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01/11 03:39
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals financial challenges with revenue and EPS declines, despite optimistic guidance. The share repurchase program is a positive, but the impact of foreign exchange and lower ASPs are concerning. The Q&A highlights uncertainty in management's responses regarding tariffs and ASP strategies, adding to negative sentiment. The lack of strong positive catalysts like partnerships or record revenue, combined with weak financials and guidance, suggests a negative stock price movement.
Total Revenues $979,300,000, down 1.6% sequentially and down 1.8% year-over-year. Unfavorable foreign exchange impacted revenues by approximately $21,400,000 sequentially and $31,100,000 year-over-year.
Clear Aligner Revenues $796,800,000, up 0.3% sequentially, primarily from higher volumes, partially offset by unfavorable foreign exchange. Year-over-year, down 2.5% due to unfavorable foreign exchange of $25,800,000 and lower average selling prices (ASPs).
Average Per Case Shipment Price (Clear Aligners) $12.40, down $25 sequentially and down $110 year-over-year, primarily due to higher discounts, product mix shift to lower-priced products, and unfavorable foreign exchange.
Systems and Services Revenues $182,400,000, down 9.2% sequentially due to lower scanner systems revenues and unfavorable foreign exchange. Year-over-year, up 1.2% primarily due to higher iTero Lumina scanner wand revenues.
Gross Margin 69.5%, down 0.6 points sequentially and down 0.5 points year-over-year. Foreign exchange negatively impacted gross margin by 0.7 points sequentially and 0.9 points year-over-year.
Operating Expenses $549,000,000, down 0.7% sequentially and up 1% year-over-year. Decrease due to lower restructuring and non-recurring charges, partially offset by increased consumer marketing spend.
Operating Income $131,100,000, resulting in an operating margin of 13.4%, down 1.1 points sequentially and down 2.1 points year-over-year. Foreign exchange negatively impacted operating margin by approximately 1.1 points sequentially and 1.4 points year-over-year.
Net Income per Diluted Share $1.27, down $0.13 sequentially and down $0.13 year-over-year. Foreign exchange negatively impacted EPS by $0.08 sequentially and $0.12 year-over-year.
Cash and Cash Equivalents $873,000,000, down $170,900,000 sequentially and up $7,200,000 year-over-year.
Free Cash Flow $27,400,000, calculated as cash flow from operations minus capital expenditures.
Deferred Revenues (Clear Aligners) Decreased $9,300,000 or 0.8% sequentially and decreased $74,700,000 or 5.8% year-over-year.
Deferred Revenues (Systems and Services) Decreased $11,300,000 or 5.1% sequentially and decreased $37,200,000 or 15.2% year-over-year.
Invisalign Pallet Expander System: Commercially available in Turkey and received regulatory clearance in China, with plans for additional market introductions throughout 2025.
Invisalign System with Mandibular Advancement: Launched to address class two skeletal and dental correction, available in the US, Canada, Australia, and New Zealand.
iTero Lumina Scanner with Restorative Software: Launched to enhance diagnostic capabilities and improve practice efficiency for GP dentists.
Clear Aligner Volume Growth: Q1 clear aligner volumes grew 6.2% year over year, with significant growth in EMEA and APAC regions.
Record Doctor Submitters: Over 85,000 doctor submitters worldwide in Q1, reflecting strong demand across all patient segments.
DSO Channel Growth: Clear aligner volume from DSO customers increased sequentially and year over year, indicating a strong growth channel.
iTero Scanner Sales Growth: Strong growth in scanner sales, particularly with DSOs investing in digital workflows.
Operational Efficiencies: Continued improvements in manufacturing efficiencies and logistics contributing to margin stability.
Global Supply Chain Positioning: Align is well-positioned globally to mitigate tariff impacts and maintain operational efficiency.
Focus on Digital Transformation: Align is enhancing digital workflows and treatment planning capabilities to drive practice efficiency.
Foreign Exchange Impact: Unfavorable foreign exchange impacted Q1 revenues by approximately $21.4 million sequentially and $31.1 million year over year, affecting both clear aligner and systems and services revenues.
Tariff Risks: The US-Mexico tariff situation remains fluid, with potential impacts on costs for goods shipped from Mexico. Align Technology is currently manufacturing clear aligners in Mexico, Poland, and China, and is unable to predict future tariff changes.
Regulatory Issues: Align received a favorable ruling regarding VAT applicability to clear aligner sales in the UK, which could be challenged by HMRC until June 19.
Supply Chain Adjustments: Align has assessed potential impacts of China's retaliatory tariffs and believes it can mitigate most exposure through supply chain adjustments.
Economic Factors: Global economic uncertainty and changes in consumer sentiment may pose risks to future business performance.
Competitive Pressures: Align Technology is positioned to benefit from potential dislocation among competitors due to tariffs and supply chain challenges.
Invisalign Pallet Expander System: Commercially available in Turkey and received regulatory clearance in China, with plans for additional markets in 2025.
Invisalign System with Mandibular Advancement: Launched to address class two skeletal and dental correction, available in the US, Canada, Australia, and New Zealand.
Digital Service Organizations (DSOs) Growth: Continued growth in DSO channel, reflecting increased practice efficiency and profitability.
iTero Lumina Scanner Launch: New restorative capabilities launched, enhancing diagnostic and treatment planning for GP dentists.
Q2 2025 Revenue Guidance: Expected to be in the range of $1,050,000,000 to $1,070,000,000, up sequentially from Q1 2025.
2025 Clear Aligner Volume Growth: Expected to be mid single digits year over year.
2025 Revenue Growth: Projected to be in the range of 3.5% to 5.5% at current spot rates.
2025 Capital Expenditures: Expected to be between $100,000,000 and $150,000,000, primarily for technology upgrades and manufacturing capacity.
2025 Non-GAAP Operating Margin: Expected to be approximately 22.5%.
Share Repurchase Program: In Q1, Align Technology repurchased the remaining $72.1 million of the $275 million open market repurchase initiated in Q4 of 2024. Additionally, a new plan was initiated to repurchase the remaining $225 million of common stock under the January 2023 approved stock repurchase program of $1 billion through open market repurchases. As of 03/31/2025, $129 million had been repurchased under this program.
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