Cognex Corporation (NASDAQ:CGNX) today reported financial
results for the first quarter of 2021. The company announced new
records for first quarter revenue, net income, and net income per
diluted share. Table 1 below shows selected financial data for
Q1-21 compared with Q1-20 and Q4-20.
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: Q1-21
$239,027
$69,848
$0.39
$0.36
Prior year’s quarter: Q1-20
$167,235
$20,477
$0.12
$0.11
Change: Q1-20 to Q1-21
43%
241%
225%
227%
Prior quarter: Q4-20
$223,615
$69,345
$0.39
$0.32
Change: Q4-20 to Q1-21
7%
1%
0%
13%
*Non-GAAP net income per diluted share excludes restructuring
and other charges and tax adjustments. A reconciliation from GAAP
to Non-GAAP is shown in Exhibit 2 of this news release.
“Cognex started 2021 on a strong note,” said Robert J. Willett,
Chief Executive Officer of Cognex. “We reported the highest first
quarter revenue, net income, and earnings per share in our
company’s 40-year history. We were highly profitable—reporting an
operating margin of 33% in Q1-21 compared to 13% a year
ago—demonstrating the leverage we have in our high-growth, high
gross margin business model.”
Mr. Willett continued, “We are pleased with our achievements in
the first quarter. Our strong momentum continued in the e-commerce
sector of logistics. Business activity has been recovering in other
end markets that have struggled over the past year. Most
importantly, we introduced several innovative products in the areas
of 3D vision, edge intelligence, and handheld barcode reading that
we believe will contribute to revenue growth in years to come.”
Details of the
Quarter
Statement of Operations Highlights – First Quarter of
2021
- Cognex reported record first quarter revenue of $239 million,
which represents an increase of 43% from Q1-20 and 7% from Q4-20. A
notable contribution to growth, both year-on-year and sequentially,
came from continued strong performance in the e-commerce sector of
logistics. Outside of logistics, revenue from each geographic
region (the Americas, Asia, and Europe) increased over Q1-20 due to
improved business activity in a variety of industries.
- Gross margin was 77% for Q1-21, 75% for Q1-20, and 75% for
Q4-20, and within the company’s target range for all periods. The
increase in gross margin, both year-on-year and sequentially, is
due to higher volume and a favorable revenue mix.
- Research, Development, & Engineering (RD&E) expenses
decreased by 5% from Q1-20 and 1% from Q4-20. The decrease
year-on-year reflects cost-saving actions implemented by Cognex in
2020 following the COVID-19 outbreak and lower stock-based
compensation expense. The savings were partially offset by the
impact of foreign currency exchange rate changes.
- Selling, General & Administrative (SG&A) expenses
increased by 5% from Q1-20 and decreased by 2% from Q4-20. The
increase in SG&A spending year-on-year was due to higher
incentive compensation related to the revenue growth as well as the
impact of foreign currency exchange rate changes. The increase was
partially offset by lower travel and entertainment costs and other
savings. On a sequential basis, higher spending on marketing
communications was offset by lower sales commissions, which were
reset at the beginning of the year with relevant performance goals
for 2021.
- The effective tax rate in Q1-21 was an expense of 11% compared
with an expense of 11% in Q1-20 and a benefit of 7% in Q4-20.
Excluding the discrete tax adjustments summarized in Exhibit 2, the
effective tax rate was an expense of 18% in Q1-21, 17% in Q1-20,
and 14% in Q4-20.
Balance Sheet Highlights – April 4, 2021
- Cognex’s financial position as of April 4, 2021 continued to be
strong, with $876 million in cash and investments and no debt. In
Q1-21, Cognex generated $99 million in cash from operations and $35
million in net proceeds from the exercise of stock options. In
addition, during Q1-21, the company paid $11 million in dividends
to shareholders and spent $6 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 – Q2 2021
- Cognex believes revenue in Q2-21 will be between $250 million
and $270 million. This range represents anticipated substantial
growth over Q2-20, which was marked by significant economic
disruption following the COVID-19 outbreak.
- Gross margin for Q2-21 is expected to be in the mid-70% range,
and lower than the gross margin reported in recent quarters.
- Operating expenses are expected to be flat to slightly up from
Q1-21.
- 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 certain one-time discrete events,
such as tax adjustments (because these costs are outside of
Cognex’s normal business operations and not used by management to
assess Cognex’s operating results). Additionally, the company
excludes restructuring charges, intangible asset impairment
charges, and excess and obsolete inventory charges because these
charges result from discrete activities, such as specific
restructuring actions or acquisitions, and are frequently excluded
by management in evaluating Cognex’s operating results. 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
Daylight Time (EDT). 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. EDT today and will be available until 11:59 p.m. EDT
on Sunday, May 9, 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
13717939.
- 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, new
product offerings, capital expenditures, 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 and
potential disruptions in the supply chain; (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 and Form 10-Q for the fiscal quarter
ended April 4, 2021. 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
April 4, 2021
December 31, 2020
March 29, 2020
Revenue
$
239,027
$
223,615
$
167,235
Cost of revenue (1)
54,045
55,160
41,200
Gross margin
184,982
168,455
126,035
Percentage of revenue
77
%
75
%
75
%
Research, development, and engineering
expenses (1)
34,105
34,399
35,946
Percentage of revenue
14
%
15
%
21
%
Selling, general, and administrative
expenses (1)
72,424
74,096
69,138
Percentage of revenue
30
%
33
%
41
%
Restructuring charges
—
875
—
Operating income
78,453
59,085
20,951
Percentage of revenue
33
%
26
%
13
%
Foreign currency gain (loss)
(1,008
)
4,007
(3,003
)
Investment and other income
1,386
1,828
5,046
Income before income tax expense
(benefit)
78,831
64,920
22,994
Income tax expense (benefit)
8,983
(4,425
)
2,517
Net income
$
69,848
$
69,345
$
20,477
Percentage of revenue
29
%
31
%
12
%
Net income per weighted-average common and
common-equivalent share:
Basic
$
0.40
$
0.40
$
0.12
Diluted
$
0.39
$
0.39
$
0.12
Weighted-average common and
common-equivalent shares outstanding:
Basic
176,288
175,220
172,408
Diluted
179,971
178,590
175,602
Cash dividends per common share
$
0.060
$
2.060
$
0.055
Cash and investments per common share
$
4.96
$
4.37
$
4.92
Book value per common share
$
7.68
$
7.18
$
7.73
(1) Amounts include stock-based
compensation expense, as follows:
Cost of revenue
$
248
$
324
$
354
Research, development, and engineering
4,003
2,805
5,366
Selling, general, and administrative
7,758
7,456
9,070
Total stock-based compensation expense
$
12,009
$
10,585
$
14,790
Exhibit
2
COGNEX CORPORATION
Reconciliation of Selected
Items from GAAP to Non-GAAP
(Unaudited)
Dollars in thousands, except
per share amounts
Three-months Ended
April 4, 2021
December 31, 2020
March 29, 2020
Discrete tax adjustments
reconciliation
Income before income tax expense (benefit)
(GAAP)
$
78,831
$
64,920
$
22,994
Income tax expense (benefit) (GAAP)
$
8,983
$
(4,425
)
$
2,517
Effective tax rate (GAAP)
11
%
(7
)%
11
%
Discrete tax benefit related to
stock-based compensation
5,207
2,342
1,680
Discrete tax benefit (expense) related to
tax return filings and other
—
11,441
(242
)
Total discrete tax adjustments
$
5,207
$
13,783
$
1,438
Income tax expense (Non-GAAP)
$
14,190
$
9,358
$
3,955
Effective tax rate (Non-GAAP)
18
%
14
%
17
%
Restructuring and other charges and
discrete tax adjustments reconciliation
Net income (GAAP)
$
69,848
$
69,345
$
20,477
Excess and obsolete inventory charges
705
522
1,065
Restructuring charges
—
875
—
Tax effect on restructuring and other
charges
(127
)
(196
)
(181
)
Discrete tax adjustments
(5,207
)
(13,783
)
(1,438
)
Net income (Non-GAAP)
$
65,219
$
56,763
$
19,923
Percentage of revenue (Non-GAAP)
27
%
25
%
12
%
Net income per diluted weighted-average
common and common-equivalent share (GAAP)
$
0.39
$
0.39
$
0.12
Per share impact of non-GAAP adjustments
identified above
(0.03
)
(0.07
)
(0.01
)
Net income per diluted weighted-average
common and common-equivalent share (Non-GAAP)
$
0.36
$
0.32
$
0.11
Diluted weighted-average common and
common-equivalent shares outstanding
179,971
178,590
175,602
Exhibit
3
COGNEX CORPORATION
Balance Sheets
(Unaudited)
Dollars in thousands
April 4, 2021
December 31, 2020
Assets
Cash and investments
$
876,284
$
767,438
Accounts receivable
128,822
125,696
Inventories
61,392
60,830
Property, plant, and equipment
77,081
79,173
Operating lease assets
20,784
22,582
Goodwill and intangible assets
257,664
259,633
Deferred tax assets
429,801
434,704
Other assets
57,128
50,646
Total assets
$
1,908,956
$
1,800,702
Liabilities and Shareholders'
Equity
Accounts payable and accrued expenses
$
81,392
$
93,534
Deferred revenue and customer deposits
51,660
21,274
Operating lease liabilities
24,028
26,230
Income taxes
74,538
72,551
Deferred tax liabilities
310,884
314,952
Other liabilities
9,453
9,959
Shareholders' equity
1,357,001
1,262,202
Total liabilities and shareholders'
equity
$
1,908,956
$
1,800,702
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506006141/en/
Susan Conway Investor Relations +1 508-650-3353
Susan.conway@cognex.com
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