[ALIGN GRAPHIC OMITTED]
[invisalign GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE:
Investor Relations Contacts: Press Contact:
Eldon Bullington Shannon Mangum Henderson
Align Technology, Inc. Ethos Communication, Inc.
(408) 470-1000 (678) 540-9222
investorinfo@aligntech.com align@ethoscommunication.com
- -------------------------- ----------------------------
Matt Clawson
Allen & Caron, Inc.
(949) 474-4300
matt@allencaron.com
- -------------------
Align Technology, Inc. Announces Q1 2007 Results
o 1st Quarter Total Revenues Grew 30% to $63.8 Million Year Over
Year
o First Quarter 2007 GAAP Net Profit of $7.0 Million, or $0.10
per share
o Case Shipments Increased 23% Year Over Year
o 1,800 New Doctors Trained Worldwide
o 2007 Revenues Expected Between $268-278 Million
Santa Clara, Calif. - April 26, 2007 - Align Technology, Inc. (Nasdaq: ALGN),
the inventor of Invisalign(R), a proprietary method of straightening teeth
without wires and brackets, today reported financial results for the first
quarter of 2007. Total revenues for the first quarter of 2007 were $63.8
million, compared to $48.9 million in the first quarter of 2006, an increase of
30.4 percent.
"We are pleased that we are off to a strong start in 2007," stated Thomas M.
Prescott, President and CEO of Align Technology. "Improved operating performance
yielded a welcome return to profitability, and our solid growth in volume and
revenue on an increasing base of customers is very gratifying. We are committed
to evolving our products to meet the specific needs of our Orthodontists and GP
Dentists, which is key to generating and sustaining our top line growth."
First Quarter 2007 Revenue Analysis
- -----------------------------------
Revenue was $63.8 million for the first quarter, an increase of 30.4% from the
first quarter of 2006. In the first quarter, revenue per channel was:
o $21.5 million for U.S. Ortho, including $2.1 million for Invisalign
Express;
o $29.8 million for U.S. GP, including $2.8 million for Invisalign
Express;
o $9.2 million for International; and
o $3.3 million for Training and Other.
(2-2-2)
Key metrics include:
o 3,800 U.S. Orthos, 9,700 U.S. GPs and 2,100 International doctors
submitted cases in the first quarter. Also in the first quarter,
cases were shipped to 3,600 U.S. Orthos, 8,700 U.S. GPs and 2,000
International doctors.
o Utilization in the first quarter of 2007 was 4.8 for U.S. Orthos,
2.6 for U.S. GPs and 2.8 for International. Sequentially,
utilization rates increased for U.S. Orthos and U.S. GPs on a
growing base of participating doctors. Utilization rates have
remained consistent for International.
o In the first quarter, worldwide average selling price (ASP) for
Invisalign was $1,340. Excluding Invisalign Express, worldwide ASP
was $1,450.
o Total number of cases shipped increased 23 percent year over year to
45,000. Included in this were 6,700 Invisalign Express cases.
o Doctors trained worldwide in the first quarter increased by 1,800,
including 1,300 U.S. GP dentists, to a cumulative total of 42,600.
o Since product inception, 30,100 doctors worldwide have used
Invisalign: 6,400 U.S. Orthos; 18,200 U.S. GPs; and 5,500
International doctors. 84 percent of these doctors have started more
than one case.
A full list of quarterly metrics is available in the Fact Sheet following the
financial tables of this release. Additionally, quarterly metric information for
the last 9 quarters is available on Align's website at investor.aligntech.com.
Operating results reflect stock-based compensation expense of $2.5 million for
Q1. It also reflects a reversal of $1.8 million of the $8.3 million expense we
recorded in the fourth quarter of 2006 for the Patients First Program. The
expense reversal results from a reduction in the number of cases and associated
costs we will incur to fulfill our obligations under the Patients First Program.
These items have been excluded in the non-GAAP financials. A reconciliation of
GAAP (U.S. generally accepted accounting principles) to non-GAAP results and
outlook is contained in the tables below.
First Quarter 2007 Operating Results
- ------------------------------------
Key GAAP operating results for the first quarter of 2007 include:
o Gross margin was 72.5 percent, compared to 70.8 percent in the first
quarter 2006.
o Operating expenses were $39.2 million, compared to $39.8 million in
the first quarter 2006. First quarter 2007 operating expense
includes the $1.8 million reduction in the cost of completing the
Patients First Program cases.
o Net profit was $7.0 million, compared to a net loss of $4.8 million
in the first quarter 2006.
o Earnings per share was $0.10, compared to a loss per share of $0.08
in the first quarter 2006.
(3-3-3)
Key non-GAAP operating results for the first quarter of 2007 include:
o Gross margin was 72.9 percent, compared to 71.1 percent in the first
quarter 2006.
o Operating expenses were $38.7 million, compared to $37.8 million in
the first quarter 2006. o Net profit was $7.6 million, compared to a
net loss of $2.6 million in the first quarter 2006.
o Earnings per share was $0.11, compared to a loss per share of $0.04
in the first quarter 2006.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 2007, Align had $65.7 million in cash, cash equivalents,
marketable securities and restricted cash, compared to $64.1 million as of
December 31, 2006. During the first quarter Align reduced the borrowings against
its credit facility by $3.5 million. $8.0 million remains outstanding.
Patients First Program Update
- -----------------------------
The fourth quarter of 2006 included an $8.3 million operating expense for the
anticipated cost of completing the 30,500 registered Patients First Program
cases. As of March 31, 2007, Align had received 24,700 of the 30,500 registered
cases. In accordance with the Patients First Program terms and conditions, the
program was closed to receipt of additional cases as of March 30, 2007. As a
result, the first quarter includes a $1.8 million reversal of operating expense
to reflect the reduction in the number of cases and associated costs we will
incur to fulfill our obligation under the program. 16,300 cases have been
shipped as of March 31, 2007 with the remaining 8,400 in process cases expected
to ship in the second quarter of 2007.
Business Outlook for the Second Quarter 2007 and Full Year 2007
- ---------------------------------------------------------------
For the second quarter 2007, Align Technology expects revenues between $72.0 and
$74.0 million and GAAP earnings per share between $0.10 and $0.12. Non-GAAP EPS
is expected to be between $0.15 and $0.17.
For the fiscal year 2007, Align Technology expects revenues between $268.4 and
$278.0 million and GAAP earnings per share between $0.30 and $0.38. Non-GAAP EPS
for fiscal year 2007 is expected to be between $0.46 and $0.55.
A more comprehensive business outlook, including a reconciliation of GAAP to
Non-GAAP financial measures, is available following the financial tables of this
release.
(4-4-4)
Align Webcast and Conference Call
- ---------------------------------
Align Technology will host a webcast and conference call today, April 26, 2007
at 10:00 a.m. EDT, 7:00 a.m. PDT, to review the first quarter 2007 results and
discuss future operating trends and a business outlook. To access the webcast,
click on "Webcasts & Presentations" on Align Technology's Investor Relations web
site at http://investor.aligntech.com. To access the conference call, please
dial (201) 689-8341 approximately fifteen minutes prior to the start of the
call. If you are unable to listen to the call, an archived web cast will be
available beginning approximately one hour after the call's conclusion and will
remain available through 5:30 p.m. EDT on April 25, 2008. Additionally, a
telephonic replay of the call can be accessed by dialing (877) 660-6853 with
account number 292 followed by # and conference number 227477 followed by #. The
replay may be accessed from international locations by dialing (201) 612-7415
and using the same account and conference numbers referenced above. The
telephonic replay will be available through 5:30 p.m. EDT on May 10, 2007.
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 older teens. Align
Technology was founded in March 1997 and received FDA clearance to market
Invisalign in 1998.
To learn more about Invisalign or to find a certified Invisalign doctor in your
area, please visit www.invisalign.com or call 1-800-INVISIBLE.
About non-GAAP Financial Measures
- ---------------------------------
To supplement our consolidated financial statements, which statements are
prepared and presented in accordance with GAAP, we use the following non-GAAP
financial measures: non-GAAP gross profit, profit (loss) from operations, net
profit (loss) and certain expenses (including sales and marketing, general and
administrative and research and development), which exclude stock-based
compensation and the Patients First Program reversal. 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. For more information on these non-GAAP financial
measures, please see the tables captioned "Reconciliation of GAAP to Non-GAAP
Condensed Consolidated Statements of Operations" and "Business Outlook" included
at the end of this release.
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
(5-5-5)
Align's performance in the ordinary, ongoing and customary course of its
operations. Accordingly, management excludes from "core operating performance"
certain expenses and expenditures that may not be indicative of our operating
performance including not only non-cash charges, such as stock-based
compensation, but also discrete cash charges that are infrequent or one-time in
nature, such as the Patients First Program. 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 help them analyze the
health of our business.
Forward-Looking Statement
- -------------------------
This news release, including the tables below, contain forward-looking
statements, including statements regarding Align's anticipated financial results
and certain business metrics for the second quarter and full year of 2007,
including anticipated revenue, operating expense, earnings per share, percentage
of revenue by channel, case shipments and average selling prices, and statements
regarding the anticipated timing of the completion of the remaining Patients
First Program cases. 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, risks relating to Align's ability to
sustain or increase profitability or revenue growth in future periods while
controlling expenses, continued customer demand for Invisalign, including during
the summer vacation periods in the United States and Europe in the third
quarter, acceptance of Invisalign by consumers and dental professionals, Align's
third party manufacturing processes and personnel, foreign operational,
political and other risks relating to Align's international manufacturing
operations, Align's ability to protect its intellectual property rights,
competition from manufacturers of traditional braces and new competitors,
Align's ability to develop and successfully introduce new products and product
enhancements, and the loss of key personnel, including members of its direct
sales force. 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, 2006, which was filed with the Securities and Exchange Commission
on March 12, 2007, and its Quarterly Reports on Form 10-Q. Align undertakes no
obligation to revise or update publicly any forward-looking statements for any
reason.
# # #
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31, 2007 March 31, 2006
--------------- ---------------
(in thousands, except per share data)
Revenues $ 63,761 $ 48,908
Cost of revenues 17,529 14,297
--------------- ---------------
Gross profit 46,232 34,611
--------------- ---------------
Operating expenses:
Sales and marketing 23,150 20,066
General and administrative 12,185 15,064
Research and development 5,693 4,694
Patients First Program (1,796) --
--------------- ---------------
Total operating expenses 39,232 39,824
--------------- ---------------
Profit (loss) from operations 7,000 (5,213)
Interest and other income, net 455 698
Provision for income taxes (477) (249)
--------------- ---------------
Net profit (loss) $ 6,978 $ (4,764)
=============== ===============
Net profit (loss) per share
- basic $ 0.11 $ (0.08)
=============== ===============
- diluted $ 0.10 $ (0.08)
=============== ===============
Shares used in computing net profit
(loss) per share
- basic 65,433 62,518
=============== ===============
- diluted 69,331 62,518
--------------- ---------------
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, 2007 December 31, 2006
--------------- ---------------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 56,209 $ 55,113
Restricted cash 95 93
Marketable securities, short-term 9,384 8,931
Accounts receivable, net 38,203 33,635
Inventories, net 3,725 3,090
Other current assets 7,624 7,227
--------------- ---------------
Total current assets 115,240 108,089
Property and equipment, net 26,208 26,904
Goodwill and intangible assets, net 13,457 14,303
Other long-term assets 2,134 2,262
--------------- ---------------
Total assets $ 157,039 $ 151,558
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 8,000 $ 11,500
Accounts payable 6,761 5,034
Accrued liabilities 31,831 40,307
Deferred revenue 11,226 10,942
--------------- ---------------
Total current liabilities 57,818 67,783
Other long term liabilities 233 219
--------------- ---------------
Total liabilities 58,051 68,002
Total stockholders' equity 98,988 83,556
--------------- ---------------
Total liabilities and stockholders'
equity $ 157,039 $ 151,558
=============== ===============
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
(in thousands, except per share data)
Three Months Ended March 31, 2007 Three Months Ended March 31, 2006
-------------------------------------------- -------------------------------------------
Reported Adjustments Non GAAP Reported Adjustments Non GAAP
----------- ----------- ----------- ----------- ----------- -----------
Revenues $ 63,761 $ -- $ 63,761 $ 48,908 $ -- $ 48,908
Cost of revenues 17,529 (234)(a) 17,295 14,297 (148)(a) 14,149
----------- ----------- ----------- ----------- ----------- -----------
Gross profit 46,232 234 46,466 34,611 148 34,759
=========== =========== =========== =========== =========== ===========
Operating expenses:
Sales and marketing 23,150 (857)(a) 22,293 20,066 (679)(a) 19,387
General and administrative 12,185 (1,103)(a) 11,082 15,064 (1,088)(a) 13,976
Research and development 5,693 (328)(a) 5,365 4,694 (290)(a) 4,404
Patients First Program (1,796) 1,796 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses 39,232 (492) 38,740 39,824 (2,057) 37,767
----------- ----------- ----------- ----------- ----------- -----------
Profit (loss) from operations 7,000 726 7,726 (5,213) 2,205 (3,008)
Interest and other income, net 455 -- 455 698 -- 698
Provision for income taxes (477) (80)(b) (557) (249) -- (249)
----------- ----------- ----------- ----------- ----------- -----------
Net profit (loss) $ 6,978 $ 646 $ 7,624 $ (4,764) $ 2,205 $ (2,559)
=========== =========== =========== =========== =========== ===========
Net profit (loss) per share
- basic $ 0.11 $ 0.12 $ (0.08) $ (0.0)
=========== =========== =========== ===========
- diluted $ 0.10 $ 0.11 $ (0.08) $ (0.0)
=========== =========== =========== ===========
Shares used in computing net
profit (loss) per share
- basic 65,433 65,433 62,518 62,518
=========== =========== =========== ===========
- diluted 69,331 69,331 62,518 62,518
=========== =========== =========== ===========
(a) Non cash stock-based compensation included in cost of sales and operating
expenses.
(b) Tax impact on non-GAAP adjustments.
ALIGN TECHNOLOGY, INC.
FACT SHEET
The following information highlights business metrics for Align's first quarter
of 2007. For prior quarter information, please refer to the Investor Relations
website at http://investor.aligntech.com.
(rounded to the nearest hundred, except in utilization, ASPs and percentage
amounts)
Cases Delivered 1Q 2007 Patients First Program Information 1Q 2007
- ------------------------------------------------------------------ ---------------------------------------------------------
U.S. Orthodontists - Full 14,200
U.S. Orthodontists - Invisalign Express 2,800 Cases registered 30,500
U.S. GP dentists - Full 18,600 Final number of OC Cases Received 24,700
U.S. GP dentists - Invisalign Express 3,800 Cases shipped 16,300
International - Full 5,500 In process cases to be shipped 8,400
International - Invisalign Express 100
- ------------------------------------------------------------------
Total Cases Delivered 45,000
Doctors Trained 1Q 2007 Cumulative Total
- -----------------------------------------------------------------------------------------
U.S. Orthodontists 100 8,100
U.S. GP dentists 1,300 23,300
International 400 11,200
- ----------------------------------------------------------------------------------------
Total Doctors Trained 1,800 42,600
Submitting Doctors 1Q 2007 Doctors Cases Are Shipped To 1Q 2007
- ----------------------------------------------------------------- ---------------------------------------------------------
U.S. Orthodontists 3,800 U.S. Orthodontists 3,600
U.S. GP dentists 9,700 U.S. GP dentists 8,700
International 2,100 International 2,000
- ------------------------------------------------------------------ ---------------------------------------------------------
Total Submitting Doctors 15,600 Total Shipped to Doctors 14,300
Doctors Starting Invisalign Treatment Since Inception % of Multiple-Case Doctors Since Inception
- ------------------------------------------------------------------ ---------------------------------------------------------
U.S. Orthodontists 6,400 U.S. Orthodontists 88%
U.S. GP dentists 18,200 U.S. GP dentists 87%
International 5,500 International 74%
- ------------------------------------------------------------------ ----------------------------------------------------------
Total Doctors Starting Invisalign Treatment 30,100 Total Worldwide 84%
Doctor Utilization* 1Q 2007 Blended ASP incl. Invisalign Express 1Q 2007
- ------------------------------------------------------------------ ---------------------------------------------------------
U.S. Orthodontists 4.8 U.S. Orthodontists $ 1,260
U.S. GP dentists 2.6 U.S. GP dentists $ 1,330
International 2.8 International $ 1,650
- ------------------------------------------------------------------ ----------------------------------------------------------
* Doctor Utilization = # of cases / # of doctors cases are shipped to Total Worldwide ASP $ 1,340
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.
Financials (including reconciliation of GAAP to non-GAAP financial measures)
(in millions, except per share amounts and percentages)
2Q 2007 FY 2007
---------------------------------------------- --------------------------------------------------------
GAAP Adjustment Non-GAAP GAAP Adjustment Non-GAAP
--------------- ---------- --------------- ---------------- ------------- ---------------
Revenue $ 72.0 - $74.0 -- $ 72.0 - $74.0 $ 268.4 - $278.0 -- $268.4 - $278.0
Gross Margin 71.4% - 73.0% 0.4%(a) 71.8% - 73.4% 71.5% - 72.6% 0.4%(a) 71.9% - 73.0%
Sales and Marketing $ 24.2 - $24.5 $ 1.0(a) $ 23.2 - $23.5 $ 94.6 - $96.2 $ 4.0 - $4.3(a) $ 90.6 - $ 91.9
R&D $ 6.4 - $ 6.9 $ 0.4(a) $ 6.0 - $ 6.5 $ 25.3 - $26.7 $ 1.5 - $1.7(a) $ 23.8 - $ 25.0
G&A $ 13.8 - $14.1 $ 1.6(a) $ 12.2 - $12.5 $ 52.7 - $54.6 $ 6.1 - $6.6(a) $ 46.6 - $ 48.0
Patient's First Costs -- -- -- ($1.8) ($1.8) --
--------------- ---------- --------------- ---------------- ------------- ---------------
Operating Expenses $ 44.4 - $45.5 $ 3.0 $ 41.4 - $42.5 $ 170.8 - $175.6 $ 9.7 - $10.6 $161.1 - $165.0
Net Profit $ 7.1 - $8.5 $ 3.2 $ 10.3 - $11.8 $ 21.1 - $26.3 $10.9 - $12.0 $ 32.1 - $ 38.3
Net Profit per Share $ 0.10 - $0.12 $ 0.05 $ 0.15 - $0.17 $ 0.30 - $0.38 $0.16 - $0.17 $ 0.46 - $ 0.55
(a) Non cash stock-based compensation included in cost of sales and operating
expenses Business Metrics
2Q 2007 FY 2007
--------------- ------------------
Channel as a % of Revenue
U.S. Orthodontists - Full 29% 28%
U.S. GP Dentists - Full 45% 45%
International Invisalign 14% 14%
Invisalign Express 8% 9%
Training/Other 4% 4%
Case Shipments 53.0K - 54.0K 200.0K - 206.0K
Blended ASP, excl Express $ 1410 - $1420 $ 1390 - $1400
Blended ASP, incl Express $ 1300 - $1310 $ 1290 - $1300
Cash $ 82.0-$87.0
DSO ~55 days
Capex $ 12.0-14.0
Depreciation &
Amortization $ 13.0-14.0