ALGN

Q4 total revenues of $901.5 million and 2022 total revenues of $3.7 billion

Board of Directors has authorized a new $1 billion stock repurchase program, to succeed the current $1 billion program that is expected to be completed in Q2 2023 

• 2022 total revenues of $3.7 billion, Clear Aligner revenues of $3.1 billion and Systems and Services revenues of $662.1 million
• 2022 revenues were unfavorably impacted by foreign exchange of approximately $193.8 million(1) compared to 2021
• 2022 operating margin of 17.2%, non-GAAP operating margin of 21.5%, and diluted net income per share of $4.61, non-GAAP diluted net income per share of $7.76(3)
• 2022 operating margin was unfavorably impacted by foreign exchange of approximately 2.8 points compared to 2021(1)
• Repurchased $475 million of common stock in 2022(2) with plans to repurchase $250 million more starting in Q1 2023 and expect to entirely complete our 2021 $1 Billion Stock Repurchase Program in Q2 2023
• Q4 total revenues of $901.5 million, and diluted net income per share of $0.54, non-GAAP diluted net income per share of $1.73(3)
• Q4 revenues were unfavorably impacted by foreign exchange of approximately $16.0 million sequentially and approximately $67.6 million year over year(1)

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 fourth quarter ("Q4'22") and year ended December 31, 2022 ("2022"). Q4'22 total revenues were $901.5 million, up 1.3% sequentially and down 12.6% year-over-year. Q4'22 Clear Aligner revenues were $731.7 million, flat sequentially and down 10.3% year-over-year. Q4'22 Clear Aligner volume was up 1.1% sequentially and down 7.5% year-over-year. Q4'22 Imaging Systems and CAD/CAM Services revenues were $169.9 million, up 7.8% sequentially and down 21.3% year-over-year. Q4’22 Clear Aligner revenues were unfavorably impacted by foreign exchange of approximately $13.4 million or 1.8% sequentially and approximately $56.4 million or 7.2% year over year.(1) Q4'22 Imaging Systems and CAD/CAM Services revenues were unfavorably impacted by foreign exchange of approximately $2.7 million or 1.5% sequentially and approximately $11.2 million or 6.2% year over year.(1) Q4'22 operating income was $112.7 million resulting in an operating margin of 12.5%. Q4'22 operating margin was unfavorably impacted by foreign exchange of approximately 0.9 points sequentially and approximately 4.2 points year over year.(1) Q4'22 net income was $41.8 million, or $0.54 per diluted share. On a non-GAAP basis, Q4'22 net income was $134.2 million, or $1.73 per diluted share. (3)

During Q4’22, we incurred a total of $14.3 million of restructuring and other charges, of which $2.9 million was included in cost of net revenues and $11.5 million included in operating expenses. Restructuring and other charges included $8.7 million of severance related costs and $5.6 million of certain lease terminations costs and asset impairments.

2022 Clear Aligner revenues of $3.1 billion were unfavorably impacted by foreign exchange of approximately $160.8 million or 5.0% compared to 2021.(1) 2022 Imaging Systems and CAD/CAM Services revenues of $662.1 million were unfavorably impacted by foreign exchange of approximately $33.0 million or 4.7% compared to 2021.(1)

In Q4’22, we changed to a long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across reporting periods. Our previous methodology for calculating our non-GAAP effective tax rate included certain non-recurring and period-specific items, that produced fluctuating effective tax rates that management does not believe are reflective of the Company's long-term effective tax rate. We have recast all prior periods in 2022 to reflect this change. We did not make any changes to the results reported for 2021 as reflecting the change in methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. Refer to the section titled "Recast of Financial Measures for Prior Periods in 2022 for Tax Rate Change" under Unaudited GAAP to Non-GAAP Reconciliation for further information.

Commenting on Align's Q4'22 and 2022 results, Align Technology President and CEO Joe Hogan said, “Overall, I’m pleased to report fourth quarter results that reflect a more stable environment for doctors and their patients than recent quarters, especially in the Americas and EMEA regions, as well as most APAC markets outside of China. Throughout Q4, trends in consumer interest for orthodontic treatment, patient traffic in doctor’s practices, and iTero™ scanner demos continued to improve. However, the unfavorable effect of foreign exchange on our fourth quarter and full year 2022 results was unprecedented and reduced our revenues and margins significantly. Despite the impact of unfavorable foreign exchange, Q4 revenues of $901.5 million increased sequentially from Q3, reflecting growth in systems and services as well as a slight increase in clear aligner shipments. This is the first quarter in a year that our total revenues and volumes for both scanners and clear aligners increased sequentially. As we move through 2023, I am cautiously optimistic that we will see continued stability and an improving operating environment, but also recognize that the macroeconomic situation is fragile. Regardless, we remain confident in our large, untapped market opportunity for digital orthodontics and restorative dentistry. We anticipate that 2023 will be a very exciting year for Align innovations as we begin to commercialize one of the largest new product and technology cycles in our 25-year history.”

(1) Non-GAAP measure (2) The contract was open as of Dec 31, 2022. (3) In Q4'22, we changed our methodology for the computation of the non-GAAP effective tax rate to a long-term projected tax rate and have given effect to the new methodology from January 1, 2022, and recast the previously reported quarterly periods in 2022. We did not make any changes to the results reported for 2021 as reflecting the change in methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. Please see section captioned "Recast of Financial Measures for Prior Periods In 2022 For Tax Rate Change" under "Unaudited GAAP to Non-GAAP Reconciliation" for further information.

Financial Summary - Fourth Quarter Fiscal 2022

 

Q4'22

 

Q3'22

 

Q4'21

 

Q/Q Change

 

Y/Y Change

Invisalign Case Shipments

 

583,655

 

 

577,170

 

 

631,145

 

 

+1.1

%

 

 

(7.5

)%

GAAP

 

 

 

 

 

 

 

 

 

Net Revenues

$

901.5M

 

$

890.3M

 

$

1,031.1M

 

 

+1.3

%

 

 

(12.6

)%

Clear Aligner

$

731.7M

 

$

732.8M

 

$

815.3M

 

 

(0.2

)%

 

 

(10.3

)%

Imaging Systems and CAD/CAM Services

$

169.9M

 

$

157.5M

 

$

215.8M

 

 

+7.8

%

 

 

(21.3

)%

Net Income

$

41.8M

 

$

72.7M

 

$

191.0M

 

 

(42.5

)%

 

 

(78.1

)%

Diluted EPS

$

0.54

 

$

0.93

 

$

2.40

 

($

0.39

)

 

($

1.86

)

Non-GAAP

 

 

 

 

 

 

 

 

 

Net Income(3)

$

134.2M

 

$

127.2M

 

$

224.5M

 

 

+5.5

%

 

 

(40.2

)%

Diluted EPS(3)

$

1.73

 

$

1.63

 

$

2.83

 

 

+$0.10

 

 

($

1.10

)

Financial Summary - Fiscal 2022

 

2022

 

2021

 

Y/Y Change

Invisalign Case Shipments

 

2,358,645

 

 

2,547,685

 

 

(7.4

)%

GAAP

 

 

 

 

 

Net Revenues

$

3,734.6M

 

$

3,952.6M

 

 

(5.5

)%

Clear Aligner

$

3,072.6M

 

$

3,247.1M

 

 

(5.4

)%

Imaging Systems and CAD/CAM Services

$

662.1M

 

$

705.5M

 

 

(6.2

)%

Net Income

$

361.6M

 

$

772.0M

 

 

(53.2

)%

Diluted EPS

$

4.61

 

$

9.69

 

($

5.08

)

Non-GAAP

 

 

 

 

 

Net Income(3)

$

608.2M

 

$

893.5M

 

 

(31.9

)%

Diluted EPS(3)

$

7.76

 

$

11.22

 

($

3.46

)

(3) In Q4'22, we changed our methodology for the computation of the non-GAAP effective tax rate to a long-term projected tax rate and have given effect to the new methodology from January 1, 2022, and recast the previously reported quarterly periods in 2022. We did not make any changes to the results reported for 2021 as reflecting the change in methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. Please see section captioned "Recast of Financial Measures for Prior Periods In 2022 For Tax Rate Change" under "Unaudited GAAP to Non-GAAP Reconciliation" for further information.

As of December 31, 2022, we had over $1.0 billion in cash, cash equivalents and short-term and long-term marketable securities compared to over $1.1 billion as of September 30, 2022. As of December 31, 2022, we had $300.0 million available under a revolving line of credit which was amended during Q4'22 to extend the term through 2027. In October 2022, we purchased approximately 848 thousand shares of our common stock at an average price of $188.62 per share through a $200.0 million Accelerated Share Repurchase under our May 13, 2021 $1.0 billion Stock Repurchase Program. We have $250.0 million remaining available for repurchase under this program and we plan to repurchase this remaining amount starting in Q1 2023 through either, or a combination of, open market repurchases or an accelerated stock repurchase agreement, and entirely completing this $1.0 Billion Stock Repurchase Program in Q2 2023.

Commenting on Align's 2022 results, Align Technology CFO and EVP Global Finance, John Morici said, “We remain focused on expanding our technology and industry leadership, while making disciplined investments in our strategic growth drivers. We exited fiscal year 2022 with a strong balance sheet, including $1 billion in cash and investments, a healthy cash flow position and no long-term debt. We are pleased to announce that our Board of Directors has authorized a new $1 billion stock repurchase program to succeed the current $1 billion program. This new $1 billion program reflects the strength of our balance sheet and cash flow generation, as well as management’s and our Board's continued confidence in our ability to capitalize on large market opportunities in our target markets and trajectory for growth while concurrently returning capital to our stockholders.”

Q4'22 Announcement Highlights

• On October 3, 2022, we announced the latest release of the iTero-exocad Connector™, which integrates iTero™ intraoral camera and Near-infrared imaging ("NIRI") images within exocad DentalCAD 3.1 Rijeka software. This new integration, introduced at the exocad Insights 2022 event in Mallorca, Spain, is designed to support the goal of a seamless, end-to-end workflow for doctors and lab technicians. It optimizes design and fabrication of highly esthetic restorations by providing the ability for dental professionals to visualize the internal and external structure of teeth.
• On October 31, 2022, we announced that we entered into a new accelerated stock repurchase agreement with Goldman Sachs & Co. LLC, to repurchase $200 million of our common stock under our May 13, 2021, $1.0 billion Stock Repurchase Program.
• On November 3, 2022, we announced a strategic collaboration to supply iTero Element™ Flex intraoral scanners to Desktop Labs allowing it to connect general dentist locations with its growing network of premium full-service labs. We noted that the iTero Element Flex intraoral scanner will be the exclusive restorative scanner for Desktop Labs, one of the largest lab networks in the United States.
• On November 7, 2022, we announced the opening of Align's 2023 Research Award Program to support clinical and scientific dental research in universities across the globe. In 2023, up to $300,000 will be awarded to university faculty for scientific and technological research initiatives to advance patient care in the fields of orthodontics and dentistry. Align Technology’s Research Award Program has funded approximately $2.7 million in research since the program’s inception in 2010.

Fiscal 2023 Business Outlook

For 2023, Align provides the following business outlook:

• We are pleased with our Q4 results and what appears to be a more stable operating environment in North America, EMEA. We are cautiously optimistic for continued stability and improving trends as we move through the year. However, the macroeconomic environment remains fragile and given continued global challenges and uncertainty, we are not providing full year revenue guidance. We would like to see improvements in the operating environment and consumer demand signals, including stability in China before revisiting our approach.
• At the same time, we are confident in our large, untapped market opportunity for digital orthodontics and restorative dentistry and our ability to make progress toward our strategic initiatives. We intend to focus on the things we can control and influence which includes strategic investments in sales, marketing, technology and innovation.
• For full year 2023, assuming no additional material disruptions or circumstances beyond our control, we anticipate 2023 GAAP operating margin to be slightly above 16% and expect our 2023 non-GAAP operating margin to be slightly above 20%.
• With this backdrop, for Q1 2023, we anticipate clear aligner volumes to be down sequentially primarily due to weakness in China from COVID, partially offset by some stability from our Americas and EMEA regions. We anticipate clear aligner ASPs to be up from Q4’22 primarily due to higher pricing and favorable foreign exchange rates. We anticipate iTero scanner and services revenue to be down sequentially as the business follows a more typical capital equipment cycle.
• Taken in total, we expect Q1’23 revenues to be about flat to Q4’22. We expect our Q1’23 GAAP operating margin to be up approximately 1% point from Q4’22 GAAP operating margin and expect our Q1’23 non-GAAP operating margin to be consistent with Q4’22 non-GAAP operating margin, as we continue to make investments in R&D and go-to-market activities.
• For 2023, we expect our investments in capital expenditures to exceed $200 million. Capital expenditures primarily relate to building construction and improvements as well as additional manufacturing capacity to support our international expansion.

Align Web Cast and Conference Call

We will host a conference call today, February 1, 2023, at 4:30 p.m. ET, 1:30 p.m. PT, to review our fourth quarter and full year 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 659082. 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 328900. 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 February 15, 2023.

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, constant currency gross profit, constant currency gross margin, constant currency income from operations, constant currency operating margin, gross profit, gross margin, operating expenses, income from operations, 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 and discrete cash and non-cash charges or gains that are included in the most directly comparable GAAP measure. In Q4'22, we changed to a long-term non-GAAP effective tax rate in our computation of the non-GAAP income tax provision to provide better consistency across reporting periods. Our previous methodology for calculating our non-GAAP effective tax rate included certain non-recurring and period-specific items, that produced fluctuating effective tax rates that management does not believe are reflective of the Company's long-term effective tax rate. We have given effect to this new methodology effective January 1, 2022 and recast prior periods in 2022. No changes have been made to 2021, as reflecting the change in methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. 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, restructuring and other charges, acquisition-related costs, and arbitration award gain, and associated tax impacts.

Our management believes that the use of certain non-GAAP financial measures provides 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. 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 as 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 239 thousand doctor customers and are key to accessing Align’s 500 million consumer market opportunity worldwide. Over the past 25 years, Align has helped doctors treat over 14.5 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.

Invisalign, iTero, exocad, Align, Align Digital Platform, iTero Element and iTero-exocad Connector are trademarks of Align Technology, Inc.

Forward-Looking Statements

This news release, including the tables below, contains forward-looking statements, including statements of beliefs and expectations regarding anticipated capital expenditures, anticipated clear aligner volumes, clear aligner ASPs, iTero scanner and services revenue, total revenues and operating margin, customer and consumer demand trends and market opportunities, our ability to successfully control our business and operations and pursue our strategic growth drivers, our expectations regarding the timing and impact of new products and technologies, our beliefs for the impacts of our stock repurchase programs and our ability to generate cash flow, and our beliefs regarding the trajectory of our business. 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, rising interest rates, market volatility, weakness in general economic conditions and recessions and the impact of efforts by central banks and federal, state and local governments to combat inflation and recession;
• customer and consumer purchasing behavior and changes in consumer spending habits as a result of, among other things, prevailing macro-economic conditions, levels of employment, salaries and wages, debt obligations, discretionary income, inflationary pressure, declining consumer confidence, and the military conflict in Ukraine;
• 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 will continue to adversely impact our operations and research and development activities inside and outside of Russia;
• variations in our product mix and selling prices regionally and globally;
• 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 clear aligners and 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 doctor customers 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 September 30, 2022, which was filed with the SEC on November 4, 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 December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

Net revenues

 

$

901,515

 

 

$

1,031,099

 

 

$

3,734,635

 

 

$

3,952,584

Cost of net revenues

 

 

283,814

 

 

 

286,536

 

 

 

1,100,860

 

 

 

1,017,229

Gross profit

 

 

617,701

 

 

 

744,563

 

 

 

2,633,775

 

 

 

2,935,355

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

410,067

 

 

 

451,195

 

 

 

1,674,469

 

 

 

1,708,640

Research and development

 

 

83,520

 

 

 

72,476

 

 

 

305,258

 

 

 

250,315

Restructuring and other charges

 

 

11,453

 

 

 

—

 

 

 

11,453

 

 

 

—

Total operating expenses

 

 

505,040

 

 

 

523,671

 

 

 

1,991,180

 

 

 

1,958,955

Income from operations

 

 

112,661

 

 

 

220,892

 

 

 

642,595

 

 

 

976,400

Interest income and other income (expense), net:

 

 

 

 

 

 

 

 

Interest income

 

 

2,760

 

 

 

676

 

 

 

5,367

 

 

 

3,103

Other income (expense), net

 

 

(100

)

 

 

(1,556

)

 

 

(48,905

)

 

 

32,920

Total interest income and other income (expense), net

 

 

2,660

 

 

 

(880

)

 

 

(43,538

)

 

 

36,023

Net income before provision for income taxes

 

 

115,321

 

 

 

220,012

 

 

 

599,057

 

 

 

1,012,423

Provision for income taxes

 

 

73,546

 

 

 

29,051

 

 

 

237,484

 

 

 

240,403

Net income

 

$

41,775

 

 

$

190,961

 

 

$

361,573

 

 

$

772,020

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

2.42

 

 

$

4.62

 

 

$

9.78

Diluted

 

$

0.54

 

 

$

2.40

 

 

$

4.61

 

 

$

9.69

Shares used in computing net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

77,541

 

 

 

78,759

 

 

 

78,190

 

 

 

78,917

Diluted

 

 

77,683

 

 

 

79,431

 

 

 

78,420

 

 

 

79,670

ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

942,050

 

$

1,099,370

Marketable securities, short-term

 

 

57,534

 

 

71,972

Accounts receivable, net

 

 

859,685

 

 

897,198

Inventories

 

 

338,752

 

 

230,230

Prepaid expenses and other current assets

 

 

226,370

 

 

195,305

Total current assets

 

 

2,424,391

 

 

2,494,075

 

 

 

 

 

Marketable securities, long-term

 

 

41,978

 

 

125,320

Property, plant and equipment, net

 

 

1,231,855

 

 

1,081,926

Operating lease right-of-use assets, net

 

 

118,880

 

 

121,257

Goodwill

 

 

407,551

 

 

418,547

Intangible assets, net

 

 

95,720

 

 

109,709

Deferred tax assets

 

 

1,571,746

 

 

1,533,767

Other assets

 

 

55,826

 

 

57,509

 

 

 

 

 

Total assets

 

$

5,947,947

 

$

5,942,110

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

127,870

 

$

163,886

Accrued liabilities

 

 

454,374

 

 

607,315

Deferred revenues

 

 

1,343,643

 

 

1,152,870

Total current liabilities

 

 

1,925,887

 

 

1,924,071

 

 

 

 

 

Income tax payable

 

 

124,393

 

 

118,072

Operating lease liabilities

 

 

100,334

 

 

102,656

Other long-term liabilities

 

 

195,975

 

 

174,597

Total liabilities

 

 

2,346,589

 

 

2,319,396

 

 

 

 

 

Total stockholders’ equity

 

 

3,601,358

 

 

3,622,714

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

5,947,947

 

$

5,942,110

ALIGN TECHNOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Year Ended December 31,

 

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net cash provided by operating activities

 

$

568,732

 

 

$

1,172,544

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Net cash used in investing activities

 

 

(213,316

)

 

 

(563,430

)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net cash used in financing activities

 

 

(501,686

)

 

 

(458,332

)

 

 

 

 

 

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

 

 

(11,514

)

 

 

(12,117

)

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

 

 

(157,784

)

 

 

138,665

 

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

 

$

942,355

 

 

$

1,100,139

 

ALIGN TECHNOLOGY, INC.

INVISALIGN BUSINESS METRICS

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Invisalign Average Selling Price (ASP)

 

$

1,195

 

$

1,185

 

$

1,195

 

$

1,200

 

$

1,250

 

$

1,220

 

$

1,150

 

$

1,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Invisalign Trained Doctors Cases Were Shipped To

 

 

78,605

 

 

83,465

 

 

85,500

 

 

83,540

 

 

82,440

 

 

82,275

 

 

84,410

 

 

82,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invisalign Trained Doctor Utilization Rates*:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

9.1

 

 

9.9

 

 

9.8

 

 

9.3

 

 

9.2

 

 

9.3

 

 

8.9

 

 

8.8

North American Orthodontists

 

 

26.8

 

 

29.4

 

 

29.7

 

 

26.9

 

 

26.8

 

 

26.8

 

 

25.9

 

 

24.8

North American GP Dentists

 

 

4.8

 

 

5.3

 

 

5.0

 

 

5.1

 

 

5.0

 

 

5.1

 

 

4.8

 

 

5.0

International

 

 

6.8

 

 

7.1

 

 

6.5

 

 

6.8

 

 

6.4

 

 

6.4

 

 

6.0

 

 

6.5

Total Utilization Rates**

 

 

7.6

 

 

8.0

 

 

7.7

 

 

7.6

 

 

7.3

 

 

7.3

 

 

6.8

 

 

7.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clear Aligner Revenue Per Case Shipment***:

 

$

1,265

 

$

1,265

 

$

1,280

 

$

1,290

 

$

1,350

 

$

1,335

 

$

1,270

 

 

1,255

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

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

*** Clear Aligner revenues / Case shipments

ALIGN TECHNOLOGY, INC.

STOCK-BASED COMPENSATION

(in thousands)

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

 

Q1

 

Q2

 

Q3

 

Q4

 

Fiscal

 

 

2021

 

2021

 

2021

 

2021

 

2021

 

2022

 

2022

 

2022

 

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

 

$

1,651

 

$

1,659

 

$

6,438

SBC included in Operating Expenses

 

 

25,935

 

 

27,437

 

 

26,951

 

 

28,380

 

 

108,703

 

 

30,107

 

 

32,526

 

 

31,267

 

 

33,029

 

$

126,929

Total SBC

 

$

27,241

 

$

28,855

 

$

28,402

 

$

29,838

 

$

114,336

 

$

31,621

 

$

34,140

 

$

32,918

 

$

34,688

 

$

133,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION

CONSTANT CURRENCY NET REVENUES

(in thousands, except percentages)

Sequential constant currency analysis:

 

 

Three Months Ended

 

 

 

 

December 31, 2022

 

September 30,

2022

 

Impact % of Revenue

GAAP net revenues

 

$

901,515

 

$

890,348

 

 

Constant currency impact (1)

 

 

16,023

 

 

 

1.7

%

Constant currency net revenues (1)

 

$

917,538

 

 

 

 

 

 

 

 

 

 

 

GAAP Clear Aligner net revenues

 

$

731,654

 

$

732,837

 

 

Clear Aligner constant currency impact (1)

 

 

13,362

 

 

 

1.8

%

Clear Aligner constant currency net revenues (1)

 

$

745,016

 

 

 

 

 

 

 

 

 

 

 

GAAP Imaging Systems and CAD/CAM Services net revenues

 

$

169,861

 

$

157,511

 

 

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

 

 

2,661

 

 

 

1.5

%

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

 

$

172,522

 

 

 

 

Year-over-year constant currency analysis:

 

 

Three Months Ended

December 31,

 

 

 

 

2022

 

2021

 

Impact % of Revenue

GAAP net revenues

 

$

901,515

 

$

1,031,099

 

 

Constant currency impact (1)

 

 

67,588

 

 

 

7.0

%

Constant currency net revenues (1)

 

$

969,103

 

 

 

 

 

 

 

 

 

 

 

GAAP Clear Aligner net revenues

 

$

731,654

 

$

815,259

 

 

Clear Aligner constant currency impact (1)

 

 

56,387

 

 

 

7.2

%

Clear Aligner constant currency net revenues (1)

 

$

788,041

 

 

 

 

 

 

 

 

 

 

 

GAAP Imaging Systems and CAD/CAM Services net revenues

 

$

169,861

 

$

215,840

 

 

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

 

 

11,201

 

 

 

6.2

%

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

 

$

181,062

 

 

 

 

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

CONSTANT CURRENCY NET REVENUES CONTINUED

(in thousands, except percentages)

Current year versus prior year constant currency analysis:

 

 

Year Ended December 31,

 

 

 

 

2022

 

2021

 

Impact % of Revenue

GAAP net revenues

 

$

3,734,635

 

$

3,952,584

 

 

Constant currency impact (1)

 

 

193,797

 

 

 

4.9

%

Constant currency net revenues (1)

 

$

3,928,432

 

 

 

 

 

 

 

 

 

 

 

GAAP Clear Aligner net revenues

 

$

3,072,585

 

$

3,247,080

 

 

Clear Aligner constant currency impact (1)

 

 

160,804

 

 

 

5.0

%

Clear Aligner constant currency net revenues (1)

 

$

3,233,389

 

 

 

 

 

 

 

 

 

 

 

GAAP Imaging Systems and CAD/CAM Services net revenues

 

$

662,050

 

$

705,504

 

 

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

 

 

32,993

 

 

 

4.7

%

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

 

$

695,043

 

 

 

 

Note:

(1)

We define constant currency net revenues as total net revenues excluding the effect of foreign exchange rate movements and use it to determine the percentage for the constant currency impact on net revenues on a sequential, year-over-year and current year versus prior year 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 on net revenues 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 GROSS PROFIT AND GROSS MARGIN

(in thousands, except percentages)

Sequential constant currency analysis:

 

 

Three Months Ended

 

 

December 31, 2022

 

September 30, 2022

GAAP gross profit

 

$

617,701

 

$

619,169

Constant currency impact on net revenues

 

 

16,023

 

 

Constant currency gross profit

 

$

633,724

 

 

 

 

Three Months Ended

 

 

December 31, 2022

 

September 30, 2022

GAAP gross margin

 

68.5

%

 

69.5

%

Gross margin constant currency impact (1)

 

0.6

 

 

 

Constant currency gross margin (1)

 

69.1

%

 

 

Year-over-year constant currency analysis:

 

 

Three Months Ended

December 31,

 

 

2022

 

2021

GAAP gross profit

 

$

617,701

 

$

744,563

Constant currency impact on net revenues

 

 

67,588

 

 

Constant currency gross profit

 

$

685,289

 

 

 

 

Three Months Ended

December 30,

 

 

2022

 

2021

GAAP gross margin

 

68.5

%

 

72.2

%

Gross margin constant currency impact (1)

 

2.2

 

 

 

Constant currency gross margin (1)

 

70.7

%

 

 

Note:

(1)

We define constant currency gross margin as constant currency gross profit as a percentage of constant currency net revenues. Gross margin constant currency impact is the increase or decrease in constant currency gross margin compared to the GAAP gross margin.

 

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

 

 

December 31, 2022

 

September 30, 2022

GAAP income from operations

 

$

112,661

 

$

143,656

Income from operations constant currency impact (1)

 

 

10,698

 

 

Constant currency income from operations (1)

 

$

123,359

 

 

 

 

Three Months Ended

 

 

December 31, 2022

 

September 30, 2022

GAAP operating margin

 

12.5

%

 

16.1

%

Operating margin constant currency impact (2)

 

0.9

 

 

 

Constant currency operating margin (2)

 

13.4

%

 

 

Year-over-year constant currency analysis:

 

 

Three Months Ended

December 31,

 

 

2022

 

2021

GAAP income from operations

 

$

112,661

 

$

220,892

Income from operations constant currency impact (1)

 

 

49,320

 

 

Constant currency income from operations (1)

 

$

161,981

 

 

 

 

Three Months Ended

December 31,

 

 

2022

 

2021

GAAP operating margin

 

12.5

%

 

21.4

%

Operating margin constant currency impact (2)

 

4.2

 

 

 

Constant currency operating margin (2)

 

16.7

%

 

 

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

CONSTANT CURRENCY INCOME FROM OPERATIONS AND OPERATING MARGIN CONTINUED

(in thousands, except percentages)

Current year versus prior year constant currency analysis:

 

 

Year Ended December 31,

 

 

2022

 

2021

GAAP income from operations

 

$

642,595

 

$

976,400

Income from operations constant currency impact (1)

 

 

144,079

 

 

Constant currency income from operations (1)

 

$

786,674

 

 

 

 

Year Ended December 31,

 

 

2022

 

2021

GAAP operating margin

 

17.2

%

 

24.7

%

Operating margin constant currency impact (2)

 

2.8

 

 

 

Constant currency operating margin (2)

 

20.0

%

 

 

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 on a sequential, year-over-year and current year versus prior year basis. 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 December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

GAAP gross profit

 

$

617,701

 

 

$

744,563

 

 

$

2,633,775

 

 

$

2,935,355

 

Stock-based compensation

 

 

1,659

 

 

 

1,458

 

 

 

6,438

 

 

 

5,633

 

Amortization of intangibles (1)

 

 

2,610

 

 

 

2,798

 

 

 

10,134

 

 

 

9,502

 

Restructuring charges (2)

 

 

2,866

 

 

 

—

 

 

 

2,866

 

 

 

—

 

Non-GAAP gross profit

 

$

624,836

 

 

$

748,819

 

 

$

2,653,213

 

 

$

2,950,490

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

68.5

%

 

 

72.2

%

 

 

70.5

%

 

 

74.3

%

Non-GAAP gross margin

 

 

69.3

%

 

 

72.6

%

 

 

71.0

%

 

 

74.6

%

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

 

$

505,040

 

 

$

523,671

 

 

$

1,991,180

 

 

$

1,958,955

 

Stock-based compensation

 

 

(33,029

)

 

 

(28,380

)

 

 

(126,929

)

 

 

(108,703

)

Amortization of intangibles (1)

 

 

(810

)

 

 

(933

)

 

 

(3,417

)

 

 

(3,668

)

Restructuring and other charges (3)

 

 

(11,453

)

 

 

—

 

 

 

(11,453

)

 

 

—

 

Acquisition-related costs (4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(104

)

Non-GAAP total operating expenses

 

$

459,748

 

 

$

494,358

 

 

$

1,849,381

 

 

$

1,846,480

 

 

 

 

 

 

 

 

 

 

GAAP income from operations

 

$

112,661

 

 

$

220,892

 

 

$

642,595

 

 

$

976,400

 

Stock-based compensation

 

 

34,688

 

 

 

29,838

 

 

 

133,367

 

 

 

114,336

 

Amortization of intangibles (1)

 

 

3,420

 

 

 

3,731

 

 

 

13,551

 

 

 

13,170

 

Restructuring and other charges (2),(3)

 

 

14,319

 

 

 

—

 

 

 

14,319

 

 

 

—

 

Acquisition-related costs (4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

104

 

Non-GAAP income from operations

 

$

165,088

 

 

$

254,461

 

 

$

803,832

 

 

$

1,104,010

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

12.5

%

 

 

21.4

%

 

 

17.2

%

 

 

24.7

%

Non-GAAP operating margin

 

 

18.3

%

 

 

24.7

%

 

 

21.5

%

 

 

27.9

%

 

 

 

 

 

 

 

 

 

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

 

$

2,660

 

 

$

(880

)

 

$

(43,538

)

 

$

36,023

 

Arbitration award gain (5)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(43,403

)

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

 

$

2,660

 

 

$

(880

)

 

$

(43,538

)

 

$

(7,380

)

 

 

 

 

 

 

 

 

 

GAAP net income before provision for income taxes

 

$

115,321

 

 

$

220,012

 

 

$

599,057

 

 

$

1,012,423

 

Stock-based compensation

 

 

34,688

 

 

 

29,838

 

 

 

133,367

 

 

 

114,336

 

Amortization of intangibles (1)

 

 

3,420

 

 

 

3,731

 

 

 

13,551

 

 

 

13,170

 

Restructuring and other charges (2),(3)

 

 

14,319

 

 

 

—

 

 

 

14,319

 

 

 

—

 

Acquisition-related costs (4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

104

 

Arbitration award gain (5)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(43,403

)

Non-GAAP net income before provision for income taxes

 

$

167,748

 

 

$

253,581

 

 

$

760,294

 

 

$

1,096,630

 

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 December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

GAAP provision for income taxes

 

$

73,546

 

 

$

29,051

 

 

$

237,484

 

 

$

240,403

 

Tax impact on non-GAAP adjustments (6)

 

 

(39,997

)

 

 

49

 

 

 

(85,426

)

 

 

(37,312

)

Non-GAAP provision for income taxes (6)

 

$

33,549

 

 

$

29,100

 

 

$

152,058

 

 

$

203,091

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

63.8

%

 

 

13.2

%

 

 

39.6

%

 

 

23.7

%

Non-GAAP effective tax rate (6)

 

 

20.0

%

 

 

11.5

%

 

 

20.0

%

 

 

18.5

%

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

41,775

 

 

$

190,961

 

 

$

361,573

 

 

$

772,020

 

Stock-based compensation

 

 

34,688

 

 

 

29,838

 

 

 

133,367

 

 

 

114,336

 

Amortization of intangibles (1)

 

 

3,420

 

 

 

3,731

 

 

 

13,551

 

 

 

13,170

 

Restructuring and other charges (2),(3)

 

 

14,319

 

 

 

—

 

 

 

14,319

 

 

 

—

 

Acquisition-related costs (4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

104

 

Arbitration award gain (5)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(43,403

)

Tax impact on non-GAAP adjustments (6)

 

 

39,997

 

 

 

(49

)

 

 

85,426

 

 

 

37,312

 

Non-GAAP net income (6)

 

$

134,199

 

 

$

224,481

 

 

$

608,236

 

 

$

893,539

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income per share

 

$

0.54

 

 

$

2.40

 

 

$

4.61

 

 

$

9.69

 

Non-GAAP diluted net income per share (6)

 

$

1.73

 

 

$

2.83

 

 

$

7.76

 

 

$

11.22

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted net income per share

 

 

77,683

 

 

 

79,431

 

 

 

78,420

 

 

 

79,670

 

Notes:

(1)

Amortization of intangible assets related to certain acquisitions

(2)

During the fourth quarter of 2022, we initiated a restructuring plan to increase efficiencies across the organization and lower the overall cost structure. Restructuring charges recorded to Cost of net revenues relate primarily to severance costs and impairment charges.

(3)

Restructuring and other charges recorded to Operating expenses primarily relate to severance costs, lease termination charges and asset impairments.

(4)

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

(5)

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

(6)

In Q4'22, we changed our methodology for the computation of the non-GAAP effective tax rate to a long-term projected tax rate and have given effect to the new methodology from January 1, 2022, and recast previously reported quarterly periods in 2022. We did not make any changes to the results reported for 2021 as reflecting the change in methodology for the computation of the non-GAAP effective tax rate was immaterial to our 2021 results. Please see section captioned "Recast of Financial Measures for Prior Periods In 2022 For Tax Rate Change" under "Unaudited GAAP to Non-GAAP Reconciliation" for further information.

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

ALIGN TECHNOLOGY, INC. UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED RECAST OF FINANCIAL MEASURES FOR PRIOR PERIODS IN 2022 FOR TAX RATE CHANGE (in thousands, except per share data)

In Q4'22, we changed our methodology for the computation of the non-GAAP effective tax rate to a long-term projected tax rate as our management believes shifting to a long-term projected tax rate provides better consistency across reporting periods. Our previous methodology for calculating non-GAAP effective tax rate included certain non-recurring and period-specific items that produced, between periods, results management does not believe are reflective of the Company's long-term effective tax rate. We have given effect to the new methodology effective January 1, 2022, and recast the previously reported quarterly periods in 2022 relating to the Non-GAAP provision for income taxes, Non-GAAP effective tax rate, Non-GAAP net income and Non-GAAP diluted net income per share. We used a projected non-GAAP effective tax rate of 20% for 2022, and expect to use the same rate for 2023. The non-GAAP effective tax rate could be subject to change for a variety of reasons, including the evolving global tax environment, significant changes to our geographic earnings mix, or other changes to our strategy or business operations. We will re-evaluate the long-term projected tax rate as appropriate. No changes were made to the results reported for 2021, as reflecting the change in methodology for the computation of the non-GAAP effective tax rate would have been immaterial to our 2021 results.

For the convenience of the reader, we have presented the relevant sections of the GAAP to non-GAAP reconciliation, for all the quarterly periods in 2022, both before and after the non-GAAP effective tax rate methodology change described above.

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

RECAST OF FINANCIAL MEASURES FOR PRIOR PERIODS IN 2022 FOR TAX RATE CHANGE CONTINUED

(in thousands, except per share data)

 

Table below shows the information before the tax rate change:

 

 

 

Three Months Ended

 

Three Months Ended

 

Six Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Three Months Ended

 

Year Ended

 

 

March 31, 2022

 

June 30, 2022

 

September 30, 2022

 

December 31, 2022

GAAP provision for income taxes

 

$

53,188

 

 

$

60,809

 

 

$

113,997

 

 

$

49,941

 

 

$

163,938

 

 

$

73,546

 

 

$

237,484

 

Tax impact on non-GAAP adjustments

 

 

10,788

 

 

 

4,317

 

 

 

15,105

 

 

 

3,300

 

 

 

18,405

 

 

 

22,531

 

 

 

40,936

 

Tax related non-GAAP items

 

 

(10,169

)

 

 

(11,065

)

 

 

(21,234

)

 

 

(682

)

 

 

(21,916

)

 

 

(18,568

)

 

 

(40,484

)

Non-GAAP provision for income taxes

 

$

53,807

 

 

$

54,061

 

 

$

107,868

 

 

$

52,559

 

 

$

160,427

 

 

$

77,509

 

 

$

237,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

28.4

%

 

 

35.0

%

 

 

31.6

%

 

 

40.7

%

 

 

33.9

%

 

 

63.8

%

 

 

39.6

%

Non-GAAP effective tax rate

 

 

24.2

%

 

 

25.6

%

 

 

24.9

%

 

 

33.1

%

 

 

27.1

%

 

 

46.2

%

 

 

31.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

134,298

 

 

$

112,800

 

 

$

247,098

 

 

$

72,700

 

 

$

319,798

 

 

$

41,775

 

 

$

361,573

 

Stock-based compensation

 

 

31,621

 

 

 

34,140

 

 

 

65,761

 

 

 

32,918

 

 

 

98,679

 

 

 

34,688

 

 

 

133,367

 

Amortization of intangibles

 

 

3,397

 

 

 

3,265

 

 

 

6,662

 

 

 

3,469

 

 

 

10,131

 

 

 

3,420

 

 

 

13,551

 

Restructuring and other charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,319

 

 

 

14,319

 

Tax impact on non-GAAP adjustments

 

 

(10,788

)

 

 

(4,317

)

 

 

(15,105

)

 

 

(3,300

)

 

 

(18,405

)

 

 

(22,531

)

 

 

(40,936

)

Tax related non-GAAP items

 

 

10,169

 

 

 

11,065

 

 

 

21,234

 

 

 

682

 

 

 

21,916

 

 

 

18,568

 

 

 

40,484

 

Non-GAAP net income

 

$

168,697

 

 

$

156,953

 

 

$

325,650

 

 

$

106,469

 

 

$

432,119

 

 

$

90,239

 

 

$

522,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income per share

 

$

1.70

 

 

$

1.44

 

 

$

3.13

 

 

$

0.93

 

 

$

4.07

 

 

$

0.54

 

 

$

4.61

 

Non-GAAP diluted net income per share

 

$

2.13

 

 

$

2.00

 

 

$

4.13

 

 

$

1.36

 

 

$

5.49

 

 

$

1.16

 

 

$

6.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted net income per share

 

 

79,193

 

 

 

78,545

 

 

 

78,840

 

 

 

78,237

 

 

 

78,652

 

 

 

77,683

 

 

 

78,420

 

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

ALIGN TECHNOLOGY, INC.

UNAUDITED GAAP TO NON-GAAP RECONCILIATION CONTINUED

RECAST OF FINANCIAL MEASURES FOR PRIOR PERIODS IN 2022 FOR TAX RATE CHANGE CONTINUED

(in thousands, except per share data)

 

Table below shows the information after the tax rate change:

 

 

 

Three Months Ended

 

Three Months Ended

 

Six Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Three Months Ended

 

Year Ended

 

 

March 31, 2022

 

June 30, 2022

 

September 30, 2022

 

December 31, 2022

GAAP provision for income taxes

 

$

53,188

 

 

$

60,809

 

 

$

113,997

 

 

$

49,941

 

 

$

163,938

 

 

$

73,546

 

 

 

237,484

 

Tax impact on non-GAAP adjustments

 

 

(8,687

)

 

 

(18,606

)

 

 

(27,293

)

 

 

(18,136

)

 

 

(45,429

)

 

 

(39,997

)

 

 

(85,426

)

Non-GAAP provision for income taxes

 

$

44,501

 

 

$

42,203

 

 

$

86,704

 

 

$

31,805

 

 

$

118,509

 

 

$

33,549

 

 

$

152,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP effective tax rate

 

 

28.4

%

 

 

35.0

%

 

 

31.6

%

 

 

40.7

%

 

 

33.9

%

 

 

63.8

%

 

 

39.6

%

Non-GAAP effective tax rate

 

 

20.0

%

 

 

20.0

%

 

 

20.0

%

 

 

20.0

%

 

 

20.0

%

 

 

20.0

%

 

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

134,298

 

 

$

112,800

 

 

$

247,098

 

 

$

72,700

 

 

$

319,798

 

 

$

41,775

 

 

$

361,573

 

Stock-based compensation

 

 

31,621

 

 

 

34,140

 

 

 

65,761

 

 

 

32,918

 

 

 

98,679

 

 

 

34,688

 

 

 

133,367

 

Amortization of intangibles

 

 

3,397

 

 

 

3,265

 

 

 

6,662

 

 

 

3,469

 

 

 

10,131

 

 

 

3,420

 

 

 

13,551

 

Restructuring and other charges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,319

 

 

 

14,319

 

Tax impact on non-GAAP adjustments

 

 

8,687

 

 

 

18,606

 

 

 

27,293

 

 

 

18,136

 

 

 

45,429

 

 

 

39,997

 

 

 

85,426

 

Non-GAAP net income

 

$

178,003

 

 

$

168,811

 

 

$

346,814

 

 

$

127,223

 

 

$

474,037

 

 

$

134,199

 

 

$

608,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted net income per share

 

$

1.70

 

 

$

1.44

 

 

$

3.13

 

 

$

0.93

 

 

$

4.07

 

 

$

0.54

 

 

$

4.61

 

Non-GAAP diluted net income per share

 

$

2.25

 

 

$

2.15

 

 

$

4.40

 

 

$

1.63

 

 

$

6.03

 

 

$

1.73

 

 

$

7.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing diluted net income per share

 

 

79,193

 

 

 

78,545

 

 

 

78,840

 

 

 

78,237

 

 

 

78,652

 

 

 

77,683

 

 

 

78,420

 

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

ALIGN TECHNOLOGY, INC.

Q1 2023 - GAAP TO NON-GAAP RECONCILIATION

 

 

 

Three Months Ended

 

Year Ended

 

 

March 31, 2023

 

December 31, 2023

GAAP Operating Margin

 

~13.5%

 

slightly above 16%

Stock-based compensation

 

~4.0%

 

~4.0%

Amortization of intangibles (1)

 

~0.4%

 

~0.4%

Non-GAAP Operating Margin

 

~18.0%

 

slightly above 20%

 

(1) Amortization of intangible assets related to certain acquisitions

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20230201005433/en/

Align Technology Madelyn Valente (909) 833-5839 mvalente@aligntech.com

Zeno Group Sarah Johnson (828) 551-4201 sarah.johnson@zenogroup.com