It's been smooth sailing for quite a while now for Align Technology (ALGN -3.06%). The orthodontic-device maker best known for its Invisalign clear aligners topped earnings expectations for all four quarters in 2016.
Align announced its 2017 first-quarter earnings after the market closed on Thursday. Did the smooth sailing continue? Here are the highlights.
Align results: The raw numbers
|$310.3 million||$238.7 million||
Net income from continuing operations
|$69.4 million||$40.5 million||
What happened with Align this quarter?
As the above numbers show, Align Technology performed superbly in the first quarter. The strong revenue growth stemmed primarily from a record-high 208,000 case shipments of Invisalign. That figure was 27% higher than the shipments in the prior-year period.
Align enjoyed especially robust international growth for Invisalign. The company's international operations shipped 75,175 cases, up 41% year over year. U.S. clear aligner shipments also increased by 20% over the first quarter of 2016.
It wasn't just higher shipment volumes that caused Align to be so successful in the first quarter. The average selling price for Invisalign increased from $1,255 in the first quarter of last year to $1,270 in the most recent quarter.
Align also reported higher utilization rates across the board. North American orthodontists' utilization increased 12.6% from 10.4% in the prior-year period. North American general practitioner dentists' utilization rose from 3% in the first quarter of 2016 to 3.1% in the first quarter of this year. International utilization also increased to 5% from 4.7% in the same quarter last year.
In addition, the company's scanner and services business performed very well in the first quarter. Revenue from this business soared 46.9% year over year to $27.8 million.
Align's bottom-line improvement was even better than its revenue figures. The significant increase in net income stemmed in large part from from excess tax benefits on stock-based compensation resulting from the company's adoption of new accounting standards in the first quarter.
The company ended the first quarter with $644.2 million in cash, cash equivalents, and marketable securities. At the end of 2016, Align's cash stockpile totaled $700.0 million. Some of the cash was spent on the purchase of a new headquarters building in San Jose, California.
What management had to say
Align Technology president and CEO Joe Hogan said:
2017 is off to a great start with first quarter revenues, volumes, gross margin and EPS above our expectations. For the quarter, net revenues were up 30% year over year, driven by strong Invisalign case shipments of 27% year over year to a record 38.9 thousand doctors shipped to during the quarter.
These results reflect growth from both our North America and International regions, and higher than expected teenage cases across the board, which increased 32% year over year. iTero scanner revenues increased 47% year over year, and were down sequentially as expected.
Align Technology expects second-quarter revenue between $340 million and $345 million, a 26% to 28% year-over-year increase. This revenue growth is modeled on projected second-quarter Invisalign case shipments of 221,000 to 224,000, which reflects an increase of 25% to 27% over the prior-year period.
The company also projects diluted earnings per share between $0.71 and $0.74 (including $0.03 of excess tax benefit). The mid-point of this range reflects a 17% year-over-year increase.
All of the fundamentals for Align seem to be lining up quite nicely (no pun intended -- well, maybe just a little bit intended). Demand for the company's clear aligners continues to grow, as does demand for its iTero scanners. Align appears to be executing well, especially in international markets. Unless some unforeseen issue arises, Align Technology should be on track to break its revenue and Invisalign shipments records yet again in the second quarter of 2017.