approval has been obtained.
Align Web Cast and Conference Call
Align Technology will host a conference call today, October 17, 2012 at 4:30 p.m. ET, 1:30 p.m. PT, to review its preliminary third quarter fiscal 2012 results, discuss future operating trends and 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 400990 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, 2012.
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 iTero and iOC scanning systems, OrthoCAD iCast, OrthoCAD iQ 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 use the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating expenses, non-GAAP profit from operations, non-GAAP net profit and non-GAAP earnings per share, which exclude, as applicable, acquisition and integration related costs, amortization of acquired intangible assets, severance and benefit costs, 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, ongoing 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 2012, including anticipated net revenue, gross margin, operating expense, operating income, earnings per share, case shipments and cash. 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 acquisition of Cadent Holdings, Inc., 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 fiscal year ended December 31, 2011, which was filed with the Securities and Exchange Commission on February 29, 2012. In addition to that information, the possibility of an impairment charge, which could result in a substantial reduction against goodwill and a commensurate charge against earnings, could have a material adverse impact on the preliminary results reported in this press release and on results during a subsequent period. While the Company expects to reflect the outcome of its impairment testing in its Form 10-Q and final reported results for the third quarter ended September 30, 2012, 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 | |||||||||||||||
Preliminary September 30, 2012 | September 30, 2011 | Preliminary September 30, 2012 | September 30, 2011 | |||||||||||||
| Net revenues | $ | 136,496 | 125,894 | $ | 417,201 | 350,836 | ||||||||||
| Cost of revenues | 36,146 | 33,524 | 107,291 | 85,103 | ||||||||||||
| Gross profit | 100,350 | 92,370 | 309,910 | 265,733 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 36,468 | 34,655 | 114,272 | 106,062 | ||||||||||||
| General and administrative | 23,896 | 21,609 | 68,674 | 66,695 | ||||||||||||
| Research and development | 9,952 | 8,926 | 31,158 | 27,586 | ||||||||||||
| Amortization of acquired intangible assets | 866 | 868 | 2,620 | 1,460 | ||||||||||||
| Total operating expenses | 71,182 | 66,058 | 216,724 | 201,803 | ||||||||||||
| Profit from operations | 29,168 | 26,312 | 93,186 | 63,930 | ||||||||||||
| Interest and other income (expense), net | (353 | ) | (118 | ) | (624 | ) | (335 | ) | ||||||||
| Profit before income taxes | 28,815 | 26,194 | 92,562 | 63,595 | ||||||||||||
| Provision for income taxes | 4,494 | 6,930 | 18,765 | 17,328 | ||||||||||||
| Net profit | $ | 24,321 | $ | 19,264 | $ | 73,797 | $ | 46,267 | ||||||||
| Net profit per share | ||||||||||||||||
| - basic | $ | 0.30 | $ | 0.25 | $ | 0.92 | $ | 0.60 | ||||||||
| - diluted | $ | 0.29 | $ | 0.24 | $ | 0.89 | $ | 0.58 | ||||||||
| Shares used in computing net profit per share | ||||||||||||||||
| - basic | 81,437 | 78,455 | 80,356 | 77,735 | ||||||||||||
| - diluted | 83,906 | 80,266 | 83,016 | 80,040 | ||||||||||||
| ALIGN TECHNOLOGY, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
Preliminary September 30, 2012 | December 31, 2011 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 304,907 | $ | 240,675 | ||||
| Restricted cash | 1,564 | 4,026 | ||||||
| Marketable securities, short-term | 23,142 | 7,395 | ||||||
| Accounts receivable, net | 105,902 | 91,537 | ||||||
| Inventories | 15,137 | 9,402 | ||||||
| Other current assets | 33,594 | 31,781 | ||||||
| Total current assets | 484,246 | 384,816 | ||||||
| Marketable securities, long-term | 20,802 | - | ||||||
| Property and equipment, net | 75,248 | 53,965 | ||||||
| Goodwill and intangible assets, net | 182,644 | 185,405 | ||||||
| Deferred tax asset | 27,189 | 22,337 | ||||||
| Other long-term assets | 2,700 | 2,741 | ||||||
| Total assets | $ | 792,829 | $ | 649,264 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 14,415 | $ | 19,265 | ||||
| Accrued liabilities | 71,949 | 76,600 | ||||||
| Deferred revenue | 65,324 | 52,252 | ||||||
| Total current liabilities | 151,688 | 148,117 | ||||||
| Other long term liabilities | 14,311 | 10,366 | ||||||
| Total liabilities | 165,999 | 158,483 | ||||||
| Total stockholders' equity | 626,830 | 490,781 | ||||||
| Total liabilities and stockholders' equity | $ | 792,829 | $ | 649,264 | ||||
| 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, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Gross profit | $ | 100,350 | $ | 108,800 | $ | 92,370 | ||||||
| Acquisition and integration costs related to cost of revenues (1) | 55 | 72 | 202 | |||||||||
| Amortization of acquired intangible assets related to cost of revenues (2) | 213 | 232 | 267 | |||||||||
| Severance and benefit costs related to cost of revenues(3) | 39 | 135 | 175 | |||||||||
| Non-GAAP Gross profit | $ | 100,657 | $ | 109,239 | $ | 93,014 | ||||||
| Reconciliation of GAAP to Non-GAAP Gross Profit Scanner and CAD/CAM Services | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Scanner and CAD/CAM Services gross profit | $ | 2,016 | $ | 3,183 | $ | 2,500 | ||||||
| Acquisition and integration costs related to cost of revenues (1) | 55 | 72 | 202 | |||||||||
| Amortization of acquired intangible assets related to cost of revenues (2) | 213 | 232 | 267 | |||||||||
| Severance and benefit costs related to cost of revenues(3) | 39 | 135 | 175 | |||||||||
| Non-GAAP Gross profit | $ | 2,323 | $ | 3,622 | $ | 3,144 | ||||||
| Reconciliation of GAAP to Non-GAAP Operating Expenses | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Operating expenses | $ | 71,182 | $ | 72,788 | $ | 66,058 | ||||||
| Acquisition and integration costs related to operating expenses (1) | (179 | ) | (261 | ) | (1,296 | ) | ||||||
| Amortization of acquired intangible assets related to operating expenses (2) | (866 | ) | (869 | ) | (868 | ) | ||||||
| Severance and benefit costs related to operating expenses (3) | (105 | ) | (49 | ) | (72 | ) | ||||||
| Non-GAAP Operating expenses | $ | 70,032 | $ | 71,609 | $ | 63,822 | ||||||
| Reconciliation of GAAP to Non-GAAP Profit from Operations | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Profit from operations | $ | 29,168 | $ | 36,012 | $ | 26,312 | ||||||
| Acquisition and integration costs (1) | 234 | 333 | 1,498 | |||||||||
| Amortization of acquired intangible assets (2) | 1,079 | 1,101 | 1,135 | |||||||||
| Severance and benefit costs (3) | 144 | 184 | 247 | |||||||||
| Non-GAAP Profit from operations | $ | 30,625 | $ | 37,630 | $ | 29,192 | ||||||
| Reconciliation of GAAP to Non-GAAP Net Profit | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Three Months Ended | ||||||||||||
September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Net profit | $ | 24,321 | $ | 28,492 | $ | 19,264 | ||||||
| Acquisition and integration costs (1) | 234 | 333 | 1,498 | |||||||||
| Amortization of acquired intangible assets (2) | 1,079 | 1,101 | 1,135 | |||||||||
| Severance and benefit costs (3) | 144 | 184 | 247 | |||||||||
| Income tax-related adjustments (4) | (2,078 | ) | (1,512 | ) | (203 | ) | ||||||
| Non-GAAP Net profit | $ | 23,700 | $ | 28,598 | $ | 21,941 | ||||||
| Diluted Net profit per share: | ||||||||||||
| GAAP | $ | 0.29 | $ | 0.34 | $ | 0.24 | ||||||
| Non-GAAP | $ | 0.28 | $ | 0.34 | $ | 0.27 | ||||||
| Shares used in computing diluted GAAP Net profit per share | 83,906 | 82,954 | 80,266 | |||||||||
| Shares used in computing diluted Non-GAAP Net profit per share | 83,906 | 82,954 | 80,266 | |||||||||
| Reconciliation of GAAP Net Profit to EBITDA and Adjusted EBITDA | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||
| GAAP Net profit | $ | 24,321 | $ | 28,492 | $ | 19,264 | ||||||
| Provision for income taxes | 4,494 | 8,061 | 6,930 | |||||||||
| Depreciation and amortization (5) | 4,374 | 4,267 | 4,823 | |||||||||
| EBITDA (6) | 33,189 | 40,820 | 31,017 | |||||||||
| Adjustments or charges: | ||||||||||||
| Acquisition and integration related costs (1) | 234 | 333 | 1,498 | |||||||||
| Severance and benefit costs (3) | 144 | 184 | 247 | |||||||||
| EBITDA after adjustments (6) | $ | 33,567 | $ | 41,337 | $ | 32,762 | ||||||
References to GAAP in the third quarter tables above are preliminary GAAP results and do not include the impact of any potential impairment charge.
(1) Acquisition costs and integration related. We have incurred acquisition-related and other expenses which include legal, banker, accounting and other advisory fees of third parties, retention bonuses, integration and professional fees. We do not engage in acquisitions in the ordinary course of business. We believe that it is important to understand these charges; however, we do not believe that these charges are indicative of future operating results. We believe that eliminating these expenses from our non-GAAP measures is useful because we generally would not have otherwise incurred such expenses in the periods presented as part of our continuing operations.
(2) Amortization of acquired intangible assets. When conducting internal development of intangible assets (including developed technology, customer relationships, trademarks, etc.), GAAP accounting rules require that we expense the costs as incurred. In the case of acquired businesses, however, we are required to allocate a portion of the purchase price to the accounting value assigned to intangible assets acquired and amortize this amount over the estimated useful lives of the acquired intangibles. The acquired company, in most cases, has itself previously expensed the costs incurred to develop the acquired intangible assets, and the purchase price allocated to these assets is not necessarily reflective of the cost we would incur in developing the intangible asset. We eliminate these amortization charges for our non-GAAP operating results to provide better comparability of pre and post-acquisition operating results and comparability to results of businesses utilizing internally developed intangible assets.
(3) Severance and benefits costs. These costs are related to the closure of our New Jersey operations and were realized through the first three quarters of 2012. We have engaged in various restructuring and exit activities in 2011 and 2009 that have resulted in costs associated with severance and benefits. Such activity has been a discrete event based on a unique set of business objectives or circumstances, and each has differed from the others in terms of its operational implementation, business impact and scope. We do not engage in restructuring and/or exit activities in the ordinary course of business. We believe that it is important to understand these charges and, we believe that investors benefit from excluding these charges from our operating results to facilitate a more meaningful evaluation of current operating performance and comparisons to past operating performance.
(4) Income tax-related adjustments. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for discrete tax items and items excluded from GAAP income in calculating the non-GAAP financial measures presented above. Our estimated tax rate on non-GAAP income is determined annually and may be re-calculated during the year to take into account events or trends that we believe materially impact the estimated annual rate.
(5) Includes the amortization of acquired intangible assets.
(6) EBITDA and adjusted EBITDA. We use EBITDA as a performance measure for benchmarking against our peers and competitors. We believe EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in the medical technology industry. We also use adjusted EBITDA which excludes certain special or non-recurring expenses, net of certain special or non-recurring benefits, detailed in the reconciliation tables that accompany this release, as an internal measure of business operating performance. We believe such financial measures provide a meaningful perspective of the underlying operating performance to our current business. EBITDA and adjusted EBITDA are not recognized terms under GAAP. Because all companies do not calculate EBITDA and similarly titled financial measures in the same way, those measures as used by other companies may not be consistent with the way we calculate such measures and should not be considered as alternative measures of operating or net profit.
| Q3 2012 EARNINGS RELEASE ADDITIONAL DATA | ||||||||||||||||||||||||||||||||
| REVENUE PERFORMANCE AND CLEAR ALIGNER METRICS | ||||||||||||||||||||||||||||||||
| (in thousands except per share data) | ||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FISCAL | Q1 | Q2 | Q3 | |||||||||||||||||||||||||
| 2011 | 2011 | 2011 | 2011 | 2011 | 2012 | 2012 | 2012 | |||||||||||||||||||||||||
| Invisalign Clear Aligner Revenues by Geography: | ||||||||||||||||||||||||||||||||
| North America | $ | 74,258 | $ | 79,755 | $ | 79,678 | $ | 81,789 | $ | 315,480 | $ | 86,871 | $ | 92,997 | $ | 89,568 | ||||||||||||||||
| North American Orthodontists | 35,017 | 37,112 | 37,450 | 37,939 | 147,518 | 41,688 | 43,942 | 43,090 | ||||||||||||||||||||||||
| North American GP Dentists | 39,241 | 42,643 | 42,228 | 43,850 | 167,962 | 45,183 | 49,055 | 46,478 | ||||||||||||||||||||||||
| International | 25,179 | 27,898 | 28,346 | 30,054 | 111,477 | 29,700 | 32,883 | 29,700 | ||||||||||||||||||||||||
| Non-case* | 5,419 | 5,994 | 6,254 | 7,089 | 24,756 | 6,757 | 7,789 | 7,457 | ||||||||||||||||||||||||
| Total Clear Aligner Revenue | $ | 104,856 | $ | 113,647 | $ | 114,278 | $ | 118,932 | $ | 451,713 | $ | 123,328 | $ | 133,669 | $ | 126,725 | ||||||||||||||||
| YoY % growth | 16.4 | % | 5.0 | % | 19.1 | % | 28.0 | % | 16.7 | % | 17.6 | % | 17.6 | % | 10.9 | % | ||||||||||||||||
| QoQ % growth | 12.9 | % | 8.4 | % | 0.6 | % | 4.1 | % | 3.7 | % | 8.4 | % | -5.2 | % | ||||||||||||||||||
| *includes Invisalign training, ancillary products, and retainers | ||||||||||||||||||||||||||||||||
| Invisalign Clear Aligner Revenues by Product: | ||||||||||||||||||||||||||||||||
| Invisalign Full | $ | 71,128 | $ | 76,636 | $ | 75,158 | $ | 79,469 | $ | 302,391 | $ | 82,424 | $ | 88,617 | $ | 80,294 | ||||||||||||||||
| Invisalign Express/Lite | 10,051 | 11,095 | 10,498 | 10,865 | 42,509 | 11,806 | 13,632 | 12,779 | ||||||||||||||||||||||||
| Invisalign Teen | 11,876 | 12,817 | 15,393 | 14,443 | 54,529 | 15,148 | 16,380 | 19,144 | ||||||||||||||||||||||||
| Invisalign Assist | 6,382 | 7,105 | 6,974 | 7,066 | 27,527 | 7,193 | 7,251 | 7,051 | ||||||||||||||||||||||||
| Non-case* | 5,419 | 5,994 | 6,255 | 7,089 | 24,757 | 6,757 | 7,789 | 7,457 | ||||||||||||||||||||||||
| Total Clear Aligner Revenue | $ | 104,856 | $ | 113,647 | $ | 114,278 | $ | 118,932 | $ | 451,713 | $ | 123,328 | $ | 133,669 | $ | 126,725 | ||||||||||||||||
| Average Invisalign Selling Price (ASP), as billed: | ||||||||||||||||||||||||||||||||
| Total Worldwide Blended ASP | $ | 1,395 | $ | 1,410 | $ | 1,385 | $ | 1,360 | $ | 1,385 | $ | 1,370 | $ | 1,335 | $ | 1,320 | ||||||||||||||||
| International ASP | $ | 1,555 | $ | 1,660 | $ | 1,560 | $ | 1,530 | $ | 1,575 | $ | 1,485 | $ | 1,455 | $ | 1,355 | ||||||||||||||||
| Invisalign Clear Aligner Cases Shipped by Geography: | ||||||||||||||||||||||||||||||||
| North America | 55,180 | 59,230 | 61,190 | 62,990 | 238,585 | 65,280 | 72,685 | 70,610 | ||||||||||||||||||||||||
| North American Orthodontists | 26,890 | 28,520 | 30,070 | 29,890 | 115,370 | 32,235 | 35,420 | 35,885 | ||||||||||||||||||||||||
| North American GP Dentists | 28,290 | 30,710 | 31,120 | 33,100 | 123,215 | 33,045 | 37,265 | 34,725 | ||||||||||||||||||||||||
| International | 16,190 | 16,790 | 18,170 | 19,600 | 70,750 | 19,985 | 22,595 | 21,905 | ||||||||||||||||||||||||
| Total Cases Shipped | 71,370 | 76,020 | 79,360 | 82,590 | 309,335 | 85,265 | 95,280 | 92,515 | ||||||||||||||||||||||||
| Invisalign Clear Aligner Cases Shipped by Product: | ||||||||||||||||||||||||||||||||
| Invisalign Full | 48,110 | 51,100 | 51,360 | 55,700 | 206,270 | 57,145 | 62,510 | 57,400 | ||||||||||||||||||||||||
| Invisalign Express/Lite | 10,500 | 11,310 | 11,020 | 11,385 | 44,215 | 12,855 | 15,300 | 14,610 | ||||||||||||||||||||||||
| Invisalign Teen | 7,930 | 8,615 | 11,730 | 9,810 | 38,080 | 9,935 | 11,860 | 15,265 | ||||||||||||||||||||||||
| Invisalign Assist | 4,830 | 4,995 | 5,250 | 5,695 | 20,770 | 5,330 | 5,610 | 5,240 | ||||||||||||||||||||||||
| Total Cases Shipped | 71,370 | 76,020 | 79,360 | 82,590 | 309,335 | 85,265 | 95,280 | 92,515 | ||||||||||||||||||||||||
| Number of Invisalign Doctors Cases Shipped to: | ||||||||||||||||||||||||||||||||
| North American Orthodontists | 4,150 | 4,160 | 4,260 | 4,280 | 5,280 | 4,460 | 4,575 | 4,660 | ||||||||||||||||||||||||
| North American GP Dentists | 10,250 | 10,665 | 11,040 | 10,875 | 17,305 | 11,365 | 12,120 | 11,925 | ||||||||||||||||||||||||
| International | 4,150 | 4,260 | 4,590 | 4,795 | 7,625 | 5,085 | 5,480 | 5,400 | ||||||||||||||||||||||||
| Total Doctors Cases were Shipped to Worldwide | 18,550 | 19,085 | 19,890 | 19,950 | 30,210 | 20,910 | 22,175 | 21,985 | ||||||||||||||||||||||||
| Invisalign Doctor Utilization Rates*: | ||||||||||||||||||||||||||||||||
| North American Orthodontists | 6.5 | 6.9 | 7.1 | 7.0 | 21.9 | 7.2 | 7.7 | 7.7 | ||||||||||||||||||||||||
| North American GP Dentists | 2.8 | 2.9 | 2.8 | 3.0 | 7.1 | 2.9 | 3.1 | 2.9 | ||||||||||||||||||||||||
| International | 3.9 | 3.9 | 4.0 | 4.1 | 9.3 | 3.9 | 4.1 | 4.1 | ||||||||||||||||||||||||
| Total Utilization Rates | 3.9 | 4.0 | 4.0 | 4.1 | 10.2 | 4.1 | 4.3 | 4.2 | ||||||||||||||||||||||||
| * # of cases shipped/# of doctors to whom cases were shipped | ||||||||||||||||||||||||||||||||
| Number of Invisalign Doctors Trained: | ||||||||||||||||||||||||||||||||
| North American Orthodontists | 75 | 80 | 100 | 100 | 355 | 90 | 95 | 125 | ||||||||||||||||||||||||
| North American GP Dentists | 715 | 765 | 630 | 855 | 2,960 | 720 | 995 | 675 | ||||||||||||||||||||||||
| International | 165 | 520 | 855 | 970 | 2,510 | 715 | 965 | 685 | ||||||||||||||||||||||||
| Total Doctors Trained Worldwide | 955 | 1,365 | 1,585 | 1,925 | 5,825 | 1,525 | 2,055 | 1,485 | ||||||||||||||||||||||||
| Total to Date Worldwide | 64,780 | 66,145 | 67,730 | 69,655 | 69,655 | 71,180 | 73,235 | 74,720 | ||||||||||||||||||||||||
| Scanner and CAD/CAM Services Revenue: | ||||||||||||||||||||||||||||||||
| North America Scanner and CAD/CAM Services | $ | - | $ | 5,241 | $ | 9,098 | $ | 9,611 | $ | 23,950 | $ | 11,120 | $ | 11,752 | $ | 9,439 | ||||||||||||||||
| International Scanner and CAD/CAM Services | - | 1,198 | 2,518 | 362 | 4,078 | 631 | 205 | 332 | ||||||||||||||||||||||||
| Total Scanner and CAD/CAM Revenue | $ | - | $ | 6,439 | $ | 11,616 | $ | 9,973 | $ | 28,028 | $ | 11,751 | $ | 11,957 | $ | 9,771 | ||||||||||||||||
| Scanner Revenue | $ | - | $ | 2,735 | $ | 5,420 | $ | 5,228 | $ | 13,383 | $ | 5,361 | $ | 6,032 | $ | 4,023 | ||||||||||||||||
| CAD/CAM Services Revenue | - | 3,704 | 6,196 | 4,745 | 14,645 | 6,390 | 5,925 | 5,748 | ||||||||||||||||||||||||
| Total Scanner and CAD/CAM Revenue | $ | - | $ | 6,439 | $ | 11,616 | $ | 9,973 | $ | 28,028 | $ | 11,751 | $ | 11,957 | $ | 9,771 | ||||||||||||||||
| Total Revenue by Geography: | ||||||||||||||||||||||||||||||||
| Total North America Revenue | $ | 74,258 | $ | 84,996 | $ | 88,776 | $ | 91,400 | $ | 339,430 | $ | 97,991 | $ | 104,749 | $ | 99,007 | ||||||||||||||||
| Total International Revenue | 25,179 | 29,096 | 30,864 | 30,416 | 115,555 | 30,331 | 33,088 | 30,032 | ||||||||||||||||||||||||
| Total Non-case Revenue | 5,419 | 5,994 | 6,254 | 7,089 | 24,756 | 6,757 | 7,789 | 7,457 | ||||||||||||||||||||||||
| Total Worldwide Revenue | $ | 104,856 | $ | 120,086 | $ | 125,894 | $ | 128,905 | $ | 479,741 | $ | 135,079 | $ | 145,626 | $ | 136,496 | ||||||||||||||||
| YoY % growth | 16.4 | % | 11.0 | % | 31.2 | % | 38.8 | % | 23.9 | % | 28.8 | % | 21.3 | % | 8.4 | % | ||||||||||||||||
| QoQ % growth | 12.9 | % | 14.5 | % | 4.8 | % | 2.4 | % | 4.8 | % | 7.8 | % | -6.3 | % | ||||||||||||||||||
| Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals. | ||||||||||||||||||||||||||||||||
ALIGN TECHNOLOGY, INC.
BUSINESS OUTLOOK SUMMARY
(unaudited)
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.
| Financials | |||||||
| (in millions, except per share amounts and percentages) | |||||||
| Q4 2012 | |||||||
| GAAP | Adjustment | (a) | Non-GAAP | ||||
| Net Revenue | $134.2 - 137.8 | $134.2 - 137.8 | |||||
| Gross Profit | $96.2 - $99.3 | $0.3 | $96.5 - 99.6 | ||||
| Gross Margin | 71.7% - 72.1% | 71.9% - 72.3% | |||||
| Operating Expenses | $73.6 - $74.9 | (b) | $1.0 | $72.6 - $73.9 | |||
| Operating Margin | 16.9% - 17.7% | (b) | 17.8% - 18.7% | ||||
| Net Income per Diluted Share | $0.21 - $0.23 | (b) | $0.00 | $0.21 - $0.23 | |||
| Stock Based Compensation Expense: | |||||||
| Cost of Revenues | $0.5 | $0.5 | |||||
| Operating Expenses | $5.2 | $5.2 | |||||
| Total Stock Based Compensation Expense | $5.7 | $5.7 | |||||
| (a) Includes scanner and CAD/CAM services amortization of acquired intangibles assets, and severance and benefit costs. | |||||||
| (b) Excludes the impact of any potential impairment charge. | |||||||
| Business Metrics: | |||||||
| Q4 2012 | |||||||
| Case Shipments | 90.0K - 93.0K | ||||||
| Cash, Cash Equivalents, and Marketable Securities | $385M - $395M * | ||||||
| Capex | $11.0M - $12.5M | ||||||
| Depreciation & Amortization | $3.7M - $4.1M | ||||||
| Diluted Shares Outstanding | 84.5M* | ||||||
| * Excludes any stock repurchases during the quarter | |||||||
Investor Relations Contact
Shirley Stacy
Align Technology, Inc.
(408) 470-1150
sstacy@aligntech.com
Press Contact
Shannon Mangum Henderson
Ethos Communication, Inc.
(678) 261-7803
align@ethoscommunication.com