Cognex Corporation (NASDAQ: CGNX) today reported financial
results for the second quarter of 2021. Cognex announced the
highest quarterly revenue in the company’s 40-year history and new
records for second quarter revenue, net income, and net income per
diluted share. Table 1 below shows selected financial data for
Q2-21 compared with Q2-20 and Q1-21, and for the six months of 2021
compared with the same period in 2020.
Table
1
(Dollars in thousands, except per
share amounts)
Revenue
Net
Income/(Loss)
Net Income/(Loss)
per Diluted
Share
Non-GAAP
Net Income
per Diluted Share*
Quarterly Comparisons
Current quarter: Q2-21
$269,158
$77,598
$0.43
$0.43
Prior year’s quarter: Q2-20
$169,097
$(1,142)
$(0.01)
$0.18
Change: Q2-20 to Q2-21
59%
N/M
N/M
139%
Prior quarter: Q1-21
$239,027
$69,848
$0.39
$0.36
Change: Q1-21 to Q2-21
13%
11%
10%
19%
Year-to-Date Comparisons
Six months ended July 4, 2021
$508,185
$147,446
$0.82
$0.79
Six months ended June 28, 2020
$336,332
$19,335
$0.11
$0.29
Change from first six months of 2020 to
first six months of 2021
51%
663%
645%
172%
*Non-GAAP net income per diluted share excludes restructuring
and other charges and discrete tax adjustments. Notably, Cognex
recorded charges totaling over $42 million in Q2-20 that reduced
earnings for the quarter by $0.19 per diluted share. A
reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this
news release.
“What a quarter!” said Robert J. Willett, Chief Executive
Officer of Cognex. “Revenue was the highest in our company’s
40-year history and grew substantially year over year due to
strong, broad-based demand for Cognex products. We were also highly
profitable and reported an operating margin of 34%, which is well
above our 30% long-term target.”
Mr. Willett continued, “We are excited about the growth
opportunities we see for our company, and we are managing well so
far through a difficult supply environment. Even so, we expect the
revenue growth rate will moderate in the second half, particularly
in Q3, because of the substantial increase in revenue we reported
last year from the consumer electronics industry.”
Details of the
Quarter
Statement of Operations Highlights – Second Quarter of
2021
- Cognex reported record revenue of $269 million for the second
quarter, which represents an increase of 59% from Q2-20 and 13%
from Q1-21. Revenue from each geographic region (the Americas,
Asia, and Europe) grew substantially from Q2-20, which was marked
by significant economic disruption following the COVID-19 outbreak.
The largest end-market contributions in absolute dollars came from
logistics, which set another quarterly revenue record, and the
automotive industry. Consumer electronics also increased
substantially both year-on-year and sequentially, helped by revenue
that we had expected to recognize in the second half of 2021.
- Gross margin was 75% for Q2-21, 70% for Q2-20, and 77% for
Q1-21. The increase in gross margin year-on-year is due to a
pre-tax charge of $8 million in Q2-20 for the write-down of excess
and obsolete inventories resulting from the difficult business
conditions Cognex was experiencing in many of its markets.
- Research, Development, & Engineering (RD&E) expenses
increased by 3% from Q2-20 and decreased 8% from Q1-21. RD&E
spending increased year-on-year due to the impact of foreign
currency exchange rates on the company’s international operations.
Higher incentive compensation costs and stock-based compensation
expense were offset by savings from the company’s actions in 2020
to reduce expenses (discussed below). RD&E spending decreased
on a sequential basis due to the timing of application engineering
for large revenue opportunities.
- Selling, General & Administrative (SG&A) expenses
increased by 28% from Q2-20 and 6% from Q1-21. SG&A spending
increased year-on-year due to higher incentive compensation costs
(including sales commissions and the bonus accrual), stock-based
compensation expense, travel, and sales and marketing activities
and the impact of foreign currency exchange rate changes. SG&A
spending increased on a sequential basis due to higher sales
commissions, travel, and internal equipment.
- Notable in Q2-20, Cognex recorded a pre-tax charge of $15
million for restructuring actions announced by the company on May
28, 2020, and a pre-tax charge of $20 million for the impairment of
acquired intangible assets resulting from deteriorated market
conditions a year ago.
- The effective tax rate in Q2-21 was an expense of 17% compared
with a benefit of 51% in Q2-20 and an expense of 11% in Q1-21.
Excluding the discrete tax adjustments summarized in Exhibit 2, the
effective tax rate was an expense of 18% in both Q2-21 and Q1-21
compared to a benefit of 1% in Q2-20.
Balance Sheet Highlights – July 4, 2021
- Cognex’s financial position as of July 4, 2021 continued to be
strong, with $952 million in cash and investments and no debt. In
the first six months of 2021, Cognex generated $195 million in cash
from operations and $44 million in net proceeds from the exercise
of stock options. In addition, the company paid $21 million in
dividends to shareholders and spent $21 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 – Q3 2021
- Cognex believes revenue in Q3-21 will be between $275 million
and $295 million. This range represents growth over both Q3-20 and
Q2-21 due to higher expected revenue from logistics, automotive,
and the broader factory automation market. The growth rate in Q3-21
is expected to moderate as compared to the first half of 2021
because of consumer electronics. Cognex believes consumer
electronics revenue will be more evenly split between Q2 and Q3 in
2021 than in 2020 (when the majority was recognized in Q3) and that
consumer electronics revenue will decline modestly for the
year.
- Gross margin for Q3-21 is expected to be in the low-to-mid 70%
range, and lower than the gross margin reported for Q2-21, due to
the company’s support of a high-potential customer in logistics and
higher supply chain costs.
- Operating expenses are expected to be up by mid-single digits
from Q2-21 due to investments in engineering and sales, support of
large deployments of Cognex products and upcoming product launches,
and increased sales activities.
- 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 discrete 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, that management frequently
excludes 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.
- We estimate the tax effect of items identified in the
reconciliation 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, we estimate the tax
effect 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, August 8, 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
13720531.
- 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; growth
opportunities; the expected impact of the COVID-19 pandemic on our
assets, business and results of operations; managing supply
constraints; customer order rates and timing of related revenue;
future product mix; restructuring and other cost-savings
initiatives; research and development activities; sales and
marketing activities; investments; 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, which could impact timely delivery of customer orders; (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 July 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
Six-months Ended
July 4, 2021
April 4, 2021
June 28, 2020
July 4, 2021
June 28, 2020
Revenue
$
269,158
$
239,027
$
169,097
$
508,185
$
336,332
Cost of revenue (1)
68,432
54,045
50,320
122,477
91,520
Gross margin
200,726
184,982
118,777
385,708
244,812
Percentage of revenue
75
%
77
%
70
%
76
%
73
%
Research, development, and engineering
expenses (1)
31,302
34,105
30,397
65,407
66,343
Percentage of revenue
12
%
14
%
18
%
13
%
20
%
Selling, general, and administrative
expenses (1)
76,843
72,424
60,153
149,267
129,291
Percentage of revenue
29
%
30
%
36
%
29
%
38
%
Restructuring charges
—
—
14,798
—
14,798
Intangible asset impairment charges
—
—
19,571
—
19,571
Operating income (loss)
92,581
78,453
(6,142
)
171,034
14,809
Percentage of revenue
34
%
33
%
(4
)%
34
%
4
%
Foreign currency gain (loss)
(639
)
(1,008
)
336
(1,647
)
(2,667
)
Investment and other income
1,596
1,386
3,494
2,982
8,540
Income (loss) before income tax expense
(benefit)
93,538
78,831
(2,312
)
172,369
20,682
Income tax expense (benefit)
15,940
8,983
(1,170
)
24,923
1,347
Net income (loss)
$
77,598
$
69,848
$
(1,142
)
$
147,446
$
19,335
Percentage of revenue
29
%
29
%
(1
)%
29
%
6
%
Net income (loss) per weighted-average
common and common-equivalent share:
Basic
$
0.44
$
0.40
$
(0.01
)
$
0.84
$
0.11
Diluted
$
0.43
$
0.39
$
(0.01
)
$
0.82
$
0.11
Weighted-average common and
common-equivalent shares outstanding:
Basic
176,626
176,288
172,283
176,454
172,345
Diluted
179,991
179,971
172,283
179,982
175,499
Cash dividends per common share
$
0.060
$
0.060
$
0.055
$
0.120
$
0.110
Cash and investments per common share
$
5.39
$
4.96
$
5.18
$
5.39
$
5.18
Book value per common share
$
8.09
$
7.68
$
7.95
$
8.09
$
7.95
(1) Amounts include stock-based
compensation expense, as follows:
Cost of revenue
$
351
$
248
$
363
$
599
$
717
Research, development, and engineering
3,064
4,003
2,401
7,067
7,767
Selling, general, and administrative
7,315
7,758
5,254
15,073
14,324
Total stock-based compensation expense
$
10,730
$
12,009
$
8,018
$
22,739
$
22,808
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
July 4, 2021
April 4, 2021
June 28, 2020
July 4, 2021
June 28, 2020
Discrete tax adjustments
reconciliation
Income (loss) before income tax expense
(benefit) (GAAP)
$
93,538
$
78,831
$
(2,312
)
$
172,369
$
20,682
Income tax expense (benefit) (GAAP)
$
15,940
$
8,983
$
(1,170
)
$
24,923
$
1,347
Effective tax rate (GAAP)
17
%
11
%
(51
)%
14
%
7
%
Discrete tax benefit related to
stock-based compensation
1,431
5,207
4,413
6,638
6,093
Discrete tax expense related to tax return
filings and other
(535
)
—
(3,267
)
(535
)
(3,509
)
Total discrete tax adjustments
$
896
$
5,207
$
1,146
$
6,103
$
2,584
Income tax expense (benefit)
(Non-GAAP)
$
16,836
$
14,190
$
(24
)
$
31,026
$
3,931
Effective tax rate (Non-GAAP)
18
%
18
%
(1
)%
18
%
19
%
Restructuring and other charges and
discrete tax adjustments reconciliation
Net income (loss) (GAAP)
$
77,598
$
69,848
$
(1,142
)
$
147,446
$
19,335
Excess and obsolete inventory charges
1,111
705
7,718
1,816
8,783
Restructuring charges
—
—
14,798
—
14,798
Intangible asset impairment charges
—
—
19,571
—
19,571
Tax effect on restructuring and other
charges
(200
)
(127
)
(7,997
)
(327
)
(8,199
)
Discrete tax adjustments
(896
)
(5,207
)
(1,146
)
(6,103
)
(2,584
)
Net income (Non-GAAP)
$
77,613
$
65,219
$
31,802
$
142,832
$
51,704
Percentage of revenue (Non-GAAP)
29
%
27
%
19
%
28
%
15
%
Net income (loss) per diluted
weighted-average common and common-equivalent share (GAAP)
$
0.43
$
0.39
$
(0.01
)
$
0.82
$
0.11
Per share impact of non-GAAP adjustments
identified above
—
(0.03
)
0.19
(0.03
)
0.18
Net income per diluted weighted-average
common and common-equivalent share (Non-GAAP)
$
0.43
$
0.36
$
0.18
$
0.79
$
0.29
Diluted weighted-average common and
common-equivalent shares outstanding (Non-GAAP)
179,991
179,971
175,403
179,982
175,499
Exhibit 3
COGNEX CORPORATION
Balance Sheets
(Unaudited)
Dollars in thousands
July 4, 2021
December 31, 2020
Assets
Cash and investments
$
951,749
$
767,438
Accounts receivable
149,157
125,696
Inventories
68,503
60,830
Property, plant, and equipment
76,972
79,173
Operating lease assets
21,277
22,582
Goodwill and intangible assets
256,608
259,633
Deferred tax assets
425,618
434,704
Other assets
75,037
50,646
Total assets
$
2,024,921
$
1,800,702
Liabilities and Shareholders'
Equity
Accounts payable and accrued expenses
$
108,957
$
93,534
Deferred revenue and customer deposits
76,445
21,274
Operating lease liabilities
24,250
26,230
Income taxes
67,834
72,551
Deferred tax liabilities
306,355
314,952
Other liabilities
11,626
9,959
Shareholders' equity
1,429,454
1,262,202
Total liabilities and shareholders'
equity
$
2,024,921
$
1,800,702
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805006044/en/
Susan Conway Investor Relations +1 508-650-3353
Susan.conway@cognex.com
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