Align Technology Inc. (NASDAQ:ALGN) Q4 2018 Earnings Conference Call - Final Transcript

Jan 29, 2019 • 04:30 pm ET

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Align Technology Inc. (NASDAQ:ALGN) Q4 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to Align Technology Q4 Full-Year Earnings Call. At this time, all participants are in a listen-only mode. A brief 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 you, Shirley Stacy with Align. Thank you, please begin.

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 2018 financial results today via GlobeNewswire, which is available on our website at investor.aligntech.com.

Today's conference call is also 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 12. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13685779 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 2019. 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 and full year 2018 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 Technologies' 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 in the fourth quarter and full year, then briefly discuss the performance of our two operating segments, clear aligners and intraoral scanners. John will provide more detail on our financial results and discuss our outlook for the first quarter and share our thoughts for 2019. Following that I'll come back and summarize a few key points and open up the call to questions.

Our fourth quarter was a strong finish to a great year. Q4 revenues were better than expected reflecting higher Invisalign ASPs and volume growth at 31% year over year, as well as another record quarter for our iTero scanners with revenue up 55% year-over-year. Q4 sequential growth was driven by a strong quarter for EMEA with record growth from teens, as well as continued traction with Invisalign Lite and iGo. Q4 operating margin of 22.6% reflects higher doctor training and manufacturing costs, as well as higher legal fees than anticipated, partially offset by sequential improvement in Invisalign ASPs.

For the quarter, we trained a record, 5,270