07/29/2020 | Press release | Archived content
NATICK, Mass.--(BUSINESS WIRE)-- Cognex Corporation (NASDAQ:CGNX) today reported financial results for the second quarter of 2020. Table 1 below shows selected financial data for Q2-20 compared with Q2-19 and Q1-20, and for the six months ended June 28, 2020 compared with the same period in 2019. Notably, Cognex recorded significant restructuring and other charges, totaling over $42 million, in Q2-20 that reduced earnings for the quarter by $0.20 per diluted share.
Table 1 (Dollars in thousands, except per share amounts) |
||||
Revenue |
Net |
Net |
Non-GAAP |
|
Quarterly Comparisons |
||||
Current quarter: Q2-20 |
$169,097 |
$(1,142) |
$(0.01) |
$0.18 |
Prior year's quarter: Q2-19 |
$199,047 |
$48,749 |
$0.28 |
$0.28 |
Change: Q2-19 to Q2-20 |
(15)% |
(102)% |
(104)% |
(36)% |
Prior quarter: Q1-20 |
$167,235 |
$20,477 |
$0.12 |
$0.11 |
Change: Q1-20 to Q2-20 |
1% |
(106)% |
(108)% |
64% |
Year-to-Date Comparisons |
||||
Six months ended June 28, 2020 |
$336,332 |
$19,335 |
$0.11 |
$0.29 |
Six months ended June 30, 2019 |
$372,531 |
$81,853 |
$0.47 |
$0.45 |
Change from first six months of 2019 to first six months of 2020 |
(10)% |
(76)% |
(77)% |
(36)% |
*Non-GAAP net income per diluted share excludes restructuring and other charges that occurred only in Q2-20 and tax adjustments for all periods presented. A reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this news release.
"As we expected, the second quarter was very difficult for Cognex as it was for many companies around the world," said Dr. Robert J. Shillman, Founder and Chairman of Cognex. "Because of the poor business conditions due to government-imposed shutdowns attributed to COVID-19, we found it necessary to implement significant changes to our company that, we believe, will put us in a stronger position going forward."
"Few companies, including Cognex, are happy with their operating results this quarter," said Robert J. Willett, Chief Executive Officer of Cognex. "However, we accomplished a lot by moving quickly to support customers and win business remotely, continue our product development schedules, and reconfigure our company for future growth. Machine vision remains a great business with substantial long-term growth potential, and we intend to continue leading the way as companies around the world resume their manufacturing efforts."
"Order activity was strong during Q2 in both the consumer electronics and e-commerce markets, and we believe that bodes well for revenue in Q3. As a result, we expect to report growth next quarter on both a year-on-year and sequential basis despite tepid demand in the broader factory automation market," concluded Mr. Willett.
Pre-tax Restructuring and Other Charges in Q2 2020
On May 26, 2020, the Board of Directors approved actions intended to reduce expenses and increase operating efficiencies. This included an 8% reduction in Cognex's worldwide headcount, closure of leased office space, and reduced compensation for Chairman Dr. Shillman, CEO Mr. Willett, and the company's other board members through the end of 2020. As a result of the restructuring, Cognex recorded a pre-tax charge of $14.8 million in Q2-20. Cognex also recorded pre-tax charges of $19.6 million for the impairment of intangible assets and $7.7 million for the write-down of excess and obsolete inventory in Q2-20 due to difficult business conditions the company is currently experiencing in many of its markets.
Details of the Quarter
Statement of Operations Highlights - Second Quarter of 2020
Balance Sheet Highlights - June 28, 2020
Financial Outlook - Q3 2020
Non-GAAP Financial Measures
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 2.3 million image-based products, representing over $7 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, the expected impact of the COVID-19 pandemic on Cognex's business and results of operations, customer order rates and timing of related revenue, future product mix, restructuring and other cost savings initiatives, research and development activities, investments, liquidity, strategic plans, and estimated tax benefits and expenses and other 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 impact, duration and severity of the COVID-19 pandemic; (2) current and future conditions in the global economy, including the impact of the COVID-19 pandemic and the imposition of tariffs or export controls; (3) the loss of, or curtailment of purchases by, a large customer; (4) the reliance on revenue from the consumer electronics or automotive industries; (5) the inability to penetrate the logistics industry and other new markets; (6) the inability to achieve significant international revenue; (7) fluctuations in foreign currency exchange rates and the use of derivative instruments; (8) information security breaches or business system disruptions; (9) the inability to attract and retain skilled employees; (10) the failure to effectively manage our growth; (11) the reliance upon key suppliers to manufacture and deliver critical components for our products; (12) the failure to effectively manage product transitions or accurately forecast customer demand; (13) the inability to design and manufacture high-quality products; (14) the technological obsolescence of current products and the inability to develop new products; (15) the failure to properly manage the distribution of products and services; (16) the inability to protect our proprietary technology and intellectual property; (17) our involvement in time-consuming and costly litigation; (18) the impact of competitive pressures; (19) the challenges in integrating and achieving expected results from acquired businesses, including the recent acquisition of Sualab; (20) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill; (21) exposure to additional tax liabilities; and (22) potential disruptions to our business due to restructuring activities and the failure of such activities to generate the anticipated cost savings; and the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2019 and Form 10-Q for the fiscal quarter ended June 28, 2020. 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 COGNEX CORPORATION Statements of Operations (Unaudited) Dollars in thousands, except per share amounts |
|||||||||||||||
Three-months Ended |
Six-months Ended |
||||||||||||||
June 28, 2020 |
March 29, 2020 |
June 30, 2019 |
June 28, 2020 |
June 30, 2019 |
|||||||||||
Revenue |
$ |
169,097 |
$ |
167,235 |
$ |
199,047 |
$ |
336,332 |
$ |
372,531 |
|||||
Cost of revenue (1) |
50,320 |
41,200 |
50,967 |
91,520 |
97,251 |
||||||||||
Gross margin |
118,777 |
126,035 |
148,080 |
244,812 |
275,280 |
||||||||||
Percentage of revenue |
70 |
% |
75 |
% |
74 |
% |
73 |
% |
74 |
% |
|||||
Research, development, and engineering expenses (1) |
30,397 |
35,946 |
28,079 |
66,343 |
58,321 |
||||||||||
Percentage of revenue |
18 |
% |
21 |
% |
14 |
% |
20 |
% |
16 |
% |
|||||
Selling, general, and administrative expenses (1) |
60,153 |
69,138 |
68,245 |
129,291 |
135,056 |
||||||||||
Percentage of revenue |
36 |
% |
41 |
% |
34 |
% |
38 |
% |
36 |
% |
|||||
Restructuring charges |
14,798 |
- |
- |
14,798 |
- |
||||||||||
Intangible asset impairment charges |
19,571 |
- |
- |
19,571 |
- |
||||||||||
Operating income (loss) |
(6,142 |
) |
20,951 |
51,756 |
14,809 |
81,903 |
|||||||||
Percentage of revenue |
(4 |
)% |
13 |
% |
26 |
% |
4 |
% |
22 |
% |
|||||
Foreign currency gain (loss) |
336 |
(3,003 |
) |
140 |
(2,667 |
) |
(108 |
) |
|||||||
Investment and other income |
3,494 |
5,046 |
5,079 |
8,540 |
10,911 |
||||||||||
Income (loss) before income tax expense (benefit) |
(2,312 |
) |
22,994 |
56,975 |
20,682 |
92,706 |
|||||||||
Income tax expense (benefit) |
(1,170 |
) |
2,517 |
8,226 |
1,347 |
10,853 |
|||||||||
Net income (loss) |
$ |
(1,142 |
) |
$ |
20,477 |
$ |
48,749 |
$ |
19,335 |
$ |
81,853 |
||||
Percentage of revenue |
(1 |
)% |
12 |
% |
24 |
% |
6 |
% |
22 |
% |
|||||
Net income (loss) per weighted-average common and common-equivalent share: |
|||||||||||||||
Basic |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.48 |
||||
Diluted |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.47 |
||||
Weighted-average common and common-equivalent shares outstanding: |
|||||||||||||||
Basic |
172,283 |
172,408 |
171,318 |
172,345 |
171,209 |
||||||||||
Diluted |
172,283 |
175,602 |
175,448 |
175,499 |
175,528 |
||||||||||
Cash dividends per common share |
$ |
0.055 |
$ |
0.055 |
$ |
0.050 |
$ |
0.110 |
$ |
0.100 |
|||||
Cash and investments per common share |
$ |
5.18 |
$ |
4.92 |
$ |
5.05 |
$ |
5.18 |
$ |
5.05 |
|||||
Book value per common share |
$ |
7.95 |
$ |
7.73 |
$ |
6.98 |
$ |
7.95 |
$ |
6.98 |
|||||
(1) Amounts include stock-based compensation expense, as follows: |
|||||||||||||||
Cost of revenue |
$ |
363 |
$ |
354 |
$ |
329 |
$ |
717 |
$ |
780 |
|||||
Research, development, and engineering |
2,401 |
5,366 |
3,550 |
7,767 |
8,017 |
||||||||||
Selling, general, and administrative |
5,254 |
9,070 |
7,088 |
14,324 |
14,451 |
||||||||||
Total stock-based compensation expense |
$ |
8,018 |
$ |
14,790 |
$ |
10,967 |
$ |
22,808 |
$ |
23,248 |
|||||
Exhibit 2 COGNEX CORPORATION Reconciliation of Selected Items from GAAP to Non-GAAP (Unaudited) Dollars in thousands, except per share amounts |
|||||||||||||||
Three-months Ended |
Six-months Ended |
||||||||||||||
June 28, 2020 |
March 29, 2020 |
June 30, 2019 |
June 28, 2020 |
June 30, 2019 |
|||||||||||
Adjustment for stock expense and tax benefit for stock exercises |
|||||||||||||||
Operating income (loss) (GAAP) |
$ |
(6,142 |
) |
$ |
20,951 |
$ |
51,756 |
$ |
14,809 |
$ |
81,903 |
||||
Stock-based compensation expense |
8,018 |
14,790 |
10,967 |
22,808 |
23,248 |
||||||||||
Operating income (Non-GAAP) |
$ |
1,876 |
$ |
35,741 |
$ |
62,723 |
$ |
37,617 |
$ |
105,151 |
|||||
Percentage of revenue (Non-GAAP) |
1 |
% |
21 |
% |
32 |
% |
11 |
% |
28 |
% |
|||||
Net income (loss) (GAAP) |
$ |
(1,142 |
) |
$ |
20,477 |
$ |
48,749 |
$ |
19,335 |
$ |
81,853 |
||||
Stock-based compensation expense |
8,018 |
14,790 |
10,967 |
22,808 |
23,248 |
||||||||||
Tax effect on stock-based compensation expense |
(1,277 |
) |
(2,564 |
) |
(1,813 |
) |
(3,841 |
) |
(4,035 |
) |
|||||
Discrete tax benefit related to stock-based compensation |
(4,413 |
) |
(1,680 |
) |
(1,248 |
) |
(6,093 |
) |
(3,978 |
) |
|||||
Net income (Non-GAAP) |
$ |
1,186 |
$ |
31,023 |
$ |
56,655 |
$ |
32,209 |
$ |
97,088 |
|||||
Percentage of revenue (Non-GAAP) |
1 |
% |
19 |
% |
28 |
% |
10 |
% |
26 |
% |
|||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.47 |
||||
Per share impact of non-GAAP adjustments identified above |
0.02 |
0.06 |
0.04 |
0.07 |
0.08 |
||||||||||
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) |
$ |
0.01 |
$ |
0.18 |
$ |
0.32 |
$ |
0.18 |
$ |
0.55 |
|||||
Diluted weighted-average common and common-equivalent shares outstanding (Non-GAAP) |
175,403 |
175,602 |
175,448 |
175,499 |
175,528 |
||||||||||
Exclusion of tax adjustments |
|||||||||||||||
Income (loss) before income tax expense (benefit) (GAAP) |
$ |
(2,312 |
) |
$ |
22,994 |
$ |
56,975 |
$ |
20,682 |
$ |
92,706 |
||||
Income tax expense (benefit) (GAAP) |
$ |
(1,170 |
) |
$ |
2,517 |
$ |
8,226 |
$ |
1,347 |
$ |
10,853 |
||||
Effective tax rate (GAAP) |
(51 |
)% |
11 |
% |
14 |
% |
7 |
% |
12 |
% |
|||||
Tax adjustments: |
|||||||||||||||
Discrete tax benefit related to stock-based compensation |
4,413 |
1,680 |
1,248 |
6,093 |
3,978 |
||||||||||
Discrete tax benefit (expense) related to tax return filings and other |
(3,267 |
) |
(242 |
) |
- |
(3,509 |
) |
3 |
|||||||
Tax rate adjustment |
(415 |
) |
- |
- |
- |
- |
|||||||||
Income tax expense (benefit) (Non-GAAP) |
$ |
(439 |
) |
$ |
3,955 |
$ |
9,474 |
$ |
3,931 |
$ |
14,834 |
||||
Effective tax rate (Non-GAAP) |
(19 |
)% |
17 |
% |
17 |
% |
19 |
% |
16 |
% |
|||||
Net income (loss) (Non-GAAP) |
$ |
(1,873 |
) |
$ |
19,039 |
$ |
47,501 |
$ |
16,751 |
$ |
77,872 |
||||
Percentage of revenue (Non-GAAP) |
(1 |
)% |
11 |
% |
24 |
% |
5 |
% |
21 |
% |
|||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.47 |
||||
Per share impact of non-GAAP adjustments identified above |
- |
(0.01 |
) |
(0.01 |
) |
(0.01 |
) |
(0.03 |
) |
||||||
Net income (loss) per diluted weighted-average common and common-equivalent share (Non-GAAP) |
$ |
(0.01 |
) |
$ |
0.11 |
$ |
0.27 |
$ |
0.10 |
$ |
0.44 |
||||
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) |
172,283 |
175,602 |
175,448 |
175,499 |
175,528 |
||||||||||
Exhibit 2 |
|||||||||||||||
Three-months Ended |
Six-months Ended |
||||||||||||||
June 28, 2020 |
March 29, 2020 |
June 30, 2019 |
June 28, 2020 |
June 30, 2019 |
|||||||||||
Exclusion of restructuring and other charges |
|||||||||||||||
Gross margin (GAAP) |
$ |
118,777 |
$ |
126,035 |
$ |
148,080 |
$ |
244,812 |
$ |
275,280 |
|||||
Excess and obsolete inventory charges |
7,718 |
1,065 |
933 |
8,783 |
1,713 |
||||||||||
Gross margin (Non-GAAP) |
$ |
126,495 |
$ |
127,100 |
$ |
149,013 |
$ |
253,595 |
$ |
276,993 |
|||||
Percentage of revenue (Non-GAAP) |
75 |
% |
76 |
% |
75 |
% |
75 |
% |
74 |
% |
|||||
Operating income (loss) (GAAP) |
$ |
(6,142 |
) |
$ |
20,951 |
$ |
51,756 |
$ |
14,809 |
$ |
81,903 |
||||
Excess and obsolete inventory charges |
7,718 |
1,065 |
933 |
8,783 |
1,713 |
||||||||||
Restructuring charges |
14,798 |
- |
- |
14,798 |
- |
||||||||||
Intangible asset impairment charges |
19,571 |
- |
- |
19,571 |
- |
||||||||||
Operating income (Non-GAAP) |
$ |
35,945 |
$ |
22,016 |
$ |
52,689 |
$ |
57,961 |
$ |
83,616 |
|||||
Percentage of revenue (Non-GAAP) |
21 |
% |
13 |
% |
26 |
% |
17 |
% |
22 |
% |
|||||
Net income (loss) (GAAP) |
$ |
(1,142 |
) |
$ |
20,477 |
$ |
48,749 |
$ |
19,335 |
$ |
81,853 |
||||
Excess and obsolete inventory charges |
7,718 |
1,065 |
933 |
8,783 |
1,713 |
||||||||||
Restructuring charges |
14,798 |
- |
- |
14,798 |
- |
||||||||||
Intangible asset impairment charges |
19,571 |
- |
- |
19,571 |
- |
||||||||||
Tax effect on restructuring and other charges |
(7,997 |
) |
(181 |
) |
(159 |
) |
(8,199 |
) |
(274 |
) |
|||||
Net income (Non-GAAP) |
$ |
32,948 |
$ |
21,361 |
$ |
49,523 |
$ |
54,288 |
$ |
83,292 |
|||||
Percentage of revenue (Non-GAAP) |
19 |
% |
13 |
% |
25 |
% |
16 |
% |
22 |
% |
|||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.47 |
||||
Per share impact of non-GAAP adjustments identified above |
0.20 |
- |
- |
0.20 |
- |
||||||||||
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) |
$ |
0.19 |
$ |
0.12 |
$ |
0.28 |
$ |
0.31 |
$ |
0.47 |
|||||
Diluted weighted-average common and common-equivalent shares outstanding (Non-GAAP) |
175,403 |
175,602 |
175,448 |
175,499 |
175,528 |
||||||||||
Three-months Ended |
Six-months Ended |
||||||||||||||
June 28, 2020 |
March 29, 2020 |
June 30, 2019 |
June 28, 2020 |
June 30, 2019 |
|||||||||||
Exclusion of restructuring and other charges and tax adjustments |
|||||||||||||||
Net income (loss) (GAAP) |
$ |
(1,142 |
) |
$ |
20,477 |
$ |
48,749 |
$ |
19,335 |
$ |
81,853 |
||||
Excess and obsolete inventory charges |
7,718 |
1,065 |
933 |
8,783 |
1,713 |
||||||||||
Restructuring charges |
14,798 |
- |
- |
14,798 |
- |
||||||||||
Intangible asset impairment charges |
19,571 |
- |
- |
19,571 |
- |
||||||||||
Tax effect on restructuring and other charges |
(7,997 |
) |
(181 |
) |
(159 |
) |
(8,199 |
) |
(274 |
) |
|||||
Tax adjustments |
(731 |
) |
(1,438 |
) |
(1,248 |
) |
(2,584 |
) |
(3,981 |
) |
|||||
Net income (Non-GAAP) |
$ |
32,217 |
$ |
19,923 |
$ |
48,275 |
$ |
51,704 |
$ |
79,311 |
|||||
Percentage of revenue (Non-GAAP) |
19 |
% |
12 |
% |
24 |
% |
15 |
% |
21 |
% |
|||||
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) |
$ |
(0.01 |
) |
$ |
0.12 |
$ |
0.28 |
$ |
0.11 |
$ |
0.47 |
||||
Per share impact of non-GAAP adjustments identified above |
0.19 |
(0.01 |
) |
- |
0.18 |
(0.02 |
) |
||||||||
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) |
$ |
0.18 |
$ |
0.11 |
$ |
0.28 |
$ |
0.29 |
$ |
0.45 |
|||||
Diluted weighted-average common and common-equivalent shares outstanding (Non-GAAP) |
175,403 |
175,602 |
175,448 |
175,499 |
175,528 |
||||||||||
Exhibit 3 |
||||
COGNEX CORPORATION Balance Sheets (Unaudited) Dollars in thousands |
||||
June 28, 2020 |
December 31, 2019 |
|||
Assets |
||||
Cash and investments |
$ |
896,192 |
$ |
845,353 |
Accounts receivable |
111,671 |
103,447 |
||
Inventories |
52,953 |
60,261 |
||
Property, plant, and equipment |
83,936 |
89,443 |
||
Operating lease assets |
25,819 |
17,522 |
||
Goodwill and intangible assets |
259,773 |
282,935 |
||
Deferred tax assets |
443,732 |
449,519 |
||
Other assets |
60,788 |
37,455 |
||
Total assets |
$ |
1,934,864 |
$ |
1,885,935 |
Liabilities and Shareholders' Equity |
||||
Accounts payable and accrued expenses |
$ |
84,263 |
$ |
70,065 |
Deferred revenue and customer deposits |
46,738 |
14,432 |
||
Operating lease liabilities |
28,836 |
17,973 |
||
Income taxes |
67,169 |
93,009 |
||
Deferred tax liabilities |
326,295 |
332,344 |
||
Other liabilities |
5,085 |
2,402 |
||
Shareholders' equity |
1,376,478 |
1,355,710 |
||
Total liabilities and shareholders' equity |
$ |
1,934,864 |
$ |
1,885,935 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200729005868/en/
Susan Conway
Investor Relations
+1 508-650-3353
[email protected]
Source: Cognex Corporation