Align Technology Inc. (NASDAQ:ALGN)

The analysis of the property, plant, and equipment data over the five-year period reveals a consistent upward trend in both gross assets and net book values, indicating ongoing investment and expansion in fixed assets.

Clinical and manufacturing equipment

This category shows a steady and substantial increase each year, growing from $236,179 thousand in 2018 to $583,776 thousand in 2022. The growth suggests ongoing modernization and capacity expansion in manufacturing capabilities.

Building

There is a pronounced increase from $139,315 thousand in 2018 to $466,003 thousand in 2022. The magnitude of growth indicates significant capital expenditure on building infrastructure, particularly accelerating in the later years of the period analyzed.

Leasehold improvements

This item exhibits some fluctuations, decreasing from $77,168 thousand in 2018 to $53,327 thousand in 2019, then modestly increasing and stabilizing around the $60,000 thousand range in subsequent years. The fluctuations may reflect a change in lease arrangements or amortization of earlier improvements.

Computer software and hardware

There is a consistent but moderate increase from $93,914 thousand in 2018 to $120,544 thousand in 2022. This steady growth aligns with the likely gradual upgrading of IT infrastructure supporting operations and administration.

Land

Land value has grown markedly from $17,630 thousand in 2018 to $58,885 thousand in 2022, with the largest increase occurring between 2020 and 2021. This may reflect strategic acquisitions of land for future development or expansion.

Furniture, fixtures, and other

There is a clear upward trend, with values increasing from $33,436 thousand in 2018 to $102,933 thousand in 2022. The steady growth indicates ongoing investment in office and facility furnishings and miscellaneous assets.

Construction in progress

This category shows a significant increase, especially notable in 2021 where it jumps to $367,686 thousand from $163,492 thousand in 2020, before slightly declining to $285,202 thousand in 2022. The large values and fluctuations reflect active ongoing projects under development and a possible completion of some projects in the most recent period.

Property, plant and equipment, gross

The gross value rises continuously from $693,056 thousand in 2018 to $1,681,581 thousand in 2022, demonstrating substantial asset growth over the analyzed time frame.

Accumulated depreciation and impairment charges

Accumulated depreciation increases in magnitude annually from -$171,727 thousand in 2018 to -$449,726 thousand in 2022, consistent with asset aging and usage. The growing depreciation charge aligns with the expansion of the asset base.

Property, plant and equipment, net

The net book value follows an escalating trend, moving from $521,329 thousand in 2018 to $1,231,855 thousand in 2022. This indicates that asset additions and capital investments exceed depreciation and impairments, reflecting overall growth and strengthening of the fixed asset base.

Average Age Ratio

The average age ratio exhibited a fluctuating trend over the five-year period. It increased from 25.42% in 2018 to a peak of 30.08% in 2020, indicating an aging asset base at that time. Subsequently, the ratio declined to 25.98% in 2021, before rising again to 27.71% in 2022. This suggests periodic adjustments in the asset profile or acquisition of newer assets affecting the average age.

Estimated Total Useful Life

The estimated total useful life showed variability, beginning at 12 years in 2018, decreasing slightly to 11 years in 2019, then increasing to 13 years in 2020. It further extended to 15 years in both 2021 and 2022. This overall upward adjustment may reflect revaluation of asset longevity or changes in asset composition towards more durable equipment.

Estimated Age, Time Elapsed Since Purchase

The estimated age remained relatively stable from 2018 through 2022, starting at 3 years for the first two periods, and increasing to 4 years consistently from 2020 onward. The steady incremental increase aligns with a regular aging of the asset base, suggesting no significant disposal or replacement activity affecting asset age.

Estimated Remaining Life

The estimated remaining life showed a mixed trend. After starting at 9 years in 2018, it declined to 8 years in 2019, then rebounded to 9 years in 2020. A more notable increase occurred in 2021 and 2022, with estimated remaining life extended to 11 years. This likely reflects adjustments in asset valuation or adoption of longer-lived assets within the property, plant, and equipment category.

Accumulated Depreciation and Impairment Charges

The accumulated depreciation and impairment charges exhibited a consistent increase over the examined period, rising from approximately 171.7 million USD in 2018 to nearly 449.7 million USD in 2022. This upward trend indicates ongoing asset usage and consumption, reflecting normal wear and tear alongside potential asset impairments.

Property, Plant and Equipment, Gross

The gross value of property, plant, and equipment showed strong growth throughout the period, increasing from around 693.1 million USD in 2018 to approximately 1.68 billion USD in 2022. This significant growth suggests substantial capital investments and asset additions, supporting business expansion or modernization efforts.

Land

The recorded value of land assets increased steadily from about 17.6 million USD in 2018 to nearly 58.9 million USD by 2022. The most notable jump occurred between 2020 and 2021, where land value rose sharply, indicating acquisition of new land parcels or revaluation adjustments during that time frame.

Average Age Ratio

The average age ratio, representing the proportion of depreciated asset life relative to total asset life, remained relatively stable with slight fluctuations. Starting at 25.42% in 2018, the ratio peaked at 30.08% in 2020, then decreased to 25.98% in 2021 before rising again to 27.71% in 2022. This pattern suggests a balance between asset aging and new asset additions or replacement activities.

Overall Insights

The data reveals a persistent increase in both gross property, plant, and equipment values and accumulated depreciation. The growth in gross PP&E exceeds the rise in accumulated depreciation, implying an overall increase in net asset value. The upward movement in land assets highlights a focus on acquiring real estate, potentially for operational expansion. The relatively stable average age ratio indicates consistent asset management, balancing renewal and utilization effectively.

Property, Plant and Equipment, Gross

The gross property, plant, and equipment value exhibited a consistent upward trend from 2018 through 2022. Starting at approximately $693 million in 2018, the value increased steadily each year, reaching roughly $1.68 billion by the end of 2022. This represents more than a doubling over the five-year span, indicating significant capital investment in fixed assets.

Land

The value attributed to land also rose over the period under review. Beginning at about $17.6 million in 2018, it increased to approximately $26.4 million in 2019 and continued to grow, reaching around $58.9 million by 2021. The value then stabilized from 2021 to 2022, with virtually no change in the reported land value. This pattern suggests acquisitions or revaluations of land assets primarily occurred before 2021, with no notable changes afterwards.

Depreciation Expense

The depreciation expense demonstrated an increasing trajectory, rising from $54.7 million in 2018 to $109.8 million in 2022. This near doubling corresponds with the growth in gross property, plant, and equipment, reflecting higher consumption of asset value due to increased asset base and possibly changes in depreciation policies.

Estimated Total Useful Life

The estimated total useful life of the assets varied across the years. It showed a decline from 12 years in 2018 to 11 years in 2019, followed by an increase to 13 years in 2020 and then a further rise to 15 years in both 2021 and 2022. This pattern may imply revisions of asset life assumptions, potentially affecting the calculation of depreciation expense and indicative of changes in asset composition or management’s reassessment of asset longevity.

Accumulated Depreciation and Impairment Charges

The accumulated depreciation and impairment charges exhibit a consistent upward trajectory over the five-year period. Starting at $171.7 million at the end of 2018, the figure increases steadily each year, reaching $449.7 million by the end of 2022. This indicates a continual allocation of cost over time to the property, plant, and equipment assets, reflecting both the aging of assets and the impact of impairment charges.

Depreciation Expense

The depreciation expense shows a general increasing trend throughout the period. Beginning at $54.7 million in 2018, the expense rises notably to $109.8 million by 2022. This upward trend suggests either an increasing base of depreciable assets or accelerated depreciation methods being applied. The increment from 2018 to 2019 is particularly pronounced, with a more moderate but consistent increase in subsequent years.

Time Elapsed Since Purchase

The time elapsed since purchase remains relatively stable, moving from 3 years in 2018 and 2019 to 4 years from 2020 through 2022. This suggests that the asset base has matured slightly but has not significantly aged beyond this range, indicating ongoing asset replacement or acquisitions within a similar timeframe.

Overall Insights

The company's property, plant, and equipment assets show a pattern of steady depreciation both in cumulative and annual terms. The increasing accumulated depreciation and rising depreciation expenses reflect ongoing consumption of asset value, likely tied to asset utilization and replacement cycles. The relatively stable time elapsed since purchase indicates a consistent asset turnover period, which can imply effective management of asset lifecycle and investment in maintaining or upgrading the asset base.

Net Property, Plant, and Equipment

The net value of property, plant, and equipment exhibited a consistent upward trend over the five-year period. Starting at $521,329 thousand as of December 31, 2018, it increased annually to reach $1,231,855 thousand by December 31, 2022. The most significant growth occurred between 2020 and 2021, where the value rose from $734,721 thousand to $1,081,926 thousand, indicating substantial capital investments or asset acquisitions during that year.

Land

The recorded value of land showed steady growth from $17,630 thousand in 2018 to $58,885 thousand in 2022. The increase was particularly notable between 2019 and 2021, where the value more than doubled from $26,422 thousand to $58,869 thousand by 2021, after which it plateaued. This suggests significant land acquisitions or revaluation in that period, with stabilization thereafter.

Depreciation Expense

Depreciation expense consistently increased year over year, rising from $54,700 thousand in 2018 to $109,800 thousand in 2022. The growth in depreciation expense aligns with the increasing net property, plant, and equipment values, reflecting expanding asset bases undergoing depreciation. The largest annual increase was between 2021 and 2022, with depreciation rising from $92,100 thousand to $109,800 thousand.

Estimated Remaining Life

The estimated remaining life of the assets showed minor fluctuations, starting at 9 years in 2018, decreasing to 8 years in 2019, returning to 9 years in 2020, and then increasing to 11 years in both 2021 and 2022. This indicates possible asset additions with longer useful lives or reassessments extending the useful life estimates in the latter years.