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International Sales Help Align Technology, Inc. in Q2

By Keith Speights – Jul 29, 2016 at 10:17AM

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From strong international clear-aligner growth to soaring scanner sales, there was a lot to like in this orthodontic-device maker's Q2 results.


Align Technology (ALGN -2.51%) shareholders had to smile at the company's first-quarter results. Driven in part by the solid numbers posted, Align's shares have been on a roll.

The orthodontic-device maker announced its second-quarter results after the market closed on Thursday. Were investors still smiling? Here are the highlights from Align's second quarter.

Align results: The raw numbers


Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)


$269.4 million

$209.5 million


Net income 

$50.1 million

$31.4 million


Earnings per diluted share from continuing operations





Everything seemed to go right for Align in the second quarter. The biggest driver of its revenue growth, though, was international sales of its Invisalign clear aligners. Align's international Invisalign revenue soared to $83.7 million in the second quarter from $61.9 million in the prior-year period -- a 35.2% increase.

The company also recorded North American clear aligner revenue of $143.9 million in the second quarter, up 14% from the $126.1 million posted in the same quarter of 2015.

Align's scanner and services revenue nearly tripled year over year, increasing to $26 million from $8.7 million in the prior-year period. This impressive growth stemmed from high demand for the company's iTero Element scanner.

The company reported $685 million in cash, cash equivalents, and marketable securities on hand at the end of the second quarter. Align still has no debt on its balance sheet.

What management had to say

Joe Hogan, Align's president and CEO, highlighted the great numbers from his company's second-quarter results:

Q2 was driven by better-than-expected revenue due to continued strong year-over-year Invisalign volume across our customer base and record utilization, with international case volume up 38.3%, and North America up 15.3%. We also had continued strong demand for our iTero Element, with record shipments this quarter resulting in revenue growth of almost 200% year over year.

Looking forward

Align expressed a positive outlook for the third quarter. The company projected Invisalign case shipments will be between 174,200 and 176,900, up 18.1%-19.9% from the third quarter of 2015. Net revenue for the third quarter is expected to be between $267.2 million and $273.5 million, with diluted earnings per share of $0.49-$0.52.

Two factors in the details of Align's quarterly results bode well for the company's prospects. First, the number of doctors to which Align shipped Invisalign cases jumped nearly 13% year over year. The biggest growth came from international markets. Second, the utilization rate by doctors for the second quarter was 5.1%, a significant increase from the 4.6% rate reported a year ago.

Continued success for iTero Element also indicates that Align is competing well against a bigger rival, Dentsply Sirona (XRAY -3.24%). The merger earlier this year of Dentsply, a leader in the dental consumables market, and Sirona, which makes dental technology and equipment, might have made some Align investors a little nervous, because Dentsply Sirona's Cerec scanners compete against Align's iTero scanners. So far, though, it appears the market is big enough for both companies to succeed.

Even though it's smaller than Dentsply Sirona, Align is in better shape in terms of its cash position. What will the company do with its sizable cash stockpile? Over the last couple of years, Align has spent $250 million repurchasing its shares. It plans to keep the repurchase program going by buying back another $50 million in stock soon. Align also recently authorized another $300 million buyback.

Not every quarter will be as positive as Align's second quarter. However, if the company keeps its momentum going with Invisalign and scanner sales, it should give long-term investors confidence in Align's future.

Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Align Technology. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Align Technology Stock Quote
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$189.78 (-2.51%) $-4.89
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