Company – Scrape Financial
Risk Factors Summary

Risk Factors Update Summary

  • Unfavorable rulings could result in injunctions, exclusion orders, and monetary damages.
  • Materially and adversely affect our ability to accept scans, manufacture treatments, and service customers. This could harm sales, reputation, and strategic partnerships.
  • Failure to accurately predict customer demand may lead to manufacturing capacity issues and delays.
  • Incorporating AI and machine learning technologies may result in legal, regulatory risks, and reputational harm. Compliance challenges with evolving regulations.
  • Macroeconomic conditions may reduce spending on elective treatments, impacting orthodontic case starts and patient traffic.
  • Exposed to additional vulnerabilities due to single supply relationships for intraoral scanners. Risk of multiple supply chain vulnerabilities.
  • Fluctuations in demand, manufacturing costs, and average selling prices can impact financial results.
  • Increased costs of fuel, energy, food, and essential items may reduce consumer disposable income.
  • Changes in assumptions like revenue growth rates and discount rates may impact asset impairment.
  • Subject to antitrust, competition, and enforcement actions that may result in fines, penalties, and substantial costs impacting operations. Compliance challenges with evolving regulations.
  • Failure to attract, motivate, train, or retain personnel may impede growth and strategic priorities. Dependence on skilled personnel.
  • Hardware issues with iTero scanners and compatibility challenges with third-party components may lead to widespread failures.
  • The Inflation Reduction Act of 2022 may lead to a 1% excise tax on stock repurchases.
  • Intense competition for technical and digital talent. Competitors recruiting personnel may impact retention efforts.
  • Competition from traditional and new entrants may impact market acceptance and sales of products.
  • Increased fuel costs led to a material increase in freight costs in 2022. Higher shipping costs could negatively impact gross margin.
  • Reliance on complex IT systems and potential cybersecurity threats may disrupt operations and financials.

Full Text Changes in Most Recent 10-K

Intended use: review the highlighted statements. These are additions to the risk factors disclosure in the most recent 10-K filing compared to the previous 10-K filing. Deleted and moved text is less important and is shown for context.

To view the full company filings, click on the following link to be taken to the SEC EDGAR database landing page for the company: https://www.sec.gov/edgar/browse/?CIK=1097149&owner=exclude

Click here to download the PDF

Days Sales Outstanding (DSO) (hover/click for more information)

**Click to collapse**

Days Sales Outstanding, commonly known as DSO, is a measure of the average number of days that a company takes to collect payment after a sale has been made. It's a financial indicator that illustrates how well a company manages its accounts receivables and how efficiently it collects cash from customers.

DSO is calculated by dividing the total accounts receivable during a certain period by the total net credit sales for the same period, and then multiplying the result by the number of days in the period. A low DSO value means that it takes a company fewer days to collect its accounts receivable, which is generally positive as it could mean a healthier cash flow. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect payment, which could be a sign of cash flow problems. An increasing DSO could indicate several issues requiring further investigation.

However, DSO can be influenced by a company's industry and business practices. For instance, if a company operates in an industry where long payment terms are the norm, it may have a high DSO. In some cases, companies may have a high DSO because they are extending more credit to their customers to boost sales. Therefore, it's crucial to compare DSO with competitors in the same industry.

Selling accounts receivable will artificially lower DSO. We provide the DSO and Adjusted DSO data below to give a clearer picture of the company's financial health. Keep in mind that this is only one aspect of an entire financial analysis and should not be used in isolation when making investment decisions.

DSO Tab Color Descriptions:
  • Red: The most recent DSO has been adjusted for selling accounts receivable and is more than 10% higher than the previous DSO.
  • Light Red: The most recent DSO is adjusted for selling accounts receivable, or more than 10% higher than the previous 3-period average DSO.
  • Yellow: The most recent DSO is more than 5% higher than the previous DSO.
  • Green: No alarms were triggered for the company.

DSO Data

***This tool is in beta mode and data validation is still in progress.***

Item (Click to expand row) 2018 2019 2020 2021 2022 2023
Revenues ($ millions) 1,966 2,407 2,472 3,953 3,735 3,862
Accounts Receivable ($ millions) 439 550 658 897 860 903
DSO 81.5 83.5 97.4 82.9 84.0 85.4
Accounts Receivable Sold ($ millions) N/A N/A N/A 37 37 51
Adjusted Accounts Receivable ($ millions) N/A N/A N/A 934 897 955
Adjusted DSO N/A N/A N/A 86.5 87.9 90.5

Text from Filings Related to Selling Accounts Receivable

2024-02-28

For the year ended December 31, 2023 and 2022, we entered into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of financial assets and include the cash proceeds as a part of our cash flows from operations in the Consolidated Statements of Cash Flows. Total accounts receivable sold under factoring arrangements was $ 51.2 million and $ 37.0 million during the year ended December 31, 2023, and 2022, respectively. Factoring fees incurred on the sales of accounts receivable were recorded in other income (expense), net in our Consolidated Statements of Operations and were not material.

2023-02-27

In 2022, we entered into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of accounts receivables and include the cash proceeds as a part of our cash flows from operations in the Consolidated Statements of Cash Flows. Total accounts receivable sold under the factoring arrangements was $ 37.0 million during the year ended December 31, 2022. Factoring fees on the sales of receivables were recorded in other income (expense), net in our Consolidated Statement of Operations and were not material.

Free Cash Flow (FCF, gray bars), Net Income (blue line) and Adjusted Free Cash Flow are used to validate reported financial performance. Adjusted Free Cash Flow provides a more accurate measure of cash generated from normal operating activities.

  • Dotted line indicates the beginning of sales of Accounts Receivable included in FCF adjustment. Selling Receivables data is only pulled for the past 6 years. If the red dotted line appears on todays date (right end of the graph) that indicates that we did not find sales of accounts receivable for the company.
  • Cash generated from selling accounts receivable is subtracted from Free Cash Flow. See "DSO" tab for data.
  • Stock-Based Compensation, if paired with Share Buybacks, is removed from Free Cash Flow. GAAP treats such transactions as financing expenses. Adjusted Free Cash Flow effectively treats this as a normal operating use of cash for employee compensation. The adjustment is the minimum of Stock-Based Compensation and Share Buybacks
  • Gross capex (rather than net capex) is used to exclude one time items that would reduce capex and increase fcf. For companies with regular asset sales, net capex should be evaluated.

Click any value in the table below to view the endpoint the company used to report each data point. We aim to flag year-to-year changes that could indicate more or less aggressive accounting practices. Clicking the row label in the "Item" column will expand the entire row.

Net Income and Adjusted Free Cash Flow Data

Item (Click to expand row) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Net Income ($ millions) 80 -31 74 67 59 64 146 144 190 231 400 443 1,776 772 362 445
Cash Flow from Operations ($ millions) 40 74 130 130 134 186 227 238 248 439 555 747 662 1,173 569 786
Capital Expenditures ($ millions) 14 7 18 30 38 19 24 53 71 196 223 150 155 401 292 178
Free Cash Flow ($ millions) 25 67 111 100 95 167 203 185 177 243 331 598 507 771 277 608
Stock-Based Compensation ($ millions) 17 15 16 19 21 26 40 53 54 59 71 88 98 114 133 154
Total Buybacks ($ millions) 50 N/A N/A 8 47 95 98 102 96 104 300 400 N/A 375 435 592
Accounts Receivable Sold ($millions) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 37 37 51
Adjusted Free Cash Flow ($ millions) 8 67 111 92 74 140 163 132 123 184 261 509 507 657 106 440