Align Technology Inc. (NASDAQ:ALGN)

Goodwill

Goodwill remained relatively stable around 64 million US dollars from 2018 to 2019, then experienced a substantial increase to over 444 million in 2020, followed by a gradual decrease in the subsequent years reaching approximately 408 million by 2022.

Existing technology

This asset showed significant growth starting from 12.6 million in 2018 and 2019, jumping sharply to nearly 99.4 million in 2020, and then continued to increase slightly to over 112 million by 2022.

Customer relationships

Customer relationships increased moderately from 33.5 million in 2018 and 2019 to 55 million in 2020 and 2021, before declining sharply to 21.5 million in 2022.

Trademarks and tradenames

These intangibles approximately doubled from 7.1 million in 2018 and 2019 to around 16.6 million in 2020, then marginally increased to 17.2 million by 2021, maintaining that level through 2022.

Reacquired rights

The value of reacquired rights was stable at 7.5 million between 2018 and 2019 but was no longer reported from 2020 onwards, indicating possible disposal or reclassification.

Patents

Patent value slightly declined over the period, decreasing from 7.4 million in 2018 and 2019 to about 6.5 million between 2020 and 2022.

Acquired intangible long-lived assets, gross carrying amount

This item more than doubled from 68.1 million in 2018 and 2019 to approximately 177.6 million in 2020, with minor fluctuations thereafter, ending just above 157 million in 2022.

Accumulated amortization

Accumulated amortization increased steadily from about -31 million in 2018 to a peak of roughly -57.4 million in 2021, before decreasing to approximately -51.2 million in 2022, reflecting the amortization expense and potential asset retirements or impairments.

Accumulated impairment loss

This account remained steady at about -19.3 million from 2018 through 2021, but showed a significant reduction to -8.5 million in 2022, suggesting a reversal of impairments or asset revaluations.

Foreign currency translation adjustments

This item was not reported in 2018 and 2019, then showed a positive adjustment of 13 million in 2020, followed by decreases in subsequent years to a negative figure of approximately -1.9 million in 2022, indicating currency exchange fluctuations affecting the assets.

Intangible assets, net

Net intangible assets experienced significant growth in 2020 to over 130 million from relatively low values in 2018 and 2019 but then declined steadily to about 95.7 million by 2022, reflecting the impact of amortization, impairments, and asset management.

Goodwill and intangible assets, total

This aggregate line increased dramatically in 2020 to nearly 575 million from approximately 82 million in 2018. It then decreased gradually to around 503 million by 2022, following similar trends to goodwill and intangible assets individually, indicating major acquisitions or revaluations in 2020 and subsequent amortization or impairments.

The financial data reveals significant growth trends in both assets and equity over the five-year period from 2018 to 2022. A comparison between the reported and goodwill-adjusted figures provides insights into the impact of goodwill on the company’s financial position.

Total Assets

The reported total assets increased markedly from approximately $2.05 billion at the end of 2018 to about $5.95 billion by the end of 2022. This represents an almost threefold increase over five years, indicating substantial expansion. The largest jump occurred between 2019 and 2020, where reported assets nearly doubled.

The adjusted total assets, which exclude goodwill, also show a strong increasing trend, rising from roughly $1.99 billion in 2018 to about $5.54 billion in 2022. Although slightly lower than the reported figures, the adjusted total assets follow a similar trajectory and pattern of growth, reflecting genuine asset increases beyond goodwill.

Stockholders’ Equity

Reported stockholders’ equity more than doubled from about $1.25 billion in 2018 to approximately $3.60 billion in 2022. The most significant rise occurred in 2020, with equity increasing by a large margin compared to prior years, likely linked to overall asset growth and retained earnings accumulation.

Adjusted stockholders’ equity, which excludes goodwill, rose from about $1.19 billion in 2018 to $3.19 billion in 2022. The adjusted equity figures are consistently lower than the reported ones, highlighting the material impact of goodwill on total equity. The growth pattern in adjusted equity similarly suggests strengthening financial health independent of goodwill adjustments.

Overall, the company has demonstrated strong asset and equity growth during the five-year period. The inclusion of goodwill elevates reported asset and equity levels, but the adjusted figures confirm that the company’s core financial position has improved substantially. Peak growth periods around 2019–2020 indicate possible acquisitions or other financial events contributing to significant increases. Subsequent years show continued steady growth, implying ongoing successful operations and value creation.

The financial data presents several key trends and changes over the five-year period from 2018 to 2022. A comparison between reported and goodwill adjusted figures reveals consistent patterns across all metrics, with the adjusted data generally reflecting slightly higher values.

Total Asset Turnover

The total asset turnover ratio, both reported and adjusted, remained stable at around 0.96-0.99 in 2018 and 2019. However, a marked decline is observed in 2020, where the ratio dropped to approximately 0.51-0.56, indicating reduced efficiency in utilizing assets to generate sales. Although there was a small recovery in 2021, with ratios increasing to about 0.67-0.72, the asset turnover ratio declined again slightly in 2022 to 0.63-0.67. This trend suggests challenges in maintaining asset productivity following 2019.

Financial Leverage

The financial leverage ratio shows moderate variability. Reported leverage increased from 1.64 in 2018 to 1.86 in 2019, followed by a decrease to 1.49 in 2020. Subsequently, it rose again to stabilize around 1.64-1.65 in 2021 and 2022. Adjusted leverage follows a similar pattern but is marginally higher, ranging from 1.67 in 2018 to a peak of 1.9 in 2019 and settling near 1.72-1.73 in the latest years. This indicates a fluctuating but generally stable use of debt relative to equity over the period.

Return on Equity (ROE)

ROE experienced significant volatility. Both reported and adjusted ROE increased from the low 30% range in 2018 and 2019 to peak sharply in 2020 at approximately 55% (reported) and 64% (adjusted). However, this was followed by notable declines in 2021 and further in 2022, dropping to near 10% and 11%, respectively. This sharp surge then decline reflects potential irregular profitability or non-recurring events affecting equity returns.

Return on Assets (ROA)

ROA follows a trend similar to ROE but at lower absolute levels. The ratio decreased slightly from 19.5% (reported) and 20.1% (adjusted) in 2018 to about 17.7% and 18.2% in 2019, before exhibiting a strong increase in 2020 to 36.8% (reported) and 40.5% (adjusted). This peak was short-lived, with ROA declining sharply to approximately 13% and 14% in 2021 and further decreasing to around 6% to 6.5% in 2022. The pattern suggests similar influences on profitability as seen in ROE, but indicative of asset efficiency.

In summary, the data reflects a period of relatively stable operational efficiency and leverage until 2019, followed by a sharp deterioration in asset turnover in 2020 and partial recovery afterward. Profitability metrics peaked strongly in 2020 but fell significantly in the subsequent two years. Financial leverage exhibited some variability but remained within a moderate range. The alignment between reported and goodwill adjusted values confirms that goodwill adjustments have a modest but consistent impact on the ratios.

Total Assets

The reported total assets increased steadily from approximately 2.05 billion USD in 2018 to nearly 5.95 billion USD by 2022, showing a significant growth trend over the five-year period. Similarly, the adjusted total assets, which likely exclude goodwill, also grew from about 1.99 billion USD in 2018 to roughly 5.54 billion USD in 2022. Both reported and adjusted assets nearly tripled, with a noticeable acceleration in growth occurring between 2019 and 2020.

Total Asset Turnover

The reported total asset turnover ratio decreased sharply from 0.96 in 2018 and 2019 to 0.51 in 2020. Following this decline, there was a partial recovery to 0.67 in 2021, followed by a slight downturn to 0.63 in 2022. The adjusted total asset turnover ratio mirrored this pattern, declining from 0.99 in 2018 and 2019 to 0.56 in 2020, then increasing to 0.72 in 2021 before decreasing slightly to 0.67 in 2022. This suggests that asset efficiency diminished notably in 2020 but showed signs of improvement in the subsequent years, although not returning to pre-2020 levels.

Insights

The rapid growth in total assets, both reported and adjusted, indicates substantial expansion or acquisition activity during the period, particularly around 2020. The sharp drop in total asset turnover in 2020 coincides with this asset growth, indicating that the company's ability to generate sales relative to its asset base temporarily weakened, possibly due to integration challenges or delayed revenue recognition from newly acquired or developed assets. The partial recovery in asset turnover in 2021 and stabilization in 2022 suggest improvements in operational efficiency or revenue generation relative to the larger asset base, although efficiency has not fully returned to the levels seen in 2018 and 2019.

Total Assets

The reported total assets exhibited a consistent upward trajectory from 2018 through 2021, nearly tripling over this period, rising from approximately 2.05 billion USD in 2018 to nearly 5.94 billion USD by the end of 2021. However, growth plateaued in 2022 as total assets remained nearly flat compared to the prior year. Adjusted total assets followed a similar pattern, showing substantial growth through 2021, then stabilizing in 2022. The adjustment excluding goodwill resulted in a slightly lower asset base each year but preserved the overall trend.

Stockholders’ Equity

Reported stockholders’ equity increased markedly from 1.25 billion USD in 2018 to over 3.23 billion USD by the end of 2020, reflecting strong equity growth. This growth continued more modestly into 2021 and slightly declined in 2022. The adjusted stockholders’ equity, which excludes goodwill, showed a comparable trend but at lower absolute values, indicating that a portion of equity growth was attributable to goodwill adjustments. The peak equity was reached in 2021 with a mild reduction thereafter.

Financial Leverage Ratios

Reported financial leverage ratios demonstrated some fluctuation, starting at 1.64 in 2018, rising to 1.86 in 2019, then declining notably to 1.49 in 2020 before increasing again through 2022 to approximately 1.65. The adjusted financial leverage ratios mirrored this pattern but remained consistently slightly higher than the reported ratios each year. This suggests that after adjusting for goodwill, the company exhibited marginally higher leverage, indicating a slightly increased proportion of debt relative to adjusted equity.

Overall Insights

The financial data reveals a period of substantial asset and equity expansion through 2021, followed by stabilization in 2022. The distinction between reported and adjusted figures underscores the impact of goodwill on the company’s balance sheet structure, with adjustments reducing both assets and equity but not altering overarching trends. The financial leverage ratios indicate a company that managed its leverage levels with some variability but without extreme deviation, maintaining leverage ratios consistently between approximately 1.5 and 1.9. The slight increase in leverage post-2020 may warrant monitoring to assess the implications for financial risk.

The financial data over the five-year period presents several notable trends in both reported and goodwill adjusted metrics related to stockholders' equity and return on equity (ROE).

Stockholders' Equity (Reported and Adjusted)

Reported stockholders’ equity exhibits a consistent upward trajectory from 2018 through 2021, increasing from approximately 1.25 billion USD in 2018 to around 3.62 billion USD in 2021. However, there is a slight decline in 2022, with the figure decreasing to approximately 3.60 billion USD. Adjusted stockholders' equity, which removes the impact of goodwill, follows a similar pattern, rising steadily from about 1.19 billion USD in 2018 to around 3.20 billion USD in 2021 before experiencing a marginal decrease to about 3.19 billion USD in 2022.

Return on Equity (Reported and Adjusted)

Reported ROE shows a peak in 2020, reaching nearly 55%, which is a significant increase from roughly 32% in the preceding years of 2018 and 2019. However, after 2020, there is a notable decline in reported ROE, falling to approximately 21% in 2021 and further down to just over 10% in 2022. The adjusted ROE trend mirrors this pattern but starts at a slightly higher base and reaches a higher peak of approximately 64% in 2020, again followed by a sharp decline to about 24% in 2021 and around 11% in 2022.

The data suggests strong growth and profitability improvements through 2020, highlighted by substantial increases in stockholders’ equity and ROE. The subsequent decline in ROE during 2021 and 2022, despite relatively stable equity levels, indicates a potential reduction in profitability or efficiency in generating returns for shareholders in recent years. The close alignment between reported and adjusted figures implies that goodwill adjustments have a minor impact on the overall equity and return measures, reflecting consistent underlying financial performance trends.

Total Assets

The reported total assets exhibited a significant upward trend from 2018 through 2021, increasing from approximately $2.05 billion to nearly $5.94 billion. However, in 2022, the reported total assets showed a marginal increase to about $5.95 billion, indicating a plateau in asset growth during the last recorded year.

The adjusted total assets, which exclude goodwill, followed a similar trend. They rose steadily from approximately $1.99 billion in 2018 to about $5.52 billion in 2021, with a slight increase to roughly $5.54 billion in 2022. The narrowing gap between reported and adjusted total assets over the years suggests a relative stability or reduction in goodwill adjustments.

Return on Assets (ROA)

The reported ROA displayed a fluctuating pattern. Beginning at 19.5% in 2018, it experienced a slight decrease in 2019 to 17.71%, followed by a sharp rise to 36.77% in 2020. However, the ROA declined notably thereafter, falling to 12.99% in 2021 and further to 6.08% in 2022. This indicates a peak in asset profitability in 2020 with subsequent deterioration.

The adjusted ROA mirrored the reported ROA trend but with slightly higher values. Starting at 20.13% in 2018, it decreased to 18.17% in 2019, surged significantly to 40.5% in 2020, then declined to 13.98% in 2021, and finally dropped to 6.53% in 2022. This pattern suggests that when adjusting for goodwill, asset efficiency was somewhat better but followed the same overall trajectory of growth followed by decline.