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Align Technology, Inc. (ALGN - Free Report) delivered second-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.41, up 8.6% from the year-ago quarter’s level. The reported figure topped the Zacks Consensus Estimate by 3.9%.
GAAP EPS for the quarter was $1.28 compared with $1.46 in the prior-year quarter. This reflected a decline of 12.3% year over year.
Revenues
The top line increased 2.6% year over year to $1.03 billion, but missed the Zacks Consensus Estimate by a marginal 0.9%. Revenues were unfavorably impacted by foreign exchange of approximately $18.1 million or 1.7% year over year.
Segments in Detail
The company has two reportable segments — Clear Aligner and Imaging Systems, and CAD/CAM Services (Systems and Services)
Revenues in the Clear Aligner segment were down 0.1% year over year to $831.7 million.
Clear Aligner revenues had a 1.7% unfavorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services rose 16.1% to $196.8 million in the quarter. The top line, too, witnessed an unfavorable currency impact of 1.7% year over year.
Margins
The gross profit in the second quarter was $722.6 million, up 1.3% year over year. The gross margin in the quarter under review contracted 95-basis points (bps) year over year to 70.3% on an increase of 5.9% in the cost of net revenues.
During the quarter, SG&A expenses decreased 0.2% to $452.3 million, while R&D expenses rose 4.2% to $92.2 million.
Operating income totaled $178.2 million, up 3.6% year over year. The operating margin expanded 17 bps to 17.3%.
Financial Details
Align Technology exited the second quarter with cash and cash equivalents of $761.4 million compared with $865.8 million recorded at the end of the first quarter.
The cumulative net cash provided by operating activities at the end of the second quarter was $188.5 million compared with $451.7 million in the year-ago period.
Stock Repurchase
Inthe reported quarter, Align Technology repurchased approximately 0.6 million shares in total through $150.0 million of open market repurchases.
Currently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in Jan 2023.
Guidance
Align Technology updated its financial outlook for the full year 2024 and provided third-quarter 2024 outlook.
For the full year, ALGN anticipates revenues to be up 4-6% year over year (down from the previous guidance of 6-8%). The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.12 billion, suggesting a 6.6% growth over year-ago reported figure.
Align Technology, Inc. Price, Consensus and EPS Surprise
The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 GAAP operating margins and the 2024 non-GAAP operating margin to be above the 2023 non-GAAP operating margin.
The company expects to invest approximately $100 million in capital expenditures, primarily related to building construction and improvements and manufacturing capacity, to support continued expansion.
For the third quarter of 2024, ALGN anticipates worldwide revenues in the range of $0.9 billion-$1 billion. The Zacks Consensus Estimate is pegged at $1.03 billion.
Our Take
Align Technology exited the second quarter of 2024 on a mixed note with better-than-expected earnings and revenues lagging the Zacks Consensus Estimates. On a year-over-year basis, second-quarter revenues were up driven by growth in both Clear Aligner volumes and Imaging Systems and CAD/CAM Services revenues.
Second Quarter Clear Aligner revenue growth was partially offset by lower ASPs and higher discounts. Whereas, the company’s Imaging Systems & CAD/CAM Services business segment reported strong growth on a year-over-year basis reflecting higher scanner volumes, higher scanner ASPs, and higher non-system revenues driven by iTero Lumina terra wand luminal wand upgrades.
During this quarter, the company was involved in several significant developments. ALGN made the Invisalign Palatal Expander System available in both Australia and New Zealand. The company’s adult patient case starts were up reflecting the highest number of adult shipments in 8 quarters, which was driven by strength in the GP channel, led by North American and APAC dentists.
However, the reduced 2024 revenue outlook impacted by lower Clear Aligner ASPs from continued unfavorable foreign exchange and product mix is a concern. Further, the company’s postponement of the launch of iTero Lumina with restorative capabilities looks discouraging. Escalating costs and the contraction of gross margin are matters of concern.
Zacks Rank and Key Picks
Align Technology currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Haemonetics (HAE - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Haemonetics, carrying a Zacks Rank #2, reported a fiscal 2024 fourth-quarter adjusted EPS of 90 cents, which surpassed the Zacks Consensus Estimate by 2.3%. Revenues of $343.3 million exceeded the Zacks Consensus Estimate by 5%.
HAE has an estimated fiscal 2025 earnings growth rate of 15.4% compared with the industry’s 12.5%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 13.2%.
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Align Technology (ALGN) Beats on Q2 Earnings, Lowers '24 Sales View
Align Technology, Inc. (ALGN - Free Report) delivered second-quarter fiscal 2024 adjusted earnings per share (EPS) of $2.41, up 8.6% from the year-ago quarter’s level. The reported figure topped the Zacks Consensus Estimate by 3.9%.
GAAP EPS for the quarter was $1.28 compared with $1.46 in the prior-year quarter. This reflected a decline of 12.3% year over year.
Revenues
The top line increased 2.6% year over year to $1.03 billion, but missed the Zacks Consensus Estimate by a marginal 0.9%. Revenues were unfavorably impacted by foreign exchange of approximately $18.1 million or 1.7% year over year.
Segments in Detail
The company has two reportable segments — Clear Aligner and Imaging Systems, and CAD/CAM Services (Systems and Services)
Revenues in the Clear Aligner segment were down 0.1% year over year to $831.7 million.
Clear Aligner revenues had a 1.7% unfavorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services rose 16.1% to $196.8 million in the quarter. The top line, too, witnessed an unfavorable currency impact of 1.7% year over year.
Margins
The gross profit in the second quarter was $722.6 million, up 1.3% year over year. The gross margin in the quarter under review contracted 95-basis points (bps) year over year to 70.3% on an increase of 5.9% in the cost of net revenues.
During the quarter, SG&A expenses decreased 0.2% to $452.3 million, while R&D expenses rose 4.2% to $92.2 million.
Operating income totaled $178.2 million, up 3.6% year over year. The operating margin expanded 17 bps to 17.3%.
Financial Details
Align Technology exited the second quarter with cash and cash equivalents of $761.4 million compared with $865.8 million recorded at the end of the first quarter.
The cumulative net cash provided by operating activities at the end of the second quarter was $188.5 million compared with $451.7 million in the year-ago period.
Stock Repurchase
Inthe reported quarter, Align Technology repurchased approximately 0.6 million shares in total through $150.0 million of open market repurchases.
Currently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in Jan 2023.
Guidance
Align Technology updated its financial outlook for the full year 2024 and provided third-quarter 2024 outlook.
For the full year, ALGN anticipates revenues to be up 4-6% year over year (down from the previous guidance of 6-8%). The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.12 billion, suggesting a 6.6% growth over year-ago reported figure.
Align Technology, Inc. Price, Consensus and EPS Surprise
Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote
The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 GAAP operating margins and the 2024 non-GAAP operating margin to be above the 2023 non-GAAP operating margin.
The company expects to invest approximately $100 million in capital expenditures, primarily related to building construction and improvements and manufacturing capacity, to support continued expansion.
For the third quarter of 2024, ALGN anticipates worldwide revenues in the range of $0.9 billion-$1 billion. The Zacks Consensus Estimate is pegged at $1.03 billion.
Our Take
Align Technology exited the second quarter of 2024 on a mixed note with better-than-expected earnings and revenues lagging the Zacks Consensus Estimates. On a year-over-year basis, second-quarter revenues were up driven by growth in both Clear Aligner volumes and Imaging Systems and CAD/CAM Services revenues.
Second Quarter Clear Aligner revenue growth was partially offset by lower ASPs and higher discounts. Whereas, the company’s Imaging Systems & CAD/CAM Services business segment reported strong growth on a year-over-year basis reflecting higher scanner volumes, higher scanner ASPs, and higher non-system revenues driven by iTero Lumina terra wand luminal wand upgrades.
During this quarter, the company was involved in several significant developments. ALGN made the Invisalign Palatal Expander System available in both Australia and New Zealand. The company’s adult patient case starts were up reflecting the highest number of adult shipments in 8 quarters, which was driven by strength in the GP channel, led by North American and APAC dentists.
However, the reduced 2024 revenue outlook impacted by lower Clear Aligner ASPs from continued unfavorable foreign exchange and product mix is a concern. Further, the company’s postponement of the launch of iTero Lumina with restorative capabilities looks discouraging. Escalating costs and the contraction of gross margin are matters of concern.
Zacks Rank and Key Picks
Align Technology currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Haemonetics (HAE - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Haemonetics, carrying a Zacks Rank #2, reported a fiscal 2024 fourth-quarter adjusted EPS of 90 cents, which surpassed the Zacks Consensus Estimate by 2.3%. Revenues of $343.3 million exceeded the Zacks Consensus Estimate by 5%.
HAE has an estimated fiscal 2025 earnings growth rate of 15.4% compared with the industry’s 12.5%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 13.2%.