[May 02, 2016] |
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Cognex Reports First Quarter 2016 Results
Cognex
Corporation (NASDAQ: CGNX) today announced its financial results for
the first quarter of 2016. In Table 1 below, selected financial data for
the quarter ended April 3, 2016 is compared to the first and fourth
quarters of 2015. A reconciliation of certain financial measures from
GAAP to non-GAAP is shown in Exhibit 2 of this news release.
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Table 1*
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Revenue
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Net Income from Continuing Operations
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Net Income from Continuing Operations
per Diluted Share
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Quarterly Comparisons
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Current quarter: Q1-16
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$96,205,000
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$14,885,000
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$0.17
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Prior year's quarter: Q1-15
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$101,373,000
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$19,472,000
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$0.22
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Change from Q1-15 to Q1-16
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(5%)
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(24%)
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(23%)
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Prior quarter: Q4-15
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$97,768,000
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$18,854,000
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$0.22
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Change from Q4-15 to Q1-16
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(2%)
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(21%)
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(23%)
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*Table 1 excludes the results of discontinued operations, which relate
to the company's Surface Inspection Systems Division (SISD) that was
sold on July 6, 2015.
"I am pleased to report that our first quarter results were better than
the guidance we gave to investors in February," said Dr.
Robert J. Shillman, Chairman of Cognex. "This positive news was due
to several factors in the quarter, including higher revenue from
customers in the logistics market, a higher gross margin and
lower-than-planned operating expenses. However, despite these favorable
developments, I am not pleased to report that the slower business trends
we saw in the second half of last year have continued."
"The year started off on a stronger note than anticipated, and our
guidance for Q2 reflects a significant sequential increase in revenue
and substantial margin expansion due to an expected concentration of
large orders in the consumer electronics industry," said Robert
J. Willett, Chief Executive Officer of Cognex. "Nevertheless, our
outlook for 2016 is not any more bullish than it was a few months ago."
Details of the Quarter
Statement of Operations Highlights - First Quarter of 2016
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Revenue for Q1 2016 decreased 5% from Q1 2015 and 2% from Q4 2015.
Cognex experienced the typical seasonal decline from Q4 to Q1 in
factory automation. The decline from last year's record first-quarter
revenue was primarily due to lower revenue from the consumer
electronics industry.
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Gross margin was 78% for both Q1 2016 and Q1 2015, and 76% for Q4
2015. Gross margin increased on a sequential basis due to revenue mix,
with a higher percentage of revenue coming from product sales than
service.
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Research, Development & Engineering (RD&E) expenses increased 21% from
Q1 2015 and 17% from Q4 2015. RD&E increased year-on-year due to
Cognex's investment in engineering resources and higher outsourced
engineering costs. RD&E increased on a sequential basis due to support
of potential high-volume opportunities and higher stock option expense.
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Selling, General & Administrative (SG&A) expenses decreased 4% from Q1
2015 and increased 2% from Q4 2015. SG&A decreased year-on-year as
Cognex's investment in its sales and support organization was offset
by lower patent-related legal fees. SG&A increased on a sequential
basis due to higher stock option expense.
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Investment and other income was $1,344,000 in Q1 2016, $540,000 in Q1
2015 and $2,059,000 in Q4 2015. The increase year-on-year was due to a
higher average invested balance. The decrease on a sequential basis
was the result of a larger reduction in Q4 than in Q1 to the estimated
liability for contingent consideration related to a recent acquisition.
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The tax rate was 15% in Q1 2016, 16% in Q1 2015, and 13% in Q4 2015.
Excluding discrete tax items, the rate was 18% in Q1 2016 and Q1 2015,
and 17% in Q4 2015 (tax adjustments are summarized in Exhibit 2).
Balance Sheet Highlights - April 3, 2016
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Cognex's financial position as of April 3, 2016, was very strong, with
$649 million in cash and investments and no debt. During Q1 2016,
Cognex paid out $6 million in dividends to shareholders. Earlier
today, Cognex announced it will increase the cash dividend paid in Q2
2016 to $0.075 per share from $0.07 per share paid in Q1. The company
also intends to repurchase shares of its common stock in Q2 2016,
subject to market conditions and other relevant factors.
Financial Outlook - Q2 2016
-
Cognex expects revenue for Q2 2016 to be between $135 million and $140
million. This range represents substantial growth over Q1 2016, due
primarily to large orders expected from consumer electronics
customers, but a slight decline from Q2 2015 due to timing. In 2016,
Cognex expects to recognize large consumer electronics orders in both
Q2 and Q3, as opposed to last year when the majority was recognized in
Q2.
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Gross margin is expected to be in the mid-to-high 70% range.
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Operating expenses are expected to increase by up to 4% on a
sequential basis, and to be essentially flat year-on-year.
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The effective tax rate is expected to be 18% before discrete tax items.
Non-GAAP Financial Measures
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Exhibit 2 of this news release includes a reconciliation of certain
financial measures from GAAP to non-GAAP. Cognex believes these
non-GAAP financial measures are helpful because they allow investors
to more accurately compare Cognex results over multiple periods using
the same methodology that management employs in its budgeting process
and in its review of Cognex's operating results. In particular,
non-GAAP presentations exclude the following: (1) stock option expense
for the purpose of calculating non-GAAP adjusted operating income
(because these expenses have no current effect on cash or the future
uses of cash, and they fluctuate as a result of changes in Cognex's
stock price), and (2) certain one-time discrete events, such as tax
adjustments. Cognex does not intend for non-GAAP financial measures to
be considered in isolation, nor as a substitute for financial
information provided in accordance with GAAP.
Analyst Conference Call and Simultaneous Webcast
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Cognex will host a conference call today at 5:00 p.m. Eastern Time
(ET). The telephone number is (866) 256-9239 (or (703) 639-1213 if
outside the United States). A replay will begin at 8:00 p.m. ET today
and will run continuously until 11:59 p.m. ET on Thursday, May 5,
2016. The telephone number for the replay is (888) 266-2081 (or (703)
925-2533 if outside the United States). The access code for both the
live call and the replay is 1670550.
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Internet users can listen to a real-time audio broadcast of the
conference call or an archived recording on the Cognex Investor
Relations website: http://www.cognex.com/Investor.
About Cognex Corporation
Cognex Corporation designs, develops, manufactures and markets a range
of products that incorporate sophisticated machine vision technology
that gives them the ability to "see." Cognex products include barcode
readers, machine vision sensors and machine vision systems that are used
in factories, warehouses and distribution centers around the world to
guide, gauge, inspect, identify and assure the quality of items during
the manufacturing and distribution process. Cognex is the world's leader
in the machine vision industry, having shipped more than 1 million
vision-based products, representing over $4 billion in cumulative
revenue, since the company's founding in 1981. Headquartered in Natick,
Massachusetts, USA, Cognex has regional offices and distributors located
throughout the Americas, Europe and Asia. For details visit Cognex
online at http://www.cognex.com.
Certain statements made in this news release, which do not relate
solely to historical matters, are forward-looking statements. These
statements can be identified by use of the words "expects,"
"anticipates," "estimates," "believes," "projects," "intends," "plans,"
"will," "may," "shall," "could," "should," and similar words and other
statements of a similar sense. These forward-looking statements,
which include statements regarding business and market trends, future
financial performance, customer order rates, timing for future orders,
expected areas of growth, future product mix, research and development
activities, future stock repurchases, investments, and strategic plans,
involve known and unknown risks and uncertainties that could cause
actual results to differ materially from those projected. Such
risks and uncertainties include: (1) the loss of a large customer; (2)
current and future conditions in the global economy; (3) the reliance on
revenue from the consumer electronics or automotive industries; (4) the
inability to penetrate new markets; (5) the inability to achieve
significant international revenue; (6) fluctuations in foreign currency
exchange rates and the use of derivative instruments; (7) information
security breaches or business system disruptions; (8) the inability to
attract and retain skilled employees; (9) the reliance upon key
suppliers to manufacture and deliver critical components for our
products; (10) the failure to effectively manage product transitions or
accurately forecast customer demand; (11) the inability to design and
manufacture high-quality products; (12) the technological obsolescence
of current products and the inability to develop new products; (13) the
failure to properly manage the distribution of products and services;
(14) the inability to protect our proprietary technology and
intellectual property; (15) our involvement in time-consuming and costly
litigation; (16) the impact of competitive pressures; (17) the
challenges in integrating and achieving expected results from acquired
businesses; (18) potential impairment charges with respect to our
investments or for acquired intangible assets or goodwill; (19) exposure
to additional tax liabilities; and (20) the other risks detailed in
Cognex reports filed with the SEC, including its Form 10-K for the
fiscal year ended December 31, 2015. You should not place undue
reliance upon any such forward-looking statements, which speak only as
of the date made. Cognex disclaims any obligation to update
forward-looking statements after the date of such statements.
Exhibit 1
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COGNEX CORPORATION
Statements of Operations
(Unaudited)
Dollars in thousands, except per share amounts
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Three-months Ended
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April 3, 2016
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December 31, 2015
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April 5, 2015
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Revenue
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$
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96,205
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$
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97,768
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$
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101,373
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Cost of revenue (1)
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20,968
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23,400
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22,344
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Gross margin
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75,237
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74,368
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79,029
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Percentage of revenue
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78
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%
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76
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%
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78
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%
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Research, development, and engineering expenses (1)
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20,555
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17,526
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16,986
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Percentage of revenue
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21
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%
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18
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%
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17
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%
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Selling, general, and administrative expenses (1)
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38,338
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37,694
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39,933
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Percentage of revenue
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40
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%
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39
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%
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39
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%
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Operating income
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16,344
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19,148
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22,110
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Percentage of revenue
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17
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%
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20
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%
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22
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%
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Foreign currency gain (loss)
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(100
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542
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659
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Investment and other income
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1,344
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2,059
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540
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Income from continuing operations before income tax expense
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17,588
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21,749
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23,309
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Income tax expense on continuing operations
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2,703
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2,895
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3,837
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Net income from continuing operations
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14,885
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18,854
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19,472
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Percentage of revenue
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15
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%
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19
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%
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19
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%
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Net income (loss) from discontinued operations (1)
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-
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(108
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1,030
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Net income
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$
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14,885
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$
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18,746
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$
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20,502
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Basic earnings per weighted-average common and common-equivalent
share:
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Net income from continuing operations
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$
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0.18
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$
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0.22
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$
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0.22
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Net income from discontinued operations
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-
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-
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0.02
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Net income
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$
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0.18
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$
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0.22
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$
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0.24
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Diluted earnings per weighted-average common and common-equivalent
share:
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Net income from continuing operations
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$
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0.17
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$
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0.22
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$
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0.22
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Net income from discontinued operations
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-
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-
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0.01
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Net income
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$
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0.17
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$
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0.22
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$
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0.23
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Weighted-average common and common-equivalent shares outstanding:
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Basic
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84,943
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84,850
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86,764
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Diluted
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86,541
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86,212
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88,749
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Cash dividends per common share
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$
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0.07
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$
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0.07
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$
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-
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Cash and investments per common share
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$
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7.64
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$
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7.32
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$
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6.30
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Book value per common share
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$
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10.00
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$
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9.73
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$
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8.80
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(1) Amounts include stock option expense, as follows:
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Cost of revenue
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$
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293
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$
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348
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$
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467
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Research, development, and engineering
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2,179
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1,097
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1,814
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Selling, general, and administrative
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4,332
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2,759
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4,382
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Discontinued operations
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-
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-
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283
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Total stock option expense
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$
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6,804
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$
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4,204
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$
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6,946
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Exhibit 2
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COGNEX CORPORATION
Reconciliation of Selected Items from GAAP to Non-GAAP
(Unaudited)
Dollars in thousands
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Three-months Ended
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April 3, 2016
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December 31, 2015
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April 5, 2015
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Adjustment for stock option expense
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Operating income (GAAP)
|
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$
|
16,344
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$
|
19,148
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$
|
22,110
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Stock option expense related to continuing operations
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6,804
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4,204
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|
|
|
|
6,663
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Operating income (Non-GAAP)
|
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|
|
$
|
23,148
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|
|
|
$
|
23,352
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$
|
28,773
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Percentage of revenue (Non-GAAP)
|
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|
|
24
|
%
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|
|
24
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%
|
|
|
|
28
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%
|
|
|
|
|
|
|
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Exclusion of tax adjustments
|
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|
|
|
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|
|
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Income from continuing operations before income tax expense (GAAP)
|
|
|
|
$
|
17,588
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|
|
|
|
$
|
21,749
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|
|
|
|
$
|
23,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (GAAP)
|
|
|
|
$
|
2,703
|
|
|
|
|
$
|
2,895
|
|
|
|
|
$
|
3,837
|
|
Effective tax rate (GAAP)
|
|
|
|
15
|
%
|
|
|
|
13
|
%
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax adjustments:
|
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|
|
|
|
|
|
|
|
|
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Discrete tax events
|
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|
|
(463
|
)
|
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|
|
(910
|
)
|
|
|
|
(364
|
)
|
Income tax expense excluding tax adjustments (Non-GAAP)
|
|
|
|
$
|
3,166
|
|
|
|
|
$
|
3,805
|
|
|
|
|
$
|
4,201
|
|
Effective tax rate (Non-GAAP)
|
|
|
|
18
|
%
|
|
|
|
17
|
%
|
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations excluding tax adjustments
(Non-GAAP)
|
|
|
|
$
|
14,422
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|
|
|
|
$
|
17,944
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|
|
|
|
$
|
19,108
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Percentage of revenue (Non-GAAP)
|
|
|
|
15
|
%
|
|
|
|
18
|
%
|
|
|
|
19
|
%
|
|
|
|
|
|
|
|
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|
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|
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Exhibit 3
|
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COGNEX CORPORATION
Balance Sheets
(Unaudited)
Dollars in thousands
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2016
|
|
|
|
|
December 31, 2015
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and investments
|
|
|
|
$
|
649,463
|
|
|
|
|
|
$
|
621,531
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Accounts receivable
|
|
|
|
45,095
|
|
|
|
|
|
42,846
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Inventories
|
|
|
|
35,620
|
|
|
|
|
|
37,334
|
Property, plant, and equipment
|
|
|
|
53,413
|
|
|
|
|
|
53,285
|
Goodwill and intangible assets
|
|
|
|
86,718
|
|
|
|
|
|
87,763
|
Other assets
|
|
|
|
43,328
|
|
|
|
|
|
44,997
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
$
|
913,637
|
|
|
|
|
|
$
|
887,756
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
40,949
|
|
|
|
|
|
$
|
41,132
|
Deferred revenue and customer deposits
|
|
|
|
11,862
|
|
|
|
|
|
11,571
|
Income taxes
|
|
|
|
7,061
|
|
|
|
|
|
6,134
|
Other liabilities
|
|
|
|
3,046
|
|
|
|
|
|
3,252
|
Shareholders' equity
|
|
|
|
850,719
|
|
|
|
|
|
825,667
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
|
|
$
|
913,637
|
|
|
|
|
|
$
|
887,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 4
|
|
|
|
|
COGNEX CORPORATION
Additional Information Schedule
(Unaudited)
Dollars in thousands
|
|
|
|
|
|
|
|
|
|
Three-months Ended
|
|
|
|
|
April 3, 2016
|
|
|
|
December 31, 2015
|
|
|
|
April 5, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
96,205
|
|
|
|
|
$
|
97,768
|
|
|
|
|
$
|
101,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by geography:
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
38
|
%
|
|
|
|
38
|
%
|
|
|
|
34
|
%
|
Europe
|
|
|
|
35
|
%
|
|
|
|
35
|
%
|
|
|
|
41
|
%
|
Greater China
|
|
|
|
13
|
%
|
|
|
|
12
|
%
|
|
|
|
11
|
%
|
Other Asia
|
|
|
|
14
|
%
|
|
|
|
15
|
%
|
|
|
|
14
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by market:
|
|
|
|
|
|
|
|
|
|
|
|
|
Factory automation
|
|
|
|
94
|
%
|
|
|
|
95
|
%
|
|
|
|
94
|
%
|
Semiconductor and electronics capital equipment
|
|
|
|
6
|
%
|
|
|
|
5
|
%
|
|
|
|
6
|
%
|
Total
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
|
|
|
100
|
%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160502006001/en/
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