Cognex Corporation (NASDAQ: CGNX) today announced financial results for the second quarter of 2018. Table 1 below shows selected financial data for Q2-18 compared with Q2-17 and Q1-18, and the first six months of 2018 compared with the first six months of 2017. All periods presented reflect the two-for-one stock split in Q4-17.
Table 1* |
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(Dollars in thousands, except per share amounts) |
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Revenue |
Net Income |
Net Income |
Non-GAAP |
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Quarterly Comparisons |
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Current quarter: Q2-18 |
$211,264 | $56,196 | $0.32 | $0.31 | ||||
Prior year’s quarter: Q2-17 | $178,080 | $56,495 | $0.32 | $0.28 | ||||
Change: Q2-17 to Q2-18 | 19% | (1%) | 0% | 11% | ||||
Prior quarter: Q1-18 | $169,567 | $37,217 | $0.21 | $0.18 | ||||
Change: Q1-18 to Q2-18 | 25% | 51% | 52% | 72% | ||||
Year-to-Date Comparisons |
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Six months ended July 1, 2018 | $380,831 | $93,413 | $0.52 | $0.49 | ||||
Six months ended July 2, 2017 | $317,119 | $101,966 | $0.57 | $0.46 | ||||
Change from first six months of 2017 to first six months of 2018 | 20% | (8%) | (9%) | 7% |
* 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 per diluted share excludes tax adjustments. A reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this news release.
“Our results for Q2 of 2018 were rather good,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “Revenue was the second highest of any quarter in our company’s 37-year history. And operating margin was at our 30% long-term target.”
“I am pleased with our overall Q2 performance, which was slightly better than our expectations,” said Robert J. Willett, Chief Executive Officer of Cognex. “Revenue grew by 19% year-on-year despite significantly lower revenue from the OLED display market in Asia. Opportunities for machine vision in our other served markets continue to grow rapidly, and because of that, we plan to go on investing strongly in new product development and sales resources to position ourselves for success over the long term.”
Mr. Willett continued, “Looking at the second-half, comparisons will be more challenging, particularly for Q3, because of last year’s extraordinary sales into OLED display and smartphone manufacturing.”
Details of the Quarter
Statement of Operations Highlights – Second Quarter of 2018
Balance Sheet Highlights – July 1, 2018
Financial Outlook – Q3 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, emerging markets, future product mix, research and development activities, further stock repurchases, investments, strategic plans and tax matters, 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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Statements of Operations |
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(Unaudited) |
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Dollars in thousands, except per share amounts |
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Three-months Ended | Six-months Ended | |||||||||||||||||||
July 1, 2018 |
April 1, 2018 |
July 2, 2017 |
July 1, 2018 |
July 2, 2017 |
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Revenue (1) | $ | 211,264 | $ | 169,567 | $ | 178,080 | $ | 380,831 | $ | 317,119 | ||||||||||
Cost of revenue (1) | 54,169 | 40,198 | 42,164 | 94,367 | 74,696 | |||||||||||||||
Gross margin | 157,095 | 129,369 | 135,916 | 286,464 | 242,423 | |||||||||||||||
Percentage of revenue | 74 | % | 76 | % | 76 | % | 75 | % | 76 | % | ||||||||||
Research, development, and engineering expenses (1) | 26,888 | 31,076 | 23,377 | 57,964 | 46,147 | |||||||||||||||
Percentage of revenue | 13 | % | 18 | % | 13 | % | 15 | % | 15 | % | ||||||||||
Selling, general, and administrative expenses (1) | 66,752 | 63,697 | 52,518 | 130,449 | 99,039 | |||||||||||||||
Percentage of revenue | 32 | % | 38 | % | 29 | % | 34 | % | 31 | % | ||||||||||
Operating income | 63,455 | 34,596 | 60,021 | 98,051 | 97,237 | |||||||||||||||
Percentage of revenue | 30 | % | 20 | % | 34 | % | 26 | % | 31 | % | ||||||||||
Foreign currency gain (loss) | (195 | ) | (134 | ) | (184 | ) | (329 | ) | (447 | ) | ||||||||||
Investment and other income | 3,313 | 3,517 | 1,969 | 6,830 | 4,251 | |||||||||||||||
Income before income tax expense | 66,573 | 37,979 | 61,806 | 104,552 | 101,041 | |||||||||||||||
Income tax expense (benefit) | 10,377 | 762 | 5,311 | 11,139 | (925 | ) | ||||||||||||||
Net income (loss) | $ | 56,196 | $ | 37,217 | $ | 56,495 | $ | 93,413 | $ | 101,966 | ||||||||||
Percentage of revenue | 27 | % | 22 | % | 32 | % | 25 | % | 32 | % | ||||||||||
Earnings per weighted-average common and common-equivalent share (2): | ||||||||||||||||||||
Basic | $ | 0.33 | $ | 0.21 | $ | 0.33 | $ | 0.54 |
$ |
0.59 | ||||||||||
Diluted | $ | 0.32 | $ | 0.21 | $ | 0.32 |
$ |
0.52 |
$ |
0.57 |
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Weighted-average common and common-equivalent shares outstanding (2): | ||||||||||||||||||||
Basic | 172,370 | 173,280 | 173,278 | 172,825 | 172,960 | |||||||||||||||
Diluted | 177,149 | 179,641 | 179,228 | 178,418 | 178,904 | |||||||||||||||
Cash dividends per common share (2) | $ | 0.0450 | $ | 0.0450 | $ | 0.0425 | $ | 0.0900 | $ | 0.0800 | ||||||||||
Cash and investments per common share (2) | $ | 4.39 | $ | 4.65 | $ | 4.42 | $ | 4.39 | $ | 4.42 | ||||||||||
Book value per common share (2) | $ | 6.27 | $ | 6.23 | $ | 6.08 | $ | 6.27 | $ | 6.08 | ||||||||||
(1) Amounts include stock option expense, as follows: | ||||||||||||||||||||
Cost of revenue | $ | 557 | $ | 797 | $ | 454 | $ | 1,354 | $ | 884 | ||||||||||
Research, development, and engineering | 3,154 | 4,815 | 2,715 | 7,969 | 5,325 | |||||||||||||||
Selling, general, and administrative | 5,291 | 7,582 | 4,677 | 12,873 | 9,120 | |||||||||||||||
Total stock option expense | $ | 9,002 | $ | 13,194 | $ | 7,846 | $ | 22,196 | $ | 15,329 | ||||||||||
(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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Reconciliation of Selected Items from GAAP to Non-GAAP |
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(Unaudited) |
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Dollars in thousands, except per share amounts |
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Three-months Ended | Six-months Ended | ||||||||||||||||||||
July 1, 2018 | April 1, 2018 | July 2, 2017 | July 1, 2018 | July 2, 2017 | |||||||||||||||||
Adjustment for stock option expense and tax benefit for stock option exercises | |||||||||||||||||||||
Operating income (GAAP) | $ | 63,455 | $ | 34,596 | $ | 60,021 | $ | 98,051 | $ | 97,237 | |||||||||||
Stock option expense | 9,002 | 13,194 | 7,846 | 22,196 | 15,329 | ||||||||||||||||
Operating income (Non-GAAP) | $ | 72,457 | $ | 47,790 | $ | 67,867 | $ | 120,247 | $ | 112,566 | |||||||||||
Percentage of revenue (Non-GAAP) | 34 | % | 28 | % | 38 | % | 32 | % | 35 | % | |||||||||||
Net income (loss) (GAAP) | $ | 56,196 | $ | 37,217 | $ | 56,495 | $ | 93,413 | $ | 101,966 | |||||||||||
Stock option expense | 9,002 | 13,194 | 7,846 | 22,196 | 15,329 | ||||||||||||||||
Tax effect on stock option expense | (1,607 | ) | (2,347 | ) | (2,583 | ) | (3,954 | ) | (5,022 | ) | |||||||||||
Discrete tax benefit related to employee stock option exercises | (654 | ) | (4,935 | ) | (5,787 | ) | (5,589 | ) | (18,954 | ) | |||||||||||
Net income (loss) (Non-GAAP) | $ | 62,937 | $ | 43,129 | $ | 55,971 | $ | 106,066 | $ | 93,319 | |||||||||||
Percentage of revenue (Non-GAAP) | 30 | % | 25 | % | 31 | % | 28 | % | 29 | % | |||||||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) | $ | 0.32 | $ | 0.21 | $ | 0.32 | $ | 0.52 | $ | 0.57 | |||||||||||
Share impact of non-GAAP adjustments identified above (1) | 0.04 | 0.03 | (0.01 | ) | 0.07 | (0.05 | ) | ||||||||||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (Non-GAAP) (1) |
$ | 0.36 | $ | 0.24 | $ | 0.31 | $ | 0.59 | $ | 0.52 | |||||||||||
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) | 177,149 | 179,641 | 179,228 | 178,418 | 178,904 | ||||||||||||||||
Exclusion of tax adjustments | |||||||||||||||||||||
Income before income tax expense (GAAP) | $ | 66,573 | $ | 37,979 | $ | 61,806 | $ | 104,552 | $ | 101,041 | |||||||||||
Income tax expense (GAAP) | $ | 10,377 | $ | 762 | $ | 5,311 | $ | 11,139 | $ | (925 | ) | ||||||||||
Effective tax rate (GAAP) | 16 | % | 2 | % | 9 | % | 11 | % | (1 | )% | |||||||||||
Tax adjustments: | |||||||||||||||||||||
Discrete tax benefit related to employee stock option exercises | (654 | ) | (4,935 | ) | (5,787 | ) | (5,589 | ) | (18,954 | ) | |||||||||||
Other discrete tax events | — | — | — | — | (143 | ) | |||||||||||||||
Income tax expense excluding tax adjustments (Non-GAAP) | $ | 11,031 | $ | 5,697 | $ | 11,098 | $ | 16,728 | $ | 18,172 | |||||||||||
Effective tax rate (Non-GAAP) | 17 | % | 15 | % | 18 | % | 16 | % | 18 | % | |||||||||||
Net income excluding tax adjustments (Non-GAAP) | $ | 55,542 | $ | 32,282 | $ | 50,708 | $ | 87,824 | $ | 82,869 | |||||||||||
Percentage of revenue (Non-GAAP) | 26 | % | 19 | % | 28 | % | 23 | % | 26 | % | |||||||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) | $ | 0.32 | $ | 0.21 | $ | 0.32 | $ | 0.52 | $ | 0.57 | |||||||||||
Share impact of non-GAAP adjustments identified above (1) | (0.01 | ) | (0.03 | ) | (0.04 | ) | (0.03 | ) | (0.11 | ) | |||||||||||
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) (1) | $ | 0.31 | $ | 0.18 | $ | 0.28 | $ | 0.49 | $ | 0.46 | |||||||||||
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) | 177,149 | 179,641 | 179,228 | 178,418 | 178,904 | ||||||||||||||||
(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.
Exhibit 3 |
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COGNEX CORPORATION |
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Balance Sheets |
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(Unaudited) |
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Dollars in thousands |
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July 1, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Cash and investments | $ | 754,883 | $ | 827,984 | |||
Accounts receivable | 136,084 | 119,388 | |||||
Unbilled revenue | 3,603 | 7,454 | |||||
Inventories | 89,556 | 67,923 | |||||
Property, plant, and equipment | 87,893 | 78,048 | |||||
Goodwill and intangible assets | 124,859 | 126,397 | |||||
Other assets | 79,432 | 60,559 | |||||
Total assets | $ | 1,276,310 | $ | 1,287,753 | |||
Liabilities and Shareholders' Equity | |||||||
Accounts payable and accrued expenses | $ | 71,242 | $ | 91,712 | |||
Deferred revenue and customer deposits | 40,881 | 9,420 | |||||
Income taxes | 80,421 | 85,044 | |||||
Other liabilities | 4,634 | 5,904 | |||||
Shareholders' equity | 1,079,132 | 1,095,673 | |||||
Total liabilities and shareholders' equity | $ | 1,276,310 | $ | 1,287,753 | |||
Exhibit 4 |
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COGNEX CORPORATION |
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Restated Statements of Operations under ASC 606 "Revenue from Contracts with Customers" |
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(Unaudited) |
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Dollars in thousands |
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Three-months Ended | ||||||||||||||||
April 2, |
July 2, |
October 1, |
December 31, |
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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 | % | ||||||||
Selling, general, and administrative expenses | 46,521 | 52,518 | 61,054 | 60,635 | ||||||||||||
Percentage of revenue | 33 | % | 29 | % | 23 | % | 33 | % | ||||||||
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 | )% | ||||||||
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" |
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Three-months Ended | ||||||||||||||||
April 2, |
July 2, |
October 1, |
December 31, |
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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/20180730005722/en/
Cognex Corporation
Susan Conway, 508-650-3353
Senior Director
of Investor Relations
[email protected]