Analysis of Reportable Segments
Align Technology Inc. operates in 2 segments: Clear Aligner and Imaging Systems and CAD/CAM Services.
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- Income Statement
- Statement of Comprehensive Income
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
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Segment Profit Margin
Align Technology Inc., profit margin by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Clear Aligner | |||||
| Imaging Systems and CAD/CAM Services |
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).
- Clear Aligner Segment Profit Margin
- The profit margin for the Clear Aligner segment exhibited a fluctuating trend over the five-year period. Starting at 42.12% in 2018, there was a slight decline to 41.27% in 2019, followed by a more pronounced decrease to 36.55% in 2020. The margin rebounded to 40.83% in 2021 but declined again in 2022 to 36.92%. This indicates variability with a general downward tendency from the initial high levels seen in 2018 and 2019.
- Imaging Systems and CAD/CAM Services Segment Profit Margin
- This segment showed a somewhat inconsistent margin performance. The profit margin remained stable at around 36% in 2018 and 2019, before dropping sharply to 25.93% in 2020. A recovery occurred in 2021, with margin increasing to 36.73%, nearly matching previous high levels. However, this was followed by another decline in 2022 to 27.15%, reflecting volatility and challenges in sustaining profitability at earlier levels.
- Comparative Insights
- Both segments experienced significant fluctuations over the period. The Clear Aligner segment, while showing some recovery phases, ended 2022 with a margin close to its trough in 2020, indicating persistent margin pressures. The Imaging Systems and CAD/CAM Services segment had a sharper mid-period decline but saw a notable recovery in 2021 before once again declining in 2022. The data suggests that both segments encountered cost or pricing pressures impacting margins, with no sustained long-term improvement seen through the end of 2022.
Segment Profit Margin: Clear Aligner
Align Technology Inc.; Clear Aligner; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Income from operations | |||||
| Net revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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).
1 2022 Calculation
Segment profit margin = 100 × Income from operations ÷ Net revenues
= 100 × ÷ =
The financial results for the Clear Aligner segment over the five-year period indicate several notable trends in income, revenue, and profitability.
- Income from Operations
- The income from operations showed an overall upward trajectory from 2018 through 2021, starting at $712.4 million and rising sharply to $1.33 billion in 2021. However, in 2022, this figure declined to approximately $1.13 billion, representing a noticeable decrease compared to the previous year, though it remained well above the 2018 and 2019 levels.
- Net Revenues
- Net revenues exhibited consistent growth from 2018 up to 2021, increasing from $1.69 billion to $3.25 billion, almost doubling over the period. In 2022, net revenues declined slightly to $3.07 billion, marking the first revenue decrease in the examined timeframe yet maintaining a significantly higher base than prior to 2020.
- Segment Profit Margin
- The segment profit margin demonstrated variability with an initial slight decline from 42.12% in 2018 to 41.27% in 2019, followed by a more pronounced reduction to 36.55% in 2020. In 2021, there was an improvement to 40.83%, but this was followed by another decline to 36.92% in 2022. This indicates fluctuating profitability efficiency relative to revenues, with 2020 and 2022 experiencing notable margin compression.
In summary, the Clear Aligner segment experienced significant growth in both operating income and net revenue from 2018 through 2021, with some correction in 2022. Profit margins were highest in the earlier years and showed inconsistency in the later years, suggesting potential pressures on cost management or pricing strategies during those periods. The data highlights the importance of monitoring margin dynamics in conjunction with revenue and income trends to fully understand segment performance.
Segment Profit Margin: Imaging Systems and CAD/CAM Services
Align Technology Inc.; Imaging Systems and CAD/CAM Services; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Income from operations | |||||
| Net revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
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).
1 2022 Calculation
Segment profit margin = 100 × Income from operations ÷ Net revenues
= 100 × ÷ =
The segment data reveals fluctuations in income from operations over the five-year period assessed. Starting at USD 98,998 thousand at the end of 2018, income from operations increased significantly to USD 137,720 thousand by the end of 2019, followed by a decline to USD 96,052 thousand at the end of 2020. Thereafter, a sharp rise occurred in 2021, with income reaching USD 259,127 thousand, before decreasing again to USD 179,765 thousand in 2022.
Net revenues exhibit a generally upward trend from 2018 through 2022 but with notable variations. Revenues increased steadily from USD 275,025 thousand in 2018 to USD 381,046 thousand in 2019. In 2020, there was a slight decrease to USD 370,482 thousand. A substantial surge followed in 2021, where revenues nearly doubled to USD 705,504 thousand, before a decrease to USD 662,050 thousand in 2022, albeit remaining significantly higher than prior to 2021.
The segment profit margin shows considerable variability that does not fully correspond to the movements in absolute income or revenue values. The margin remained relatively stable around 36% from 2018 to 2019. However, it declined sharply to 25.93% in 2020, indicating reduced profitability relative to revenues. In 2021, the margin rebounded strongly to 36.73%, reflecting improved operational efficiency or cost management during that year. This profitability advantage diminished in 2022, with the margin falling again to 27.15%.
Overall, the segment experienced significant growth in absolute income and revenues in 2021, accompanied by an improvement in profit margin, suggesting a peak performance year. Despite declines in 2022, the income and revenues levels remained well above pre-2021 figures. The profit margin volatility highlights challenges in maintaining consistent profitability relative to revenue changes, emphasizing potential variability in costs or pricing strategies within the segment.
Net revenues
Align Technology Inc., net revenues by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Clear Aligner | |||||
| Imaging Systems and CAD/CAM Services | |||||
| Total |
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).
- Clear Aligner Segment
- The Clear Aligner segment exhibited a consistent upward trend in net revenues from 2018 to 2021, increasing from approximately $1.69 billion to about $3.25 billion. This represented substantial growth over the four-year period. However, in 2022, there was a slight decline in revenue to approximately $3.07 billion, indicating a small decrease following the peak in 2021.
- Imaging Systems and CAD/CAM Services Segment
- The Imaging Systems and CAD/CAM Services segment demonstrated growth between 2018 and 2019, rising from approximately $275 million to $381 million. In 2020, revenues decreased slightly to around $370 million. The segment experienced significant growth in 2021, with revenues nearly doubling to about $706 million. In 2022, a modest decline occurred, bringing revenues down to approximately $662 million, though remaining notably above the pre-2021 levels.
- Total Net Revenues
- Total net revenues reflected the combined patterns from both segments. There was steady growth from 2018 through 2020, increasing from nearly $2.0 billion to about $2.47 billion. In 2021, total revenues surged substantially to approximately $3.95 billion, driven by increases in both segments. In 2022, a mild decline occurred, reducing total revenues to around $3.73 billion, yet maintaining a level well above earlier years.
- Summary
- Overall, the data shows strong growth in annual net revenues across both reportable segments over the five-year period, with a notable acceleration in 2021. The subsequent slight declines in 2022 may suggest market adjustments or other influencing factors following the robust expansion phase. Despite the declines in the most recent year, revenue levels remain significantly higher than those recorded in 2018 through 2020, indicating sustained growth compared to earlier periods.
Income from operations
Align Technology Inc., income from operations by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Clear Aligner | |||||
| Imaging Systems and CAD/CAM Services | |||||
| Unallocated corporate expenses | |||||
| Total |
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).
- Clear Aligner Segment Income from Operations
- The income from operations in the Clear Aligner segment demonstrates a generally positive trajectory over the analyzed period. Starting at approximately $712 million in 2018, it increased to a peak of around $1.33 billion in 2021, representing significant growth. However, in 2022 there is a noticeable decline to approximately $1.13 billion, which, while lower than the previous year, remains substantially higher than the values from 2018 through 2020.
- Imaging Systems and CAD/CAM Services Segment Income from Operations
- This segment shows more variability across the years. The income rose from about $99 million in 2018 to a peak of approximately $260 million in 2021. There is a decline in 2022 to roughly $180 million, which indicates some volatility but still an overall increase compared to the earlier years of the period.
- Unallocated Corporate Expenses
- Unallocated corporate expenses consistently represent a negative impact on total income from operations, reflecting ongoing costs not attributed to the reportable segments. These expenses have progressively increased in magnitude from approximately -$345 million in 2018 to around -$672 million in 2022, indicating rising overhead or central costs over time.
- Total Income from Operations
- The total income from operations, which aggregates the above segments and accounts for unallocated expenses, reveals a fluctuating pattern. After an increase from about $467 million in 2018 to approximately $542 million in 2019, there is a significant drop in 2020 to $387 million. This decline is followed by a strong rebound in 2021, reaching $976 million. However, the total then decreases substantially in 2022 to around $643 million. This volatility suggests sensitivity to external or internal factors affecting overall profitability.
- Overall Analysis
- Both reportable segments showed growth peaks in 2021, with declines noted in 2022. Unallocated corporate expenses have steadily increased in absolute terms, exerting higher pressure on total profitability. The total income from operations reflects these dynamics, with a notable dip in 2020, a recovery in 2021, and a decline again in 2022. This pattern indicates challenges in maintaining consistent operational income growth, despite strong segment revenues, largely due to rising corporate expenses and segment-specific variances.