Cognex Corporation Announces First Quarter Results.NATICK Natick (nā`tĭk), town (1990 pop. 30,510), Middlesex co., E Mass., a residential and industrial suburb of Boston, on Lake Cochituate; founded as a Native American village by John Eliot 1651, settled by colonial Americans 1718, inc. 1781. , Mass. -- Cognex Corporation Cognex Corporation is an American corporation that manufactures commercial machine vision systems. Cognex is the world leader in its field, holding an array of patents and employing academic experts. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CGNX) today announced revenue for the first quarter ended April 2, 2006, of $59,040,000, and net income of $8,800,000, or $0.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. These most recent quarterly results are compared to the company's historical results for the first and fourth quarters of 2005 in the table below.
Revenue Net Income Earnings
per
Diluted
Share
----------------------------------------------------------------------
Quarterly Comparisons
----------------------------------------------------------------------
Current quarter: Q1-06 $59,040,000 $8,800,000 $0.18
----------------------------------------------------------------------
Prior year's quarter: Q1-05 $43,198,000 $5,294,000 $0.11
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Change from Q1-05 to Q1-06 37% 66% 62%
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Prior quarter: Q4-05 $60,818,000 $11,750,000 $0.24
----------------------------------------------------------------------
Change from Q4-05 to Q1-06 (3%) (25%) (25%)
----------------------------------------------------------------------
The company's reported results for 2006 include pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta stock-based compensation expense of $2,956,000, or $0.05 per share, which Cognex Cog·nex A trademark for the drug tacrine hydrochloride. tacrine hydrochloride Cognex Pharmacologic class: Cholinergic (cholinesterase inhibitor) Therapeutic class: was required to include in its financial results beginning in the first quarter of 2006. To help readers compare its results on a consistent basis excluding stock-based compensation expense, the company's Statement of Operations See Income statement. is shown in Exhibit 1 (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and Exhibit 2 (Non-GAAP - Excluding Stock-Based Compensation Expense), and a reconciliation of the quarter ended April 2, 2006, is shown in Exhibit 3 (GAAP to Non-GAAP). The reported results for 2006 also include DVT See deep vein thrombosis. Corporation, which was acquired on May 9, 2005, and the amortization costs related to that acquisition ($1,143,000 in the first quarter of 2006). "Our results for the first quarter of 2006 were good, though not as good as I'd I'd 1. Contraction of I had. 2. Contraction of I would. I'd I had or I would I'd have ~would like them to be," said Dr. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Shillman, Cognex's Chairman and Chief Executive Officer. "We were highly profitable with net income equal to 15% of revenue (or 19% excluding stock-based compensation expense) and the year-on-year comparables showed significant increases at both the top and bottom lines. However, revenue declined on a sequential One after the other in some consecutive order such as by name or number. basis and it was below our expectations for the quarter. This was primarily due to lower revenue from the Surface Inspection market, which was anticipated, and slower than expected order trends in the automotive segment of our business." Dr Shillman continued, "This temporary situation does not change our view of the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential for Cognex. In fact, we believe that Cognex stock is attractive and we repurchased nearly 879,000 shares in the first quarter at a cost of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $25 million. We intend to review opportunities for future repurchases as well." Details of the Quarter Statement of Operations Highlights - First Quarter of 2006 --Revenue for the first quarter of 2006 increased 37% over the first quarter of 2005 due to higher revenue from the Factory Automation market (including incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue of approximately $5,400,000 from the DVT acquisition) and the Semiconductor and Electronics Capital Equipment market, which increased 60% from a cyclically low level a year ago. On a sequential basis, revenue decreased 3% due to lower revenue from the Surface Inspection market, which was anticipated, and from the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. . --Gross margin was 72% in the first quarter of 2006 compared to 68% in the first quarter of 2005 and 72% in the prior quarter. Cost of revenue for the first quarter of 2006, the first quarter of 2005, and the fourth quarter of 2005 includes a benefit of $252,000, $118,000, and $287,000, respectively, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the sale of inventory previously reserved. Excluding this benefit from all three periods, and excluding stock-based compensation expense of $355,000 from the first quarter of 2006, gross margin would have been 72% in the first quarter of 2006, 68% in the first quarter of 2005, and 71% in the prior quarter. Gross margin increased year-on-year due to higher sales of modular vision systems. The increase in gross margin on a sequential basis is due to product mix; a greater percentage of revenue came from the sale of modular vision systems in the first quarter than from surface inspection systems. --Research, Development & Engineering (R, D & E) spending in the first quarter of 2006 increased 25% from the first quarter of 2005 and 14% from the prior quarter (or 13% and 3%, respectively, excluding $782,000 of stock-based compensation expense in the first quarter of 2006). Spending increased year-on-year due to incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. associated with the employees added from the DVT acquisition. The increase on a sequential basis is due to higher employee-related costs, primarily new employees, and higher outside service costs related to new product initiatives. --Selling, General & Administrative (S, G & A) spending in the first quarter of 2006 increased 36% from the first quarter of 2005 and 8% on a sequential basis (or 25% and 0%, respectively, excluding $1,819,000 of stock-based compensation expense in the first quarter of 2006). The increase year-on-year is primarily due to incremental DVT costs and the company's investment in sales and marketing. --The company reported a foreign currency loss of $145,000 in the first quarter of 2006, a gain of $99,000 in the first quarter of 2005 and a loss of $286,000 in the prior quarter. The company recognizes foreign currency gains and losses on the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. and settlement of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and payable balances that are reported in one currency and collected or paid in another. --Investment and other income was $1,566,000 in the first quarter of 2006 compared to $1,470,000 in the first quarter of 2005 and $1,531,000 in the prior quarter. The increase in investment and other income, both year-on-year and sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , is due to higher yields. --The effective tax rate was 27% in the first quarter of 2006, which is an increase from 26% in the first quarter of 2005 and in the prior quarter. The increase in the effective tax rate is due to the expectation that more of the company's profits will be earned and taxed in higher tax jurisdictions in 2006 than in 2005. Balance Sheet Highlights - April 2, 2006 --Cognex's financial position at April 2, 2006, was very strong, with over $303,000,000 in cash and investments, and no debt. Cash and investments decreased by nearly $9,000,000 from the end of 2005. In the first quarter of 2006, Cognex generated positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of approximately $15,000,000, and paid out nearly $3,800,000 in dividends to shareholders and over $25,000,000 to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. approximately 879,000 shares of its common stock on the open market. --Days sales outstanding (DSO See CSO. ) for the first quarter of 2006 was 63 days, and remains within the company's targeted range. --Inventories at April 2, 2006, increased by approximately $3,200,000, or 17%, from the end of 2005, and inventory turns were equivalent to 3.2 times per year. Inventory increased due to the shift of a portion of the company's manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. from Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. to Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. . The company also increased inventory to better
support distributors.
Business Trends and Financial Outlook --For the first quarter of 2006, bookings increased over the prior quarter due to higher orders from the Semiconductor and Electronics Capital Equipment and the Surface Inspection markets. As a result, Cognex expects revenue for the second quarter of 2006 to increase to be between $62 million and $64 million. At that revenue level, gross margin is expected to be in the low-70% range, including estimated pre-tax stock-based compensation expense of $400,000. For the second quarter, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (R, D & E and S, G & A), including estimated pre-tax stock-based compensation expense of $2,800,000, are expected to increase by approximately 5% on a sequential basis. The effective tax rate is expected to be 27%. As a result of the above, earnings are expected to be between $0.20 and $0.22 per diluted share (or between $0.25 and $0.27 per diluted share excluding estimated stock-based compensation expenses of $3,200,000). Non-GAAP Financial Measures This press release and its attachments contain Non-GAAP financial measures which Cognex believes are helpful in allowing individuals to more accurately assess and compare its results over multiple periods. However, these Non-GAAP financial measures are not meant to be considered in isolation, nor as a substitute for financial information provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call to discuss its results for the first quarter of 2006, as well as its financial outlook, today at 5:00 p.m. eastern time. The telephone number for the live call is 800-770-5589 (or 973-935-2039 if outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ). A replay will begin tonight at approximately 7:00 p.m. eastern time and will run continuously for 72 hours. The telephone number for the replay is 877-519-4471 (or 973-341-3080 if outside the United States) and the access code is 7216381. Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f can listen to a real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. audio broadcast of the conference call, as well as an archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. replay of the call, on Cognex's website at http://www.cognex.com/investor/default.asp. About Cognex Corporation Cognex Corporation designs, develops, manufactures, and markets machine vision sensors
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Asia, and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Visit
Cognex on-line at http://www.cognex.com/.
Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements made in this press release, which do not relate solely to historical matters, are forward-looking statements. You can identify these forward-looking statements by use of the words "expects," "anticipates," "estimates," "believes," "projects," "intends," "plans," "will," "may," "shall" and similar words. These forward-looking statements, which include statements regarding business trends and the company's financial outlook, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) global economic conditions that impact the capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. trends of manufacturers in a variety of industries; (2) the cyclicality of the semiconductor and electronics industries; (3) the reliance upon certain sole-source suppliers to manufacture and deliver critical components for the company's products; (4) the inability to design and manufacture high-quality products; (5) the technological obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. of current products and the inability to develop new products; (6) the inability to protect the company's proprietary technology and intellectual property; (7) the challenges in integrating acquisitions and achieving anticipated benefits; and (8) the other risks detailed in the company's reports filed with the SEC, including the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 31, 2005. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. The company disclaims any obligation to update forward-looking statements after the date of such statements.
COGNEX CORPORATION
Statements of Operations
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
Cost of revenue (1) 16,710 17,289 13,790
-------- -------- --------
Gross margin 42,330 43,529 29,408
Percentage of revenue 72% 72% 68%
Research, development, and engineering
expenses (1) 7,917 6,916 6,315
Percentage of revenue 13% 11% 15%
Selling, general, and administrative
expenses (1) 23,779 21,979 17,508
Percentage of revenue 40% 36% 41%
-------- -------- --------
Operating income 10,634 14,634 5,585
Percentage of revenue 18% 24% 13%
Foreign currency gain (loss) (145) (286) 99
Investment and other income 1,566 1,531 1,470
-------- -------- --------
Income before taxes 12,055 15,879 7,154
Income tax provision 3,255 4,129 1,860
-------- -------- --------
Net income $8,800 $11,750 $5,294
Percentage of revenue 15% 19% 12%
======== ======== ========
Net income per diluted common and common
equivalent share (2) $0.18 $0.24 $0.11
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,320 47,181
======== ======== ========
Cash dividends per common share $0.08 $0.08 $0.08
======== ======== ========
(1) Amounts include stock-based compensation
expense, as follows:
Cost of revenue $355 - -
Research, development, and
engineering 782 - -
Selling, general, and
administrative 1,819 - -
-------- -------- --------
Total stock-based compensation
expense $2,956 - -
======== ======== ========
(2) Net income per diluted common and
common equivalent share excluding
stock-based compensation expense $0.23 $0.24 $0.11
======== ======== ========
COGNEX CORPORATION
Statements of Operations - Non-GAAP
Excluding Stock-Based Compensation Expense
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
Cost of revenue 16,355 17,289 13,790
-------- -------- --------
Gross margin 42,685 43,529 29,408
Percentage of revenue 72% 72% 68%
Research, development, and engineering
expenses 7,135 6,916 6,315
Percentage of revenue 12% 11% 15%
Selling, general, and administrative
expenses 21,960 21,979 17,508
Percentage of revenue 37% 36% 41%
-------- -------- --------
Operating income 13,590 14,634 5,585
Percentage of revenue 23% 24% 13%
Foreign currency gain (loss) (145) (286) 99
Investment and other income 1,566 1,531 1,470
-------- -------- --------
Income before taxes 15,011 15,879 7,154
Income tax provision 4,053 4,129 1,860
-------- -------- --------
Net income $10,958 $11,750 $5,294
Percentage of revenue 19% 19% 12%
======== ======== ========
Net income per diluted common and common
equivalent share $0.23 $0.24 $0.11
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,320 47,181
======== ======== ========
Cash dividends per common share $0.08 $0.08 $0.08
======== ======== ========
COGNEX CORPORATION
Statements of Operations Reconciliation
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, 2006
Stock
Option
GAAP Expense Non-GAAP
--------------------------
Revenue $59,040 $59,040
Cost of revenue 16,710 355 16,355
-------- -------- --------
Gross margin 42,330 (355) 42,685
Percentage of revenue 72% 72%
Research, development, and engineering
expenses 7,917 782 7,135
Percentage of revenue 13% 12%
Selling, general, and administrative
expenses 23,779 1,819 21,960
Percentage of revenue 40% 37%
-------- -------- --------
Operating income 10,634 (2,956) 13,590
Percentage of revenue 18% 23%
Foreign currency loss (145) (145)
Investment and other income 1,566 1,566
-------- -------- --------
Income before taxes 12,055 (2,956) 15,011
Income tax provision 3,255 (798) 4,053
-------- -------- --------
Net income $8,800 $(2,158) $10,958
Percentage of revenue 15% 19%
======== ======== ========
Net income per diluted common and common
equivalent share $0.18 $(0.05) $0.23
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,419
======== ========
Cash dividends per common share $0.08 $0.08
======== ========
COGNEX CORPORATION
Balance Sheets
(Unaudited)
In thousands
April December
2, 31,
2006 2005
-------------------
Assets
Cash and investments $303,450 $312,258
Accounts receivable 42,200 42,051
Inventories 22,021 18,819
Property, plant, and equipment 24,240 24,175
Other assets 163,587 167,259
--------- ---------
Total assets $555,498 $564,562
========= =========
Liabilities and Shareholders' Equity
Current liabilities $59,434 $58,041
Shareholders' equity 496,064 506,521
--------- ---------
Total liabilities and shareholders' equity $555,498 $564,562
========= =========
COGNEX CORPORATION
Additional Information Schedule
(Unaudited)
Dollars in thousands
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
======== ======== ========
Revenue by division:
Modular Vision Systems Division 89% 86% 84%
Surface Inspection Systems Division 11% 14% 16%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by geography:
United States 33% 37% 37%
Japan 30% 28% 28%
Europe 27% 28% 29%
Other 10% 7% 6%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by market:
Discrete factory automation 56% 56% 56%
Semiconductor and electronics capital
equipment 33% 30% 28%
Surface inspection 11% 14% 16%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by product:
Vision sensors 48% 45% 39%
PC-based vision systems 36% 34% 37%
Surface inspection vision systems 7% 10% 10%
Service 9% 11% 14%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
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