Wall Street wasn't too pleased with Align Technology (NASDAQ:ALGN) the last time the company reported its financial results. In the fourth quarter of 2014, Align narrowly missed earnings estimates, and shares dropped 10% in reaction. The maker of dental medical devices had another chance to win investors' favor when it announced 2015 first-quarter earnings after the market closed on Thursday.
Did Align's results line up with expectations this time around? Nope -- they exceeded expectations. Shares were up more than 7% in after-hours trading after the company posted strong first-quarter results. Here are the highlights.
By the numbers
Align reported first quarter revenue of $198.1 million. That reflects a 9.7% year-over-year increase, and beat the company's guidance of revenue between $187.3 million and $192.4 million. It also easily topped the average analyst's revenue estimate of $190.83 million.
First-quarter earnings came in at $36.2 million, or $0.44 per diluted share. This represented a nice jump from the $32.4 million, or $0.39 per diluted share, reported in the same quarter of 2014. Align's previous guidance called for earnings from $0.29 to $0.32 per share. The company's quarterly earnings also handily beat the consensus analyst estimate of $0.32 per share.
Clear aligner case shipments saw solid year-over-year growth. Align shipped 130,780 clear aligner cases compared to 112,180 in the same quarter of 2014 -- a 16.6% jump.
Behind the numbers
Align's CEO Thomas Prescott said that the "first quarter was a bit stronger than we expected." What made the difference?
The biggest growth driver stemmed from higher Invisalign volume in North America, especially from orthodontists. Utilization rates for North American orthodontists shot up to 9% in the first quarter of 2015 from 8.1% in the same quarter of the prior year.
Align's international business was also strong, with 12% year-over-year sales growth. What's particularly impressive is that the company was able to pull off a revenue and earnings beat despite facing lower average selling prices for Invisalign.
The only blemish for the first quarter came from Align's Scanner and Services business. Align reported Scanner and Services revenue fell by 10.9%, to $11.1 million from $12.4 million in first quarter of 2014. That one negative was easily outweighed by the good news from Invisalign.
After a very good start to 2015, Align thinks next quarter should be solid, also. The company expects to ship 139,500 to 142,000 Clear Aligner cases in the second quarter -- roughly 18% higher than the same quarter of 2014. Align projects revenue between $206.6 million and $210.4 million, right in line with the $207.27 million expected by Wall Street. Align projects diluted earnings per share between $0.35 and $0.38. The consensus analysts' estimate calls for second-quarter earnings of $0.40 per share.
Align could see even better results in the second quarter from its international business. The first quarter can be somewhat slower due to winter holidays in Europe and the Lunar New Year in Asia. Probably the biggest challenge will come from currency fluctuations. For now, though, Wall Street should be pleased with Align Technology after its first-quarter results.
Keith Speights hasn't yet taken a bite on buying shares of Align Technology, but The Motley Fool recommends the stock. Try any of our Foolish newsletter services free for 30 days. 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.