Align Technology Inc. (NASDAQ:ALGN) Q4 2017 Earnings Conference Call Transcript

Jan 30, 2018 • 04:30 pm ET

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Align Technology Inc. (NASDAQ:ALGN) Q4 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings and welcome to Align Q4 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Shirley Stacy. Please go ahead.

Executive
Shirley Stacy

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 2017 financial results today via Marketwired, which is available on our website at investor.aligntech.com.

Today's conference call is 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 PM Eastern Time through 5:30 PM Eastern Time on February 13th. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13674959 followed by pound. 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 2018. 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 statements. We've posted historical financial statements, including the corresponding reconciliations and our fourth quarter 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?

Executive
Joseph M. Hogan

Thanks, Shirley. Good afternoon and thanks for joining us. On our call today, I'll provide some highlights from the quarter and then briefly discuss the performance of our two operating segments, clear aligners and oral scanners. John will provide more detail on our financial results and discuss our outlook for the first quarter, and how we see 2018 unfolding. Following that, I'll come back and summarize a few key points and then open up the call to questions.

Overall, the fourth quarter was a strong finish to another outstanding year for Align with better than expected revenues, volumes and operating income. Record Q4 revenues were up 43.7% year-over-year, driven by increased Invisalign volumes across all geographies and customer channels, as well as by record iTero scanner revenue. Q4 Invisalign volume was up 34.2% year-over-year, reflecting strong international growth from increased utilization and expansion of our customer base, which included over 4000 new customers for the third consecutive quarter. Notwithstanding the strong performance, our Q4 results were impacted by the new U.S. Tax Cut and Jobs Act, which reduced our reported net income and EPS. However, Q4 operating income was a record $109.6 million or 26%. John