Exhibit 99.1
ALIGN TECHNOLOGY, INC. ANNOUNCES Q4 2006 AND FISCAL YEAR 2006 RESULTS
* 4th Quarter Total Revenues Grew 8% to $55.2 Million
* Fiscal 2006 Total Revenues of $206.4 Million; GAAP Net Loss of $35.0
Million, or $0.55 per share
* Excluding One-Time Items and Stock-Based Compensation, Fiscal Year 2006
non-GAAP Net Loss of $11.7 Million, or $0.19 per share
* Case Shipments Increased 22% Year Over Year
* 2007 Revenues Expected Between $240.0-255.0 Million
SANTA CLARA, Calif., Jan. 30 /PRNewswire-FirstCall/ -- 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 fourth quarter and full year of 2006. Total revenues for the fourth
quarter of 2006 were $55.2 million, compared to $51.2 million in the fourth
quarter of 2005, an increase of 7.9 percent. For fiscal year 2006, Align
reported revenues of $206.4 million, compared to $207.1 million for fiscal year
2005, a decrease of 0.4 percent.
"2006 was eventful and productive," stated Thomas M. Prescott, President and
CEO of Align Technology. "We resolved our legal disputes with OrthoClear and
refocused our efforts on product development, customer service and market
expansion. Overall, we shipped a record number of cases and our base of doctors
grew tremendously. We expect 2007 to be the year we restage growth, introduce
products that meet the unique needs of the Orthodontists and GPs and continue
our path to profitability."
Revenue Analysis
Revenue was $55.2 million for the fourth quarter, an increase of 7.9% from
the fourth quarter of 2005, and $206.4 million for the year ended December 31,
2006, a decrease of 0.4% over the prior year. In the fourth quarter, revenue per
channel was:
* $17.4 million for U.S. Ortho, including $2.0 million for Invisalign
Express;
* $24.5 million for U.S. GP, including $2.9 million for Invisalign
Express;
* $9.6 million for International; and
* $3.7 million for Other.
Key metrics include:
* 3,700 U.S. Orthos, 9,000 U.S. GPs, and 2,100 International doctors
submitted cases in the fourth quarter. Also in the fourth quarter, cases
were shipped to 3,400 U.S. Orthos, 7,900 U.S. GPs and 1,900
International doctors.
* Utilization in the fourth quarter of 2006 was 4.2 for U.S. Orthos, 2.4 for
U.S. GPs, and 2.9 for International. Utilization in the ortho channel
declined because a large number of doctors, who had not started cases in
the previous year, started new Invisalign cases in the fourth quarter.
Utilization was flat in the U.S. GP channel and slightly up in
international.
* In the fourth quarter, worldwide average selling price (ASP) for
Invisalign was $1,320. Excluding Invisalign Express, worldwide ASP was
$1,445.
* Total number of cases shipped in fiscal year 2006 increased 22% to
150,100. Included in this were 36,600 Invisalign Express cases.
* Doctors trained worldwide in fiscal year 2006 increased by 5,000,
including 3,800 U.S. GP dentists, to a cumulative total of 40,800.
* Since product inception, 28,700 doctors worldwide have used Invisalign:
6,200 U.S. Orthos; 17,200 U.S. GPs; and 5,300 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 8 quarters is available on Align's website at
investor.aligntech.com.
Operating results reflect stock-based compensation expense of $2.2 million
for Q4 and $8.9 million for full year 2006 due to the implementation of FAS 123(
R ) in the first quarter of 2006. It also reflects $14.3 million of one- time
costs incurred from our agreement with OrthoClear including settlement costs and
costs associated with 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.
Fourth Quarter 2006 Operating Results
Key GAAP operating results for the fourth quarter of 2006 include:
* Gross margin was 68.8 percent, compared to 67.3 percent in the fourth
quarter 2005.
* Operating expenses were $56.1 million, compared to $33.8 million in the
fourth quarter 2005. Operating expense in the fourth quarter 2006 includes
a one-time charge of $14.3 million. This includes $6.0 million in
settlement costs related to the $20 million paid to OrthoClear ($14.0
million was capitalized and will be amortized over 5 years) and $8.3
million for the cost of completing the Patients First Program cases.
* Net loss was $17.3 million, compared to a net profit of $528,000 in the
fourth quarter 2005.
* Net loss per share was $0.27, compared to EPS of $0.01 in the fourth
quarter 2005.
Key non-GAAP operating results for the fourth quarter of 2006 include:
* Gross margin was 69.2 percent, compared to 67.3 percent in the fourth
quarter 2005.
* Operating expenses were $39.7 million, compared to $33.8 million in the
fourth quarter 2005.
* Net loss was $764,000, compared to a net profit of $528,000 in the fourth
quarter 2005.
* Net loss per share was $0.01, compared to EPS of $0.01 in the fourth
quarter 2005.
Full Year 2006 Operating Results
Key GAAP operating results for the full year 2006 include:
* Gross margin was 68.6 percent, compared to 69.2 percent in 2005.
* Operating expenses were $179.1 million, compared to $140.9 million in
2005. Operating expenses include a one-time charge for the Patients First
Program and settlement costs taken in the fourth quarter 2006 as described
above. 2006 operating expense also includes $19.6 million of legal and
other OrthoClear-related expenses.
* Net loss was $35.0 million, compared to a net profit of $1.4 million in
2005.
* Net loss per share was $0.55, compared to EPS of $0.02 in 2005.
Key non-GAAP operating results for the full year 2006 include:
* Gross margin was 68.9 percent, compared to 69.2 percent in 2005.
* Operating expenses were $156.6 million, compared to $140.9 million in
2005.
* Net loss was $11.7 million, compared to a net profit of $1.4 million in
2005.
* Net loss per share was $0.19, compared to EPS of $0.02 in 2005.
Liquidity and Capital Resources
As of December 31, 2006, Align had $64.1 million in cash, cash equivalents,
marketable securities and restricted cash, compared to $74.4 million as of
December 31, 2005. In the third quarter 2006, Align borrowed $15.0 million from
its credit facility. $11.5 million remains outstanding.
Patients First Program Update
As of December 31, 2006, of the 30,500 registered cases, 19,000 completed
treatment forms have been received and 3,600 cases were shipped.
Business Outlook for the First Quarter 2007 and Full Year 2007
For the first quarter 2007, Align Technology expects revenues between $56.8
and $59.8 million and GAAP earnings/loss per share between ($0.02) and $0.00.
Non-GAAP EPS is expected to be between $0.02 and $0.04.
For the fiscal year 2007, Align Technology expects revenues between $240.0
and $255.0 million and GAAP earnings/loss per share between ($0.04) and $0.07.
Non-GAAP EPS for fiscal year 2007 is expected to be between $0.15 and $0.27.
A more comprehensive business outlook section, including a reconciliation of
GAAP to Non-GAAP financial measures, is available following the financial tables
of this release.
Align Webcast and Conference Call
Align Technology will host a webcast and conference call today, January 30,
2007 at 10:00 a.m. EST, 7:00 a.m. PST, to review the fourth quarter and fiscal
year 2006 results and discuss future operating trends and guidance. 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 January 29, 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 227475
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 February 13, 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 and settlement costs. 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 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 and settlement costs. 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 first quarter and full year of 2007,
including anticipated percentage of revenue by channel, case shipments and
average selling prices, and statements by Mr. Prescott regarding introduction of
new products and anticipated return to profitability in fiscal 2007.
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,
including expenses related to the OrthoClear settlement, customer demand for
Invisalign, 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, 2005, which was filed with the Securities and Exchange Commission
on March 1, 2006, and its Quarterly Reports on Form 10-Q. Align undertakes no
obligation to revise or update publicly any forward-looking statements for any
reason.
Investor Relations Contact: Press Contact:
Barbara Domingo Shannon Henderson
Align Technology, Inc. Ethos Communications, Inc.
(408) 470-1000 (678) 540-9222
investorinfo@aligntech.com align@ethoscommunication.com
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Year Ended
--------------------------- ---------------------------
(in thousands, except Dec. 31, Dec. 31, Dec. 31, Dec. 31,
per share data) 2006 2005 2006 2005
- ------------------------------------- ------------ ------------ ------------ ------------
Revenues $ 55,191 $ 51,164 $ 206,354 $ 207,125
Cost of revenues 17,197 16,711 64,775 63,784
Gross profit 37,994 34,453 141,579 143,341
Operating expenses:
Sales and marketing 22,121 18,570 81,993 80,068
General and administrative 14,649 11,293 64,305 42,242
Research and development 4,948 3,927 18,474 18,585
Patients First Program and
settlement costs 14,343 -- 14,343 --
Total operating expenses 56,061 33,790 179,115 140,895
Profit (Loss) from operations (18,067) 663 (37,536) 2,446
Interest and other income, net 1,008 255 3,401 283
Provision for income taxes (210) (390) (828) (1,316)
Net profit (loss) $ (17,269) $ 528 $ (34,963) $ 1,413
Net profit (loss) per share
- basic $ (0.27) $ 0.01 $ (0.55) $ 0.02
- diluted $ (0.27) $ 0.01 $ (0.55) $ 0.02
Shares used in computing net profit
(loss) per share
- basic 64,252 62,045 63,246 61,644
- diluted 64,252 63,247 63,246 63,152
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31, December 31,
(in thousands) 2006 2005
- ------------------------------------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 55,113 $ 74,219
Restricted cash 93 150
Marketable securities, short-term 8,931 -
Accounts receivable, net 33,635 29,305
Inventories, net 3,090 2,930
Other current assets 7,227 4,982
Total current assets 108,089 111,586
Property and equipment, net 26,904 26,427
Goodwill and intangible assets, net 14,303 1,296
Other long-term assets 2,262 2,801
Total assets $ 151,558 $ 142,110
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 11,500 $ --
Accounts payable 5,034 2,489
Accrued liabilities 40,307 29,372
Deferred revenue 10,942 16,747
Total current liabilities 67,783 48,608
Other long term liabilities 219 64
Total liabilities 68,002 48,672
Total stockholders' equity 83,556 93,438
Total liabilities and
stockholders' equity $ 151,558 $ 142,110
ALIGN TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
Three Months Ended Three Months Ended
December 31, 2006 December 31, 2005
-------------------------------------------- ------------------------------------------
(in thousands, except Non Non
per share data) Reported Adjustments GAAP Reported Adjustments GAAP
- ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Revenues $ 55,191 $ -- $ 55,191 $ 51,164 $ -- $ 51,164
Cost of revenues 17,197 (185)(a) 17,012 16,711 -- 16,711
Gross profit 37,994 185 38,179 34,453 -- 34,453
Operating expenses:
Sales and marketing 22,121 (737)(a) 21,384 18,570 -- 18,570
General and
administrative 14,649 (922)(a) 13,727 11,293 -- 11,293
Research and
development 4,948 (318)(a) 4,630 3,927 -- 3,927
Patients First
Program and
settlement costs 14,343 (14,343) -- -- -- --
Total operating
expenses 56,061 (16,320) 39,741 33,790 -- 33,790
Profit (Loss) from
operations (18,067) 16,505 (1,562) 663 -- 663
Interest and other
income, net 1,008 -- 1,008 255 -- 255
Provision for income
taxes (210) -- (210) (390) -- (390)
Net profit (loss) $ (17,269) $ 16,505 $ (764) $ 528 $ -- $ 528
Net profit (loss)
per share
- basic $ (0.27) $ (0.01) $ 0.01 $ 0.01
- diluted $ (0.27) $ (0.01) $ 0.01 $ 0.01
Shares used in
computing net
profit (loss)
per share
- basic 64,252 64,252 62,045 62,045
- diluted 64,252 64,252 63,247 63,247
(a) Non cash stock-based compensation included in cost of sales and operating
expenses.
ALIGN TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
Year Ended Year Ended
December 31, 2006 December 31, 2005
-------------------------------------------- --------------------------------------------
(in thousands, except Non Non
per share data) Reported Adjustments GAAP Reported Adjustments GAAP
- ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Revenues $ 206,354 $ -- $ 206,354 $ 207,1 $ -- $ 207,125
Cost of revenues 64,775 (700)(a) 64,075 63,784 -- 63,784
Gross profit 141,579 700 142,279 143,341 -- 143,341
Operating expenses:
Sales and
marketing 81,993 (2,862)(a) 79,131 80,068 (6)(a) 80,062
General and
administrative 64,305 (4,054)(a) 60,251 42,242 (6)(a) 42,236
Research and
development 18,474 (1,294)(a) 17,180 18,585 -- 18,585
Patients First
Program and
settlement costs 14,343 (14,343) -- -- -- --
Total operating
expenses 179,115 (22,553) 156,562 140,895 (12) 140,883
Profit (Loss) from
operations (37,536) 23,253 (14,283) 2,446 12 2,458
Interest and other
income, net 3,401 -- 3,401 283 -- 283
Provision for income
taxes (828) -- (828) (1,316) -- (1,316)
Net profit
(loss) $ (34,963) $ 23,253 $ (11,710) $ 1,413 $ 12 $ 1,425
Net profit (loss)
per share
- basic $ (0.55) $ (0.19) $ 0.02 $ 0.02
- diluted $ (0.55) $ (0.19) $ 0.02 $ 0.02
Shares used in
computing net
profit (loss)
per share
- basic 63,246 63,246 61,644 61,644
- diluted 63,246 63,246 63,152 63,152
(a) Non cash stock-based compensation included in cost of sales and operating
expenses
ALIGN TECHNOLOGY, INC.
FACT SHEET
The following information highlights business metrics for Align's fourth
quarter of 2006. 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 4Q 2006
- ---------------------------------------- ----------
U.S. Orthodontists - Full 11,700
U.S. Orthodontists - Invisalign Express 2,700
U.S. GP dentists - Full 15,100
U.S. GP dentists - Invisalign Express 4,000
International - Full 5,400
International - Invisalign Express 100
Total Cases Delivered 39,000
Patients First Program Information 4Q 2006
- ---------------------------------------- ----------
Final number of OC Cases 33,100
Cases registered 30,500
Completed treatment forms received 19,000
Cases shipped 3,600
Cumulative
Doctors Trained 4Q 2006 Total
- ---------------------------------------- ---------- ----------
U.S. Orthodontists -- 8,000
U.S. GP dentists 1,300 22,000
International 400 10,800
Total Doctors Trained 1,700 40,800
Submitting Doctors 4Q 2006
- ---------------------------------------- ----------
U.S. Orthodontists 3,700
U.S. GP dentists 9,000
International 2,100
Total Submitting Doctors 14,800
Doctors Cases Are Shipped To 4Q 2006
- ---------------------------------------- ----------
U.S. Orthodontists 3,400
U.S. GP dentists 7,900
International 1,900
Total Submitting Doctors 13,200
Since
Doctors Starting Invisalign Treatment Inception
- ---------------------------------------- ----------
U.S. Orthodontists 6,200
U.S. GP dentists 17,200
International 5,300
Total Doctors Starting Invisalign
Treatment 28,700
Since
% of Multiple-Case Doctors Inception
- ---------------------------------------- ----------
U.S. Orthodontists 88%
U.S. GP dentists 86%
International 73%
Total Worldwide 84%
Doctor Utilization* 4Q 2006
- ---------------------------------------- ----------
U.S. Orthodontists 4.2
U.S. GP dentists 2.4
International 2.9
* Doctor Utilization = # of cases / # of doctors cases are shipped to
Blended ASP incl. Invisalign Express 4Q 2006
- ---------------------------------------- ----------
U.S. Orthodontists 1,215
U.S. GP dentists 1,285
International 1,725
Total Worldwide ASP 1,320
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)
1Q 2007
-----------------------------------------------------
GAAP Adjustment Non-GAAP
--------------- --------------- ---------------
Revenue $56.8-59.8 $56.8-59.8
Gross Margin 69.3-70.2% 0.3-0.4% 69.6-70.6%
Operating Expense $40.5-42.2 $2.3-2.6 (a) $38.2-39.6
Net Profit (Loss) ($1.2)-$0.1 $2.5-2.8 (a) $1.3-2.9
Net Profit (Loss) per Share ($0.02)-$0.00 $0.04 (a) $0.02-0.04
FY 2007
-----------------------------------------------------
GAAP Adjustment Non-GAAP
--------------- --------------- ---------------
Revenue $240.0-255.0 $240.0-255.0
Gross Margin 68.7-70.1% 0.50%(a) 69.2-70.6%
Operating Expense $167.9-175.5 $11.6-12.5 (a) $156.3-163.0
Net Profit (Loss) ($2.7)-$4.5 $12.7-13.7 (a) $10.0-18.2
Net Profit (Loss) per Share ($0.04)-$0.07 $0.19-0.20 (a) $0.15-0.27
(a) Non cash stock-based compensation included in cost of sales and operating
expenses
Business Metrics 1Q 2007 FY 2007
- ------------------------------- --------------- ---------------
Channel as a % of Revenue
U.S. Orthodontists - Full 30% 31%
U.S. GP Dentists - Full 41% 39%
International 15% 14%
Invisalign Express 9% 12%
Case Shipments 41.6-43.5K 182.7-190.0K
Blended ASP, excl Express $1,425-$1,440 $1,410-$1,425
Blended ASP, incl Express $1,305-$1,315 $1,260-$1,280
Cash $54.0-58.0M
DSO ~55 days
Capex $12.0-14.0M
Depreciation & Amortization $13.0-14.0M
SOURCE Align Technology, Inc.
-0- 01/30/2007
/CONTACT: investors, Barbara Domingo of Align Technology, Inc.,
+1-408-470-1000, or investorinfo@aligntech.com; or media, Shannon Henderson of
Ethos Communications, Inc., +1-678-540-9222, or align@ethoscommunication.com,
for Align/
/Web site: http://www.invisalign.com /
(ALGN)