Greetings, and welcome to the Align Technology First Quarter 2015 Earnings Call. At this time all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Thank you. Ms. Stacy. 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 today for today’s call is Tom Prescott, President and CEO; David White, CFO and Joe Hogan, Incoming President and CEO. We issued first quarter 2015 financial results today via MarketWire, which is available on our Web site at investor.aligntech.com. Today’s conference call is being audio webcast and will be archived on our Web site for approximately 12 months. A telephone replay will be available today by approximately 05:30 PM Eastern Time through 05:30 PM Eastern Time on April 30th. To access the telephone replay, domestic callers should dial 877-660-6853 with conference number 13605393 followed by pound. 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, without limitation, statements about Align’s future events, product outlook, and the expected financial results for the second quarter of 2015. These forward-looking statements are only predictions and involve risks and uncertainties such that actual results may vary significantly. These and other risks are set forth in more detail on our Form 10-K for the fiscal year ended December 31, 2014. These forward-looking statements reflect beliefs, estimates and predictions as of today, and Align expressly assumes no obligation to update any such 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, Tom Prescott. Tom?

Thanks Shirley. Good afternoon everyone and thank you all for joining us. I’m pleased to have Joe here with us on the call today. He doesn’t officially start until June 1st, so we won’t make him answer any questions about the business, but he will be happy to take a couple of your questions during Q&A about why he is so excited of joining Align. Let me turn now to our first quarter results. On our call today I’ll provide some financial highlights and then briefly discuss the performance of our two operating segments Invisalign Clear Aligner, and Scanner and Services. I’ll also include some commentary on our performance with customers as well as progress in our geographies around the world. David will provide more detail on our financials and discuss our outlook for the second quarter. Following that I’ll come back and summarize a few key points and open the call up to questions. Our first quarter was a bit stronger than we expected getting us off to a good start to the year. This progress was driven by continued strong year-over-year growth by international team and solid improvement in our North America business as well. We are pleased to have delivered better than expected results, with strong revenues, margins and EPS driven primarily by higher Invisalign volume from our North American orthodontists. Our Q1 results reflect continued execution of our strategic plan including our three key strategic growth drivers which are market expansion, product innovation and brand strength. I’ll provide a brief update on each of these before discussing our results further. Market expansion comprises in many ways. We are working to expand the adult orthodontic treatment category with clear aligner therapy, increase our share of the Teenage orthodontic market and open up new and existing markets and…

Thanks, Tom. Note that this fiscal year, we are consolidating some of the supplementary product and geographic breakdowns that we provide for volumes and revenue as well as combining sales and marketing expense with general and administrative. We will continue to explain the performance of our products in geographies and include commentaries appropriate. However, we believe the consolidated view of our quarterly financials is more consistent with disclosures respect to peer group. Let’s review our first quarter financial results. Revenue for the first quarter was $198.1 million, down 0.3% from the prior quarter and up 9.7% from the corresponding quarter a year ago. First quarter Clear Aligner revenue of $187 million was up 0.3% sequentially and up 11.2% year-over-year. Sequential revenue growth reflected higher volume from our North American ortho doctors, offset slightly by lower volume from our international doctors as well as lower worldwide ASPs. Q1 ASPs were down sequentially $35, of which approximately $32 or $4.2 million in aggregate, was related to foreign exchange rates. Our year-over-year revenue growth reflected Invisalign case volume growth across all customer channels, partially offset by lower ASPs, primarily related to foreign exchange rates. For the first quarter, total Invisalign shipments of 138,000 cases were up 3.1% sequentially, reflecting growth from our North American orthodontists and to a less extend North American GP customers. Year-over-year case volume growth was 16.6% reflecting continued strength in international as well as strong demand from our North American orthodontists. Our North American orthodontists Q1 Invisalign case volume was up 7.9% sequentially and up 17% year-over-year. For North American GP Dentist, case volume was up 1.6% sequentially and 6.5% year-over-year. For international doctors, Invisalign case volume was seasonally down 0.9% sequentially and up 29% year-over-year. Q1 marks the sixth consecutive quarter of greater than 25% growth for our…

Thanks David. We’re extremely pleased that we’ve seen strong performance in all regions getting us off to a good start to the year. In every direction we look, our strategy is working well. In market expansion as our continued investments in go-to-market initiatives delivered volume growth from better coverage and support. In product innovation the adoption growth continue to be driven by our innovation cycle for both Invisalign and our scanner technology. In brand strength as we reached more and more consumers hoping them connect with the right practice ensuring they get a great Invisalign treatment experience. The significant growth initiatives we discussed during our year-end call including our expectations from most of the impact showing up in our second half results. While we’re pleased to see some of the positive impact early in the we do expect to see continued progress throughout 2015 as more of Align’s key initiatives begin a great leverage in the business. There is never an ideal time for our company to have change in the CEO but there are better times to make this important transition in new leadership. As figure today there is clear evidence of our solid execution of Align’s winning strategy demonstrating continued and sustainable progress for the business. We have a strong leadership team and great talent across the Align organization. The Company has outstanding prospects for continues growth in revenue and earnings and expect to be a market leader for the long-term, so while there's never an ideal time this is certainly not a bad time to make this change. After 13 years of leading this company and following a well executed succession plan this is a good time for me to step aside effective June 1. I'm extremely pleased to welcome Joe Hogan as the new President of…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] our first question is coming from the line of John Kreger with William Blair, please proceed with your question.

Could you maybe give us, as Tom suggested, a little bit of what drove your decision to join this company? It's obviously a pretty different profile from where you've been. And if you've formed them, perhaps what your first year priorities might be?

Hi John appreciate the question, look I'm really happy to be here, I mean Align is a great company, is a great history and good leadership and team here. I think your question to I know it's smaller than what I've done in the last maybe 10 years or 12 years of my career, but honestly gentlemen I've always have always been close to customers, I love technology, growth in markets and customers always have been terrific for me too and so I look at this a chance from a career standpoint to join a winning team, a company that has a lot of growth and also to do more of the things I really enjoy which is technology piece and the customer piece too, so I'm really looking forward to joining the company, I think the last part of our question is, look I see a terrific trajectory here and a strong team, I don't see any reason to change that. So I come on board, I'll take over the plant here and work diligently with the team to keep the momentum that Align's had over the last couple of years.

And then Tom, maybe coming back to you, now that you've got the Sirona interoperability deal in place, can you give us a sense about what does your sales force -- what are they able to do now that they've got that? Can they work collaboratively with Sirona or Patterson? Can they be knocking on the doors of existing CEREC users? How much might their approach change now that that deal is in place?

Great question and I think the right touchstone is to remember that's the Omnicam starting with a pretty darn small install base to begin with and mostly all GP dentists and most of which do not do Invisalign today, so it does give us an opportunity to recruit, great attractive practices or if they're small Invisalign customers you need to grow them but we're talking small number of thousands of units not the bigger part of the Sirona install base. Longer term Sirona is a terrific company they're doing a great job and I think they intentionally turned their install base over to Omnicam’s more and that will make that opportunity bigger but let’s just say start small and do the same things we’ve done with 3M True Definition, ensure that the customer has the best utility possible and we can make sure we deliver our great Invisalign experience help the practice grow, help the patients benefit, so same approach, we'll just keep moving forward.

Our next question comes from the line of Robert Jones with Goldman Sachs, please bear with your questions.

Thanks for the questions and welcome, Joe. I look forward to working with you. Tom, I guess, on the strong growth in cases in the quarter, clearly really strong in both the GPs and Orthos in North America. I think third and fourth quarters have accelerating growth consecutively respectively. Can you maybe just share with us how much of that in your mind is the improving underlying market versus you said some early traction in the go-to-market strategy changes?

I'd say yes. I don't mean to be flip but I wish we could be very clear about exactly what the quantitative drivers were, we know that when practice flow is steady and perhaps growing a little bit and procedures, procedure mix is positive for higher value procedures we do better than most and we certainly I would say steady to improving conditions as we exited '14 and went into '15. Secondly and I'll reach back to our call at the end of year, we were already in motion on most of these initiatives both on the consumer side and the product side and on a go to market side so while we think of this model generally as more backend loaded for impact in leverage we were already seeing some positive feedback from customer in Q3 and Q4 as we started to making these changes. A better coverage, more effective coverage, better support for the practices generally means could things happen. So it’s early and it’s way too early to call victory here. But we think our improving capabilities and better coverage alongside solid market is good news. We still project continued impact throughout the year as we normally see.

So it sounds like a combination of improving markets and some of your efforts then.

I think that’s fair.

And then I guess just sticking with North America but moving over to pricing, ASPs were down a little more than we had expected at least. I’m just curious how much leeway are you giving out there to the reps in the marketplace to drive some volume through pricing or through promotions?

Well, put this clearly I’ll let David come to ASPs specifics. We have series of program the reps have no attitude at deals or anything else. We have a very organized system of promotions we put in place usually a quarter or two in advance and those are fairly consistent and we have the advantage program which is the way we basically manage price. So there is no kind of field based management of this per say, I’ll let David maybe talk about some mix and few other issues that contributed to some of that ASP, none of which in our mind is negative.

Rob, ASPs on a worldwide basis for the quarter were primarily influenced by foreign exchange so we continue to believe that as we treat more complex cases as our international business continues to grow we believe that our worldwide ASP should trend slightly up over the foreseeing future. Periodically we are going to see little volatility in that from quarter-to-quarter basis just depend upon how that mix land. This last quarter our international business is pretty flat quarter-to-quarter seasonally and so as a result our ASPs that we typically sell under here in North America influence that worldwide number a little bit more in what they would have otherwise.

Okay, so the North American then was orchestrated through some of the specific targeted promotional activity it sounds like.

We only disclose what the North America ASPs were so I’m not sure how you’re backing into that. But we didn’t do anything fundamentally to change ASPs here in North America during the quarter.

If I can pile on for a second, if you think about that for minute we had great expansion in ortho and some kind of say new improving traction with GP. When we get more high volume doctors do more volume through the Advantage program, you’re going to see a little that in ASP. There was also a little bit of mix on the Express side, Express shift, Express mix stayed steady but little more in Express 5. But in general nothing unusual going on and all the directions are good.

Next question is from the line of Steve Beuchaw with Morgan Stanley. Please go ahead with your question.

First off, Joe, welcome to the call and thanks for taking the time to join.

Thanks Steve.

And Tom, in case this is my last opportunity, thanks for everything that you have done.

Great, Steve it’s been a pleasure working with you I’m sure see you around.

Hopefully in San Francisco in a few weeks?

Absolutely, there you go.

I guess I’ll start with Tom and a question following up to the question on the Sirona relationship as we think about how that rolls out over the next year or so. I wonder what you are hearing thus far, whether it’s from your planning team or from the field, about how customers might take advantage of the scanner. We know in the orthodontics channel that people who have iTero, they tend to do more cases. So how are you thinking about the impact on GP customers who might have an Omnicam but not an iTero? How could their utilization evolve and how does that play out over time?

Well, it goes right to the point of why we are pursuing this open systems approach within our operability. One is channel have to be capable, each of our partners have had to go into investing into software and tuning their systems to work with what the very prescribed for Invisalign and the Omnicam has met that standard and they rollout their 1.1 software we’ll be able to get cases. What we would expect is whether there are low volume Invisalign user today having to do impressions PBS impressions to sent it in, that are to be a positive. Very few GPs and especially a bigger office using CEREC for example is doing a huge amount of Invisalign because they’ve got such busy practice already. So we’re in addition to their practice we are not mean the main street part of their practice. This gives them an opportunity to me way more efficient to lower their cost and for the patient to be a whole lot happier. All of those things point to increase utilization. The result is never is significant as when you have a very high volume ortho that nearly switches over the scanners where it really removes friction, it’s very visible. So it does give us a great hunting license to go earn a bigger share of mine and share of practice being in more relevant and that’s the case whether it’s iTero or that’s the case whether it’s definition 3M’s True Definition, and it will be the case for Omnicam. So I think overtime our commitment is to work with each of these other players to ensure that we can deliver that great customers experience where patients are happy, docs are happy, we do that right we're going to get increased adoption growth in each of these accounts overtime.

And then one for Joe, I don't think anyone can expect you to have much in the way of specifics for how you want to operate at Align at this point. But I wonder if you can reflect on your past experience with regard to building a business, a combination of organic growth and acquisitive growth, and maybe give us a sense for how you at least philosophically think about the balance there. If you have any preferences or criteria that you use to think about for capital allocation by M&A and how you think about share buybacks for a company like Align that is such a strong generator of cash? Thanks.

I see that can read through your question and I've done a lot of M&A in my life and I'm sometimes labeled as an M&A person but I can tell you that I've only done that in the sense of looking at what organic growth is in different businesses I've been in and 10 to 1 I’d rather grow organically than look at acquisitions. But every role that I've been in whether it was running businesses within GE or most recently ABB, I don't really come in with a playbook, I come in and just see what the company does well and where it might need help, assess the team and understand the team and the strength of that team and then figure out how to grow and how to operate well and so I don't really have a playbook in that sense I think that if you go back to my history and I know several people out there contacted some of my friends and different people which I appreciate you get an idea from them rather directly from me but indirectly from them how they felt about working with me or for me and hopefully you'll hear that. So honestly I come in here I see a team that has an incredible track record a tremendous leadership like Tom, a business that has incredible potential in a lot of ways, whether it's scale or through additional technology and some of the things that David and Tom just talked about and I look to see how we can enhance that and obviously as I start and look at the company I'll get out and see customers, meet as much the company as I can and then from there we'll figure out what we need to do to grow more and what makes more sense.

Our next question is coming from the line of Chris Lewis of ROTH Capital. Please proceed with your question.

I just wanted to start on the gross margins. And I may have missed it but it looks like it came in about 300 basis points above your outlook. So can you elaborate on what drove the upside for gross margin during the quarter in the face of FX headwinds? And then as you look into the second quarter, what are the factors that are leading to your expectation for a sequential decline in gross margin in the second quarter?

So one of the phenomena about our business has to do with the training events that go on from period-to-period and in periods when we have more training events than other periods our margins tend to fluctuate in the down direction or in the up direction, depends on whether those training events are increasing or decreasing. And so when you look from Q4 to Q1 the training events were down in Q1 and we’re anticipating they're going to back up in Q2. And that certainly has some influence on it, when you look at the Q2 guidance part of it is foreign exchange rates have moved another five points on us since the last, well since Q1 average and so that has obviously some bearing on the margin guidance with we gave for Q2.

But Chris if I could add that we had increased volumes in the business, we had good performance of management of direct cost by the team, so we've seen where we put volume in this business it shows up in a variety of ways.

And then in terms of the high teen volume growth outlook you provided on the last call, 17% year-over-year volume growth this quarter, 18% guided to the midpoint next quarter, can you just talk about how you're feeling you're tracking towards that high teen volume growth outlook at this point, given your already kind of there in the first and second quarter and you talked about further impact from the North American go to market approach on the back half of this year.

David's the one providing the guidance I'll turn it over to him but I'll start by saying that all the elements we talked about that we tested during fiscal year '14 and pretty much had in place. We were getting good feedback and we said it was very early in the year at the end of January to see but we’re getting good feedback from customers that they felt that coverage had improved, our responsiveness was improving, we were in better position to help them be successful in their practices I'd say the maturation of things like deep bite and some of the initiatives we've been working on for a while, all those things kind of start to come together with a great consumer program so pleased that there are innovation cycle, coverage and go-to-market adjustments around the world and now in North America a little more, and consumer programs kind of work together and again actually the back drop is reasonably healthy market but we've been reasonably comfortable that we're on the right track, again the tide can go out a little bit but I think we're going to do better than most, I'll David come back and comment specifically on the framework he provided for the year.

Yes, so Chris when we gave the framework back in January and so forth we had obviously a lot of lifting to do against the foreign exchange headwinds and so forth we had a lot of investments we were making to hopefully drive top line in not only the long term but certainly in the short term and you may recall in our comments I think we might even have mentioned something that effect here early in the call that we expect to see more of our growth coming in the second half of the year. Some of those investments we can take hold. So as we think about the year in totality we feel like we gotten up to a great start and sitting April feeling good about that but we also know we have a lot of works still got ahead of us to deliver the full year results that we give you the outlook on just couple of months ago.

Our next question is from the line of Jeff Johnson with Robert W. Baird. Please proceed with your question.

Thank you. Good evening, guys, and welcome Joe and Tom. Hopefully I’ll catch you in San Francisco in a couple weeks like some of the others.

Perfect.

I wanted to start, Joe, you made a comment that some of us have been out there checking on you and one of the labels that gets put on you is maybe an M&A focus. One of the other labels, if I want to phrase it that way, is that you may be a very cost-conscious or cost-focused kind of guy as well. Maybe that stems obviously from your GE Healthcare days. But just in general, how do you think about costs? And you’re running obviously the growth company a West Coast based growth company. Any comments you could make on that side of the story?

Jeff, that’s a really good question. In my career I have had to understand the operations and be part of operations or whatever. One of the reason I’m here is because I love growth and I love businesses have potential to grow and obviously investment in growth is really important thing I think when you listen to Tom and David I smile because you can see good input and output ratio in the sense what investments are being made here and the consequential growth you can get in about very shorter period of time. And so it’s hopefully you can see in the sense of the business that works and I like things that work in the business and what leadership pull and how things work. Secondly from a cost standpoint I am a guy who want to understand cost and make sure that we do make investments that they are good investments you just don’t take that for granted and you also need to diligent around cost really understand where it’s going in. And often from a portfolio standpoint you might want to make some move something from part of the business and other part so you actually growing more. So I don’t think it’s a liability at all that I understand operations and enjoy operations but look at in the sense of just from the standpoint of cost saving cost. It’s just an allocation of capital and resources and where that best goes in the business in the point in time.

It does. Very helpful as well, thank you, David, one question for you and I’ll take kind of maybe the opposite side of Bob’s question earlier. On ASPs, the sequential decline of $35 was actually less than we were thinking it was going to be; the decline was less. So ASPs came in a bit above what we were thinking. And you said 90% of that was currency. When I look at the GP number, GP up 6.5% was a decently good number, better than it’s been, but stacked comps still got a little slower. So I guess what I’m trying to figure out is, you had a sizable Express 5 promotion in place this quarter. Has that just not generated the traction yet? Should we think about kind of the acceleration off that promotion kind of coming more in Q2 and I would assume that would then impact the ASPs a little bit more in 2Q over the 1Q as well?

It’s specifically Jeff regarding the Express promotion we implemented that in the middle of the quarter and then you have to recognize that it’s going to take a while before doctors are going to get engage with that promotion it’s going to take a while for them to get patients in the seat to get them to treatment planning. Get treatment planning approved. Fabricate the aligners et cetera. So we only saw a small impact of Express 5 really during Q1. We are continuing that promotion in the Q2. So to the extent that has some impact on ASPs we think it will be relatively modest and I’d say the other thing is that objective with the Express 5 promotion is to drive adoption and we kind of view the Express 5 promotion as a way to increase the bonds that we would otherwise done as a company in any of that. So we see Express 5 promotion really as incremental. To the extent it was widely successful which we certainly hope for. That would have some impact on ASPs but we’re not expecting it to be that meaningful.

Understood.

If I add to that I’ll point you back to what I said earlier, this is about really getting progress in regular adoption by the course customer group we want Orthos and GPs that have made a big part of their practice and when that happen they get a little better pricing. There is little more of our total volume going to advantage and we would expect the little bit of them move on ASP down. So that’s a really good of that because we’re most efficient covering those customers versus bringing a very low volume customer along with a very low leverage in the go-to market model. So we’ve always been very willing to have that volume impact for fairly modest ASP decline. So that’s in more mindset progress.

Yes. I got it. Not a criticism of the program at all. Just wanted to check when the impact would come down.

Didn’t take it that way just trying to be clear.

Next question is from the line of Jon Block with Stifel. Please proceed with your question.

I’ll preface this by saying, trying to be clear not that I’m complaining, but when the company [indiscernible] when you guys complete those case volumes in conjunction with Tom’s retirement, if I remember correctly, that was at the very end of March. I think like the 25th or the 26th. And sort of the wording in that release would have implied around 127,000, 128,000 1Q cases. You did close t o 131. I mean the way your revenue model works, the quarter was closed back then. So I'm just asking, David, I guess this one's for you. Can you explain that discrepancy? And then Tom, as a function of that, maybe if you can comment on intra-quarter trends that you saw and more specifically how you exited March and April?

I'm going to get in front of David for one reason, this was not a going away gift for me, this is the way the business evolves in trying to meet customer needs, it's really-really simple and the way the volume flowed through the quarter was pretty linear but it was just -- to meet our kind of, our standard requirements we wanted to get those cases out. We're not trying to micromanage that and again we had some work to do while we were coming out with this news on me, I'll let David talk.

I think the press release, I don't know the exact wording in it, Jon but I think it said we expected to be slightly above the high-end of our range and I guess you can define what slightly means but you know the only other alternative would have been to put a number out there and we just didn’t feel that was the right thing to do but you know I think we gave you the best guidance we could in terms of the appropriateness of what we put in the press release before we're ready to close out the financials and talk about it a few weeks later.

Fair enough and again, not that I'm complaining. Question two, if I can just have sort of a call it part A and part B. The first one, part A, David, longer-term, that 25% to 30% sort of three- to five-year op margin goal, should we think about that and normalize for FX? And I know you don't want that sort of a moving target and floating daily to currencies, but that should be down maybe 200 to 300 basis points from when you gave that last year at the analyst day. So should we think of that more 22% to 27%, or how should we flow that through our model? And then Tom, the B is I'm sort of trying end our interaction with a difficult question. On the Sirona deal, which still, in my opinion, came two years too late, but to dig deeper, why not make that exclusive and have something where you have a payment flowing from you guys to Sirona so when you fast-forward three years, they can't sign up a DENTSPLY or a Danaher and lock up that volume on Invisalign's platform. Thank you guys.

I think that's a four part question Jon, let me start first with the whole logic for being in open systems. Simply stated it's better for our customers. No one wants to have to redesign, start over, buy multiple pieces of equipment if they can have greatest utility from a scanner by the way, with this open systems we still sell more standalone scanner than anybody else, so we're doing pretty well even as we're opening up Invisalign which would be an advantage for our iTero team to sell our own scanner so we believe what we hear from our customers is they don't want to be forced to buy a system from you for the pleasure of offering Invisalign to their patients and other therapies we may have down the road, so we feel actually very strongly. To the point of paying Sirona this is really about value creation right for our customer, most buyers of scanners say they want to make sure the scanner can do a therapy like Invisalign so if anybody was going to pay it ought to be the other way around and to exclusivity we think that if everybody brings a different story to the market you know Sirona has a great product offering with the stored up dentistry, Patterson carries a lot of products, they're focused for that. There's no reason, we don’t really directly compete with them there's no reason for us not to act in complementary ways because it's good for the customer, so in our minds we don't need to own the channel we don’t to have exclusivity in fact we want probably more high quality scanners that can make it easier to do Invisalign and other chair side procedures that we have unique capability to fulfill. So I think, well I'd point to the opposite direction there's more benefit from giving a customer what they want at a lower cost and great utility over time than anything else.

Fair enough and David can I get you to comment on the 3-5 year margin guidance?

So Jon our operating model that we’ve been targeting and striving to achieve for some time, it's certainly influenced by a lot of variables, FX being just one of them, we still -- and I think we demonstrated the leverage we get out of our business model in the last year 2014 being the first year that we actually landed results inside that model. And so we do get leverage from growth and growth is the best strategy for growing out of the headwinds we're getting from FX. And so while those headwinds may set us back a little bit while we try and readjust our business and so forth, I think the great thing about our business is the fact that it's growing and as we continue to grow particularly on the international side we believe we can grow out of those currency headwinds so we don't see any reason to update our model, I think it's still, it’s a long term model, it's still aspirational in some respects and we still feel pretty strongly about the potential of the business to grow into again even with the headwinds.

Next question is from the line of Glen Santangelo with Credit Suisse. Please go ahead with your question.

Thanks. Tom and David, last quarter, we spent a fair amount of time talking about some of the incremental investments that you plan to make around areas of sleep apnea, the new ERP system, some of the North American sales people. And at that time, you gave some pretty specific details around that and the potential impacts it might have on margin. Maybe could you give us a little bit of an update there, maybe give us a sense for maybe how much you might have spent in those areas this quarter and what you’re forecasting to spend in the second quarter?

Glen I don’t know I really got an update for your I think when we gave the outlook for the year and as you see our first quarter results and our guidance for Q2 I think you can see the uplift in our operating expenses I think you can assume that most of that uplift has to do with new investments. We talk about sleep apnea in Q1. We talked about the investments in the sales force in go-to-market coverage et cetera. Those investments are all P&L investments. So I think it’s pretty transparent when you look at our Q1 results and our guidance that those investments are proceedings as we indicated and I think they will continue to proceed throughout the balance of the year as we continue to plant seeds for the future direction and the growth of business.

Okay. That’s fine. Maybe if I can just ask Joe a question. Joe, it kind of sounds like you’re excited about a bunch of the opportunities that you see, but what one of the issues that’s been on investors’ minds is around intellectual property and the expiration of some of the patents in 2017 and 2018. And so I’m kind of curious. Could you maybe share with us how much due diligence you did around this IP issue, and how maybe you got comfortable with this issue when considering taking the position?

Glen it’s a good question honestly my due diligence was almost with a huge receive from Top and rest of the team and looking at what’s going on. If you look at the R&D investment the number of patterns and -- if you look at the sequential technology capability that Align is really shown to these investments starting with relatively simple kind of liners through the years becoming more and more capable of doing more difficult cases I think shows that overall the initial exploration was patterns in two years forward, just more through this in just a couple of patterns coming off respect to this success here almost been done. So obviously, in my life, I have been associated with lot IP particularly with GE Medical and GE Healthcare. I understand the impact of customer preference also market channeling, skill, all of those things as it relates to IP2. When I look at Align I see there is much more going on here than just a pattern coming off over the next couple years and this sets the momentum with the opportunities to -- that’s not in the gate what that might need from the competitive standpoint that everyone has competition, competition should make you better and company should be able to respond in that too and I think Align has shown that they can do that. As I take over for Tom and we work as a team. We’ll continue to focus on customers. We’ll continue to invest in R&D. We continue to scale globally and I think that’s going to help that whole equation a lot.

Okay. Thanks for the comments.

Thanks Glen. Operator, we’ll take one last question please.

Yes, that question will be coming from the line of Jeffrey Matthews at Ram Partners. Please proceed with your questions.

Hi. Can you hear me?

Hi Jeff, yes.

Hi. Joe, I just want to say I look forward to meeting you. My old pal Nat Kingman speaks very highly of you. And Tom, I don’t want to offend any of the sports fans on the call, but I feel like I did when Mariano Rivera retired from the Yankees. Very sad, but very appreciative of his track record and I just want to say congratulations and great good luck. You deserve all good things.

Very nice of you to say, I appreciate it.

Well, thank you every one for joining us. That concludes our conference call today. We look forward to seeing you at upcoming conferences and industry meetings. If you have any follow up questions please contact Investor Relations. Have a great day.