October 7, 2022

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Align Technology Announces Second Quarter 2022 Financial Results

TEMPE, Ariz.–(BUSINESS WIRE)–Align Technology, Inc. (Nasdaq: ALGN), a leading global medical device company that designs, manufactures, and sells the Invisalign® system of clear aligners, iTero™ intraoral scanners, and exocad™ CAD/CAM software for digital orthodontics and restorative dentistry, today reported financial results for the second quarter of fiscal 2022 (“Q2’22”). Q2’22 total revenues were $969.6 million, down 0.4% sequentially and down 4.1% year-over-year. Q2’22 Clear Aligner revenues were $798.4 million, down 1.4% sequentially and down 5.1% year-over-year. Q2’22 Imaging Systems and CAD/CAM Services revenues were $171.2 million, up 4.7% sequentially and up 0.8% year-over-year. Q2’22 Clear Aligner volume was flat sequentially and down 10.0% year-over-year. Q2’22 Imaging Systems and CAD/CAM Services revenues were unfavorably impacted by foreign exchange of approximately $2.9 million or 1.7% sequentially and approximately $7.0 million or 3.9% year over year.(1) Q2’22 Clear Aligner revenues were unfavorably impacted by foreign exchange of approximately $12.3 million or 1.5% sequentially and approximately $32.9 million or 4.0% year over year.(1) Q2’22 operating income was $188.2 million resulting in an operating margin of 19.4%. Q2’22 net income was $112.8 million, or $1.44 per diluted share. On a non-GAAP basis, Q2’22 net income was $157.0 million or $2.00 per diluted share.

Commenting on Align’s second quarter results, Align Technology President and CEO Joe Hogan said, “I’m pleased to report solid second quarter results with top line revenues relatively unchanged from Q1 and operating margin of approximately 20% despite the impact from unfavorable foreign exchange. The underlying market for orthodontics continues to be impacted by macro-economic environmental factors and lingering effects of COVID-19 variants in certain markets. Notwithstanding these headwinds, we continued to deliver on our strategic initiatives, including opening new offices in the Middle East and Africa and our new manufacturing facility in Poland, launching new solutions to better support the way our customers want to do business, such as the Doctor Subscription Program and Teen case packs, and announcing new products and innovation to help our doctors and their patients. These new innovations are revolutionizing digital treatment planning and helping to drive the evolution of digital orthodontics and comprehensive dentistry. Align is well positioned to withstand the current market conditions to lead the digital revolution in orthodontics and dentistry as the environment and growth trends improve.”

Financial Summary

 

Q2’22

 

Q1’22

 

Q2’21

 

Q/Q Change

 

Y/Y Change

Invisalign Case Shipments

598,990

 

598,835

 

665,575

 

0.0

%

 

(10.0

)%

GAAP

 

 

 

 

 

 

 

 

 

Net Revenues

$969.6M

 

$973.2M

 

$1,010.8M

 

(0.4

)%

 

(4.1

)%

Clear Aligner

$798.4M

 

$809.7M

 

$841.0M

 

(1.4

)%

 

(5.1

)%

Imaging Systems and CAD/CAM Services

$171.2M

 

$163.5M

 

$169.8M

 

+4.7

%

 

+0.8

%

Net Income

$112.8M

 

$134.3M

 

$199.7M

 

(16.0

)%

 

(43.5

)%

Diluted EPS

$1.44

 

$1.70

 

$2.51

 

($0.26

)

 

($1.07

)

Non-GAAP

 

 

 

 

 

 

 

 

 

Net Income

$157.0M

 

$168.7M

 

$242.1M

 

(7.0

)%

 

(35.2

)%

Diluted EPS

$2.00

 

$2.13

 

$3.04

 

($0.13

)

 

($1.04

)

As of June 30, 2022, we had $977.2 million in cash, cash equivalents and short-term and long-term marketable securities compared to $1.1 billion as of March 31, 2022. In Q2’22, we purchased approximately 757 thousand shares of our common stock at an average price of $264.37 per share for a total purchase price of $200.0 million. We have approximately $450.0 million remaining available for repurchase of our common stock under our May 2021 $1.0 Billion Repurchase Program.

As of June 30, 2022, we also have $300.0 million available under a revolving line of credit.

Commenting on Align’s Q2’22 results, Align Technology CFO and EVP Global Finance, John Morici said, “In times like these, our strong fundamental business differentiates Align and we are grateful to have a profitable underlying business model that generates strong cash flow, as well as a healthy balance sheet that provides flexibility to invest in our growth while supporting our employees, customers, and stockholders. As we move into the second half of the year, we will continue to manage investments to account for headwinds and uncertainty, while focusing on successfully delivering on our strategic growth drivers.”

Q2’22 Announcement Highlights

  • On May 19, 2022, we introduced Invisalign Outcome Simulator Pro, the next generation of our advanced patient communication tool, enabling doctors to show patients their potential new smile after Invisalign treatment, using in-face visualization and/or 3D dentition view, all done chairside in minutes. Invisalign Outcome Simulator Pro is currently in limited market release and will be available on all iTero Element™ Plus Series scanners and imaging systems starting in the second half of 2022.
  • On May 20, 2022, we announced a strategic partnership with Asana to offer Asana Smiles™ for Align®, to Invisalign trained doctors in the U.S., a new work management solution providing a customizable workflow solution that helps orthodontic and dental practices keep track of tasks connected to the lifecycle of a patient’s Invisalign treatment journey. Booking consultations, submitting prescriptions, monitoring ClinCheck® software treatment plans, and preparing for aligner delivery appointments can be easily organized, tracked, and communicated across a practice with Asana Smiles for Align. This solution can be implemented directly or as an additive solution for practices with other software currently in place.
  • On June 22, 2022, we announced a $250.0 thousand donation to JA (Junior Achievement) Worldwide through the Align Foundation, Align’s donor-advised charitable fund through Fidelity Charitable. This donation commemorates Align’s 25th anniversary milestone as a company that has transformed smiles and changed lives for millions of people around the world through Align’s pioneering technology innovations and doctor-driven business model.
  • On June 6, 2022, we announced the award of eleven research grants totaling $275.0 thousand to universities under Align’s twelfth Annual Research Award Program. The funded research studies cover a wide range of topics for projects seeking to better understand treatment in orthodontics and dentistry including distalization, stability in retention, pre-surgical treatment of cleft palate, maintenance of space in mixed dentition with aligners, consideration of periodontal conditions in treatment, and the demand for education regarding treatment with aligners.

Align Web Cast and Conference Call

We will host a conference call today, July 27, 2022, at 4:30 p.m. ET, 1:30 p.m. PT, to review our second quarter 2022 results, discuss future operating trends, and our business outlook. The conference call will also be webcast live via the Internet. To access the webcast, go to the “Events & Presentations” section under Company Information on Align’s Investor Relations website at http://investor.aligntech.com. To access the conference call, please dial 844-200-6205 with access code 947492. An archived audio webcast will be available beginning approximately one hour after the call’s conclusion and will remain available for approximately one month. Additionally, a telephonic replay of the call can be accessed by dialing 866-813-9403 with access code 137829. For international callers, please dial 929-458-6194 and use the same access code referenced above. The telephonic replay will be available through 5:30 p.m. ET on August 10, 2022.

About Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we may provide investors with certain non-GAAP financial measures which may include constant currency net revenues, gross profit, gross margin, operating expenses, income from operations, operating margin, constant currency income from operations, constant currency operating margin, interest income and other income (expense), net, net income before provision for income taxes, provision for income taxes, effective tax rate, net income and/or diluted net income per share, which excludes certain items that may not be indicative of our fundamental operating performance including, foreign currency exchange rate impacts, discrete cash and non-cash charges or gains that are included in the most directly comparable GAAP measure. Unless otherwise indicated, when we refer to non-GAAP financial measures they will exclude the effects of stock-based compensation, amortization of certain acquired intangibles, deferred tax asset amortization related to the intra-entity transfer of non-inventory assets, acquisition-related costs, and arbitration award gain, and, if applicable, any associated tax impacts.

We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that the use of certain non-GAAP financial measures provide meaningful supplemental information regarding our recurring core operating performance. 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 used by our institutional investors and the analyst community to help them analyze the performance of our business.

There are limitations to using non-GAAP financial measures, though, because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which charges are excluded from the non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a GAAP as well as a non-GAAP basis and also by providing GAAP measures in our public disclosures. The presentation of non-GAAP financial information is meant to be considered in addition to, not as a substitute for or in isolation from, the directly comparable financial measures prepared in accordance with GAAP. We urge investors to review the reconciliation of our GAAP financial measures to the comparable non-GAAP financial measures included herein and not to rely on any single financial measure to evaluate our business. For more information on these non-GAAP financial measures, please see the tables captioned “Unaudited GAAP to Non-GAAP Reconciliation.”

About Align Technology, Inc.

Align Technology designs and manufactures the Invisalign® system, the most advanced clear aligner system in the world, iTero® intraoral scanners and services, and exocad® CAD/CAM software. These technology building blocks enable enhanced digital orthodontic and restorative workflows to improve patient outcomes and practice efficiencies for over 229 thousand doctor customers and is key to accessing Align’s 500 million consumer market opportunity worldwide. Align has helped doctors treat over 13.4 million patients with the Invisalign system and is driving the evolution in digital dentistry through the Align™ Digital Platform, our integrated suite of unique, proprietary technologies and services delivered as a seamless, end-to-end solution for patients and consumers, orthodontists and GP dentists, and lab/partners. Visit www.aligntech.com for more information.

For additional information about the Invisalign system or to find an Invisalign doctor in your area, please visit www.invisalign.com. For additional information about the iTero digital scanning system, please visit www.itero.com. For additional information about exocad dental CAD/CAM offerings and a list of exocad reseller partners, please visit www.exocad.com.

Forward-Looking Statements

This news release, including the tables below, contains forward-looking statements, including statements of beliefs and expectations regarding market opportunities, factors, events and circumstances impacting macro-economic conditions and predictability, the impact of new products and innovations, our positioning and ability to lead the digital revolution of orthodontic treatment, the benefits of our operating model and balance sheet, our ability to manage investments and our areas of focus and commitment. Forward-looking statements contained in this news release 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 reflect our best judgments based on currently known facts and circumstances 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:

  • macroeconomic conditions, including inflation, fluctuations in currency exchange rates, weakness in general economic conditions and recessions;
  • customer and consumer purchasing behavior and changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages, inflationary pressure, declining consumer confidence, the military conflict in Ukraine, fluctuations in currency exchange rates, and the impact of efforts by central banks to combat inflation and recession;
  • the impact of the COVID-19 pandemic and its variants on the health and safety of our employees, customers, patients, and our suppliers, as well as the physical and economic impacts of the various recommendations, orders, and protocols issued by local and national governmental agencies in light of continual evolution of the pandemic, including any periodic reimplementation of preventative measures in various global locations;
  • the economic and geopolitical ramifications of the military conflict in Ukraine, including sanctions, retaliatory sanctions, nationalism, supply chain disruptions and other consequences, any of which may or continue to adversely impact our commercial and research and development activities inside and outside of Russia;
  • the timing and availability and cost of raw materials, components, products and other shipping and supply chain constraints;
  • unexpected or rapid changes in the growth or decline of our domestic and/or international markets;
  • competition from existing and new competitors;
  • rapidly evolving and groundbreaking advances that fundamentally alter the dental industry or the way new and existing customers market and provide products and services to consumers;
  • the ability to protect our intellectual property rights;
  • continued compliance with regulatory requirements;
  • declines in, or the slowing of the growth of, sales of our intraoral scanners domestically and/or internationally and the impact either would have on the adoption of Invisalign products;
  • the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers;
  • the possibility that the development and release of new products or enhancements to existing products do not proceed in accordance with the anticipated timeline or may themselves contain bugs, errors or defects in software or hardware requiring remediation and that the market for the sale of these new or enhanced products may not develop as expected;
  • a tougher consumer demand environment in China generally, especially for manufacturers and service providers whose headquarters or primary operations are not based in China;
  • the risks relating to our ability to sustain or increase profitability or revenue growth in future periods (or minimize declines) while controlling expenses;
  • expansion of our business and products;
  • the impact of excess or constrained capacity at our manufacturing and treat operations facilities and pressure on our internal systems and personnel;
  • the compromise of our systems or networks, including any customer and/or patient data contained therein, for any reason;
  • the timing of case submissions from our doctors within a quarter as well as an increased manufacturing costs per case;
  • foreign operational, political, military and other risks relating to our operations; and
  • the loss of key personnel, labor shortages or work stoppages for us or our suppliers.

The foregoing and other risks are detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 and our latest Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, which was filed with the SEC on May 5, 2022. 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

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net revenues

 

$

969,553

 

 

$

1,010,808

 

 

$

1,942,772

 

 

$

1,905,579

Cost of net revenues

 

 

281,994

 

 

 

252,270

 

 

 

545,867

 

 

 

469,943

Gross profit

 

 

687,559

 

 

 

758,538

 

 

 

1,396,905

 

 

 

1,435,636

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

426,398

 

 

 

431,921

 

 

 

865,855

 

 

 

829,036

Research and development

 

 

72,965

 

 

 

57,715

 

 

 

144,772

 

 

 

112,252

Total operating expenses

 

 

499,363

 

 

 

489,636

 

 

 

1,010,627

 

 

 

941,288

Income from operations

 

 

188,196

 

 

 

268,902

 

 

 

386,278

 

 

 

494,348

Interest income and other income (expense), net:

 

 

 

 

 

 

 

 

Interest income

 

 

245

 

 

 

383

 

 

 

922

 

 

 

2,026

Other income (expense), net

 

 

(14,832

)

 

 

(483

)

 

 

(26,105

)

 

 

34,049

Total interest income and other income (expense), net

 

 

(14,587

)

 

 

(100

)

 

 

(25,183

)

 

 

36,075

Net income before provision for income taxes

 

 

173,609

 

 

 

268,802

 

 

 

361,095

 

 

 

530,423

Provision for income taxes

 

 

60,809

 

 

 

69,088

 

 

 

113,997

 

 

 

130,333

Net income

 

$

112,800

 

 

$

199,714

 

 

$

247,098

 

 

$

400,090

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

1.44

 

 

$

2.53

 

 

$

3.15

 

 

$

5.06

Diluted

 

$

1.44

 

 

$

2.51

 

 

$

3.13

 

 

$

5.02

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

78,395

 

 

 

79,008

 

 

 

78,568

 

 

 

79,004

Diluted

 

 

78,545

 

 

 

79,638

 

 

 

78,840

 

 

 

79,737

ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

June 30,

2022

 

December 31,

2021

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

877,501

 

$

1,099,370

Marketable securities, short-term

 

 

22,138

 

 

71,972

Accounts receivable, net

 

 

931,854

 

 

897,198

Inventories

 

 

310,046

 

 

230,230

Prepaid expenses and other current assets

 

 

235,265

 

 

195,305

Total current assets

 

 

2,376,804

 

 

2,494,075

 

 

 

 

 

Marketable securities, long-term

 

 

77,551

 

 

125,320

Property, plant and equipment, net

 

 

1,182,444

 

 

1,081,926

Operating lease right-of-use assets, net

 

 

117,912

 

 

121,257

Goodwill

 

 

390,100

 

 

418,547

Intangible assets, net

 

 

93,817

 

 

109,709

Deferred tax assets

 

 

1,518,648

 

 

1,533,767

Other assets

 

 

52,843

 

 

57,509

 

 

 

 

 

Total assets

 

$

5,810,119

 

$

5,942,110

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

145,607

 

$

163,886

Accrued liabilities

 

 

416,459

 

 

607,315

Deferred revenues

 

 

1,242,348

 

 

1,152,870

Total current liabilities

 

 

1,804,414

 

 

1,924,071

 

 

 

 

 

Income tax payable

 

 

116,414

 

 

118,072

Operating lease liabilities

 

 

98,332

 

 

102,656

Other long-term liabilities

 

 

191,878

 

 

174,597

Total liabilities

 

 

2,211,038

 

 

2,319,396

 

 

 

 

 

Total stockholders’ equity

 

 

3,599,081

 

 

3,622,714

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

5,810,119

 

$

5,942,110

ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Six Months Ended

June 30,

 

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net cash provided by operating activities

 

$

157,543

 

 

$

544,691

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Net cash used in investing activities

 

 

(72,078

)

 

 

(123,920

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net cash used in financing activities

 

 

(312,396

)

 

 

(291,756

)

 

 

 

 

 

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

 

4,978

 

 

 

(3,511

)

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(221,953

)

 

 

125,504

 

Cash, cash equivalents, and restricted cash at beginning of the period

 

 

1,100,139

 

 

 

961,474

 

Cash, cash equivalents, and restricted cash at end of the period

 

$

878,186

 

 

$

1,086,978

 

ALIGN TECHNOLOGY, INC.

INVISALIGN BUSINESS METRICS

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

Invisalign Average Selling Price (ASP):

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Products ASP

 

$

1,265

 

$

1,250

 

$

1,255

 

$

1,270

 

$

1,315

 

$

1,280

Non-Comprehensive Products ASP

 

$

1,030

 

$

1,040

 

$

1,050

 

$

1,040

 

$

1,080

 

$

1,085

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Invisalign Doctors Cases Were Shipped To:

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

 

38,975

 

 

40,740

 

 

41,310

 

 

40,460

 

 

39,455

 

 

39,815

International

 

 

39,630

 

 

42,725

 

 

44,190

 

 

43,080

 

 

42,985

 

 

42,460

Total Doctors Cases Shipped To

 

 

78,605

 

 

83,465

 

 

85,500

 

 

83,540

 

 

82,440

 

 

82,275

 

 

 

 

 

 

 

 

 

 

 

 

 

Invisalign Doctor Utilization Rates*:

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

9.1

 

 

9.9

 

 

9.8

 

 

9.3

 

 

9.2

 

 

9.3

North American Orthodontists

 

 

26.8

 

 

29.4

 

 

29.7

 

 

26.9

 

 

26.8

 

 

26.8

North American GP Dentists

 

 

4.8

 

 

5.3

 

 

5.0

 

 

5.1

 

 

5.0

 

 

5.1

International

 

 

6.8

 

 

7.1

 

 

6.5

 

 

6.8

 

 

6.4

 

 

6.4

Total Utilization Rates**

 

 

7.6

 

 

8.0

 

 

7.7

 

 

7.6

 

 

7.3

 

 

7.3

* # of cases shipped / # of doctors to whom cases were shipped

** LATAM utilization rate is not separately disclosed but included in the total utilization rates

ALIGN TECHNOLOGY, INC.

STOCK-BASED COMPENSATION

(in thousands)

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

 

Q1

 

Q2

 

 

2021

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

Stock-based Compensation (SBC):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBC included in Gross Profit

 

$

1,306

 

$

1,418

 

$

1,451

 

$

1,458

 

$

5,633

 

$

1,514

 

$

1,614

SBC included in Operating Expenses

 

 

25,935

 

 

27,437

 

 

26,951

 

 

28,380

 

 

108,703

 

 

30,107

 

 

32,526

Total SBC

 

$

27,241

 

$

28,855

 

$

28,402

 

$

29,838

 

$

114,336

 

$

31,621

 

$

34,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION

CONSTANT CURRENCY REVENUES

(in thousands, except percentages)

Sequential constant currency analysis:

 

 

Three Months Ended

 

 

 

 

June 30,

2022

 

March 31,

2022

 

Impact % of

Revenue

GAAP net revenues

 

$

969,553

 

$

973,219

 

 

Constant currency impact (1)

 

 

15,268

 

 

 

1.6

%

Constant currency net revenues (1)

 

$

984,821

 

 

 

 

 

 

 

 

 

 

 

GAAP Clear Aligner net revenues

 

$

798,398

 

$

809,696

 

 

Clear Aligner constant currency impact (1)

 

 

12,323

 

 

 

1.5

%

Clear Aligner constant currency net revenues (1)

 

$

810,721

 

 

 

 

 

 

 

 

 

 

 

GAAP Imaging Systems and CAD/CAM Services net revenues

 

$

171,155

 

$

163,523

 

 

Imaging Systems and CAD/CAM Services constant currency impact (1)

 

 

2,945

 

 

 

1.7

%

Imaging Systems and CAD/CAM Services constant currency net revenues (1)

 

$

174,100

 

 

 

 

Year-over-year constant currency analysis:

 

 

Three Months Ended June 30,

 

 

 

 

2022

 

2021

 

Impact % of

Revenue

GAAP net revenues

 

$

969,553

 

$

1,010,808

 

 

Constant currency impact (1)

 

 

39,888

 

 

 

4.0

%

Constant currency net revenues (1)

 

$

1,009,441

 

 

 

 

 

 

 

 

 

 

 

GAAP Clear Aligner net revenues

 

$

798,398

 

$

840,959

 

 

Clear Aligner constant currency impact (1)

 

 

32,935

 

 

 

4.0

%

Clear Aligner constant currency net revenues (1)

 

$

831,333

 

 

 

 

 

 

 

 

 

 

 

GAAP Imaging Systems and CAD/CAM Services net revenues

 

$

171,155

 

$

169,849

 

 

Imaging Systems and CAD/CAM Services constant currency impact (1)

 

 

6,953

 

 

 

3.9

%

Imaging Systems and CAD/CAM Services constant currency net revenues (1)

 

$

178,108

 

 

 

 

Note:

(1)

We define constant currency revenues as total revenues excluding the effect of foreign exchange rate movements and use it to determine the constant currency revenue percentage change on year-on-year and quarter-on-quarter basis. Constant currency impact in dollars is calculated by translating the current period GAAP net revenues using the foreign currency exchange rates that were in effect during the previous comparable period and subtracting it by the current period GAAP net revenues. The percentage for the constant currency impact is calculated by dividing the constant currency impact in dollars (numerator) by constant currency net revenues in dollars (denominator). Refer to “About Non-GAAP Financial Measures” section of press release.

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

CONSTANT CURRENCY INCOME FROM OPERATIONS AND OPERATING MARGIN

(in thousands, except percentages)

Sequential constant currency analysis:

 

 

Three Months Ended

 

 

June 30,

2022

 

March 31,

2022

GAAP income from operations

 

$

188,196

 

$

198,082

Income from operations constant currency impact (1)

 

 

13,917

 

 

Constant currency income from operations (1)

 

$

202,113

 

 

 

 

Three Months Ended

 

 

June 30,

2022

 

March 31,

2022

GAAP operating margin

 

19.4

%

 

20.4

%

Operating margin constant currency impact (2)

 

1.1

 

 

 

Constant currency operating margin (2)

 

20.5

%

 

 

Year-over-year constant currency analysis:

 

 

Three Months Ended June 30,

 

 

2022

 

2021

GAAP income from operations

 

$

188,196

 

$

268,902

Income from operations constant currency impact (1)

 

 

31,871

 

 

Constant currency income from operations (1)

 

$

220,067

 

 

 

 

Three Months Ended June 30,

 

 

2022

 

2021

GAAP operating margin

 

19.4

%

 

26.6

%

Operating margin constant currency impact (2)

 

2.4

 

 

 

Constant currency operating margin (2)

 

21.8

%

 

 

Notes:

(1)

We define constant currency income from operations as GAAP income from operations excluding the effect of foreign exchange rate movements for GAAP net revenues and operating expenses. Constant currency impact in dollars is calculated by translating the current period GAAP net revenues and operating expenses using the foreign currency exchange rates that were in effect during the previous comparable period and subtracting it by the current period GAAP net revenues and operating expenses.

 

(2)

We define constant currency operating margin as constant currency income from operations as a percentage of constant currency net revenues. Operating margin constant currency impact is the increase or decrease in constant currency operating margin compared to the GAAP operating margin.

Refer to “About Non-GAAP Financial Measures” section of press release.

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

FINANCIAL MEASURES OTHER THAN CONSTANT CURRENCY

(in thousands, except per share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

2021

 

2022

 

2021

GAAP gross profit

 

$

687,559

 

 

$

758,538

 

 

$

1,396,905

 

 

$

1,435,636

 

Stock-based compensation

 

 

1,614

 

 

 

1,418

 

 

 

3,128

 

 

 

2,724

 

Amortization of intangibles (1)

 

 

2,393

 

 

 

2,175

 

 

 

4,880

 

 

 

4,350

 

Non-GAAP gross profit

 

$

691,566

 

 

$

762,131

 

 

$

1,404,913

 

 

$

1,442,710

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

70.9

%

 

 

75.0

%

 

 

71.9

%

 

 

75.3

%

Non-GAAP gross margin

 

 

71.3

%

 

 

75.4

%

 

 

72.3

%

 

 

75.7

%

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

 

$

499,363

 

 

$

489,636

 

 

$

1,010,627

 

 

$

941,288

 

Stock-based compensation

 

 

(32,526

)

 

 

(27,437

)

 

 

(62,633

)

 

 

(53,372

)

Amortization of intangibles (1)

 

 

(872

)

 

 

(887

)

 

 

(1,782

)

 

 

(1,775

)

Acquisition-related costs (2)

 

 

 

 

 

(68

)

 

 

 

 

 

(104

)

Non-GAAP total operating expenses

 

$

465,965

 

 

$

461,244

 

 

$

946,212

 

 

$

886,037

 

 

 

 

 

 

 

 

 

 

GAAP income from operations

 

$

188,196

 

 

$

268,902

 

 

$

386,278

 

 

$

494,348

 

Stock-based compensation

 

 

34,140

 

 

 

28,855

 

 

 

65,761

 

 

 

56,096

 

Amortization of intangibles (1)

 

 

3,265

 

 

 

3,062

 

 

 

6,662

 

 

 

6,125

 

Acquisition-related costs (2)

 

 

 

 

 

68

 

 

 

 

 

 

104

 

Non-GAAP income from operations

 

$

225,601

 

 

$

300,887

 

 

$

458,701

 

 

$

556,673

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

19.4

%

 

 

26.6

%

 

 

19.9

%

 

 

25.9

%

Non-GAAP operating margin

 

 

23.3

%

 

 

29.8

%

 

 

23.6

%

 

 

29.2

%

 

 

 

 

 

 

 

 

 

GAAP total interest income and other income (expense), net

 

$

(14,587

)

 

$

(100

)

 

$

(25,183

)

 

$

36,075

 

Arbitration award gain (3)

 

 

 

 

 

 

 

 

 

 

 

(43,403

)

Non-GAAP total interest income and other income (expense), net

 

$

(14,587

)

 

$

(100

)

 

$

(25,183

)

 

$

(7,328

)

 

 

 

 

 

 

 

 

 

GAAP net income before provision for income taxes

 

$

173,609

 

 

$

268,802

 

 

$

361,095

 

 

$

530,423

 

Stock-based compensation

 

 

34,140

 

 

 

28,855

 

 

 

65,761

 

 

 

56,096

 

Amortization of intangibles (1)

 

 

3,265

 

 

 

3,062

 

 

 

6,662

 

 

 

6,125

 

Acquisition-related costs (2)

 

 

 

 

 

68

 

 

 

 

 

 

104

 

Arbitration award gain (3)

 

 

 

 

 

 

 

 

 

 

 

(43,403

)

Non-GAAP net income before provision for income taxes

 

$

211,014

 

 

$

300,787

 

 

$

433,518

 

 

$

549,345

 

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

FINANCIAL MEASURES OTHER THAN CONSTANT CURRENCY CONTINUED

(in thousands, except per share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

2021

 

2022

 

2021

GAAP provision for income taxes

 

$

60,809

 

 

$

69,088

 

 

$

113,997

 

 

$

130,333

 

Tax impact on non-GAAP adjustments

 

 

4,317

 

 

 

6,218

 

 

 

15,105

 

 

 

13,373

 

Tax related non-GAAP items (4)

 

 

(11,065

)

 

 

(16,651

)

 

 

(21,234

)

 

 

(34,845

)

Non-GAAP provision for income taxes

 

$

54,061

 

 

$

58,655

 

 

$

107,868

 

 

$

108,861

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

35.0

%

 

 

25.7

%

 

 

31.6

%

 

 

24.6

%

Non-GAAP effective tax rate

 

 

25.6

%

 

 

19.5

%

 

 

24.9

%

 

 

19.8

%

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

112,800

 

 

$

199,714

 

 

$

247,098

 

 

$

400,090

 

Stock-based compensation

 

 

34,140

 

 

 

28,855

 

 

 

65,761

 

 

 

56,096

 

Amortization of intangibles (1)

 

 

3,265

 

 

 

3,062

 

 

 

6,662

 

 

 

6,125

 

Acquisition-related costs (2)

 

 

 

 

 

68

 

 

 

 

 

 

104

 

Arbitration award gain (3)

 

 

 

 

 

 

 

 

 

 

 

(43,403

)

Tax impact on non-GAAP adjustments

 

 

(4,317

)

 

 

(6,218

)

 

 

(15,105

)

 

 

(13,373

)

Tax related non-GAAP items (4)

 

 

11,065

 

 

 

16,651

 

 

 

21,234

 

 

 

34,845

 

Non-GAAP net income

 

$

156,953

 

 

$

242,132

 

 

$

325,650

 

 

$

440,484

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income per share

 

$

1.44

 

 

$

2.51

 

 

$

3.13

 

 

$

5.02

 

Non-GAAP diluted net income per share

 

$

2.00

 

 

$

3.04

 

 

$

4.13

 

 

$

5.52

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted net income per share

 

 

78,545

 

 

 

79,638

 

 

 

78,840

 

 

 

79,737

 

Notes:

(1)

Amortization of intangible assets related to certain acquisitions

(2)

Acquisition-related costs for professional fees related to our 2020 exocad acquisition

(3)

Gain from the SDC arbitration award regarding the value of Align’s capital account balance

(4)

Amortization and related adjustments to the benefit from the transferred intangible assets of our Swiss entity

Refer to “About Non-GAAP Financial Measures” section of press release.