Cognex Corporation (NASDAQ: CGNX) today announced financial results for the first quarter of 2018. Table 1 below shows selected financial data for Q1-18 compared with Q1-17 and Q4-17. All periods presented reflect the two-for-one stock split in Q4-17.
Table 1* (Dollars in thousands, except per share amounts) |
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Revenue |
Net |
Net |
Non-GAAP |
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Quarterly Comparisons |
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Current quarter: Q1-18 | $169,567 | $37,217 | $0.21 | $0.18 | ||||||||
Prior year’s quarter: Q1-17 | $139,039 | $45,471 | $0.25 | $0.18 | ||||||||
Change: Q1-17 to Q1-18 | 22% | (18%) | (16%) | 0% | ||||||||
Prior quarter: Q4-17 | $182,922 | ($27,747) | ($0.16) | $0.24 | ||||||||
Change: Q4-17 to Q1-18 | (7%) | N/M | N/M | (25%) |
* The financial results for all periods presented reflect the retroactive adoption of a new revenue recognition standard (ASC 606, “Revenue from Contracts with Customers”) that became effective on January 1, 2018. This standard did not have a material impact on total revenue. For a historical perspective, Exhibit 4 of this news release includes the company’s quarterly Statement of Operations for 2017 adjusted for the impact of the new standard.
**Non-GAAP net income/(loss) per diluted share excludes tax adjustments. A reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this news release.
“Overall, our results for Q1 2018 were good,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “Revenue grew 22% year-on-year, which was above our long-term target for revenue growth. We were also highly profitable, reporting an operating margin of 20% and a net margin of 22%. Nevertheless, while many companies would applaud these results, we are dissatisfied given the higher levels of profitability that we demonstrated in 2017.”
“Revenue in Q1 grew across most end markets and geographic regions, reflecting broad demand for our products,” said Robert J. Willett, Chief Executive Officer of Cognex. “Investing for the future remains key to our ongoing success, and, therefore, we will continue to aggressively develop new products, expand our world-wide sales force and make strategic IT and infrastructure investments.”
Mr. Willett continued, “Following a record year in 2017, we face tough comparisons this year, particularly in the second half, due to anticipated lower demand from consumer electronics—our largest industry vertical. Because of that, we believe that Cognex revenue over the next nine months will be relatively flat in total with the comparable period in 2017.”
Details of the Quarter
Statement of Operations Highlights – First Quarter of 2018
Balance Sheet Highlights – April 1, 2018
Financial Outlook – Q2 2018
This financial outlook reflects the new revenue recognition standard (ASC 606, “Revenue from Contracts with Customers”) that took effect on January 1, 2018. Cognex does not believe this standard will have a material impact on total revenue. For a historical perspective, Exhibit 4 of this news release includes the company’s quarterly Statement of Operations for 2017 adjusted for the impact of the new standard.
Non-GAAP Financial Measures
Analyst Conference Call and Simultaneous Webcast
About Cognex Corporation
Cognex Corporation designs, develops, manufactures and markets a wide range of image-based products, all of which use artificial intelligence (AI) techniques that give them the human-like ability to make decisions on what they see. Cognex products include machine vision systems, machine vision sensors and barcode readers that are used in factories and distribution centers around the world where they eliminate production and shipping errors.
Cognex is the world's leader in the machine vision industry, having shipped more than 1.5 million vision-based products, representing over $5 billion in cumulative revenue, since the company's founding in 1981. Headquartered in Natick, Massachusetts, USA, Cognex has offices and distributors located throughout the Americas, Europe and Asia. For details visit Cognex online at 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 and the timing of related revenue, expected areas of growth, research and development activities, further 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 failure to effectively manage our growth; (10) the reliance upon key suppliers to manufacture and deliver critical components for our products; (11) the failure to effectively manage product transitions or accurately forecast customer demand; (12) the inability to design and manufacture high-quality products; (13) the technological obsolescence of current products and the inability to develop new products; (14) the failure to properly manage the distribution of products and services; (15) the inability to protect our proprietary technology and intellectual property; (16) our involvement in time-consuming and costly litigation; (17) the impact of competitive pressures; (18) the challenges in integrating and achieving expected results from acquired businesses; (19) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill; (20) exposure to additional tax liabilities; and (21) the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2017. 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 |
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Three-months Ended | |||||||||||||||
April 1,
2018 |
December 31, 2017 |
April 2,
2017 |
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Revenue (1) | $ | 169,567 | $ | 182,922 | $ | 139,039 | |||||||||
Cost of revenue (1) | 40,198 | 44,532 | 32,532 | ||||||||||||
Gross margin | 129,369 | 138,390 | 106,507 | ||||||||||||
Percentage of revenue | 76 | % | 76 | % | 77 | % | |||||||||
Research, development, and engineering expenses (1) | 31,076 | 26,980 | 22,770 | ||||||||||||
Percentage of revenue | 18 | % | 15 | % | 16 | % | |||||||||
Selling, general, and administrative expenses (1) | 63,697 | 60,635 | 46,521 | ||||||||||||
Percentage of revenue | 38 | % | 33 | % | 33 | % | |||||||||
Operating income | 34,596 | 50,775 | 37,216 | ||||||||||||
Percentage of revenue |
20 |
% |
28 | % | 27 | % | |||||||||
Foreign currency gain (loss) | (134 | ) | (1,027 | ) | (263 | ) | |||||||||
Investment and other income | 3,517 | 2,923 | 2,282 | ||||||||||||
Income before income tax expense | 37,979 | 52,671 | 39,235 | ||||||||||||
Income tax expense (benefit) | 762 | 80,418 | (6,236 | ) | |||||||||||
Net income (loss) | $ | 37,217 | $ | (27,747 | ) | $ | 45,471 | ||||||||
Percentage of revenue | 22 | % | (15 | )% | 33 | % | |||||||||
Earnings per weighted-average common and common-equivalent share (2): | |||||||||||||||
Basic | $ | 0.21 | $ | (0.16 | ) | $ | 0.26 | ||||||||
Diluted | $ | 0.21 | $ | (0.16 | ) | $ | 0.25 | ||||||||
Weighted-average common and common-equivalent shares outstanding (2): | |||||||||||||||
Basic | 173,280 | 173,397 | 172,646 | ||||||||||||
Diluted | 179,641 | 173,397 | 178,354 | ||||||||||||
Cash dividends per common share (2) | $ | 0.0450 | $ | 0.0450 | $ | 0.0375 | |||||||||
Cash and investments per common share (2) | $ | 4.65 | $ | 4.77 | $ | 4.51 | |||||||||
Book value per common share (2) | $ | 6.23 | $ | 6.31 | $ | 5.84 | |||||||||
(1) Amounts include stock option expense, as follows: | |||||||||||||||
Cost of revenue | $ | 797 | $ | 477 | $ | 430 | |||||||||
Research, development, and engineering | 4,815 | 2,932 | 2,610 | ||||||||||||
Selling, general, and administrative | 7,582 | 5,178 | 4,443 | ||||||||||||
Total stock option expense | $ | 13,194 | $ | 8,587 | $ | 7,483 |
(2) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017.
Exhibit 2 |
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COGNEX CORPORATION |
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Three-months Ended | |||||||||||||||
April 1,
2018 |
December 31, 2017 |
April 2,
2017 |
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Adjustment for stock option expense and tax benefit for stock option exercises | |||||||||||||||
Operating income (GAAP) | $ | 34,596 | $ | 50,775 | $ | 37,216 | |||||||||
Stock option expense | 13,194 | 8,587 | 7,483 | ||||||||||||
Operating income (Non-GAAP) | $ | 47,790 | $ | 59,362 | $ | 44,699 | |||||||||
Percentage of revenue (Non-GAAP) |
28 |
% |
32 | % | 32 | % | |||||||||
Net income (loss) (GAAP) | $ | 37,217 | $ | (27,747 | ) | $ | 45,471 | ||||||||
Stock option expense | 13,194 | 8,587 | 7,483 | ||||||||||||
Tax effect on stock option expense | (2,347 | ) | (2,812 | ) | (2,439 | ) | |||||||||
Discrete tax benefit related to employee stock option exercises | (4,935 | ) | (10,995 | ) | (13,167 | ) | |||||||||
Net income (loss) (Non-GAAP) | $ | 43,129 | $ | (32,967 | ) | $ | 37,348 | ||||||||
Percentage of revenue (Non-GAAP) | 25 | % | (18 | %) | 27 | % | |||||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) | $ | 0.21 | $ | (0.16 | ) | $ | 0.25 | ||||||||
Share impact of non-GAAP adjustments identified above (1) | 0.03 | (0.03 | ) | (0.04 | ) | ||||||||||
Net income (loss) per diluted weighted-average common and
common-equivalent share
(Non-GAAP) (1) |
$ | 0.24 | $ | (0.19 | ) | $ | 0.21 | ||||||||
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) | 179,641 | 173,397 | 178,354 | ||||||||||||
Exclusion of tax adjustments | |||||||||||||||
Income before income tax expense (GAAP) | $ | 37,979 | $ | 52,671 | $ | 39,235 | |||||||||
Income tax expense (GAAP) | $ | 762 | $ | 80,418 | $ | (6,236 | ) | ||||||||
Effective tax rate (GAAP) | 2 | % | 153 | % | (16 | )% | |||||||||
Tax adjustments: | |||||||||||||||
Implications of the Tax Cuts and Jobs Act of 2017: | |||||||||||||||
Transition tax on unrepatriated foreign earnings | $ | — | $ | 101,379 | $ | — | |||||||||
Remeasurement of deferred tax positions | — | 12,523 | — | ||||||||||||
Recharacterization of certain income | — | (31,133 | ) | — | |||||||||||
Subtotal | $ | — | $ | 82,769 | $ | — | |||||||||
Discrete tax benefit related to employee stock option exercises | (4,935 | ) | (10,995 | ) | (13,167 | ) | |||||||||
Other discrete tax events | — | (594 | ) | (143 | ) | ||||||||||
Income tax expense excluding tax adjustments (Non-GAAP) | $ | 5,697 | $ | 9,238 | $ | 7,074 | |||||||||
Effective tax rate (Non-GAAP) | 15% | 18 | % | 18 | % | ||||||||||
Net income excluding tax adjustments (Non-GAAP) | $ | 32,282 | $ | 43,433 | $ | 32,161 | |||||||||
Percentage of revenue (Non-GAAP) | 19% | 24 | % | 23 | % | ||||||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) | $ | 0.21 | $ | (0.16 | ) | $ | 0.25 | ||||||||
Share impact of non-GAAP adjustments identified above (1) | (0.03 | ) | 0.40 | (0.07 | ) | ||||||||||
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) (1) | $ | 0.18 | $ | 0.24 | $ | 0.18 | |||||||||
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) (2) | 179,641 | 180,542 | 178,354 | ||||||||||||
(1) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017
(2) For the fourth quarter of 2017, includes potential common stock equivalents of 7,145 that were excluded in the GAAP net loss per share calculation because they were anti-dilutive.
Exhibit 3 |
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COGNEX CORPORATION | |||||||||
Balance Sheets | |||||||||
(Unaudited) | |||||||||
Dollars in thousands | |||||||||
|
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April 1, 2018 | December 31, 2017 | ||||||||
Assets | |||||||||
Cash and investments | $ | 803,382 | $ | 827,984 | |||||
Accounts receivable | 96,649 | 119,388 | |||||||
Unbilled revenue | 4,232 | 7,454 | |||||||
Inventories | 96,399 | 67,923 | |||||||
Property, plant, and equipment | 85,205 | 78,048 | |||||||
Goodwill and intangible assets | 125,628 | 126,397 | |||||||
Other assets | 57,420 | 60,559 | |||||||
Total assets | $ | 1,268,915 | $ | 1,287,753 | |||||
Liabilities and Shareholders' Equity | |||||||||
Accounts payable and accrued expenses | $ | 85,599 | $ | 91,712 | |||||
Deferred revenue and customer deposits | 15,504 | 9,420 | |||||||
Income taxes | 85,933 | 85,044 | |||||||
Other liabilities | 4,780 | 5,904 | |||||||
Shareholders' equity | 1,077,099 | 1,095,673 | |||||||
Total liabilities and shareholders' equity | $ | 1,268,915 | $ | 1,287,753 |
Exhibit 4 |
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COGNEX CORPORATION Restated Statements of Operations under ASC 606 "Revenue from Contracts with Customers" (Unaudited) Dollars in thousands |
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Three-months Ended | ||||||||||||||||||||
April 2,
2017 |
July 2,
2017 |
October 1, 2017 | December 31, 2017 | |||||||||||||||||
Revenue | $ | 139,039 | $ | 178,080 | $ | 266,042 | $ | 182,922 | ||||||||||||
Cost of revenue | 32,532 | 42,164 | 68,061 | 44,532 | ||||||||||||||||
Gross margin | 106,507 | 135,916 | 197,981 | 138,390 | ||||||||||||||||
Percentage of revenue | 77 | % | 76 | % | 74 | % | 76 | % | ||||||||||||
Research, development, and engineering expenses | 22,770 | 23,377 | 26,078 | 26,980 | ||||||||||||||||
Percentage of revenue | 16 | % | 13 | % | 10 | % |
15 |
% |
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Selling, general, and administrative expenses | 46,521 | 52,518 | 61,054 | 60,635 | ||||||||||||||||
Percentage of revenue | 33 | % | 29 | % | 23 | % |
33 |
% |
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Operating income | 37,216 | 60,021 | 110,849 | 50,775 | ||||||||||||||||
Percentage of revenue | 27 | % | 34 | % | 42 | % | 28% | |||||||||||||
Foreign currency gain (loss) | (263 | ) | (184 | ) | (127 | ) | (1,027 | ) | ||||||||||||
Investment and other income | 2,282 | 1,969 | 2,030 | 2,923 | ||||||||||||||||
Income before income tax expense | 39,235 | 61,806 | 112,752 | 52,671 | ||||||||||||||||
Income tax expense (benefit) | (6,236 | ) | 5,311 | 10,259 | 80,418 | |||||||||||||||
Net income (loss) | $ | 45,471 | $ | 56,495 | $ | 102,493 | $ | (27,747 | ) | |||||||||||
Percentage of revenue | 33 | % | 32 | % | 39 | % |
(15 |
)% |
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Earnings per weighted-average common and common-equivalent share (1): | ||||||||||||||||||||
Basic | $ | 0.26 | $ | 0.33 | $ | 0.59 | $ | (0.16 | ) | |||||||||||
Diluted | $ | 0.25 | $ | 0.32 | $ | 0.57 | $ | (0.16 | ) | |||||||||||
Weighted-average common and common-equivalent shares outstanding (1): | ||||||||||||||||||||
Basic | 172,646 | 173,278 | 173,234 | 173,397 | ||||||||||||||||
Diluted | 178,354 | 179,228 | 179,354 | 173,397 |
(1) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017.
Adjustments to certain financial data as a result of the implementation of ASC 606 "Revenue from Contracts with Customers on Jan.1 2018"
Three-months Ended | ||||||||||||||||||||
April 2,
2017 |
July 2,
2017 |
October 1,
2017 |
December 31,
2017 |
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Revenue as reported | $ | 134,942 | $ | 172,904 | $ | 259,739 | $ | 180,365 | ||||||||||||
Adjustments to revenue | 4,097 | 5,176 | 6,303 | 2,557 | ||||||||||||||||
Revenue as restated | $ | 139,039 | $ | 178,080 | $ | 266,042 | $ | 182,922 | ||||||||||||
Cost of revenue as reported | 28,225 | 37,471 | 62,360 | 40,642 | ||||||||||||||||
Adjustments to cost of revenue | 4,307 | 4,693 | 5,701 | 3,890 | ||||||||||||||||
Cost of revenue as restated | $ | 32,532 | $ | 42,164 | $ | 68,061 | $ | 44,532 | ||||||||||||
Gross margin as reported | $ | 106,717 | $ | 135,433 | $ | 197,379 | $ | 139,723 | ||||||||||||
Adjustments to gross margin | (210 | ) | 483 | 602 | (1,333 | ) | ||||||||||||||
Gross margin as restated | $ | 106,507 | 135,916 | $ | 197,981 | $ | 138,390 | |||||||||||||
Gross margin percentage as reported | 79% | 78% | 76% | 77% | ||||||||||||||||
Adjustments to gross margin percentage | (2)% | (2)% | (2)% | (1)% | ||||||||||||||||
Gross margin percentage as restated | 77% | 76% | 74% | 76% | ||||||||||||||||
Operating income as reported | $ | 37,426 | $ | 59,538 | $ | 110,247 | $ | 52,108 | ||||||||||||
Adjustments to operating income | (210 | ) | 483 | 602 | (1,333 | ) | ||||||||||||||
Operating income as restated | $ | 37,216 | $ | 60,021 | $ | 110,849 | $ | 50,775 | ||||||||||||
Operating margin as reported | 28% | 34% | 42% | 29% | ||||||||||||||||
Adjustments to operating margin |
(1)% | —% | —% | (1)% | ||||||||||||||||
Operating margin as restated |
27% | 34% | 42% | 28% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180430006375/en/
Cognex Corporation
Susan Conway, 508-650-3353
Senior Director
of Investor Relations
[email protected]