ALGN Q3 Earnings Top Estimates, Revenues Miss, Stock Falls

Core Viewpoint - Align Technology, Inc. reported mixed results for Q3 2024, with adjusted EPS exceeding estimates while revenues fell short of expectations [10] Financial Performance - Adjusted EPS for Q3 2024 was $2.35, a 9.8% increase year-over-year, surpassing the Zacks Consensus Estimate by 1.7% [1] - GAAP EPS for the quarter was $1.55, down 1.9% from $1.58 in Q3 2023 [1] - Revenues increased by 1.8% year-over-year to $977.9 million but missed the Zacks Consensus Estimate by 1.3% [2] - The revenue decline was impacted by foreign exchange losses of approximately $14.6 million, or 1.5% year-over-year [2] Segment Performance - Clear Aligner segment revenues decreased by 1% year-over-year to $786.8 million, affected by a 1.5% unfavorable foreign exchange impact [3] - Imaging Systems & CAD/CAM Services revenues rose by 15.6% to $191 million, also facing a 1.5% unfavorable currency impact [3] Margins and Expenses - Gross profit for the quarter was $681.8 million, up 2.8% year-over-year, with a gross margin of 69.7%, an increase of 67 basis points [4] - SG&A expenses rose by 6.4% to $434.1 million, while R&D expenses decreased by 3.9% to $85.3 million [4] - Operating income was $162.4 million, down 2.3% year-over-year, with an operating margin contraction of 72 basis points to 16.6% [4] Cash Position and Stock Repurchase - The company ended Q3 with cash and cash equivalents of $1 billion, up from $738.9 million at the end of Q2 [5] - ALGN has $500 million available for repurchases under its $1.0 billion Stock Repurchase Program authorized in January 2023 [6] Guidance - For full-year 2024, ALGN anticipates revenue growth of 4-6% year-over-year, revised down from previous guidance of 6-8% [8] - The Zacks Consensus Estimate for 2024 revenues is $4.04 billion, indicating a 4.5% growth year-over-year [8] - The company expects to invest over $100 million in capital expenditures for expansion [8] Q4 Expectations - For Q4, ALGN projects worldwide revenues between $995 million and $1.01 billion, with the Zacks Consensus Estimate at $1.02 billion [9] Recent Developments - ALGN introduced the iTero Design Suite for 3D printing and launched a new Invisalign treatment promotional program for Costco members [11] - Concerns remain regarding declining operating income and contracting operating margins [11]