Align Technology Announces Third Quarter 2020 Financial Results
ALIGN TECHNOLOGY, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
GAAP gross profit
$
534,088
$
437,554
$
1,152,772
$
1,271,939
Stock-based compensation
1,247
1,354
3,485
3,744
Amortization of intangibles (1)
2,700
-
4,350
-
Non-GAAP gross profit
$
538,035
$
438,908
$
1,160,607
$
1,275,683
GAAP gross margin
72.7
%
72.0
%
70.4
%
72.4
%
Non-GAAP gross margin
73.3
%
72.3
%
70.9
%
72.6
%
GAAP operating expenses
$
357,019
$
310,402
$
978,785
$
880,596
Stock-based compensation
(23,982
)
(22,822
)
(69,678
)
(63,943
)
Amortization of intangibles (1)
(580
)
-
(2,175
)
-
Acquisition related costs (2)
(314
)
-
(7,621
)
-
Impairments and other (gains) charges (3)
-
6,792
-
(22,990
)
Litigation settlement gain (4)
-
-
-
51,000
Non-GAAP operating expenses
$
332,143
$
294,372
$
899,311
$
844,663
GAAP income from operations
$
177,069
$
127,152
$
173,987
$
391,343
Stock-based compensation
25,229
24,176
73,163
67,687
Amortization of intangibles (1)
3,280
-
6,525
-
Acquisition related costs (2)
314
-
7,621
-
Impairments and other (gains) charges (3)
-
(6,792
)
-
22,990
Litigation settlement gain (4)
-
-
-
(51,000
)
Non-GAAP income from operations
$
205,892
$
144,536
$
261,296
$
431,020
GAAP operating margin
24.1
%
20.9
%
10.6
%
22.3
%
Non-GAAP operating margin
28.0
%
23.8
%
16.0
%
24.5
%
GAAP interest income and other income (expense), net
$
7,476
$
1,267
$
(9,580
)
$
15,511
Acquisition related costs (2)
-
-
10,187
-
Non-GAAP interest income and other income (expense), net
$
7,476
$
1,267
$
607
$
15,511
GAAP net income before provision for (benefit from) income
taxes and equity in losses of investee
$
184,545
$
128,419
$
164,407
$
406,854
Stock-based compensation
25,229
24,176
73,163
67,687
Amortization of intangibles (1)
3,280
-
6,525
-
Acquisition related costs (2)
314
-
17,808
-
Impairments and other (gains) charges (3)
-
(6,792
)
-
22,990
Litigation settlement gain (4)
-
-
-
(51,000
)
Non-GAAP net income before provision for (benefit from) income
taxes and equity in losses of investee
$
213,368
$
145,803
$
261,903
$
446,531
GAAP provision for (benefit from) income taxes
$
45,174
$
25,895
$
(1,452,493
)
$
77,812
Tax impact on non-GAAP adjustments
1,093
1,467
20,931
22,245
Tax related non-GAAP items (5)
(10,763
)
-
1,485,286
-
Non-GAAP provision for (benefit from) income taxes
$
35,504
$
27,362
$
53,724
$
100,057
GAAP effective tax rate
24.5
%
20.2
%
(883.5
)%
19.1
%
Non-GAAP effective tax rate
16.6
%
18.8
%
20.5
%
22.4
%
GAAP net income
$
139,371
$
102,524
$
1,616,900
$
321,514
Stock-based compensation
25,229
24,176
73,163
67,687
Amortization of intangibles (1)
3,280
-
6,525
-
Acquisition related costs (2)
314
-
17,808
-
Impairments and other (gains) charges (3)
-
(6,792
)
-
22,990
Litigation settlement gain (4)
-
-
-
(51,000
)
Tax impact on non-GAAP adjustments
(1,093
)
(1,467
)
(20,931
)
(22,245
)
Tax related non-GAAP items (5)
10,763
-
(1,485,286
)
-
Non-GAAP net income
$
177,864
$
118,441
$
208,179
$
338,946
GAAP diluted net income per share
$
1.76
$
1.28
$
20.45
$
4.00
Non-GAAP diluted net income per share
$
2.25
$
1.48
$
2.63
$
4.22
Shares used in computing diluted net income per share
79,163
79,825
79,078
80,397
Notes:
(1) During the three and nine months ended September 30, 2020, we recorded amortization of intangible assets related to our Q2'20 exocad acquisition.
(2) During the three and nine months ended September 30, 2020, we recorded certain incremental expenses related to our Q2'20 exocad acquisition including third party advisory, legal, tax, accounting, banking, valuation, and other professional or consulting fees and foreign exchange losses related to a forward contract for the purchase commitment.
(3) During the nine months ended September 30, 2019, we recorded a net impairment charge of $23.0 million consisting of impairments and other charges as a result of closing our Invisalign stores due to the arbitrator's decision regarding SDC including operating lease right-of-use asset impairments, store leasehold improvement and fixed asset impairments and employee severance and other charges offset by a gain recorded in the three months ended September 30, 2019 due to negotiation of early termination of our Invisalign store leases.
(4) During the nine months ended September 30, 2019, we recorded a $51.0 million gain from the settlement of the Straumann litigation.
(5) For the nine months ended September 30, 2020, we recorded a one-time net tax benefit for the deferred tax asset and certain costs associated with the intra-entity transfer in the three months ended March 31, 2020 of certain intellectual property rights and assets to our Swiss subsidiary and related tax impact from the amortization of the transferred intangibles assets. For the three months ended September 30, 2020, we recorded amortization of the benefit from the transferred intangibles assets.
Refer to "About Non-GAAP Financial Measures" section of press release.
Gloss