SANTA CLARA, Calif., Oct. 28 CA-Align-Tech-3Q-erns
SANTA CLARA, Calif., Oct. 28 /PRNewswire-FirstCall/ -- Align Technology,
Inc. (Nasdaq: ALGN) today reported financial results for the third quarter of
fiscal 2008, ended September 30, 2008.
Total net revenues for the third quarter of fiscal 2008 (Q3 08) were $75.2
million compared to $71.5 million reported in the third quarter of 2007 (Q3
07) and compared to $79.9 million reported in the second quarter of 2008 (Q2
08).
On a generally accepted accounting principles (GAAP) basis, net profit for
Q3 08 was $5.2 million, or $0.08 per diluted share. This is compared to net
profit of $9.5 million, or $0.13 per diluted share in Q3 07, and net profit of
$4.0 million, or $0.06 per diluted share in Q2 08. Stock-based compensation
expense included in Q3 08 net profit was $4.4 million, compared to $3.4
million in Q3 07, and $4.8 million in Q2 08.
"I am pleased with our results during these challenging times," said
Thomas M. Prescott, president and CEO of Align Technology. "We are committed
to continuing investment in new products and our key strategic initiatives
while lowering our overall cost structure, which will position the Company for
renewed growth and profitability as the environment improves."
Non-GAAP net profit for Q3 08 was $7.4 million, or $0.11 per diluted
share. This is compared to non-GAAP net profit of $9.5 million, or $0.13 per
diluted share in Q3 07, and non-GAAP net profit of $4.0 million, or $0.06 per
diluted share in Q2 08.
Non-GAAP financial measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. A detailed reconciliation between GAAP and
non-GAAP information is contained in the tables following the financial tables
of this release.
Q3 08 Operating Results
Key GAAP Operating Results Q3 08 Q2 08 Q3 07
Gross Margin75.0% 74.7% 74.6%
Operating Expense $50.7M $55.8M $44.9M
Operating Margin 7.6%4.8% 11.7%
Net Profit $5.2M $4.0M $9.5M
Earnings Per Diluted Share (EPS) $0.08 $0.06 $0.13
Key Non-GAAP Operating Results Q3 08 Q2 08 Q3 07
Non-GAAP Operating Expense $48.5M $55.8M $44.9M
Non-GAAP Net Profit $7.4M $4.0M $9.5M
Non-GAAP Earnings Per Diluted Share (EPS) $0.11 $0.06 $0.13
Liquidity and Capital Resources
As of September 30, 2008, Align had $114.3 million in cash, cash
equivalents, and short term marketable securities compared to $127.9 million
as of December 31, 2007. During Q3 08, Align purchased 930,373 shares at an
average price of $12.62 per share for a total of $11.7 million. There remains
$10.7 million under the Company's existing stock repurchase authorization.
Key Business Metrics
The following table highlights business metrics for Align's third quarter
of 2008. Additional historical information is available on the Company's
website at http://investor.aligntech.com.
Revenue by Channel:Q3 08 Q3 08/Q2 Q3 08/Q3
08 07
% Change % Change
U.S. Orthodontists $22.3 (4.2%) (0.8%)
U.S. GP Dentists $35.2 (3.9%) 1.0%
International $15.1 (8.0%) 31.1%
Training and Other $2.6 (28.3%) (1.3%)
Total Revenue $75.2 (5.9%) 5.2%
Average Selling Price (ASP): Q3 08 Q3 08/Q2 Q3 08/Q3
08 07
% Change % Change
Total Worldwide Blended ASP $1,3900.0% 5.3%
Total Worldwide ASP excluding
Invisalign Express $1,5000.0% 4.9%
U.S. Orthodontists Blended ASP$1,2900.0% 4.9%
U.S. GP Dentists Blended ASP $1,3601.5% 3.8%
International $1,660 (2.4%) 5.1%
Number of Cases Shipped: Q3 08 Q3 08/Q2 Q3 08/Q3
08 07
% Change % Change
U.S. Orthodontists - Full Invisalign 15,0001.1% (1.1%)
U.S. Orthodontists - Invisalign Express2,970 (8.6%) (5.1%)
U.S. GP Dentists - Full Invisalign21,070 (4.8%) (3.7%)
U.S. GP Dentists - Invisalign Express 4,620 (7.0%) 0.4%
International- Full Invisalign 8,950 (6.0%) 25.0%
International- Invisalign Express190 18.8% 46.2%
Total Cases Shipped 52,800 (3.8%) 1.4%
Number of Doctors Cases were Shipped to: Q3 08
U.S. Orthodontists 3,730
U.S. GP Dentists 10,920
International 2,900
Total Doctors Cases were Shipped to
Worldwide17,550
Number of Doctors Trained Worldwide: Q3 08Cumulative
U.S. Orthodontists90 8,600
U.S. GP Dentists 1,030 31,300
International330 13,670
Total Doctors Trained Worldwide1,450 53,570
Multiple Case Doctors (Cumulative as of): Q3 08
U.S. Orthodontists 90.6%
U.S. GP Dentists86.4%
International 77.3%
Doctors Starting Invisalign Treatment
(Cumulative as of): Q3 08
U.S. Orthodontists 7,030
U.S. GP Dentists 24,900
International 7,740
Total Doctors Starting Invisalign
Treatment39,670
Doctor Utilization Rates*: Q3 08 Q2 08 Q3 07
U.S. Orthodontists 4.84.94.9
U.S. GP Dentists 2.42.52.6
International3.23.33.1
Total Utilization Rate 3.03.13.2
* Utilization = # of cases/# of doctors to whom cases were shipped
Business Outlook
For the fourth quarter of fiscal 2008 (Q4 08), Align Technology expects
net revenues to be in a range of $72.5 million to $76.5 million. GAAP
earnings per diluted share for Q4 08 is expected to be in a range of $0.01 to
$0.03. Non-GAAP earnings per diluted share for Q4 08 is expected to be in a
range of $0.06 to $0.09. Stock-based stock compensation expense for Q4 08 is
expected to be approximately $4.1 million.
For fiscal 2008, Align Technology expects net revenues to be in a range of
$302.5 million to $306.5 million. The Company continues to expect the
increase in deferred revenue for fiscal 2008 to be in the range of $5 million
to $8 million primarily associated with new products, which will be recognized
in future periods, bringing the Company's total deferred revenue balance at
the end of 2008 to a range of $17 million to $20 million. GAAP earnings per
diluted share for fiscal 2008 is expected to be in a range of $0.22 to $0.24.
Non-GAAP earnings per diluted share for fiscal 2008 is expected to be in a
range of $0.31 to $0.33. Stock-based compensation expense for fiscal 2008 is
expected to be approximately $17.3 million.
A more comprehensive business outlook is available following the financial
tables of this release.
Restructuring Announcement
On October 23, 2008 Align, announced a restructuring plan to increase
efficiencies across the organization and lower the Company's overall cost
structure. The restructuring plan includes a total reduction of 110 full time
headcount in Santa Clara, California. As part of these actions, Align will
record a restructuring charge estimated to be approximately $5 million, of
which approximately $3.5 million will be realized in Q4 08 and the remainder
over the first half of 2009. This is in addition to the restructuring charge
that the Company announced in July 2008. For more information, please see
Align's press release titled, "Align Technology Announces Restructuring Plan."
Align Web Cast and Conference Call
Align Technology will host a conference call today, October 28, 2008 at
4:30 p.m. ET, 1:30 p.m. PT, to review its third quarter fiscal 2008 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 201-689-8341 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 for approximately 12
months. Additionally, a telephonic replay of the call can be accessed by
dialing 877-660-6853 with account number 292 followed by # and conference
number 289246 followed by #. The replay must 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. ET on November 11, 2008.
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. Today, the Invisalign product family includes
Invisalign, Invisalign Teen, Invisalign Assist, Invisalign Express, and Vivera
Retainers.
To learn more about Invisalign or to find a certified Invisalign doctor in
your area, please visit http://www.invisalign.com or call 1-800-INVISIBLE.
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 operating
expenses, non-GAAP net profit, non-GAAP earnings per share, which exclude the
effect of charges associated with the restructuring. 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 "Business Outlook Summary"
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 discrete 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.
Forward-Looking Statement
This news release, including the tables below, contains forward-looking
statements, including statements regarding, the expected amount of and timing
of the charges to be incurred in connection with the restructuring and Align's
anticipated financial results and certain business metrics for the fourth
quarter and full year of 2008, including anticipated revenue and deferred
revenue, gross profit, gross margin, operating expense, net profit, earnings
per share, percentage of revenue by channel, case shipments and average
selling prices. 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, failure to achieve the expected
cost savings and efficiencies related to the restructuring, including a delay
in the implementation of the relocation of certain customer facing
organizations from Santa Clara, California to Costa Rica and greater than
anticipated costs resulting from the relocation, changes in the size of the
expected restructuring charge, loss of key personnel responsible for
interpreting the relocation in a timely manner, failure to effectively manage
the relocation resulting in decreased customer service levels, 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, continued customer demand for
Invisalign and new products, changes in consumer spending habits as a result
of, among other tings, 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 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. 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, 2007, which was filed with the Securities and Exchange Commission
on February 26, 2008. Align undertakes no obligation to revise or update
publicly any forward-looking statements for any reason.
Investor Relations Contact Press Contact
Shirley Stacy Shannon Mangum Henderson
Align Technology, Inc. Ethos Communication, Inc.
(408) 470-1150 (678) 540-9222
sstacy@aligntech.com align@ethoscommunication.com
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months EndedNine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
Net revenues $75,173 $71,451 $ 229,851 $211,815
Cost of revenues 18,76618,132 58,61755,908
Gross profit 56,40753,319171,234 155,907
Operating expenses:
Sales and marketing 28,21424,226 88,73771,729
General and administrative14,39513,949 45,90538,014
Research and development 5,918 6,749 20,21419,117
Restructuring 2,189 - 2,189 -
Patients First Program - - -(1,796)
Total operating expenses 50,71644,924157,045 127,064
Profit from operations 5,691 8,395 14,18928,843
Interest and other income, net 264 1,108 1,673 2,243
Profit before income taxes 5,955 9,503 15,86231,086
Provision for income taxes (798) (43)(1,371)(1,030)
Net profit$5,157$9,460$14,491 $30,056
Net profit per share
- basic $0.08 $0.14 $0.21 $0.45
- diluted$0.08 $0.13 $0.21 $0.42
Shares used in computing net
profit per share
- basic 67,36767,970 68,33066,709
- diluted 68,70472,230 69,90671,058
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $79,756 $89,140
Marketable securities, short-term 34,499 38,771
Accounts receivable, net48,872 44,850
Inventories, net 3,0152,910
Other current assets 7,4128,846
Total current assets 173,554 184,517
Property and equipment, net 29,568 25,320
Goodwill and intangible assets, net 8,966 11,093
Other long-term assets 4,4321,831
Total assets$216,520 $222,761
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$7,485 $9,222
Accrued liabilities 33,877 39,875
Deferred revenues 15,380 12,362
Total current liabilities 56,742 61,459
Other long term liabilities124 148
Total liabilities 56,866 61,607
Total stockholders' equity 159,654 161,154
Total liabilities and stockholders' equity$216,520 $222,761
RECONCILIATION OF GAAP TO NON-GAAP KEY FINANCIAL METRICS
Reconciliation of GAAP to Non-GAAP
Operating Expenses
(in thousands)
Three Months Ended
September JuneSeptember
30, 30,30,
2008 2008 2007
GAAP Operating expenses $50,716 $55,787$44,924
Restructuring Cost (2,189) - -
Non-GAAP Operating expenses $48,527 $55,787$44,924
Reconciliation of GAAP to Non-GAAP
Net Profit (Loss)
(in thousands, except per share amounts)
Three Months Ended
September JuneSeptember
30, 30,30,
2008 2008 2007
GAAP Net profit$5,157 $4,030 $9,460
Restructuring 2,189- -
Tax effect on Restructuring 85- -
Non-GAAP Net profit$7,431 $4,030 $9,460
Diluted Net profit per share:
GAAP $0.08$0.06 $0.13
Non-GAAP $0.11$0.06 $0.13
Shares used in computing diluted net
profit per share 68,704 69,916 72,230
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. This outlook excludes the effects of any stock
repurchases.
Financials (including reconciliation of GAAP to non-GAAP financial
measures):
(in millions, except per share amounts and percentages)
Q4 2008
GAAP Adjustment(a) Non-GAAP
Net Revenue $72.5 - $76.5 $72.5 - $76.5
Gross Margin72.5% - 73.0% 72.5% - 73.0%
Operating Expenses $52.1 - $53.6$4.0(a)$48.1 - $49.6
Net Profit % 1% - 3% 5% 6% - 8%
Net Profit per
Diluted Share $0.01 - $0.03$0.05 - $0.06 $0.06 - $0.09
- $0.33
Stock Based
Compensation Expense:
Cost of Revenues$0.4$0.4
Operating Expenses $3.7$3.7
Total Stock Based
Compensation Expense $4.1$4.1
(a) Restructuring
charges
Business Metrics:
Q4 2008
Case Shipments 52.5K - 55.0K
Cash$115M - $120M
DSO~59 days
Capex $3.0M - $5.0M
Depreciation
& Amortization $2.0M - $3.0M
Diluted Shares
Outstanding68.1
FY 2008
FY 2008 Adjustment(a) Non-GAAP
Net Revenue$302.5 - $306.5 $302.5 - $306.5
Gross Margin74.0% - 74.1% 74.0% - 74.1%
Operating Expenses $209.1 - $210.6 $6.2 (a)$202.9 - $204.4
Net Profit % 5% - 6% 2% 7% - 8%
Net Profit per
Diluted Share $0.22 - $0.24$0.09 $0.31 - $0.33
Stock Based Compensation
Expense:
Cost of Revenues$1.7$1.7
Operating Expenses $15.6 $15.6
Total Stock Based
Compensation Expense $17.3 $17.3
Increase in Deferred
Revenue $5.0 - $8.0 $5.0 - $8.0
Total Deferred
Revenue Balance$17.0 - $20.0 $17.0 - $20.0
(a) Restructuring
charges
Business Metrics:
FY 2008
Case Shipments 211.9K - 214.4K
Cash$115M - $120M
DSO~59 days
Capex $15.0M - $17.0M
Depreciation
& Amortization$13.0M - $14.0M
Diluted Shares
Outstanding69.4
SOURCE Align Technology, Inc.
