Align Technology Inc. (NASDAQ:ALGN)

The analysis of the financial leverage and debt-related ratios over the five-year period reveals a relatively stable and conservative capital structure for the company.

Debt to equity (including operating lease liability)

This ratio remained low and stable, fluctuating slightly between 0.03 and 0.04 from 2019 to 2022. This indicates that the company maintains minimal debt relative to shareholders' equity, reflecting low financial risk related to leverage.

Debt to capital (including operating lease liability)

Similarly, the debt to capital ratio remained consistently low at around 0.03 to 0.04 across the periods reported. This suggests a stable balance between debt and equity financing without significant changes in the company’s capital structure.

Debt to assets (including operating lease liability)

This ratio exhibited minimal variation, staying steady at approximately 0.02 throughout the period. This low ratio confirms the company’s low reliance on debt to finance its asset base.

Financial leverage

Financial leverage showed some variability, starting at 1.64 in 2018 and reaching a peak of 1.86 in 2019, followed by a decline to 1.49 in 2020. Thereafter, it increased again to around 1.64-1.65 in 2021 and 2022. The fluctuation suggests moderate changes in the firm's use of debt relative to equity, though overall leverage remains moderate.

Fixed charge coverage

This ratio showed more significant fluctuations over the period. It started high at 28.76 in 2018, decreased to 25.37 in 2019 and then substantially dropped to 14.62 in 2020. The ratio recovered strongly to 31.46 in 2021 before dropping again to 16.8 in 2022. These changes indicate variations in the company’s ability to cover fixed charges, potentially reflecting changes in operating earnings or fixed obligations.

Overall, the data indicates that the company operates with a low level of debt relative to equity and assets, maintaining a conservative financial structure. Financial leverage and coverage ratios exhibit some volatility, particularly the fixed charge coverage ratio, which may warrant further monitoring to assess the company’s ongoing ability to meet fixed financial obligations from operating income.

Stockholders’ Equity

The stockholders’ equity demonstrates a significant upward trend across the periods analyzed. Starting at approximately 1.25 billion US dollars at the end of 2018, it increased steadily to about 1.35 billion in 2019. There was a substantial rise in 2020, with equity reaching over 3.23 billion US dollars. This upward trajectory continued, albeit at a slower pace, with the equity growing to approximately 3.62 billion in 2021 and slightly declining to about 3.60 billion in 2022. This pattern suggests a strong enhancement of the company’s net asset base, particularly between 2019 and 2020.

Total Debt

Data for total debt is unavailable for all periods, which limits the ability to analyze leverage or changes in the company's debt structure over time.

Debt to Equity Ratio

As both total debt and debt to equity ratio figures are missing for the entire timeline, no analysis can be conducted regarding the company's leverage or risk profile.

Total Debt (including operating lease liability)

The total debt shows a consistent increasing trend over the period analyzed. Starting from US$59,200 thousand in 2019, it rises to US$86,180 thousand in 2020, followed by a significant jump to US$125,375 thousand in 2021. The debt slightly increases again to US$126,908 thousand in 2022. This indicates a growing reliance on debt financing over these years.

Stockholders' Equity

Stockholders' equity displays a clear upward trend, showing substantial growth between 2018 and 2020. It increases from US$1,252,891 thousand in 2018 to US$1,346,169 thousand in 2019, then leaps to US$3,233,865 thousand in 2020. Subsequent growth is more moderate, reaching US$3,622,714 thousand in 2021 and slightly decreasing to US$3,601,358 thousand in 2022. The sharp increase in 2020 stands out as a significant event in equity growth.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remains relatively low and stable throughout the period. It is 0.04 in 2019, slightly decreases to 0.03 in 2020 and 2021, before increasing back to 0.04 in 2022. This low ratio suggests that the company maintains a conservative capital structure with equity predominantly financing its assets despite the increase in absolute debt levels.

The financial data indicates limited availability of information, particularly in the debt-related metrics. Total debt and Debt to capital ratio are not reported for any of the years, which restricts the ability to analyze the company's leverage and capital structure over the specified periods.

Regarding total capital, there is a notable upward trend observed between 2018 and 2021. Specifically, total capital increased from approximately $1.25 billion in 2018 to around $3.62 billion in 2021. This represents a near tripling of capital within a three-year span, indicating significant growth or capitalization efforts. However, in 2022, total capital slightly decreased to about $3.60 billion, suggesting a marginal contraction or stabilization after the prior years of growth.

In summary, despite the absence of debt-related data, the available capital figures reveal strong expansion of the capital base through 2021, followed by a slight decline in 2022. Without information on debt levels, it is challenging to fully assess financial risk or the proportion of financing through debt versus equity.

The annual financial data reveals several key trends regarding the company’s debt and capital structure over the five-year period.

Total Debt (including operating lease liability)

The total debt increased substantially from 59,200 thousand US dollars in 2019 to 126,908 thousand in 2022. This represents more than a twofold increase over the four-year span. The rise in debt appears steady, with notable increments each year:

From 2019 to 2020, debt grew by approximately 26,980 thousand US dollars (45.5%), from 59,200 to 86,180 thousand. It then expanded further to 125,375 thousand in 2021, marking a 45.5% increase year-over-year. The growth rate slowed considerably from 2021 to 2022, with a modest increase of around 1,533 thousand (1.2%).

Total Capital (including operating lease liability)

Total capital experienced a strong upward trajectory from 1,252,891 thousand US dollars in 2018 to 3,728,266 thousand in 2022. Notably, the capital figure almost tripled between 2019 and 2020, jumping from 1,405,369 to 3,320,045 thousand, indicating a major increase in the company’s invested resources during that period.

The capital base continued to rise through 2021, reaching 3,748,089 thousand, before slightly declining to 3,728,266 thousand in 2022. This suggests a peak in capital resources in 2021 followed by a marginal contraction in the most recent year.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio remained consistently low throughout the analyzed period, fluctuating slightly around 0.03 to 0.04. This indicates that despite increasing debt levels, the company maintains a relatively low proportion of debt compared to its total capital structure.

The ratio declined from 0.04 in 2019 to 0.03 in 2020 and held steady at 0.03 through to 2022. This stability implies effective management of capital and debt growth in parallel, maintaining a conservative leverage profile.

Overall, the data suggests that the company has significantly expanded its capital base over the period, with debt levels increasing in absolute terms but remaining low in relation to total capital. The low and stable debt to capital ratio reflects a cautious approach to leverage despite the upward trend in both debt and capital figures. The slight decline in total capital in 2022 may warrant closer monitoring to assess any future implications.

The financial data reveals several key trends over the five-year period ending December 31, 2022. Total assets exhibited a strong upward trajectory, beginning at approximately 2.05 billion US dollars as of December 31, 2018, and rising steadily through the subsequent years to reach approximately 5.95 billion US dollars by the end of 2022. This significant growth, more than doubling total assets, indicates an expanding asset base and potential business growth or acquisition activity.

No data was provided regarding total debt or the debt to assets ratio for any of the years, which limits insight into the company's leverage or capital structure changes over the period. The absence of total debt data means it is not possible to assess the company’s reliance on borrowing or its financial risk profile as compared to its asset base.

Overall, the available data points to substantial asset growth, reflecting either accumulation of investments, operational expansion, or other asset increases. However, the incomplete data on liabilities and leverage restricts a comprehensive evaluation of the financial stability and risk associated with the company’s growth.

The analysis reveals several notable trends across the financial data presented over the five-year period ending December 31, 2022.

Total Debt (Including Operating Lease Liability)

This metric demonstrates a consistent upward trend. Starting with a value of 59,200 thousand US dollars in 2019, debt increased to 86,180 thousand by the end of 2020. The growth accelerated in subsequent years, reaching 125,375 thousand in 2021 and marginally increasing to 126,908 thousand in 2022. This progression indicates a deliberate increase in leverage or financing over the period, with significant expansion particularly between 2019 and 2021.

Total Assets

Total assets exhibited strong growth from 2,052,458 thousand US dollars in 2018 to approximately 5,947,947 thousand by the end of 2022. The most pronounced growth occurred between 2019 and 2020, where assets nearly doubled from 2,500,702 thousand to 4,829,683 thousand. Subsequent growth continued, albeit at a moderated pace, with assets increasing to over 5,942,110 thousand in 2021 and slightly rising further in 2022. This suggests a period of rapid expansion and asset accumulation, possibly driven by investments, acquisitions, or other capital-intensive activities.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt-to-assets ratio remained remarkably stable at around 0.02 throughout the reported period from 2019 to 2022. Despite the substantial increases in both debt and total assets, the ratio's stability indicates that debt growth has been proportionate to asset growth. This balance suggests a controlled approach to managing financial leverage, maintaining low relative indebtedness compared to asset size.

In summary, the financial data portrays a company undergoing rapid asset growth coupled with a proportional increase in debt levels. The low and steady debt-to-assets ratio highlights prudent leverage management despite expanding obligations and asset base. The increasing total debt aligns with the company’s expanded asset base, indicating financing strategies aimed at supporting growth initiatives without significantly elevating financial risk.

The analysis of the financial data over the five-year period reveals several noteworthy trends and developments.

Total assets

The total assets experienced substantial growth from 2018 to 2021, increasing from approximately 2.05 billion US dollars in 2018 to nearly 5.94 billion US dollars in 2021. This represents a more than doubling of asset size over the three-year span. However, between 2021 and 2022, the total assets stabilized, showing a very marginal increase, indicating a plateau in asset growth during the last year observed.

Stockholders’ equity

Stockholders’ equity followed a similar upward trend, with a steady increase from about 1.25 billion US dollars in 2018 to 3.62 billion US dollars in 2021. This remarkable rise illustrates significant wealth accumulation for shareholders over this interval. In 2022, stockholders’ equity showed a slight decline to approximately 3.60 billion US dollars, suggesting a minor decrease or potential distribution that reduced equity.

Financial leverage

The financial leverage ratio displayed variability across the years. Starting at 1.64 in 2018, it rose to 1.86 in 2019, indicating increased reliance on debt relative to equity. Subsequently, it declined significantly to 1.49 in 2020, reflecting a more conservative capital structure or equity growth outpacing debt. The ratio then increased again to around 1.64 in 2021 and remained stable at 1.65 in 2022, suggesting a consistent balance between debt and equity financing in the most recent years.

In summary, the company demonstrated strong asset and equity growth through 2021, with growth plateauing in 2022. The fluctuations in financial leverage suggest strategic adjustments in financing approaches, balancing between debt and equity resources to support growth and maintain financial stability.

Earnings before Interest and Tax (EBIT)

The EBIT values exhibit a fluctuating trend over the five-year period. Starting at approximately 458 million USD in 2018, EBIT increased notably to around 555 million USD in 2019, indicating growth in operational profitability. However, in 2020, the EBIT experienced a significant decline to approximately 379 million USD, suggesting a period of operational challenges or increased costs. This downturn was followed by a substantial rebound in 2021, with EBIT reaching over 1 billion USD, the highest in the given timeframe, reflecting a strong recovery or an expansion in operations. In 2022, EBIT decreased again to nearly 599 million USD, which, while lower than the 2021 peak, remains above the levels recorded from 2018 to 2020.

Interest Expense and Interest Coverage

No data is available for interest expense or interest coverage for the entire period under review. Consequently, it is not possible to assess the interest burden on earnings or the company's ability to cover interest obligations from its operating income.

Earnings before fixed charges and tax

There was an overall upward trend in earnings before fixed charges and tax from 2018 to 2022, although the progression was not consistent. The amount increased from approximately 474,458 thousand US dollars in 2018 to a peak of about 1,045,664 thousand US dollars in 2021. However, in 2022, this figure declined to 636,976 thousand US dollars, representing a notable decrease from the previous year but still higher than the values recorded before 2020.

Fixed charges

Fixed charges increased steadily over the period from 2018 to 2022. Starting at 16,500 thousand US dollars in 2018, fixed charges rose incrementally each year, reaching 37,919 thousand US dollars by 2022. This consistent increase indicates growing obligations related to fixed expenses or interest costs for the company.

Fixed charge coverage ratio

The fixed charge coverage ratio exhibited significant fluctuations over the five-year period. In 2018, the ratio was high at 28.76, decreasing gradually to 14.62 in 2020. A substantial recovery occurred in 2021 when the ratio increased sharply to 31.46, indicating a strong ability to cover fixed charges during that year. However, this ratio dropped again in 2022 to 16.8, signaling reduced coverage capability. These variations seem to correlate with the volatility in earnings before fixed charges and tax, as well as the steadily increasing fixed charges.