Name: Align Technology Inc. (NASDAQ:ALGN) | Cash Flow Statement
Creator: Stock Analysis on Net

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.

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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).

The company exhibits a volatile net income trend between 2018 and 2022, peaking significantly in 2020 before experiencing a steady decline. Despite this volatility in accounting profit, net cash provided by operating activities remained positive throughout the period, although it demonstrated a sharp contraction in 2022. The divergence between net income and operating cash flow is most pronounced in 2020 and 2021, driven largely by substantial non-cash adjustments and fluctuations in deferred revenues.

Operating Cash Flow Dynamics: Net cash provided by operating activities reached a peak of 1.17 billion US$ in 2021, followed by a decrease to 568.7 million US$ in 2022. A critical driver of this volatility is the management of deferred revenues, which spiked to 462.6 million US$ in 2021 before retreating to 241.9 million US$ in 2022, creating a significant cash drag in the final year. Additionally, non-cash expenses, specifically stock-based compensation and depreciation and amortization, have shown a consistent year-over-year increase, rising from a combined 125.5 million US$ in 2018 to 259.2 million US$ in 2022.
Investing Activities and Capital Expenditure: Investing activities consistently resulted in net cash outflows, with the most significant expenditure occurring in 2021 at 563.4 million US$. Capital expenditures for property, plant, and equipment peaked in 2021 at 401.1 million US$ before moderating to 291.9 million US$ in 2022. The company also actively managed a portfolio of marketable securities, characterized by large purchases in 2019 (693.3 million US$) and subsequent sales and maturities to maintain liquidity.
Financing Activities and Shareholder Returns: Financing activities have been dominated by a consistent and aggressive share repurchase program. Common stock repurchases increased from 300 million US$ in 2018 to a peak of 435 million US$ in 2022. This commitment to returning capital to shareholders is augmented by payroll taxes paid on the vesting of equity awards, which fluctuated between 51.1 million US$ and 108.9 million US$ annually. Financing outflows have consistently exceeded the modest proceeds from the issuance of common stock.

The overall liquidity position transitioned from a period of growth to a contraction by the end of the analyzed period. Cash, cash equivalents, and restricted cash grew from 450.1 million US$ at the start of 2018 to a peak of 1.1 billion US$ by the end of 2021. However, 2022 saw a net decrease in cash of 157.8 million US$, ending the year at 942.4 million US$. This decline is attributable to the simultaneous reduction in operating cash flow and the continuation of high expenditure on stock repurchases.

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