Cognex Reports Record Fourth Quarter and Full Year Revenue
for 2020
Cognex Corporation (NASDAQ: CGNX) today reported financial
results for 2020. Table 1 below shows selected financial data for
Q4-20 compared with Q4-19 and Q3-20, and the year ended December
31, 2020 compared with the year ended December 31, 2019.
Table
1
(Dollars in thousands, except per
share amounts)
Revenue
Net
Income
Net Income per Diluted
Share
Non-GAAP Net Income per
Diluted Share*
Quarterly Comparisons
Current quarter: Q4-20
$223,615
$69,345
$0.39
$0.32
Prior year’s quarter: Q4-19
$169,769
$80,327
$0.46
$0.11
Change: Q4-19 to Q4-20
32%
(14)%
(15)%
191%
Prior quarter: Q3-20
$251,073
$87,506
$0.49
$0.47
Change: Q3-20 to Q4-20
(11)%
(21)%
(20)%
(32)%
Yearly
Comparisons
Year ended December 31, 2020
$811,020
$176,186
$1.00
$1.09
Year ended December 31, 2019
$725,625
$203,865
$1.16
$0.80
Change from 2019 to 2020
12%
(14)%
(14)%
36%
*Non-GAAP net income per diluted share excludes restructuring
and other charges that occurred predominantly 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.
“It’s hard to call 2020 a ‘good’ year, but we are, nevertheless,
pleased with the financial results that we were able to achieve,”
said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “We
set a new record for both Q4 and annual revenue despite significant
economic disruption and weakness in the automotive industry.
Importantly, we remained focused on long-term growth opportunities,
which we believe has positioned us well going into 2021.”
“The past year was a turbulent time for most businesses,
including Cognex,” said Robert J. Willett, Chief Executive Officer
of Cognex. “We are proud of our achievements, and the continued
dedication and hard work of Cognoids around the world during this
difficult period. While economic conditions remain unpredictable,
we are cautiously optimistic that the strength we experienced in
the second half of 2020 will continue into the new year.”
Summary of the
Year
Cognex reported record revenue of $811 million in
2020—representing an increase of 12% year-on-year―despite
significant disruptions to the global economy during the year.
Revenue growth was due to higher revenue from consumer electronics
and the e-commerce fulfillment sector of logistics, and
particularly from large customers that benefited from higher
consumer demand during the COVID-19 pandemic. Revenue from
medical-related industries also increased, though considerably less
than the increase from consumer electronics and logistics.
Operating income on a GAAP basis was 21% of revenue compared to
20% for 2019 because of the higher revenue. Cognex remained focused
on the long term and invested a record $131 million, or 16% of
revenue, in engineering, marking the company’s tenth consecutive
year of Research, Development and Engineering (RD&E) growth. We
believe that our position as a leader in machine vision is due, in
large part, to the engineering content in our products, and we
intend to continue to invest in RD&E going forward. The company
recorded pre-tax restructuring charges of approximately $16 million
for steps taken to reduce expenses, including a workforce reduction
and lease terminations. In addition, Cognex recorded non-cash
charges of approximately $27 million in the second quarter for the
impairment of intangible assets and write-down of excess and
obsolete inventory due to the deteriorated business conditions.
Excluding restructuring and other charges, operating income was 27%
of revenue for 2020 compared to 20% in the prior year.
Details of the
Quarter
Statement of Operations Highlights – Fourth Quarter of
2020
- Cognex reported record fourth quarter revenue for 2020. Revenue
increased by 32% from Q4-19 and declined by 11% from Q3-20. Growth
year-on-year was due to continued strong performance in the
e-commerce sector of logistics and higher revenue from
manufacturers of consumer electronics. The sequential decrease was
due to the Q3-20 timing of large-customer deployments in the
consumer electronics industry. Outside that industry, revenue
increased on a sequential basis due to growth in logistics and
improved spending in automotive and the broader factory automation
market.
- Gross margin was 75% for Q4-20, 74% for Q4-19, and 76% for
Q3-20, and within the company’s target range for all periods.
- RD&E expenses increased by 4% from Q4-19 and 14% from
Q3-20. The increase, both year-on-year and sequentially, reflects
higher incentive compensation costs resulting from the achievement
of company performance objectives, which are established annually.
Notably, Cognex did not meet its performance goals in 2019, and
therefore no bonuses were paid.
- Selling, General & Administrative (SG&A) expenses were
flat with Q4-19 and increased by 15% from Q3-20. The increase in
SG&A spending from Q3-20 was due to higher incentive
compensation costs, primarily sales commissions related to the
revenue growth. Lower travel and entertainment costs offset an
increase in incentive compensation on a year-on-year basis.
- The effective tax rate in Q4-20 was a benefit of 7% compared
with a benefit of 250% in Q4-19 and an expense of 14% in Q3-20.
Excluding the discrete tax adjustments summarized in Exhibit 2, the
tax rate was an expense of 14% in Q4-20, 18% in Q4-19, and 18% in
Q3-20. In Q4-20, Cognex recorded a net discrete tax benefit of $14
million related primarily to tax return filings. The largest
component is the application of new regulations on the use of
foreign tax credits in the company’s 2019 U.S. federal tax return
filed in Q4-20.
Balance Sheet Highlights – December 31, 2020
- Cognex’s financial position as of December 31, 2020 continued
to be strong, with approximately $767 million in cash and
investments and no debt. In 2020, Cognex generated $242 million in
cash from operations and $126 million from the exercise of stock
options. In addition, during 2020, the company paid $391 million in
dividends to shareholders—including approximately $350 million in a
very special dividend that was paid using existing cash
balances―and spent $51 million to repurchase its common stock.
Cognex intends to continue to repurchase shares of its common stock
pursuant to its existing stock repurchase program, subject to
market conditions and other relevant factors.
Financial Outlook – Q1 2021
- Cognex believes revenue in Q1-21 will be between $225 million
and $245 million. The company expects growth over both Q1-20 and
Q4-20 due primarily to higher revenue anticipated from the
e-commerce sector of logistics.
- Gross margin for Q1-21 is expected to be in the mid-70% range,
and likely lower than the gross margin reported for Q4-20.
- Operating expenses are expected to be flat to slightly down
from Q1-20.
- The effective tax rate is expected to be 18%, excluding
discrete tax items.
Non-GAAP Financial Measures
- 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.
Non-GAAP presentations exclude the following: (1) stock-based
compensation expense for calculating non-GAAP adjusted operating
income and net income (because these expenses have no current
effect on cash or the future uses of cash, and they fluctuate
because of changes in Cognex’s stock price), and (2) certain
one-time discrete events, such as restructuring charges, intangible
asset impairment charges, excess and obsolete inventory charges,
and tax adjustments (because these costs are outside of Cognex’s
normal business operations and not used by management to assess
Cognex’s operating results). Cognex also uses results on a
constant-currency basis as one measure to evaluate performance.
Constant-currency information compares results between periods as
if the exchange rates had remained constant period-over-period.
Cognex does not intend for non-GAAP financial measures to be
considered in isolation, or as a substitute for financial
information provided in accordance with GAAP.
- The tax effect of items identified in the reconciliation is
estimated by applying the effective tax rate to the pre-tax amount.
However, if a specific tax rate or tax treatment is required
because of the nature of the item and/or the tax jurisdiction where
the item was recorded, the tax effect is estimated by applying the
relevant specific tax rate or tax treatment, rather than the
effective tax rate.
Analyst Conference Call and Simultaneous Webcast
- Cognex will host a conference call today at 5:00 p.m. Eastern
Standard Time (EST). The telephone number is (877) 704-4573 (or
(201) 389-0911 if outside the United States). A replay will begin
at 8:00 p.m. EST today and will be available until 11:59 p.m. EST
on Sunday, February 14, 2021. The telephone number for the replay
is (877) 660-6853 (or (201) 612-7415 if outside the United States).
The access code for both the live call and the replay is
13713966.
- A real-time audio broadcast of the conference call or an
archived recording will be accessible on the Events &
Presentations page of the Cognex Investor website:
https://www.cognex.com/Investor.
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 3 million image-based products,
representing over $8 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
statements are based on our current estimates and expectations as
to prospective events and circumstances, which may or may not be in
our control and as to which there can be no firm assurances given.
These forward-looking statements, which include statements
regarding business and market trends, future financial performance,
the expected impact of the COVID-19 pandemic on our assets,
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,
capital projects, investments, acquisitions, liquidity, dividends
and stock repurchases, 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) potential disruptions to our business due to
restructuring activities; (3) the loss of, or curtailment of
purchases by, large customers in the consumer electronics and
logistics industries; (4) the reliance on revenue from the
automotive industry; (5) the reliance on key suppliers to
manufacture and deliver critical components for our products; (6)
the failure to effectively manage product transitions or accurately
forecast customer demand; (7) the inability to design and
manufacture high-quality products; (8) the inability to attract and
retain skilled employees and maintain our unique corporate culture;
(9) the failure to effectively manage our growth; (10) the
inability to achieve growth in revenue and profits from the
logistics industry; (11) the technological obsolescence of current
products and the inability to develop new products; (12) the
failure to properly manage the distribution of products and
services; (13) the impact of competitive pressures; (14) the
challenges in integrating and achieving expected results from
acquired businesses; (15) potential disruptions in our business
systems; (16) information security breaches; (17) the inability to
protect our proprietary technology and intellectual property; (18)
potential impairment charges with respect to our investments or
acquired intangible assets; (19) exposure to additional tax
liabilities; (20) fluctuations in foreign currency exchange rates
and the use of derivative instruments; (21) our involvement in
time-consuming and costly litigation; (22) unfavorable global
economic conditions; (23) economic, political, and other risks
associated with international sales and operations; and the other
risks detailed in Cognex reports filed with the SEC, including its
Form 10-K for the fiscal year ended December 31, 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
Twelve-months Ended
December 31, 2020
September 27, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Revenue
$
223,615
$
251,073
$
169,769
$
811,020
$
725,625
Cost of revenue (1)
55,160
59,741
44,871
206,421
189,754
Gross margin
168,455
191,332
124,898
604,599
535,871
Percentage of revenue
75
%
76
%
74
%
75
%
74
%
Research, development, and engineering
expenses (1)
34,399
30,240
32,991
130,982
119,427
Percentage of revenue
15
%
12
%
19
%
16
%
16
%
Selling, general, and administrative
expenses (1)
74,096
64,206
74,300
267,593
273,842
Percentage of revenue
33
%
26
%
44
%
33
%
38
%
Restructuring charges
875
251
—
15,924
—
Intangible asset impairment charges
—
—
—
19,571
—
Operating income
59,085
96,635
17,607
170,529
142,602
Percentage of revenue
26
%
38
%
10
%
21
%
20
%
Foreign currency gain (loss)
4,007
2,357
894
3,697
(509
)
Investment and other income
1,828
2,317
4,420
12,685
20,901
Income before income tax expense
(benefit)
64,920
101,309
22,921
186,911
162,994
Income tax expense (benefit)
(4,425
)
13,803
(57,406
)
10,725
(40,871
)
Net income
$
69,345
$
87,506
$
80,327
$
176,186
$
203,865
Percentage of revenue
31
%
35
%
47
%
22
%
28
%
Net income per weighted-average common and
common-equivalent share:
Basic
$
0.40
$
0.50
$
0.47
$
1.02
$
1.19
Diluted
$
0.39
$
0.49
$
0.46
$
1.00
$
1.16
Weighted-average common and
common-equivalent shares outstanding:
Basic
175,220
173,943
171,607
173,489
171,194
Diluted
178,590
177,138
175,500
176,592
175,269
Cash dividends per common share
$
2.060
$
0.055
$
0.055
$
2.225
$
0.205
Cash and investments per common share
$
4.37
$
5.80
$
4.90
$
4.37
$
4.90
Book value per common share
$
7.18
$
8.62
$
7.86
$
7.18
$
7.86
(1) Amounts include stock-based
compensation expense, as follows:
Cost of revenue
$
324
$
324
$
390
$
1,365
$
1,504
Research, development, and engineering
2,805
2,815
4,115
13,387
15,748
Selling, general, and administrative
7,456
6,129
7,642
27,909
28,337
Total stock-based compensation expense
$
10,585
$
9,268
$
12,147
$
42,661
$
45,589
Exhibit 2
COGNEX CORPORATION
Reconciliation of Selected
Items from GAAP to Non-GAAP
(Unaudited)
Dollars in thousands, except
per share amounts
Three-months Ended
Twelve-months Ended
December 31, 2020
September 27, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Discrete tax adjustments
reconciliation
Income before income tax expense (benefit)
(GAAP)
$
64,920
$
101,309
$
22,921
$
186,911
$
162,994
Income tax expense (benefit) (GAAP)
$
(4,425
)
$
13,803
$
(57,406
)
$
10,725
$
(40,871
)
Effective tax rate (GAAP)
(7
)
%
14
%
(250
)
%
6
%
(25
)
%
Discrete tax benefit related to
stock-based compensation
2,342
4,354
1,925
12,788
6,472
Discrete tax benefit (expense) related to
tax return filings and other
11,441
(129
)
602
7,803
1,932
Discrete tax expense related to migration
of acquired IP
—
—
(28,528
)
—
(28,528
)
Discrete tax benefit related to change in
tax structure
—
—
87,500
—
87,500
Total discrete tax adjustments
$
13,783
$
4,225
$
61,499
$
20,591
$
67,376
Income tax expense (benefit)
(Non-GAAP)
$
9,358
$
18,028
$
4,093
$
31,316
$
26,505
Effective tax rate (Non-GAAP)
14
%
18
%
18
%
17
%
16
%
Exclusion of restructuring and other
charges
Operating income (GAAP)
$
59,085
$
96,635
$
17,607
$
170,529
$
142,602
Percentage of revenue (GAAP)
26
%
38
%
10
%
21
%
20
%
Excess and obsolete inventory charges
522
603
1,175
9,908
5,296
Restructuring charges
875
251
—
15,924
—
Intangible asset impairment charges
—
—
—
19,571
—
Operating income (Non-GAAP)
$
60,482
$
97,489
$
18,782
$
215,932
$
147,898
Percentage of revenue (Non-GAAP)
27
%
39
%
11
%
27
%
20
%
Restructuring and other charges and
discrete tax adjustments reconciliation
Net income (GAAP)
$
69,345
$
87,506
$
80,327
$
176,186
$
203,865
Excess and obsolete inventory charges
522
603
1,175
9,908
5,296
Restructuring charges
875
251
—
15,924
—
Intangible asset impairment charges
—
—
—
19,571
—
Tax effect on restructuring and other
charges
(196
)
(154
)
(188
)
(7,719
)
(847
)
Discrete tax adjustments
(13,783
)
(4,225
)
(61,499
)
(20,591
)
(67,376
)
Net income (Non-GAAP)
$
56,763
$
83,981
$
19,815
$
193,279
$
140,938
Percentage of revenue (Non-GAAP)
25
%
33
%
12
%
24
%
19
%
Net income per diluted weighted-average
common and common-equivalent share (GAAP)
$
0.39
$
0.49
$
0.46
$
1.00
$
1.16
Per share impact of non-GAAP adjustments
identified above
(0.07
)
(0.02
)
(0.35
)
0.09
(0.36
)
Net income per diluted weighted-average
common and common-equivalent share (Non-GAAP)
$
0.32
$
0.47
$
0.11
$
1.09
$
0.80
Diluted weighted-average common and
common-equivalent shares outstanding
178,590
177,138
175,500
176,592
175,269
Exhibit 3
COGNEX CORPORATION
Balance Sheets
(Unaudited)
Dollars in thousands
December 31, 2020
December 31, 2019
Assets
Cash and investments
$
767,438
$
845,353
Accounts receivable
125,696
103,447
Inventories
60,830
60,261
Property, plant, and equipment
79,173
89,443
Operating lease assets
22,582
17,522
Goodwill and intangible assets
259,633
282,935
Deferred tax assets
434,704
449,519
Other assets
50,646
37,455
Total assets
$
1,800,702
$
1,885,935
Liabilities and Shareholders'
Equity
Accounts payable and accrued expenses
$
93,534
$
70,065
Deferred revenue and customer deposits
21,274
14,432
Operating lease liabilities
26,230
17,973
Income taxes
72,551
93,009
Deferred tax liabilities
314,952
332,344
Other liabilities
9,959
2,402
Shareholders' equity
1,262,202
1,355,710
Total liabilities and shareholders'
equity
$
1,800,702
$
1,885,935
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210211005811/en/
Susan Conway Investor Relations +1 508-650-3353
Susan.conway@cognex.com
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