Align Technology, Inc. (ALGN) Q4 2018 Earnings Conference Call Transcript

Align Technology, Inc. (ALGN 3.68%)
Q4 2018 Earnings Conference Call
Jan. 29, 2019, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants
  
  See all our earnings call transcripts.

Prepared Remarks:

Operator

Greetings and welcome to the Align Technology Q4 Full-Year Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press "*0" on your telephone keypad. As a reminder, this conference is being recorded.

I would now like to turn the conference over to Shirley Stacy with Align. Thank you. Please begin.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Good afternoon and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO, and John Morici, CFO.

We issued fourth quarter and full-year 2018 financial results today via Globe Newswire, which is available at our website at investor.aligntech.com. Today's conference call is also being audio webcast and will be archived on our website for approximately 12 months. A telephone replay will be available today by approximately 5:30 p.m. Eastern time through 5:30 p.m. Eastern time on February 12. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13685779#. International callers should dial 201-612-7415 with the same conference number.

As a reminder, the information that the presenters discuss today will include forward-looking statements, including statements about Align's future events, product outlook, and the expected financial results for the first quarter and full-year outlook for 2019. These forward-looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission. Actual results may vary significantly and Align expressly assumes no obligation to update any forward-looking statement.

We have posted historical financial statements, including the corresponding reconciliations, and our fourth quarter and full-year 2018 conference call slides on our website under "Quarterly Results." Please refer to these files for more detailed information.

With that, I'll turn the call over to Align Technology's President and CEO, Joe Hogan. Joe?

Joseph M. Hogan -- President and Chief Executive Officer

Thanks, Shirley. Good afternoon and thanks for joining us. On our call today, I'll provide some highlights from the fourth quarter and full year, then briefly discuss the performance of our two operating segments, clear aligners and intraoral scanners. John will provide more detail on our financial results, discuss our outlook for the first quarter, and share our thoughts for 2019. Following that, I'll come back and summarize a few key points and open up the call to questions.

Our fourth quarter was a strong finish to a great year. Q4 revenues were better than expected, reflecting higher Invisalign ASPs and volume growth of 31% year-over-year, as well as another record quarter for iTero scanners, with revenue up 55% year-over-year. Q4 sequential growth was driven by a strong quarter for EMEA, with record growth for teens, as well as continued traction with Invisalign Lite and I Go.

Q4 operating margin of 22.6% reflects higher doctor training and manufacturing costs, as well as higher legal fees than anticipated, partially offset by sequential improvement in Invisalign ASPs. For the quarter, we trained a record 5,270 new doctors in Q4, which includes about 3,000 international doctors of which half were in EMEA and half were in APAC.

For the year, we achieved record revenues of nearly $2 billion and had over 1.2 million people start treatment with Invisalign clear aligners for the first time, resulting in our sixth millionth Invisalign patient, a teenager from China. These results reflect record revenues and volumes for both Invisalign and iTero across customer channels and country markets and continued strength from teens, which grew 40%. The total number of teenagers treated with Invisalign this year was over 330,000, representing 27% of our volume.

Finally, in 2018, we trained a record number of new Invisalign doctors, nearly 20,000 worldwide, and for the first time, more than half of them were international doctors.

Now, let's turn to the specifics around our fourth quarter results, starting with the Americas region. For the Americas region, Q4 Invisalign case volume increased 21.7% year-over-year and was down sequentially off of record Q3 volumes which benefited from strong uptake of promotions last quarter, predominantly by high-volume Invisalign doctors. On a sequential basis, Q4 reflects growth from the Americas GPs offset by Americas orthos, particularly high-volume doctors. Year-over-year growth for Q4 reflects continued adoption of Invisalign treatment from both orthodontist and GP channels, which were up 24.7% and 17.3% respectively. We also saw good growth from our DSO partners across both GPs and orthos, up nearly 50% year-over-year.

For the full year, Invisalign volume for the Americas region was up 24.2% compared to 2017. Americas orthos were up 27.2% and Americas GP dentists were up 19.8%, the second highest annual growth rate for orthos and the highest annual growth rate for GPs in six years. For Q4, we trained a record 2,290 new Invisalign doctors in the Americas region, of which 1,725 were North American doctors and 565 were Latin American doctors. In total, we trained 7,885 new Invisalign doctors in the Americas in 2018, an increase of 19%.

For our international business, Q4 was a great quarter, with Invisalign case volume up 12.2% sequentially, driven by strong growth in the EMEA region offset somewhat by seasonality in the Asia Pacific region. On a year-over-year basis, strong Invisalign volume growth of 45.3% reflects increased utilization and continued expansion of our customer base in both EMEA and the Asia Pacific region. In Q4, we trained nearly 3,000 new Invisalign doctors internationally, with roughly 50% in EMEA and 50% in APAC.

In EMEA, Q4 was a strong quarter, up 42.7% year-over-year, driven by record Invisalign volumes in all country markets as well as strong growth in the teen segment, which was up 75.1% from the prior year, reflecting continued success of our Teen 360 program. For the full year, EMEA was up 38.6%, led by Iberia, France, and the UK, as well as our key expansion markets, led by Central and Eastern Europe. During 2018, we went direct in Turkey, Israel, and Russia, adding to our expansion country markets.

For APAC, Q4 was down sequentially, as expected, due to seasonally slower period in the region; up 49.3% year-over-year, with record Invisalign volume in almost every country market, led by China, Japan, and ANZ. Q4 results reflect continued strong growth from teenage patients as well as adults, with GP dentists up 77.1% year-over-year. During Q4, we trained 1,530 new doctors in APAC, of which half were in China. We held several clinical education events across APAC designed to help increase doctors' confidence and adoption of Invisalign treatment, including how critical the iTero scanner is to practice growth.

For the year, Invisalign volume from the international doctors increased 45%, led by growth from China and our core EMEA country markets. In total, international volumes represented 41% of worldwide Invisalign case shipments. Despite our record results, we are still very clearly underpenetrated in APAC overall and specifically in China. As the second largest market for Align, China represents enormous growth potential and our ability to expand and drive penetration across the region relies on our ability to be closer to doctors and their patients, communicate in local language, and, as much as possible, operate like a local company.

Late in Q4, we began fabricating Invisalign aligners in our new manufacturing facility in Ziyang, China, our first aligner fabrication facility outside of Juarez, Mexico. There's a temporary facility that will be replaced by our own building in 2020. Over the next year, we will continue to build our manufacturing capabilities in Ziyang and ramp up production to serve the rapidly growing Chinese market. However, it will take a couple of quarters to fully transition aligner production from Juarez to Ziyang and we would expect manufacturing overhead in Ziyang to be underutilized during this period.

Product and technology innovation continues to be a key growth driver across our regions. Over the past year, we launched several new Invisalign offerings for both comprehensive and non-comprehensive treatment to give doctors more tools and choices to treat a greater range of cases, from adults to teenagers and now even kids as young as 7 years old. In mid-2018, we launched a new Invisalign Go product with a more user-friendly iTero digital chairside experience and greater flexibility to treat a wider range of mild to moderate cases, such as crowded or gapped teeth that require teeth straightening prior to restorative treatments.

We also began offering Invisalign First, designed specifically to address a broad range of younger patients, malocclusions, including shorter clinical crowns, management of erupting dentition, and predictable dental arch expansion. We're pleased with the initial uptake and customer feedback. In 2018, we shipped nearly 5,000 Invisalign First cases to over 1,300 doctors, primarily in North America, EMEA, Australia, New Zealand, and Japan.

And in October, we received FDA approval for Invisalign with mandibular advancement feature in the U.S., which is the only clear aligner product to prove to simultaneously move teeth and the mandible in young patients. In Q4, we began shipping mandibular advancement in the U.S. Late in the quarter, we were seeing initial uptake along with continued ramp globally. To date, over 17,000 teenagers have used Invisalign treatment with mandibular advancement, led by China, Canada, France, and Spain.

Overall, for the teen market, in Q4, over 87,000 teenagers started treatment with Invisalign clear aligners, an increase of 37.3% year-over-year, driven by continued strong adoption across all major regions, driven by both the Americas and EMEA regions. For Q4, year-over-year Invisalign teen patient growth for North America orthos increased 23.7% and international doctors were up 63.7%. For the full-year, total teen cases worldwide grew 40.3% to a total of 333,000 teenagers, or 27.1% of our total volume.

Our consumer marketing efforts are designed to build the category and drive demand for Invisalign treatment through a doctor's office. We invest over $100 million each year in consumer marketing and programs, including TV, digital, social media, PR, event marketing, and, more recently, our Patient Concierge and Invisalign Experience program. Our goals are to make the Invisalign brand a household name worldwide and to motivate consumers to seek Invisalign treatment through a doctor's office.

In Q4, we continued to see strong digital engagement with consumers and had nearly 4 million unique visitors on the invisalign.com sites for a total of 17 million over the year. Other key metrics show increased activity and engagement with the Invisalign brand and are included in our fourth quarter slides.

The impact of the digital technology on our world, and specifically in our industry, is challenging our customers to evolve just about every aspect of their practice, especially how they engage with consumers and turn them into patients. What worked for doctors in the past from a marketing, conversion, and workflow perspective will not work today. Consumers expect more and are demanding different types of digital driven experiences. Many doctors don't know where and how to start. The work we are doing with our integrated consumer marketing platform, Patient Concierge service, and Invisalign Experience program has given us better insights and information that we're sharing with doctors to help them reshape their practices.

For example, the Invisalign Experience program is designed to reach consumers in a retail environment where they shop, play, and dine and educate them on the benefits of Invisalign treatment and value of getting a better smile and connect them with an Invisalign doctor. One of the ways we do this is through the Invisalign store, which is owned and operated by Align. Invisalign stores bring the brand directly to consumers in a contemporary, interactive, digital environment. Consumers can browse, ask questions, learn about Invisalign treatment and technology and the benefits of straightening their teeth. Visitors are offered a complimentary iTero intraoral 3D scan and a visual simulation of what their smile might look like after Invisalign treatment. Interested consumers are connected with a local Invisalign doctor's office of their choice to discuss potential treatment options.

By the end of 2018, we finished with 12 locations in the United States and these stores are helping us learn more than ever about reducing barriers to treatment for potential patients so that they are excited about getting a better smile with an Invisalign doctor. In addition to providing potential leads to participating Invisalign practices, we're also seeing a positive halo effect in increased growth rates for all the Invisalign practices in the surrounding area whether they participate in the store network or not. Over the past year, more than 55,000 consumers visited an Invisalign store and nearly 10,000 received a complimentary scan. While we are still early in the development of our Invisalign stores and the overarching Invisalign Experience Program, we're excited about its potential and the positive impact we can have on demand creation for Invisalign practices by engaging directly with consumers.

The Invisalign Experience program is just getting started and continues to evolve. In October, we announced that we were partnering with a few Invisalign doctors in selected U.S. cities to pilot new ways to reach consumers and connect them directly with doctors to start Invisalign treatment. These Invisalign Experience locations are owned and operated by doctors under a special license from Align and are intended to help doctors integrate consumer-friendly design and consultation workflow into their practices and test new Invisalign Experience branding and explore a consumer-focused approach to consultations and Invisalign treatment starts in a variety of settings, including in-office, retail, and mobile. We'll continue to share our learnings as we get more of these pilots up and running.

Finally, I want to spend a few minutes talking about digital technology and the transformation in our industry from an old analog process to an end-to-end digital workflow. Align is helping doctors on their digital journey, which starts with an iTero scanner and ends with stronger practices and better smiles for their patients. As a leader in digital orthodontics, we are best positioned to help Invisalign trained doctors find more efficient ways to drive digitization in their practices and support those practices and to help them improve their productivity over time.

To that end, last year we launched Project Pino -- which we have renamed Adapt: Align Digital and Practice Transformation -- with several small orthodontic clinics across EMEA, APAC, and North America, with the objective to demonstrate that a fully digital practice can be productive, efficient, and profitable. The process involves detailed analysis of the current practice data and workflows, performed by experts in continuous improvement and workflow.

While it is still early, the initial results from the Adapt study are incredibly promising. Based upon the study on practice development, we've come to the conclusion that to benefit fully from technology and to own the digital transformation of their practices, doctors need to organize their workflows and premises so that approximately 80% of their organization is built around this digital transformation with clear aligners. This means that doctors who commit to digital transformation have the potential to do more, see more patients, and expand their practice or take more time off, whatever their goals. With Invisalign plus iTero together, we can help them see the benefits they want from a fully end-to-end digital workflow.

For iTero scanner and services business, Q4 was a very strong quarter with better than expected revenues, which were up 13% sequentially and 54.8% year-over-year, driven by strength in all regions and customer channels. Record Q4 volumes reflect continued commercialization of the iTero 2 Element and the Element Flex scanners, especially for restorative GP dentists in North America, the continued rollout of our major DSO partners, and increased sales internationally, including Italy, Japan, and China, where we began manufacturing the iTero Element this past year.

For 2018, we had an outstanding year for iTero scanners with volumes up 77.2% year-over-year. Cumulatively, over 11.5 million orthodontic scans and 3.2 million restorative scans have started with iTero scanners. Use of the iTero scanners for Invisalign case submission continues to grow and remains a positive catalyst for Invisalign utilization.

For Q4, total Invisalign cases submitted with a digital scanner in the Americas increased 72.6% from 65.3% in Q4 last year. International scans increased 57.5%, up 41.4% in the same quarter last year. What's really exciting to see is that, within the Americas, 88.7% of cases submitted by North American orthos were submitted digitally. And China went from 0% to 45.9% in one year. This means that within one year or two, nearly all Invisalign cases will be submitted digitally, primarily through an iTero scanner. We're very excited about the continued progress we've made with the iTero business overall and remain confident that it will continue to help drive our overall growth and help increase adoption of Invisalign treatment.

With that, I'll now turn the call over to John.

John F. Morici -- Chief Financial Officer

Thanks, Joe. Now, for our Q4 financial results. Total revenue for the fourth quarter was $534 million, up 5.7% from the prior quarter and up 26.7% from the corresponding quarter a year ago. For the full year, revenue of about $2 billion was up 33.5% year-over-year, reflecting a record 1.2 million Invisalign shipments and 31.9% year-over-year growth, with strength across all regions and customer channels as well as record iTero scanners volume, which was up 77.2%.

For clear aligners, Q4 revenue of $445.6 million was up 4.3% sequentially on higher than expected Invisalign ASPs and strong Invisalign volume from EMEA. Year-over-year clear aligner revenue growth of 22.4% reflected strong Invisalign shipment across all customer channels and geographies.

Q4 Invisalign ASPs were up sequentially by approximately $5.00 to $1,235.00, reflecting price increases and lower discounts, partially offset by higher growth on non-comprehensive cases, and includes $10.00 of unfavorable foreign exchange. On a year-over-year basis, Q4 Invisalign ASPs were down approximately $70.00, reflecting promotional discounts, higher growth on non-comprehensive cases, and includes $25.00 of unfavorable foreign exchange, partially offset by price increases.

Total Q4 Invisalign shipments of 333,800 cases were up 4.5% sequentially and up 30.9% year-over-year. For Americas orthodontists, Q4 Invisalign case volume was slightly lower than our Q4 outlook primarily due to longer cycle times in Latin America, and was down 2.9% sequentially and up 24.7% year-over-year. For Americas GP dentists, Invisalign case volume was up 3.2% sequentially and up 17.3% year-over-year. For international doctors, Invisalign case volume was up 12.2% sequentially and up 45.3% year-over-year.

Our scanner and services revenue for the fourth quarter was $88.4 million, up 13% sequentially, due to volume increases in Americas and EMEA. Year-over-year revenue was up 54.8%, primarily due to higher scanner units across regions.

Moving on to gross margin, fourth quarter overall gross margin was 71.7%, down 1.9 points sequentially and down 3.8 points year-over-year. Clear aligner gross margin for the fourth quarter was 74.1%, down 1.2 points sequentially, primarily due to a higher number of aligners per case, higher freight costs reflecting faster international growth, higher training costs due to more doctors trained in the quarter, and manufacturing spend driven by operational expansion in China, which was partially offset by slightly higher Invisalign ASPs. Clear aligner gross margin was down 3.5 points year-over-year, primarily due to higher number of aligners per case, lower ASPs, higher training costs and freight charges, and regional expansion of our manufacturing related activities in China and EMEA. Scanner gross margin for the fourth quarter was 59.9%, down 4 points sequentially and down 2.1 points year-over-year, primarily due to manufacturing and freight costs and lower ASPs.

Q4 operating expenses were $262.6 million, up sequentially 6.5% and up 26.1% year-over-year. The sequential increase in operating expenses primarily reflects our continued investment in sales and R&D activities, along with higher legal consulting expenses, partially offset by seasonality lower advertising spending. Year-over-year, the increase in operating expenses reflects higher spending commensurate with growth.

Our fourth quarter operating income was $120.5 million, down 3.8% sequentially and up 9.9% year-over-year. The sequential decrease in operating income is primarily attributed to lower gross margin and higher operating expenses, as mentioned earlier. On a year-over-year basis, the increase in operating income primarily reflects higher revenue offset by higher sales and marketing, R&D, legal consulting spending, and unfavorable foreign exchange.

Our fourth quarter operating margin was 22.6%, down 2.2 points sequentially and down 3.4 points year-over-year. The sequential decrease in operating margin is primarily due to lower gross margin, as mentioned earlier. On a year-over-year basis, the decrease in operating margin is primarily due to lower gross margin, as described earlier, and about 0.5 points impact from unfavorable foreign exchange.

With regards to fourth quarter tax provision, our tax rate was 8.5%, which includes approximately $1.9 million in excess tax benefits related to stock-based compensation.

Fourth quarter diluted earnings per share was $1.20, down $0.04 sequentially and up $1.07 compared to the prior year.

Moving on to the balance sheet, as of the fourth quarter, cash, cash equivalents, and marketable securities, including both short- and long-term investments, were $744.5 million, an increase of approximately $131.3 million from the prior quarter, which is primarily due to higher cash flow from operations. Of our $744.5 million of cash, cash equivalents, and marketable securities, $432.5 million was held in the U.S. and $312 million was held by our international entities.

Q4 accounts receivable balance was $439 million, up approximately 4.5% sequentially. Our overall days sales outstanding was 74 days, down one day sequentially and up five days as of Q4 last year.

Cash flow from operations for the fourth quarter was $241.3 million, up $79 million compared to the prior year. Free cash flow for the quarter, defined as cash flow from operations less capital expenditures, amounted to $187 million. Capital expenditures for the fourth quarter were $54.3 million, primarily related to our continued investment in increasing aligner capacity and facilities.

During Q4, we repurchased $50 million of stock against our stock buyback authorizations and have $500 million still available for repurchase under the May 2018 repurchase program.

Before we move to the Q1 outlook, I would like to make a few comments on our full-year 2018 results. In 2018, we shipped a record 1.2 million Invisalign cases, up 31.9%. This reflect 45% volume growth for our international doctors and 24.2% volume growth from our Americas doctors. Shipments of our iTero scanner were up 77.2% versus 2017. Total revenue was a record $2 billion, up 33.5% year-over-year, with Invisalign revenues of $1.7 billion. Full-year operating income of $466.7 million, up 31.9% versus 2017, and operating margin at 23.7%. Free cash flow was $331.4 million. For the year, we repurchased 1.1 million shares of Align stock for $300 million. 2018 diluted earnings per share was $4.92.

With that, let's turn to our Q1 outlook and the factors that inform our view, starting with the demand outlook. For international, we expect Q1 to be up sequentially, as the EMEA market maintains momentum from Q4 and APAC is seasonally flat sequentially as some markets observe the Lunar New Year holiday. For Americas, we expect Q1 to also increase sequentially, with strong growth from North America orthos and a slight increase in North America GPs. We expect Latin America to be down sequentially given this is their summer holiday season. We expect our iTero business to be down slightly from a record Q4, consistent with seasonal trends in capital equipment market. And we continue to expect minimal volume from Smile Direct Club.

With this as a backdrop, we expect the first quarter to shape up as follows. Invisalign case volume is expected to be in the range of 340,000 to 345,000 cases, up approximately 25% to 27% year-over-year. We expect Q1 revenues to be in the range of $525 million to $535 million, reflecting increased volume and flat ASPs versus Q4 2018. We expect Q1 gross margin to be in the range of 70.3% to 71%, reflecting our higher start-up costs in China and increased doctor training expenses. We expect Q1 operating expenses to be in the range of $290 million to $294 million, which reflects our salesforce expansion and increased legal expenses. Q1 operating margin should be in the range of 15.1% to 16.1%.

Our effective tax rate should be approximately 16%, which is higher than 2018 due to non-deductible officer stock compensation based on recent IRS guidance and a lower stock price. We expect an approximately $3 million to $4 million equity loss related to our share of Smile Direct Club's net losses and diluted shares outstanding should be approximately 80.9 million, exclusive of any share repurchases. Taken together, we expect our Q1 diluted earnings per share to be in the range of $0.78 to $0.84. In addition, as we continue our operational expansion efforts, we expect CapEx for Q1 to be approximately $60 million to $65 million and we expect depreciation and amortization to be $19 million to $20 million.

Now, let me turn to our view for the full-year 2019, notwithstanding the impact of foreign exchange rates. We expect total revenue growth for the company, Invisalign, and iTero to be in the middle range of our long-term operating model of 20% to 30%. We anticipate Invisalign ASPs to be flat from Q4 2018, reflecting continued growth from international regions, increased share of the teen segment, and uptake of non-comprehensive products. We anticipate Invisalign volume to be in the middle of the range of our long-term model target of 20% to 30%.

We anticipate gross margin and operating margin to improve over the course of the year. We anticipate gross margin to approach our long-term model target of 73% to 78% by Q4. We will continue to fuel growth globally and expect to invest in international and operational expansion, as well as sales and marketing initiatives, including nearly 100 new sales reps in Americas hired at the end of Q4 and additional GP sales reps in EMEA beginning in Q1. These investments also include continued litigation expenses to protect our intellectual property and extend our competitive advantage.

Given our continued growth and expansion internationally, during the year, we intend to reorganize our corporate structure and intercompany relationships to more closely align with the international nature of our business activities. The proposed corporate structure may also allow us to obtain financial and operational efficiencies after they are implemented. As a result, we will incur expenses in the near term and expect to realize the related benefits in subsequent years. We expect our operating margin for the second half to be in the long-term model of 25% to 30%. For the full year, we anticipate operating margin to be below our long-term target, as it includes approximately 1.5 points to 2 points impact from increased legal fees and the planned corporate structure reorganization.

We expect the equity loss for our investment in Smile Direct Club to be $3 million to $4 million per quarter. We expect our tax rate for 2019 to be approximately 24%, which includes about $8 million of excess tax benefits. 2019 tax rate is higher than 2018 primarily due to a release of unrecognized tax benefits that will not repeat. We expect our earnings power in the second half of the year to be stronger than the first half, with second half operating results to account for somewhere in the range of 50% to 55% of our full-year results. We expect capital expenditures for 2019 to be in the range of $250 million to $260 million.

With that, I'll turn it back over to Joe for final comments. Joe?

Joseph M. Hogan -- President and Chief Executive Officer

Thanks, John, and thanks to those who joined our call today. Overall, 2018 was a great year for Align and I'm very pleased with the strong performance for Invisalign and iTero across all key regions, customers, channels, and products. This year, not only did we celebrate our 21st year in business, we also achieved several major milestones, including our sixth millionth Invisalign patient and $2 billion in revenue for the first time. It took nearly 20 years to reach our first billion dollars in sales and only two years to reach our second billion.

We also delivered on our strategic growth drivers, with new product and technology innovation, expansion of our manufacturing and treatment planning operations, and raising awareness of Invisalign treatment with consumers and engaging with them in more innovative ways than ever before.

As I step back and look ahead to 2019 and beyond, I want to reinforce the importance of the investments we're making to drive growth globally. The underlying opportunity for doctors and their patients is expanding based on digital technology that Align has spent over 21 years developing. And while we have a huge amount of accumulated expertise and knowledge in digital technology in orthodontics, we have to ensure that we have the capabilities to further expand and regionalize our operations, extend our competitive lead, and protect our business from companies willing to take shortcuts with respect to intellectual property. It is incumbent upon us to drive the transition to a fully digital workflow and continue to deliver new products and services that not only benefit Invisalign doctors but their patients and consumers alike.

Following our ortho summit in November, I met with hundreds of Invisalign doctors and their staff. I had the opportunity to travel to regional kickoff meetings and connect with Align team members at every level of our organization to hear their detailed plans for the upcoming year. While I spent more of my time at the Americas kickoff because of my interim role as Americas leader, I can say unequivocally that across the company the excitement and level of engagement surrounding our business and market opportunity was palpable.

Overall, the demand profile globally is solid and nothing we see in the environment suggests otherwise. We're running the plays we know and are confident we can bring greater efficiencies, economies of scale, and know that adding sales training to get closer to customers in local markets creates sustainable competitive advantage.

Finally, as most of you know, one of the key orthodontic journals in North America is The Journal of Clinical Orthodontics and I often flip through it and ask why there aren't more clear aligners profiled. This week, I was caught off guard when I opened the December issues and found it dedicated entirely to clear aligner therapy. Bob Keim is the editor of the JCO and has been to many of our Invisalign summits. In meetings with him and reading his editorials, I knew he supported Invisalign treatment and clear aligners, in general, but it was never clear to me the extent he believed in clear aligner technology as we've seen in the most recent issue of the JCO, especially the editor's column, "The End of Braces." If you haven't had a chance to read the JCO, you should. Bob could not take a stronger position for clear aligners. He acknowledges that he may take some flak for being so bold but I believe his strong endorsement is a major breakthrough for Align and digital orthodontics.

With that, I want to thank you again for joining our call. I look forward to updating you on our progress as the year unfolds. We'll see many of you at the Chicago mid-winter meeting next month, as well as industry and financial conferences throughout the year. Now I'll turn the call over to the operator for questions. Operator?

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press "*1" on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You can press "*2" if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing "*". One moment, please, while we poll for questions.

And thank you. Our first question comes from the line of Robert Jones with Goldman Sachs. Please proceed.

Robert Jones -- Goldman Sachs -- Analyst

Great. Thanks for the questions. I guess just start on ASPs. Joe, could you maybe talk through the progression of ASPs that you saw over the quarter? On a worldwide basis, it certainly seems like you guys were able to stabilize ASPs in 4Q relative to 3Q and looking at the implied guidance from 1Q, it seems like that's expected to continue. And in the full year, you're calling for that to be the kind of level we should look for. So, I guess just how did they progress throughout 4Q? And then just related to that, what are the major pushes and pulls as you think about ASPs over the course of '19?

Joseph M. Hogan -- President and Chief Executive Officer

Bob, that's a big question but let's make it simple. We had an issue in the third quarter in the Americas with our Advantage program that I think kicked off this ASP concern. As we said we'd do, we retracted that $300.00 that we offered on teens and also adults at that point in time. After that, basically our ASPs are what they normally are in the sense of mixes and matches across a spectrum of EMEA and different places. So, I mean, that's the total. We have an exchange hit this quarter also but, again, I think we prepared you for that last quarter. So, overall, the only change is we didn't have an Advantage issue in the fourth quarter.

Robert Jones -- Goldman Sachs -- Analyst

Yeah, I guess just to follow on that, Joe, I think the question really is, as you think about '19, obviously those programs go away. I guess the expectation looks like here in the slides that you're still thinking it's going to be flat to the 4Q level. So, just trying to understand a little bit better what could move the ASPs up over the course of the year as we think about some of the things that hopefully would not reoccur in '19 that happened in '18.

Joseph M. Hogan -- President and Chief Executive Officer

Yeah, John will jump in on this.

John F. Morici -- Chief Financial Officer

Yeah. Hi, Bob, this is John. So, the couple positive mix that we talk a lot about is the international growth -- we would continue to see strong growth internationally. Mandibular advancement in the U.S. contributes overall to our teen growth, which are comprehensive cases and those help. And we are also seeing growth on the non-comprehensive side. So, we think those three -- we see some balance and that's what we would expect for 2019.

Robert Jones -- Goldman Sachs -- Analyst

Great. And then I guess just a follow-up for me, John, while I have you. If you think about the margin outlook for the year, it looks like you guys are calling for the growth in operating margins to get into the long-term ranges in the back half. Just at a high level, I guess, how much visibility and control do you guys have over that trajectory into the back half of '19 around the margins?

John F. Morici -- Chief Financial Officer

Yeah. It really starts with some of the manufacturing efficiencies that we expect to get as we start to ramp up in China and continue to ramp up with our treatment planning. We'll see that continue to ramp as we move through the year. We have other products and programs that will also help us from a mix standpoint as well. So, we feel really good about how we view the year and the expectation of margin improvement throughout the year.

Robert Jones -- Goldman Sachs -- Analyst

That's helpful. Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

All right, Bob. Thanks.

Operator

Thank you. Our next question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed.

Elizabeth Anderson -- Evercore ISI -- Analyst

Hi. Good afternoon. I was wondering if you could talk to us a little bit more about the reorganization expenses. Are you sort of thinking of those on an ongoing basis or more one-time? I guess my question stems, in part, because I was wondering if you were thinking about potentially backing those out of your 2019 results. Thanks.

John F. Morici -- Chief Financial Officer

Hi, Elizabeth. This is John. This is one-time. I mean, as the company expands and grows internationally, it's looking at some of the efficiencies we can gain through that change. And we report numbers on a GAAP basis. We'll continue to do so but we'll give you highlights as the year goes on as an update.

Elizabeth Anderson -- Evercore ISI -- Analyst

Okay. That's helpful. And I guess, also, can you just talk a little bit more about the sales investments that you guys are making into the Americas in terms of any particular details you could provide on that? That would be helpful. Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Yeah, Elizabeth. It's Joe. Look, Americas, we're still really underpenetrated in the marketplace, particularly on the GP segment. And so we decided we would add 100 salespeople. We feel really good about that investment giving us good short-term returns. We've done this before, almost in every cycle since I've been here. It's a play we know how to run and we know the importance of it overall. So, don't look at it as an anomaly. It's just a continuation of building out our salesforce and taking advantage of some of the demand out there.

Elizabeth, I'll also tell you, it's a high-touch thing. You have to touch doctors in this business to drive sales. And it just doesn't happen by itself. There's a constant touch to it so, I mean, we're really aware of that. Often our treatment is much different than what these doctors have done before. And our salespeople, we train them well clinically but also from a business standpoint so that they can talk about, clinically, how to use the product line but also, from a business standpoint, how you integrate it into the practice. So, adding salespeople is really important.

Elizabeth Anderson -- Evercore ISI -- Analyst

Thanks. That's really helpful.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Next question.

Operator

Thank you. Our next question comes from the line of Jonathan Block with Stifel. Please proceed.

Jonathan Block -- Stifel, Nicolaus & Co. -- Analyst

Great. Thanks, guys. Good afternoon. I think the paranoia is gonna sort of move from ASPs to volumes and margins tomorrow. So, maybe on the margins side, John, for '19, you mentioned expectations to be below your long-term op margin goal of 25% to 30%. Specifically, you called out 150 to 200 bps from increased legal fees and the reorg. So, a couple of questions there.

Is that reorg all specific to '19? And then if we were to normalize for the 150 to 200 bps, would your '19 op margin approach the lower band of your long-term 25% to 30% goal? And then I've just got a quicker follow-up.

John F. Morici -- Chief Financial Officer

Yeah. That's the right way to look at it, John. So, this is 2019 expenses and we think we would have been in the long-term range that we have of 25% to 30% if we didn't have these expenses.

Jonathan Block -- Stifel, Nicolaus & Co. -- Analyst

Okay. Long question, short answer. I'll take it. And then maybe, Joe, for you, on the volumes. Just any more color? I mean, any thoughts on the North American ortho weakness? I do have a hard time believing that all of the weakness was Latin America, just looking at the size of that business. But anything more in North American ortho weakness? Is this a pause before mandibular and Invisalign First take greater hold in 2019? And maybe, if you don't mind, any thoughts on what MAV and First could contribute to North America this year? Thanks, guys.

Joseph M. Hogan -- President and Chief Executive Officer

John, look, the Americas growth this year -- I know we had the blip in the third quarter overall -- but 2018 is a good year for us. You look at the last six years, this is actually the second highest growth profile we've had. Americas grows about 17% on an average over those six years. The orthos grew. This is the second, from a percentage standpoint, best year we've had from an ortho standpoint. What happened between the third and fourth quarter, and I mentioned on my opening, was the uptake that we had with that Advantage program in the third quarter and that wasn't repeated in the fourth quarter and we think we have this quarter-over-quarter kind of discrepancy. GPs are at an all-time high from a growth standpoint overall. And then, obviously, from a Brazil standpoint, too, it's starting to become material in the sense of the size of that business and we're looking for good contributions this year.

So, John, I don't know if I'm answering your question but I'd say if you look at the volume overall, you see how strong EMEA has been. The expansion of EMEA into areas like Turkey and Russia and in the Middle East has been important to us. But also France is growing well, Spain's been strong, Italy came back, we saw it. We've had great success with Go with the GPs out of the UK but also in Germany too. So, we really feel great about that region. And then APAC. Again, we see strength. We see strength in China, we see strength in APAC overall. Japan's growth has been phenomenal. And then bleed that in with our iTero growth, too, that you've seen across the spectrum. Overall, we feel good about volume.

Jonathan Block -- Stifel, Nicolaus & Co. -- Analyst

Okay. Fair enough. Thanks for your time, guys.

Operator

Thank you. Our next question comes from the line of Brandon Couillard with Jefferies. Please proceed.

Brandon Couillard -- Jefferies -- Analyst

Thanks. Good afternoon. Just a couple of housekeeping items, John, in terms of the fourth quarter. Could you quantify the impact in Latin America from the longer cycle times? And you expect that to normalize in the first quarter? And then in terms of the fourth quarter OpEx, it looks like it was about $12 million above our guidance, which is very atypical and unusual. Can you point us to the areas of spend that were perhaps accelerated or brought you in above your plan?

John F. Morici -- Chief Financial Officer

Yeah. So, for the fourth quarter in Latin America, it's a growing business, as Joe said. It's a couple thousand cases that were kind of in transition right at the end of the fourth quarter. And then as far as spend, were you specifically talking about spend in fourth quarter or compared to the guide in the first quarter?

Brandon Couillard -- Jefferies -- Analyst

Yeah. The fourth quarter OpEx relative to your guidance.

John F. Morici -- Chief Financial Officer

Yeah, we saw added litigation expenses as we've been going as a part of our process that we have on the legal side. There's some added costs that we're showing there. And as Joe said, we added some salespeople and some of those hires and those expenses came into fourth quarter but we wanted people on the ground and ready to be able to sell and give us volume as soon as possible into 2019. So, some of those costs hit there as well.

Brandon Couillard -- Jefferies -- Analyst

Thanks. And then coming back to ASPs for 2019, it would seem to imply that worldwide ASPs for the year would be down about 3% year-over-year. I understand currency is probably half of that. Mix is another dynamic. But would it be your expectation that promotional activity would be sort of consistent year-over-year or is there some cushion built in perhaps for more promo activity in '19 relative to last year?

John F. Morici -- Chief Financial Officer

I would say there's nothing specifically that we're looking at, additional promotions or others. We look at the business as we have various products and new products that come out, changes that we make. We look at promotions to be able to drive volume and drive uptake across the regions. So, they vary by region. But nothing out of the ordinary and we were pleased to see where ASPs finish and have a good expectation, given the positive growth internationally, the positive growth that we see on teens, and we're seeing strong non-comprehensive growth. All that taken into accounts keeps us flat for ASPs.

Brandon Couillard -- Jefferies -- Analyst

Very good. Thank you.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Thanks, Brandon. Next question, please.

Operator

Thank you. Our next question comes from the line of Steve Beuchaw with Morgan Stanley. Please proceed.

Steve Beuchaw -- Morgan Stanley -- Analyst

Hi. Good afternoon and thanks for the time here. I wanted to focus on how you thought about incorporating any potential contribution from the salesforce additions in the outlook for 2019. If I think back to past years where there have been substantial adds to the salesforce, something like six months after those feet hit the street, we saw a benefit. So, in 2019, are you modeling in any benefit from these rep adds that you made already? If so, can you give us a sense for how big those might be? Because I'm just curious, as we think about the outlook for the year, let's call it 25% on volumes, 25% to 27% in the first quarter, it just doesn't look like there's an anticipation of acceleration or benefit from those hires.

John F. Morici -- Chief Financial Officer

Yeah, Steve, this is John. Six months to nine months is kind of the range you would expect to really start seeing those salespeople that you add, once they're fully trained and have their territories and can kind of hit. So, we should see an acceleration in the second half, given the adds that we have. And as we see, we factored into our guide as much as we can see now based on those adds.

Steve Beuchaw -- Morgan Stanley -- Analyst

Okay. And then I would agree with the comment that was made earlier about where the paranoia is going to shift. So, I just wanted, in part in response to the many emails I've gotten here in the last 45 minutes or so, give you a chance to just comment on your thinking on competition. Is there any sign of competition being relevant in the field that you can pick out at this point or still of the view that it's just not material and not something that people ought to be thinking about?

Joseph M. Hogan -- President and Chief Executive Officer

Hey, Steve. It's Joe. Obviously, we've seen Ormco down in ANZ and I think we saw a recent announcement that they are gonna kind of pace themselves as they go through 2019. I think you're seeing the same thing out of 3M too. So, honestly, Steve, we know you guys do surveys. We read your surveys. We do our own and whatever. We know some of the docs out there are trying these product lines and we have access to some of the software that's going on out there and the product lines that they're representing or whatever. I don't diminish it but as far as 2019 goes, we're not thinking about any major competitive issues that we're gonna face in any of our key areas or key geographies right now. We think this will take some time for them to ramp.

We've talked about this before. This business is not easy. You have to be able to hit on a lot of cylinders. You've got to have a good salesforce that touches the customers and can make that doctor feel really strong about the product line. Secondly, you have to have really good treatment planning and consistent treatment planning that can deliver. And, third, you've got to have an operation organization that can deliver these things in sequence and on time and at a high quality. And putting those things together is difficult. And so 2019, we're not factoring in a huge amount of what we think is competitive pressure.

Steve Beuchaw -- Morgan Stanley -- Analyst

Okay. Got it. Thanks a bunch.

Joseph M. Hogan -- President and Chief Executive Officer

All right, Steve. See you, man.

Operator

Thank you. Our next question comes from the line of Erin Wright with Credit Suisse. Please proceed.

Erin Wright -- Credit Suisse -- Analyst

Great. Thanks. A couple of international ones here. I guess, can you speak to the dynamics, in terms of fundamental demand trends in China given broader macro dynamics, and could you also speak to the competitive landscape and how that's evolving there? And then also on Brazil, just as you build out that market, any sort of surprises there that you're seeing in the broader traction in Brazil? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Yeah. Erin, this is Joe. From a China standpoint, our demand there has been great. I think, as I talked about in my opening, it's a really underpenetrated marketplace. And there's a lot of demand for our product line. And so our manufacturing investments we're making there, our treatment planning, all those things to make us a local company we think will allow us to really penetrate that market at a higher rate. So, look, we're not numb to the international scene right now where people are concerned about China demand. We don't have anything to report right now that would say that we have a diminishing or a paranoia over China demand as we go into 2019.

As far as competition over there, Erin, Angel Align is the most credible competitor that we have there. I would say that Angel has really focused on kind of Tier 3 cities and areas of Chinas, where we've really focused on, in the first five years or so of our existence in China, Tier 1 or 2 cities and we've moved into Tier 3. We don't feel that Angel is throttling our growth there at all. They are a fast follower. We see them in different areas that come after us but there's not a whole lot of head-to-head competition we feel right now.

And I think that reflects not a whole lot about Angel being either good or bad, it just reflects the size of this marketplace and the investments you have to make in a salesforce, how you really have to service that marketplace. There's a lot of work that you have to do. The channels just don't exist right now in a sense. And you have to build those channels and really make them viable. So, right now, we consider them a competitor and our largest competitor, I'd say, in the world, in the sense of the number of clear aligners that they supply. We don't look at them right now as slowing us down in China.

The Brazil surprise, I'd say the surprise for all of us in Brazil is the incredible uptake of our product line there. You saw the 1,300 doctors that we've trained there recently. They're so excited about the product line. We talk about Spain often, in the sense of the uptake of our product in Spain and the growth there. We see the same kind of enthusiasm and the same kind of what I would call Latin enthusiasm for what our product can do and really bring to that area. So, we look to make major investments there and increasing our salesforce and our presence in the Brazilian area. And we really feel good about Brazil from a standpoint of future growth of our product line there.

Erin Wright -- Credit Suisse -- Analyst

Okay. Great. Thanks. And a broader question on promotional activity. I'm just curious what other promotional activity could you implement that isn't necessarily price driven, whether it be co-marketing arrangements or other types of incentives. Is this something that is in your game plan for 2019 or something that you're planning? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Erin, there's no lack of creativity in our commercial forces, as promotions go. There's a lot of adult supervision that we have to supply as we do those things. And when you look at our Adapt program as a good one, that's a program where we're trying to take doctors to 80% Invisalign and really demonstrate, as I mentioned in my opening, when you get to a digital practice and you get to 80% -- first of all, no one goes back. No one goes back to wires and brackets. You really set a precedent and that you have control over your practice. You don't have 30% of your cases resulting in emergencies. Doctors aren't spending 45 minutes a day with patients. But you have to get to 80% to make that work. We'll continue to put money into that. That's not like a promotional program that we would offer at a lower price. That's just a program we work with docs who really want to get there.

There's always promotional programs that we do. We offer aligners to staff at orthos that are starting up with us. Also, with GPs or whatever, so that they can understand the product and have that experience and be able to communicate that well to patients as they come into the practice. Those are ongoing promotions that we do in all three geographies too. We do have seasonal promotions at times in different countries or different areas but I'd say that we have -- this is outside of the third quarter issue, obviously, we reported on kind of ad nauseam over the last six months. We have a good handle right now on what promotions we'll offer throughout the year.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Thanks, Erin. Next question, please.

Operator

Our next question comes from the line of Ravi Misra with Berenberg Capital Markets. Please proceed.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Hi. Thank you for taking the questions. So, I wanted to get into kind of the gross margin outlook and the commentary that you were providing. And can you help us understand maybe what the pushes and takes are between that 1Q guidance and kind of the 4Q guidance ramp? And especially in terms of what's that fixed overhead that's trapped there? Kind of in the ballpark, does that come somewhere around $10 million to $15 million a quarter right now that's annualizing through your COGS on that that's gonna fall off once the China sales ramp?

John F. Morici -- Chief Financial Officer

Yeah. Hi, Ravi, it's John. It's not that high but when we think of our operation that we've had to date, really, it's treatment planning in Costa Rica and it's been manufacturing in Mexico. We are now, as we've been expanding our treatment planning and now expanding the China manufacturing, we want volume. We want to be able to push volume through those centers and get as much productivity as possible. So, as we see some of the margin impact in the fourth quarter, that continues a bit into the fourth quarter, but as that volume comes through and as you don't have to add as much overhead, you see more and more productivity to be able to come through those, whether it's treatment planning or the China manufacturing. And so we expect to see this kind of quarter-over-quarter improvement through 2019 as we get more and more productive at these facilities.

Ravi Misra -- Berenberg Capital Markets -- Analyst

So, it sounds like that's really gonna be led by a step-up in the clear aligner gross margin versus the scanners?

John F. Morici -- Chief Financial Officer

Yes, definitely. When you look at kind of where we're seeing that volume leverage as we expand out globally, it will be on the clear aligners side and we should see that progress through the year.

Ravi Misra -- Berenberg Capital Markets -- Analyst

Great. And then maybe just two more questions. Just one on the orthodontics and then another kind of just on the consultations through the Invisalign brand experience. So, just on the orthodontic step-down, I'm curious. That's the first time in, gosh, I think about 12-14 quarters I've seen that number step down. Any kind of impact -- I know you're saying that the impact from Ormco and 3M was kind of limited, but how about some of the other direct-to-consumer manufacturers there? Is that playing into that at all? And in the sense that that end user volume might actually be going down?

And then, second, you talk about the 85,000 people that have visited the store and gotten a consult. What's the conversion rate on that? Those getting scans to actually becoming consumers of your product? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Hi, Ravi. Joe again. From a standpoint of Americas, an orthodontic standpoint, again I'll tell you, we had our second best year in history from the standpoint of overall orthodontic growth. When you talk about SDC, my feeling on SDC is they don't really take orthodontic cases. Remember, the normal orthodontist in the United States is 75% to 80% teen. You won't see many teens being done by SDC. And so those cases would primarily come out of GPs. Adults, kind of simple cases that are going on. As I mentioned, we had our highest GP sales rate ever in North American in 2018. So, on neither of those dimensions do I think that we are experiencing competition that's throttling the business in some way or that will affect us in 2019.

As far as the Invisalign stores and the scan ratios, all those things, we're still working through these 12. We haven't released that information from an overall standpoint yet. And at some point in time, when we think we're ready and we really have that ironed out. And I say that, Ravi, not that we're hiding anything. It's just we have found that when you look at CCAs, what we would call a "clear order" in this business, this can take anywhere from 4-6 months to seven months to really iron itself out. We see patients go in and get scanned and then there's a huge halo effect because we do this local advertising that benefits not just the doctors in the program but also, in a broader sense, any doctor that's within that 10 mile or 15 mile range. So, when we're ready to report this, we'll report it in a broad sense of that halo effect, the whole -- what you talked about -- the conversion rate, and also what that means from a timing standpoint. Okay?

Ravi Misra -- Berenberg Capital Markets -- Analyst

Great. Thank you.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Thanks, Ravi. Next question, please.

Operator

Thank you. Our next question comes from the line of John Kreger with William Blair. Please proceed.

John Kreger -- William Blair & Co. -- Analyst

Thanks. Joe, a few times on the call I think you talked about your view that it's sort of critical to get your customers to really make the digital conversion of their practices. Can you just talk a bit more about what that really means? And is that an expense on your part? Obviously, it's got some positive implications for volumes if and when it happens but what are the sort of practical implications of getting an ortho practice to make that transition? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Hey, John. That's a good question. There's three key parameters, right? First of all, there's extended payment terms that you have to deal with because when you go with a clear aligner product versus wires and brackets, their cost overall are about 4x, from a variable cost standpoint, of what you'd have with wires and brackets. So, you just have to get ready for that cash play and try, in some way, to extend them that kind of payments.

Secondly, you have to look at their workflows because when you really go to a full digital practice, it changes completely really. We found out in our Adapt program that you need fewer chairs but you need more consultation rooms to put people in to show them simulations, to talk them through what it would be. With no emergency cases, it completely redefines the sense of how a day goes in a doctor's office. It's not 30% of the time are people scrambling around trying to find someone that can fix something that occurred with the wires and brackets in some way.

And then, third, there's a demand component. You're gonna have to drive more demand within that practice, which Invisalign does. And so, obviously, with $100 million spend that we do a year and attracting patients and moving them into doctors, how we pipe those patients into doctors, how they prepare themselves for both teens and adults to do that. So, it's on those three dimensions.

And, John, specifically on the Adapt program, we're just going through that program right now and how we'll offer that to customers and what it will cost to actually do that, to take customers to that point. And after we've done probably 5-8 of these and have them complete, we'll have a better story and a more complete story, in the sense of here's how we'll do it, what those costs will be. But don't look at those as being overly broad. Remember, we have I Pro today, which we basically use to take customers through clinical kind of episodes. So, we have our Concierge service that grabs patients to move them through doctors too. So, the big components of operations that you need to work around the Adapt, we have those in place, we just have to modify them more for this 80% digital treatment plan.

John Kreger -- William Blair & Co. -- Analyst

Very helpful. Thanks. One quick one. John, as you think about the '19 outlook that you described for us, what sort of number of stores does that envision by year end?

John F. Morici -- Chief Financial Officer

We have 12, as we noted, now. It's really not a material change from that. We're evaluating best locations, what makes sense for us, but we really want to drive productivity and conversion at the stores we have before we go on a larger scale.

John Kreger -- William Blair & Co. -- Analyst

Okay. So, we shouldn't expect that to be materially different by December of '19?

John F. Morici -- Chief Financial Officer

That's correct.

John Kreger -- William Blair & Co. -- Analyst

Okay. Thank you.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Thanks, John. Next question?

Operator

Thank you. Our next question comes from the line of Steven Valiquette with Barclays. Please proceed.

Steven Valiquette -- Barclays Capital -- Analyst

Thanks. Good afternoon, everybody. So, I guess just given the ramp in investment in 2019, with likely some slower EPS growth, it kind of feels like 2019 is maybe somewhat similar to what Align went through back in 2015, where that was, let's call it, somewhat of a throwaway year for earnings growth because of heavy spending. But then the company came out of that and really had three strong years of growth in 2016 through 2018. I know it's a different management team back in 2015 but should we draw really any sort of parallels for 2019, where maybe you're just setting yourself up for another strong earnings growth cycle in the next couple of years beyond 2019 with the investments that you're making this year? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

Hey, Steve, it's Joe. First of all, I feel we play offense in this business. So, even though we talk about restructuring or if we talk about adding salespeople, we talk about defending our IP, all of those things are, to me, setting a foundation for future growth in the business. When you step back and you look at this business, we're incredibly underpenetrated based on consumer preference for clear aligners to move teeth and also the size of the market that digital opens up even beyond the 12 million orthodontic case starts that we talk about globally.

So, please don't call 2019 a throwaway year. Hopefully, the earnings and the growth that we're projecting here are substantial. And we haven't even mentioned the law of large number on you guys over the last three years, right? Because we continue to build these use percentages over the top of incredibly larger numbers than what we had previously. So, I'd look at it as these are aggressive investments in a young business to lay a foundation to allow us to be better in the future. And we have to take these.

Steven Valiquette -- Barclays Capital -- Analyst

I guess the only quick follow-up to that would just be how important is consistent EPS growth at a line at this stage of the corporate lifecycle? Or is this still mainly about driving top line growth for all the things that you just mentioned?

John F. Morici -- Chief Financial Officer

Hey, Steve, this is John. It's both. I mean, we want to drive top line. We want to be able to grow this business. As Joe mentioned, we're vastly underpenetrated and we have products and technology to be able to increase that market. But at the same time, we want to be able to grow profitably and as we layer on some of these investments, we expect -- whether it's China or it's salesforce addition or others that we're adding in -- over time, we'll be able to see those benefits. And that over time, as we laid out, is over 2019, we should see that sequential improvement quarter-over-quarter as those investments start to pay off as we move forward. But we want to make sure that we're returning the most back to our shareholders and that comes from revenue growth and the volume that we drive, as well as doing this from a profitability standpoint and we're very aware of the long-term growth model and we stick with that.

Steven Valiquette -- Barclays Capital -- Analyst

Okay. Got it. Okay. Thanks.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Thanks, Steve. Operator, we'll take one more question, please.

Operator

Thank you. Our next question will come from the line of Richard Newitter with SPD Leerink. Please proceed.

Richard Newitter -- Leerink Partners -- Analyst

Hi, thanks for taking the question. Hi. Joe, I was just wondering, I know it's still really, really early days in China and the opportunity is enormous and clearly your growth rates in that region haven't really shown any slowdown, but can you just talk a little bit about what -- we've seen some headlines and some other companies talking about the macro slowdown in China in the consumer discretionary realm -- can you give us your thoughts for the way you see things? Clearly, you're investing so I would imagine there's nothing that would suggest there's any slowing growth. But what are you seeing kind of at the ground level in terms of the macro?

Joseph M. Hogan -- President and Chief Executive Officer

Like I mentioned before, Richard, the growth that we saw throughout 2018 was really strong in China. I mean, obviously, we're making these investments in China as a commitment. They're our second largest country in the world right now. The underpenetration and the opportunity there is huge. Look, I mean, we're up with global events. We see the issues going on with China and the United States and hopefully they'll come to a trade deal sooner or later. I look at that investment that we talked about of manufacturing there as moving closer and having a Chinese business and being able to operate in that country with a lot of fluidity. But it also makes me feel good that we have a good insurance policy, in the sense of the trade dynamics between the two countries too.

So, right now, again, we haven't seen what other companies are reporting. I think the penetration piece we're talking about is probably maybe the variable of difference between the two. We're not saying that we're recession-proof ever. I think that's a ridiculous position to take. But what we've seen right now and the growth rates of what we've been experiencing, right now we're looking for a good 2019 in China.

Richard Newitter -- Leerink Partners -- Analyst

Excellent. And just if you could maybe just -- maybe you mentioned it earlier. But mandibular advancement, what's contemplated or how are you thinking about the contribution in 2019? Should we think of that launch kind of hitting the ground running right off the bat? Is that more of a gradual cadence? And what's contemplated in the outlook? Thanks.

Joseph M. Hogan -- President and Chief Executive Officer

I'll take a high level and let John take the specific level. But, remember, MAV was just approved in November of 2018. And I expect our normal uptake in the United States, which is orthos will do two or three cases and get used to it. It's a phenomenal product. It really is, I think. You straighten your teeth. You can move your mandible forward, in that sense, and build bone. It's just incredible. But, I mean, with something that big and that revolutionary, orthos are conservative anyway. And, obviously, they're gonna take their time in the sense of proving it.

Now, MAV has been outside the United States for a while, too, so we have, I think, 17,000 cases we talked about that we've gone through. What's really interesting, too, is we have several updates from Jelco and the engineering team on MAV also, when teeth are shorter, how you arrange your liners to make it work, making sure the wings are a lot stronger than before. So, as this is approved in the United States, we think we've significantly improved the product over the last 12 months too.

We find, too, it's just a great halo effect around MAV and teen. If you start to do more MAV, you do more teens. And so we're looking forward to that but, again, it's new days in the United States and we'll give you updates as we go through the year.

John F. Morici -- Chief Financial Officer

And so when we look at our forecast and we think about flat ASPs, this is one that helps us. This is a positive impact to our ASPs because it's a full case, it's a teen case, it's complicated. Like Joe said, it gives us more and more teen volume and we look at that as favorable mix and favorable growth for us.

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Okay. Well, thank you, everyone, for joining us on the call today. We look forward to catching up with you at subsequent conferences and if you have any questions, please contact Investor Relations. Have a great day.

Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.

Duration: 72 minutes

Call participants:

Shirley Stacy -- Vice President, Corporate Communications and Investor Relations

Joseph M. Hogan -- President and Chief Executive Officer

John F. Morici -- Chief Financial Officer

Robert Jones -- Goldman Sachs -- Analyst

Elizabeth Anderson -- Evercore ISI -- Analyst

Jonathan Block -- Stifel, Nicolaus & Co. -- Analyst

Brandon Couillard -- Jefferies -- Analyst

Steve Beuchaw -- Morgan Stanley -- Analyst

Erin Wright -- Credit Suisse -- Analyst

Ravi Misra -- Berenberg Capital Markets -- Analyst

John Kreger -- William Blair & Co. -- Analyst

Steven Valiquette -- Barclays Capital -- Analyst

Richard Newitter -- Leerink Partners -- Analyst

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