Shirley Stacy - VP, Corporate Communications and Investor Relations Joseph M. Hogan - President, Chief Executive Officer & Director David L. White - Chief Financial Officer.

Robert Patrick Jones - Goldman Sachs & Co. Steve C. Beuchaw - Morgan Stanley & Co. LLC John C. Kreger - William Blair & Co. LLC Brandon Couillard - Jefferies LLC Matthew O’Brien - Piper Jaffray & Co. (Broker) Christopher William Lewis - ROTH Capital Partners LLC Jon Block - Stifel, Nicolaus & Co., Inc. Jeff D. Johnson - Robert W. Baird & Co., Inc. (Broker).

Greetings and welcome to the Align Technology's First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I'd now like to turn the conference over to your host, Shirley Stacy, VP of Corporate and Investor Communications. Thank you.

You may now begin..

Good afternoon and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO; and David White, CFO. We issued first quarter 2016 financial results today via Marketwired, which is available on our website at investor.aligntech.com.

Today's conference call is being audio webcast and will be archived on our website for approximately 12 months. A telephone replay will be available today by approximately 5:30 PM Eastern Time through 5:30 PM Eastern Time on May 5. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13634117 followed by #.

International callers should dial 201-612-7415 with the same conference number. As a reminder, the information that the presenters discuss today will include forward-looking statements, including statements about Align's future events, product outlook and the expected financial results for the second quarter of 2016.

These forward-looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our recent periodic reports filed with the Securities and Exchange Commission. Actual results may vary significantly and Align expressly assumes no obligation to update any forward-looking statements.

We have posted a set of GAAP and non-GAAP historical financial statements, including the corresponding reconciliations and our first quarter conference call slides on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I'll turn the call over to Align Technology's President and CEO, Joe Hogan.

Joe?.

Invisalign Clear Aligners and Scanners. David will provide more detail on our financials and also discuss our outlook for the second quarter. Following that, I'll come back and summarize a few key points and open up the call to questions.

Q1 was a solid start to 2016 with better-than-expected revenue and earnings, driven by continued strong year-over-year Invisalign volume across our entire customer base, with North America up 21% and international up 34%. Demand for our new iTero Element scanner remained strong, driving a 72% year-over-year growth in Scanner & Services revenues.

For Q1, North America Clear Aligner volume was up both sequentially and year-over-year. On a sequential basis, Q1 was driven primarily by our North American orthodontist customers, who achieved record utilization of 10.4 cases per doctor this quarter.

On a year-over-year basis, our Q1 volume growth rate continues to outpace the three-year average, and was driven by continued increase in ortho utilization and expansion of our GP customer base.

Q1 Invisalign volume for international doctors was down 1.5% sequentially, as expected, given the seasonally lower period in Europe through the winter holidays and up to 34% year-over-year. In EMEA, Q1 volume was up 34% year-over-year, led by growth across our core European countries. It was especially strong in Spain, which was up 70%.

The investments made in sales, clinical and customer care with our new selling processes are showing quick returns. Our new geographies also performed well year-over-year with Benelux, Eastern Europe and the Nordic markets up over 90%. In Asia-Pacific, total Q1 volume was 35% year-over-year, led by China and Japan, each of which were up 50% or more.

Record Invisalign volume in both Southeast Asia and Taiwan was driven by growth of more than 40% year-over-year, as we continued to make progress in smaller country markets with our direct sales approach.

Next month in Macao, we look forward to hosting our second Invisalign APAC Summit, where almost 700 customers will attend the largest Invisalign Summit outside of North America.

The APAC Summit will focus heavily on recent innovations, Invisalign advantages over other treatment options and peer-to-peer sharing of successful treatment outcomes in very complex cases.

In the important teen segment, the total number of Invisalign cases worldwide in Q1 increased 22% year-over-year, reflecting continued adoption of Invisalign treatment for teenagers 11 years and 19 years old. On a 12-month basis, 148,000 teens started orthodontic treatment with Invisalign with an average age of 15 years.

We're pleased with continued growth in teenage cases, especially among North American orthos. We're also beginning to make progress in growing our teen business outside the United States, where we had 30% year-over-year growth from international doctors.

Our integrated customer marketing campaigns in North America, EMEA, and APAC leverage traditional paid media, search, digital marketing, PR and social media to engage consumers at every point in the consumer purchasing journey.

Consumers' interest and demand for Invisalign treatment continues to grow, as we can see from the increase in key program metrics worldwide. For example, in Q1, the total number of unique web visitors to invisalign.com or its regional equivalent, increased 30% to 3 million.

And the total number of consumers who search for an Invisalign provider increased 27% to nearly 0.5 million. In North America, 2016 marked the strongest Q1 to-date for the Invisalign brand, in terms of earned media with 27% increase in overall impressions.

In EMEA, we focused primarily on lead-generation activities in Q1, which drove 670,000 visitors to rejoin Invisalign website and our Invisalign social media community grew significantly, up 150% compared to Q1 last year.

In Asia-Pacific, we've been preparing for several major consumer campaigns in China, Australia, New Zealand, and Japan that we'll launch in Q1. The new campaign in China will be our very first in the country, targeting females 25 years and older in both Shanghai and Beijing.

In Q1, our Scanners business revenue was up 17% sequentially and 72% year-over-year, reflecting a record number of units shipped in a quarter. Demand for the iTero Element scanner continues to expand our installed base, fueled primarily by North American orthodontists.

As of Q1, 94% of our top 1% of elite orthos have purchased at least one scanner and 64% of our top 1% of elite GPs have purchased a scanner for their practice. We also continue to see strong adoption of digital scanners for Invisalign case submissions in place of PVS impressions.

For Q1, total Invisalign cases submitted with a digital scanning worldwide increased to 36%, which reflects a record 44% from North America and 18% from international doctors.

While these scans are predominantly from our iTero scanner, we're beginning to see some uptake from 3M's True Definition, and Sirona's Omnicam, the other two digital scanners that also qualified for Invisalign case submission. Adding to this today, we announced Invisalign interoperability with another third-party scanner.

In Q4 of this year, 3Shape scanners are expected to be approved which will enable Invisalign providers with a TRIOS scanner to submit a full arch digital impression in place of a traditional PVS impression.

Clinical validation of the workflow is mostly complete, however given our ERP implementation this summer, the ability to support TRIOS scanners for Invisalign case submissions could not be finalized in our Invisalign Doctor Site, which we call IDS until after the ERP implementation is complete.

We also announced an agreement with 3Shape to enhance existing STL export workflow between iTero scanners and laboratory partners using 3Shape dental system software. This will enable improved consistency for customers using the workflow. With that, I'll now turn the call over to David..

Invisalign case volume is anticipated to be in the range of 174.5 thousand cases to 177.0 thousand cases, up approximately 20.7% to 22.4% over the same period a year-ago. We expect Q2 net revenues to be in the range of $253.3 million to $258.3 million.

We expect Q2 gross margins to be in the range of 75% to 75.5%, slightly down sequentially, primarily due to a higher freight cost due to increased mix of international shipments, as well as increased training revenue, which carries lower gross margins. We expect operating expenses to be in the range of $142.7 million to $144.2 million.

Q2 operating expenses will increase quarter-over-quarter based on several factors. Q2 will carry the full quarter impact of employee compensation-related costs, such as annual wage increases, stock-based compensation awards, and new hires.

Some investments in sales territory coverage and go-to market activities that were anticipated in Q1, were delayed to Q2 in the second half of the year. Given our continued success in driving growth and adoption of Invisalign outside the U.S., we do intend to make some incremental investments in the second half of 2016.

Our Q2 operating margin should be in the range of 18.7% to 19.7%. Our effective tax rate should be approximately 24% and diluted shares outstanding should be approximately 81.4 million, exclusive of any share repurchases. Taken together, we expect our Q2 diluted EPS to be in the range of $0.46 to $0.49.

With that, I'll turn the time back over to Joe for final comments.

Joe?.

Thanks, David. I'm pleased with Q1 and our better-than-expected start to the year thanks to continued growth and adoption across our customer base.

We credit that to our focus on and investment in key growth drivers, especially our continued expansion outside of North America, commitment to product and technology innovation and consumer demand programs that help drive Invisalign adoption.

Q2 will be a busy quarter for us with the upcoming AAO in Orlando, the APAC Summit in Macao, and our Analyst Day coming up in June. I look forward to seeing many of you at that Analyst Meeting in New York to sharing more details about our opportunities for growth, our competitive advantages and the key things we're focusing on for the future.

Thank you for your time today. I'll now open the call to questions.

Operator?.

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from Robert Jones from Goldman Sachs..

Thanks for the questions. You guys mentioned that some of the investments were delayed from Q1 to later in the year. I guess, first part will be why, were they delayed? And then the second part and more importantly, does that delay in investment have any impact at all on your view of mid-20% revenue growth for the year.

Obviously, case growth continues to be pretty strong and also tied to that level of investment.

Just wondering, if the timing of the spend, has affected at all your view of the full-year?.

So, Bob. This is David. I'll see if I can field that for you. They were marketing expenses as we talked about, as I mentioned in the script. They were, however, though related to things that had a longer-term aspect to them. So, they weren't near-term types of items that would necessarily be driving current year case growth.

They had more to do with portfolio types of planning and studies and things like that. So, no impact to the year..

Got it. And then I guess just on the international side, case growth, you are obviously very robust there. But kind of in line with the type of growth we've seen in the last few quarters. I know you guys had mentioned more investments this year coming on the international side versus the domestic side.

I'm just curious, if you could talk about what type of growth rate or growth rate acceleration we should maybe think about on the international side, and then maybe just the timeline or timing around the returns on the investments you're making internationally would be helpful?.

It's Joe, Bob. And I'd say, you know the – what we expect is to continue with the growth rates, we've seen you know in the – from an international standpoint, but I don't see a change there.

In a sense of – you know overall in that business, it's pretty much what we've been telling you, there's not a lot of dilution in the sense of what we do internationally, in the sense of the resources that we put it in a year; and the return, we're getting on those resources through so, think about that return in the aspect of a one-year kind of return on international commercial kinds of resources..

Got it. Thanks so much..

You're welcome..

Thank you. Our next question comes from Steve Beuchaw from Morgan Stanley..

Thanks for taking the questions, guys. My first one is actually on the buyback. Well, of course, very nice to see.

My question is, are you framing the buyback for 2016, as something like a new normal or is this something that we should think of as a one-time step-up relative to the historical trend?.

So, I don't think there is any intended change in the program that we announced a couple years ago, Steve. We announced $300 million, we anticipated to repurchase $100 million a year.

In the first two years of that program, we repurchased $70 million of the $100 million in each case, using an ASR and then we repurchased the remaining $30 million in open-market transactions over the balance of the year. And this year, pretty much the same thing except for changing it to a 50-50 split. No other change other than that..

Okay. Got it. So, it's not – okay, now I understand the period you're saying.

And then, my second question actually David is, could you quantify how much of the spend was delayed out of Q1 into the balance of the year?.

So, the portion that was delayed into Q2 is in our guidance. Portion that was delayed into the second half is about $2 million or so, roughly..

Got it. And then, I will....

Go ahead..

Thank you very much. Have a good night..

You bet..

Steve..

Thank you. Our next question comes from John Kreger from William Blair..

Hi..

Hi, John..

Thanks very much. Hi, Joe, can you just maybe give us some update on market commentary. There has been a fair amount of economic volatility in recent months.

Are you seeing any of that filter through to your GP or ortho customers?.

I haven't seen any change at all from what we experienced in 2015, as we go into 2016 and nothing recently either in that sense..

So, what does that tell you? Does that say there is just not as much sensitivity around what we would probably think of is a fairly discretionary purchase by consumers or do you think there's just such an under penetration for Clear Aligners that you can kind of power through a cyclicality that an orthodontist might see?.

I'll be cautious, I haven't gone through a cycle in this business yet, John. So, I'll just be cautious on what I'd say here. See, if I look at the economic data and backup a little bit, a lot of that economic data has to do with inventory and production right now. And I don't think it's in a consumer sense, something that's definitive yet.

So, what I'm seeing right now, I want to try and communicate to you is, the market fields now is the market has for the last really 10 months since I've been here.

If this thing hits the consumer and there is a significant consumer effect, I think, it'd be naïve of us to say that we think we'll just power through that with the same kind of growth rates we have today, but I think we just got to take that a quarter, but a quarter of time right now..

Great. Thanks. And then one more. You mentioned the upcoming AAO meeting.

It's been a little longer than I think in the past of when you guys have announced some product updates, any preview you could give us about something that might be coming there or just in general the cadence that we should expect about new product innovation?.

No big change in the cadence of new product introduction. I can't give you any kind of a look under the covers right now, in the sense of – you know what we might do at the AAO, John or not do at the AAO.

But, look R&D is incredibly important to us, you know we're focused on now inclusions in the sense of making this a deeper and deeper penetration against wires and brackets. We're really excited about that future portfolio and what we can do, but not ready to announce anything big coming up on the AAO right now..

Okay. Great. Thank you..

Welcome..

Our next question comes from Brandon Couillard from Jefferies..

Hey, thanks. Good afternoon. Joe, just a question on the digital case submissions.

I'm curious as to your latest thoughts on how much contribution, or how would you characterize the success or progress of the Seric (28:32) relationship so far? And just given the installed base size, I'm surprised it didn't seem to have been a larger contributor to-date, any color you can share there?.

Brandon that really hasn't changed. I think we try to communicate to the market as much as possible, as that we think that these open-source way is the way to go to make sure that you know – ability to no matter what's game you're on, if you have the kind of accuracy and capability that you can submit in this line kind of order.

I'm frankly not surprised of what we see, I think when you look at Sirona, they've been cautious in the sense of how they bring people on and make sure of the accuracy and – which is really good in the sense of how they can interface with us.

And so, right now, it's really no change in the sense of, I think what we anticipated prior to Sirona coming on and what we're seeing right now. But again, we feel good about that open-source commitment, and we feel good from a North America standpoint, in particular, to see the rates of digitized impressions coming in.

It's good for our business, it's actually good for customers, because of the sensation, because of the accuracy of it, and how much faster we can actually turn things around..

And – sorry, if this has already been asked, I don't think so, but could you – you'd pointed to perhaps the Cadent or iTero scanner revenues falling a little bit short of your prior goal for the year.

Could you quantify that and perhaps give us a sense of the magnitude of the backlog and how long you think it might take to burn off?.

Yeah. Brandon. So, when we ended 2015, we had more than six months of backlog on the iTero scanner and that number still holds true today. Notwithstanding the fact that, our revenues in that business were up significantly in Q1 and we're almost doubling the business.

In the January call, we talked about our expectations that business perhaps doubling this year and I think that might have – given where we are today with some production capacity constraints and so forth, that might have been a little bit more optimistic by maybe 10% or so.

And we hope to work through those constraints and work down the backlog as we continue to ship product throughout the balance of the year..

Sure. Thank you..

Thank you. Our next question comes from Matthew O'Brien from Piper Jaffray..

Hi, guys. Thanks for taking the questions.

So, you guys have seen impressive North American growth over the last four quarters, how much can you attribute that to the stratification of the sales force?.

I think, it's not a binary instrument on this whole thing, I think the stratification was helpful, when you define that stratification is, we're focused on our really high-end orthos, what we call our SAM (31:38) accounts and then how we've – allow our territory managers to go across orthodontics and also GP.

It's been an efficient alignment, but we've also put a significant number of more resources into the field also, and so there is a multiplier there in a sense that the customers were touching and how we're spreading the workforce.

So, I think those two main variables, it's hard to pull part how much each was effective, but we know that both of them have been effective in the sense of allowing us more customer time and placing reps in front of high user kind of accounts that really need different types of things than some of the newer users or smaller users, too..

Great. And also, I apologize if you guys have maybe answered this already, but single arch was a big growth last quarter. How much of that contributed to GP segment this quarter? Thanks..

So, good question. As we looked at it, if you look at the single arch and you look at even the pricing actions we took a year-ago in Q2, where we lowered the pricing on both the E5 and the E10; we changed the staff discount program, and so forth.

As we look at it now, we're seeing great traction on those products; I mean they're growing well and – much faster than what the rest of our business is on a volume basis, maybe not the same way on a revenue side. But, certainly on a volume basis, they're growing at a rate faster than what our full products are.

And when you look at it on a quarter-over-quarter basis, or I should say a year-over-year basis, it's probably about three points of growth when you compare it year-over-year..

Great. Thank you very much..

Okay..

Thank you. Our next question comes from Chris Lewis from ROTH Capital Partners..

Hey, Chris..

Joe, you mentioned – hey guys..

Are you there?.

I'm here, can you hear me?.

Yeah, got you..

Okay. Great.

Joe you mentioned, you're beginning to see some progress with teen in international markets; can you talk about what's starting to drive that progress?.

Chris, again it's not subjectivity to my comment here, but I think, if you look at the history, particularly in North America, we had a history here of years of people thinking we really – orthodontics is not thinking we can do with teen.

As we go overseas, I don't think we're burdened with that mythology as much as – because obviously we changed the type of malocclusions we could do; we moved into teens pretty well.

We've changed our portfolio to address that, and just think there is less inertia to overcome overseas than maybe what we've had in North America over the years is my guess.

And obviously what we're going to have to do is double back in North America and push a lot harder in the sense of our capability in that area now to overcome, I think, some history that's existed there..

On Additional Aligners program, it's been around I think nine months since you implemented that, I was hoping you could just take a minute and kind of talk about it here, if you're starting to see ordering patterns and your customer behavior in terms of your utilization rates being impacted from that program?.

the fact that we're treating more complex cases, the fact that our mix is shifting a little bit from the standpoint that International is growing faster than what North America is, since they treat typically more complex cases than what we do here in North America; that's kind of shifting some of that.

But when we look at all those usage rates, we don't see any particular aberration in those rates that we can specifically attribute to the change in the policy. What we know is that, when we talk to doctors they love it.

They are appreciative of the fact that it's easier for them to practice with us; they don't have to be constantly thinking in the back of their mind, if I submit in a – and a request for Additional Aligners, am I going to pay for this one or not.

So, when we look at the data, we don't actually see anything that shows an aberration, since all pretty much qualitative, and we know that it's one of the factors that we believe is driving the record ortho utilization we're seeing right now. Utilization last quarter – Q1 was 10.4 cases and it's one piece of the whole puzzle, I think..

Okay. Thanks for the time..

Thank you. Our next question comes from Jon Block from Stifel..

Great. Thanks, and good afternoon, guys. Maybe two or three.

The first one Joe, I believe for you, on the teen market, I think you guys gave some metrics, teens up about 22% trailing 12 months, but it is like in adult, and you mentioned the average teen age around 15 years old, but of course, a lot of teens are out there getting orthodontic care at 11 years old to 14 years old.

So, I guess the question is, can you go younger with the current product, or do you need something more specific to mix dentition and tracking compliance et cetera?.

Jon, I think you know the answer of that question, you know that. But I think honestly, one part of the practical side of me, Jon, is that our teen utilization rate in the 20% to 25% range depending on how you look at it, is really insufficient, given the market is 75% teens.

And so, regardless of how young, you want to move back into the teen segment, we have plenty of opportunity when you look at complete dentition above 13 years old. So, we should be able to get out regardless of that kind of an approach.

But I mean, obviously our R&D is focused on how we can go back and look at what I call morphology changes rather than just moving piece is actually moving things in. Obviously, we have some clinical trials in the marketplace in that area to see how well our appliances can fit in that particular area and we're optimistic about it..

Okay. And next two questions I promise I really don't know. So with the first one David for you, you mentioned maybe on Cadent more optimistic by 10%. I just want to make sure, I understand what you meant. So, the Cadent revs were going to roughly double this year, which was the initial guidance, that was an incremental $45 million.

I believe what you're saying, maybe it's $4 million or $5 million too high, that's – is that correct? And then second part is, do you make up that $4 million or $5 million shortfall just to keep your – I think it was low to mid-20% revenue guidance for the year? And then, I've just got one more..

So, I think, the net of it all is that our revenue guidance is roughly intact. We'll make it up elsewhere either through pricing or through other things that were built into that plan..

Okay. And then just a very last one, you guys gave some interesting metrics on sort of the percent of high volume guys that own a scanner and there is a lot of them and we've been showing the average scanner user.

There is a lot more cases in your overall average, but this brings back in the question sort of the chicken or egg, so are there any metrics that you can give even at a higher level of what someone looks like before they get a scanner and then where they go six months, 12 months or 18 months after they bring it into their practice? Thanks, guys..

Hey, Jon. We're obviously looking at that. Our penetration rates are being furthered right now. You got to look at ortho, definitely we do GPs in that sense, but we really don't have anything definitive to share with you yet, that would say, you buy a scanner, you automatically do more Invisalign. We're not ready to say that..

Okay. Perfect. Thanks for your time, guys..

Thank you..

Thanks, Jon..

Our next question comes from Richard Newitter from Leerink Partners..

Hi. This is Robby (39:55) in for Rich.

Can you hear me?.

Hi, Robby (39:58), yeah..

Hi, Robby (40:00)..

Great. Thanks for taking the questions. I had a question – a couple of questions. One, maybe on the doc training and then another on gross margins. First, on the Invisalign doctors training, sequentially, it looks like there is a seasonal step down in North America, but you're flat year-over-year, whereas O-U.S. training stepped up sequentially.

Hoping you could help explain some of the dynamics behind that, and how we should see training progress throughout the year. And then, maybe second on the gross margins. Scanner gross margin of about 45%. Where do you think that can go over time? And should we think of sort of 2Q, 4Q at the similar level? Thanks..

So, Robby (40:47), on the doctors trained, when you look at those statistics, you'll notice that typically we train more doctors internationally than what we do in North America. And when you break it down and you look in North America, it's primarily GPs.

I mean, there are reengagement of orthos and so forth, but the predominant mix is on the GP side.

And in terms of the seasonality of that, we typically have a couple periods during the year, where that is higher, Q2 and Q4 are typically the periods during the year that we offer more training, and we try to get more enrollment during those time periods.

On the international side, I think it fluctuate less on a quarter-to-quarter basis and it probably geared more by our capacity that take on doctors and feel like we've got enough clinical health and so forth, to get them watched and start off their Invisalign practice.

And I don't think we see as much seasonality in terms of how we plan out the international doctor side of it. And then the second question was on scanning..

The gross margins on Scanner..

So, the gross margins on Scanners, they are in the 45% to 50% type of range and a lot of that is due to, when we designed the new iTero Element.

We designed it, as not only a more feature-rich product than the 2.9, which it replaced; but we designed it a lot for cost reduction and so, you have a much smaller footprint in terms of physical form factor, that sits in the doctor's office, you have much lower support costs for the product, because the wand detaches from the base unit.

The training is all done virtually, instead of us actually – having to actually whole classes on the training, it's done virtually. The doctor installs it himself versus us having to send somebody into do a field install.

So, all those things kind of contribute from a business model standpoint, why it's a better gross margin proposition than what the prior version was.

Does that answer your question?.

Yeah. It does. And then maybe if I could get one more in, regarding the 3Shape announcement, sorry if you had mentioned it, I may have missed it.

Did you say anything about what you think their installed base is and how many that opens up?.

No, we didn't. And we're not quite privy to that information either. So, I mean obviously, it's a successful scanner, but there is not an installed base number that's been shared with us..

Great. Thank you..

Thanks, Robby (43:46)..

Thank you, Robby (43:47)..

Operator, we'll take one more question, please..

Our last question comes from Jeff Johnson from Robert W. Baird..

Thank you. Good evening, guys..

Jeff..

Joe, just wanted to start with you. Hey, how are you? So, Joe, starting with you on the utilization number, the 10.4 case number obviously as you guys said kind of an all-time high on the North American ortho side. As I'm looking at it, it's also I think without the biggest sequential jump up I've seen in that metric as well.

So, I don't revisit the point you made about kind of end market being stable.

How much of that sequential improvement maybe is coming from some of the efforts, you guys have been putting in the field, a lot of the work we've done and I'm sure others, but survey work in that seems like North American dental market has picked up here a bit in the last six months.

How much might be tied to those factors, things like that? Just want to focus a little more on that 10.4 case number, if possible?.

Jeff, it's a good question. I'd tell you again, it's a great answer, because I think we don't see this definitively. But I would say, I just look at kind of a constant force from a market standpoint over the last 12 months. And then overall, I think it's really the people we put into field and it's obviously I think some of our inventions like D5, D6.

And then frankly, when you think about E5, E10 and some of our pricing dynamics on that too, all these things I think have really helped from a penetration standpoint with those guys. So, I wouldn't necessarily attribute it to a market uptick. I think, the market is in very consistent.

I think, our resource allocation and focuses, I think, it really help in that sense..

All right. Great. And then David, just one question for you on the guidance or at least on some of the P&L numbers. You mentioned the operating margin 250 basis points here, I think, you said between the extra Aligner policy in the FX in the quarter.

Any chance you could split that out or disaggregate those two numbers? And then, just want to make sure I've got my gating correct. It seems like the FX drag pretty much goes away starting in the second quarter in the extra Aligner policy, will at least anniversaries through the model starting in the third quarter.

Is that the right way to think about those drags?.

When you always do these compares, it's always against what you're comparing to. When you're comparing quarter-over-quarter, FX and Additional Aligner is not a big impact on Q2; it was a little bit of a drag, but 20 bps or so.

When you look at it year-over-year, you see a bigger impact and like we said about almost three point, most of that Additional Aligner, about $8 million of that is Additional Aligner and like another $2.5 million or so roughly of FX..

Okay.

And then, the FX component as we go into 2Q would expect that pretty much on a year-over-year basis, were done with most of those headwinds at this point you think?.

Well, you tell me what exactly....

No. Assuming currency stays stable where it is today..

Yeah. If currency stays flat, the only "headwind" you might say we have that we keep calling out is Additional Aligner. An Additional Aligner – our discussion about Additional Aligner and its impact, kind of swan songs in Q2, because once we get to Q3, our comparatives will have the full impact in both ways..

Got it. Thank you..

Thanks, Jeff..

Thanks, Jeff..

Well, thank you, everyone for joining us today. This concludes our conference call. If you have any further questions, please contact Investor Relations. Have a great day..

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation..