Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Align Technology Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	361,573)	772,020)	1,775,888)	442,776)	400,235)
Deferred taxes	(39,495)	15,455)	(1,491,577)	307)	(15,680)
Depreciation and amortization	125,793)	108,729)	93,538)	78,990)	54,727)
Stock-based compensation	133,367)	114,336)	98,427)	88,184)	70,763)
Non-cash operating lease cost	30,520)	26,807)	22,467)	18,475)	—)
Arbitration award gain	—)	(43,403)	—)	—)	—)
Impairments on long-lived assets	—)	—)	—)	28,498)	—)
Equity in losses of investee	—)	—)	—)	7,528)	8,693)
Gain on lease terminations	—)	—)	—)	(6,792)	—)
Gain from sale of equity method investment	—)	—)	—)	(15,769)	—)
Other non-cash operating activities	41,288)	24,363)	33,743)	29,860)	17,252)
Accounts receivable	21,549)	(262,066)	(139,777)	(121,014)	(109,224)
Inventories	(130,097)	(112,450)	(29,110)	(58,269)	(24,109)
Prepaid expenses and other assets	(65,514)	(124,626)	(21,130)	(31,529)	(9,122)
Accounts payable	(36,523)	19,747)	52,206)	22,099)	25,045)
Accrued and other long-term liabilities	(121,942)	158,543)	42,168)	60,240)	36,250)
Long-term income tax payable	6,327)	12,449)	(2,802)	14,611)	(36,548)
Deferred revenues	241,886)	462,640)	228,133)	189,075)	136,399)
Changes in assets and liabilities, net of effects of acquisitions	(84,314)	154,237)	129,688)	75,213)	18,691)
Adjustments to reconcile net income to net cash provided by operating activities	207,159)	400,524)	(1,113,714)	304,494)	154,446)
Net cash provided by operating activities	568,732)	1,172,544)	662,174)	747,270)	554,681)
Acquisitions, net of cash acquired	(12,304)	(8,002)	(420,788)	—)	—)
Purchase of property, plant and equipment	(291,900)	(401,098)	(154,916)	(149,707)	(223,312)
Purchase of marketable securities	(28,002)	(200,928)	(5,341)	(693,284)	(180,191)
Proceeds from maturities of marketable securities	23,785)	498)	42,641)	290,754)	375,105)
Proceeds from sales of marketable securities	97,316)	3,114)	278,817)	194,677)	9,560)
Repayment on unsecured promissory note	—)	4,594)	26,925)	21,820)	—)
Proceeds from arbitration award	—)	43,403)	—)	—)	—)
Purchase of investment in privately held company	—)	—)	—)	—)	(5,000)
Loan repayment from equity investee	—)	—)	—)	—)	30,000)
Other investing activities	(2,211)	(5,011)	1,156)	(14,704)	765)
Net cash (used in) provided by investing activities	(213,316)	(563,430)	(231,506)	(350,444)	6,927)
Proceeds from issuance of common stock	26,149)	25,623)	20,314)	17,907)	16,635)
Common stock repurchases	(435,036)	(375,038)	—)	(399,999)	(300,002)
Payment for equity forward contract related to accelerated stock repurchase agreement	(40,000)	—)	—)	—)	—)
Payroll taxes paid upon the vesting of equity awards	(52,799)	(108,917)	(51,122)	(57,675)	(86,067)
Purchase of finance lease	—)	—)	—)	(45,773)	—)
Net cash used in financing activities	(501,686)	(458,332)	(30,808)	(485,540)	(369,434)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(11,514)	(12,117)	10,480)	2,282)	(4,733)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(157,784)	138,665)	410,340)	(86,432)	187,441)
Cash, cash equivalents, and restricted cash at beginning of year	1,100,139)	961,474)	551,134)	637,566)	450,125)
Cash, cash equivalents, and restricted cash at end of year	942,355)	1,100,139)	961,474)	551,134)	637,566)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Net Income

Net income displayed significant volatility, with a substantial increase from 2018 (approximately $400 million) to 2020 (about $1.78 billion), followed by a sharp decline in 2021 and 2022 to $772 million and $362 million respectively.

Deferred Taxes

Deferred taxes fluctuated notably with negative values in 2018, 2020, and 2022, and small positive values in 2019 and 2021. A large negative deferred tax value in 2020 indicates a non-recurring tax adjustment during that period.

Depreciation and Amortization

Depreciation and amortization steadily increased year-over-year from approximately $55 million in 2018 to $126 million in 2022, indicating growing investment in capital assets.

Stock-Based Compensation

This expense consistently grew over the five years, increasing from about $71 million in 2018 to approximately $133 million in 2022, showing an increasing emphasis on equity incentives for employees.

Non-Cash Operating Lease Cost

Starting from 2019, non-cash operating lease costs rose each year, from $18 million to over $30 million by 2022, reflecting possibly increased leasing obligations or changes in accounting treatment under lease standards.

Miscellaneous Operating Items

Certain unusual items appeared sporadically: an arbitration award loss was recorded in 2021 (around $43 million), impairments on long-lived assets in 2019, and various gains and losses related to equity investments and lease terminations predominantly in earlier years.

Working Capital Components

Accounts receivable and inventories both showed notable negative changes in 2021, indicating a substantial use of cash or increase in balances, particularly notable with the $262 million negative change in receivables and $112 million in inventories.

Accounts payable and accrued liabilities showed volatility, with accounts payable swings from a positive $25 million in 2018 to a negative $37 million in 2022; accrued liabilities peaked positively in 2021 but were negative in 2022, suggesting changing payment cycles or obligations.

Deferred Revenues

Deferred revenues rose steadily, nearly doubling from $136 million in 2018 to $241 million in 2022, peaking in 2021 at $463 million. This suggests growth in prepayments from customers or long-term contracts.

Net Cash from Operating Activities

Operating cash flows were robust overall, with marked growth in 2019 and 2021 when cash provided exceeded $700 million and $1.17 billion respectively. However, 2022 recorded a notable decline to around $569 million.

Investing Activities

Investing cash flow was predominantly negative, with large purchases of property, plant, and equipment especially evident in 2021 ($401 million) and 2022 ($292 million), reflecting continued capital expenditures.

Investments and acquisitions varied but included significant acquisition expenses in 2020 ($421 million) and relatively smaller amounts thereafter.

Marketable securities activities showed mixed behavior between purchases and proceeds from sales and maturities, indicating active portfolio management.

Financing Activities

Financing cash outflows were significant, primarily driven by large stock repurchases: $300 million in 2018, increasing to $435 million in 2022. Issuance of common stock was modest in comparison, steadily increasing slightly over time. Additional payments related to equity forward contracts and payroll taxes among equity awards contributed to cash outflows.

Cash and Cash Equivalents

Ending cash balances increased from 2018 through 2021, peaking at about $1.1 billion, but decreased by roughly $158 million in 2022, driven by lower operating cash inflows and ongoing investing and financing outflows.

Overall Financial Trends

The company exhibited a pattern of strong operating cash flow generation, albeit with fluctuations in net income that affected overall profitability. Capital investment remained a priority, as evidenced by sustained property and equipment purchases. Financing activities indicated aggressive capital return strategies, particularly via share repurchases. The volatility in working capital accounts and unusual tax and impairment items suggest episodic operational adjustments or external events impacting certain periods. Cash position remains strong despite the variations observed.

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Align Technology Inc. (NASDAQ:ALGN)

Cash Flow Statement