Cognex Corporation Announces Ho-Hum 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 3, 2005, of $43,198,000, and net income of $5,294,000, or $0.11 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 quarter of 2004 and for the fourth quarter of 2004 in the table below.
Earnings per
Diluted
Time Period Revenue Net Income Share
------------------------------- ------------ ----------- ------------
Current quarter: Q1-05 $43,198,000 $5,294,000 $0.11
------------------------------- ------------ ----------- ------------
Prior year's quarter: Q1-04 $48,169,000 $8,567,000 $0.18
------------------------------- ------------ ----------- ------------
Change from Q1-04 to Q1-05 (10%) (38%) (39%)
------------------------------- ------------ ----------- ------------
Prior quarter: Q4-04 $43,909,000 $6,644,000 $0.14
------------------------------- ------------ ----------- ------------
Change from Q4-04 to Q1-05 (2%) (20%) (22%)
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E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]"Although we met Wall Street's consensus expectations for the quarter, and although our net profits were very respectable by most companies' standards (at 12.25% of revenue), they are not yet where we want them to be. Furthermore, both the year-on-year and sequential One after the other in some consecutive order such as by name or number. quarterly comparables are also disappointing," lamented la·ment·ed adj. Mourned for: our late lamented president. la·ment  ed·ly adv. 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 Chief Executive Officer and Chairman. "There was some glimmer of good news in the quarter...orders increased by 16% over Q4-2004, and our book-to-bill was above 1.0. And, we are mildly encouraged by the fact that all three of the primary markets that we serve showed sequential bookings increases; the largest was for SmartView(R), our vision system for surface inspection, which booked a record $12,000,000 in the first quarter, far surpassing the prior record." E[acute accent]Details of the Quarter E[acute accent]Statement of Operations See Income statement. Highlights - First Quarter of 2005 E[acute accent]--Revenue for the first quarter of 2005 decreased 10% from the comparable quarter in 2004. This decrease is due to lower sales to customers who make capital equipment for the semiconductor and electronics industries, although some of the decline was offset by revenue from discrete A component or device that is separate and distinct and treated as a singular unit. manufacturers in the factory automation area, which increased 27% year-on-year. Revenue decreased by 2% on a sequential basis, which was also due to the lower level of business with customers in the semiconductor and electronics equipment market as well as lower SmartView revenue. E[acute accent]--Gross margin was 68% in the first quarter of 2005 compared to 69% in the comparable quarter in 2004 and 73% in the prior quarter. Cost of revenue for the first and fourth quarters of 2004 as well as the first quarter of 2005 includes a benefit of $262,000, $317,000, and $118,000, respectively, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc an inventory reserve recorded in the fourth quarter of 2001. Excluding this benefit, gross margin would have been 68% in the first quarter of 2005, 69% in the first quarter of 2004, and 72% in the prior quarter. The decrease in gross margin year-on-year is due to the lower sales volume. On a sequential basis, gross margin declined due to the revenue mix as well as favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variances in the prior quarter that didn't did·n't Contraction of did not. didn't did not didn't do repeat in the first quarter due to the volume decrease. E[acute accent]--Research, Development & Engineering (R, D & E) spending in the first quarter of 2005 decreased 8% from the comparable quarter in 2004, and 9% on a sequential basis. The decrease, 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 lower employee-related expenses in the first quarter of 2005, including a lower accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of anticipated company bonuses. In addition, the fourth quarter of 2004 included outside service costs that didn't repeat in the first quarter. E[acute accent]--Selling, General & Administrative (S, G & A) spending in the first quarter of 2005 increased 7% from the first quarter of 2004 due to higher employee-related costs, including additional end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. sales personnel hired by the company during 2004, and the impact of foreign exchange rates on the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . On a sequential basis, S, G & A decreased 6% due to lower sales commissions and a lower accrual of anticipated company bonuses in the first quarter. E[acute accent]--The company reported a foreign currency gain of $99,000 in the first quarter of 2005 compared to a gain of $625,000 in the comparable quarter of 2004 and a gain of $1,568,000 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. E[acute accent]--Investment and other income was $1,470,000 in the first quarter of 2005 compared to $1,274,000 in the first quarter of 2004 and $1,322,000 in the prior quarter. The increase in investment and other income year-on-year is due to higher cash and investment balances in the first quarter of 2005. On a sequential basis, the increase in investment and other income is due to higher yields. E[acute accent]--The effective tax rate was 26% in the first quarter of 2005 as compared to 29% in both the comparable quarter of 2004 and the prior quarter. The decrease in the effective tax rate is due to more of the company's profits being earned and taxed in lower tax jurisdictions in 2005 than in 2004. E[acute accent]Balance Sheet Highlights - April 3, 2005 E[acute accent]--Cognex's financial position at April 3, 2005 was very strong, with nearly $395,000,000 in cash and investments, and no debt. Cash and investments increased by $3,400,000 from the end of 2004, primarily as a result of 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 , less a dividend payment of $3,700,000. Cumulative to date, the company has paid out nearly $70 million in repurchases of its common stock on the open market and $22 million in dividends. E[acute accent]--Days sales outstanding (DSO See CSO. ) for the first quarter of 2005 was 61 days, and remains within the company's targeted range. E[acute accent]--Inventories at April 3, 2005 decreased by $2,300,000, or 11%, from the end of the prior quarter as the company used inventory to meet customer requirements. Inventory turns in the first quarter increased slightly to a rate equivalent to 2.9 times per year. E[acute accent]Business Trends and Financial Outlook E[acute accent]--For the first quarter of 2005, bookings increased by 16% on a sequential basis. All three of the primary markets served by the company participated in the pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their , with the largest increase in surface inspection due to record orders for SmartView. As a result, Cognex Cog·nex A trademark for the drug tacrine hydrochloride. tacrine hydrochloride Cognex Pharmacologic class: Cholinergic (cholinesterase inhibitor) Therapeutic class: expects revenue for the second quarter of 2005 to increase on a sequential basis to between $46 million and $49 million. At that revenue level, gross margin is expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 70%. 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) are expected to increase by approximately 5% on a sequential basis. The effective tax rate is expected to be 26%. As a result of the above, earnings for the second quarter are expected to be between $0.13 and $0.17 per diluted share. E[acute accent]Analyst Conference Call and Simultaneous Webcast E[acute accent]Cognex Corporation will host a conference call to discuss its results for the first quarter of 2005, 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 5889943. E[acute accent]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. E[acute accent]About Cognex Corporation E[acute accent]Cognex Corporation designs, develops, manufactures, and markets machine vision systems, or computers that can "see." Cognex is the world's leader in the machine vision industry, having shipped more than 225,000 machine vision systems, representing over $1.7 billion in cumulative revenue, since the company's founding in 1981. Cognex's Modular Vision Systems Division, headquartered in Natick, Massachusetts Natick (Pronunciation IPA: /ˈneɪtɪk/) is a town in Middlesex County, Massachusetts, United States. Natick is located near the center of the MetroWest region of Massachusetts, with a population of 32,170 at the , specializes in machine vision systems that are used for automating the manufacture of a wide range of discrete items and for assuring their quality. Cognex's Surface Inspection Systems Division, headquartered in Alameda, California Alameda is a city in Alameda County, California, United States. It is located on a small island of the same name next to Oakland, California in the San Francisco Bay. An additional part of the city is Bay Farm Island, which is adjacent to the Oakland International Airport. , specializes in machine vision systems that are used for inspecting the surfaces of products manufactured in a continuous fashion, such as metals, papers and plastics. In addition to its corporate headquarters in Natick, Massachusetts, Cognex has regional offices and distributors located throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Japan, Europe Europe (y  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). , and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. . Visit Cognex on-line at
http://www.cognex.com.
E[acute accent]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. E[acute accent]Certain statements made in this press release and its attachments, 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 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 inability to achieve significant international revenue; (4) fluctuations in foreign exchange rates; (5) the loss of, or significant curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of purchases by, any one or more principal customers; (6) the reliance upon certain sole source suppliers to manufacture and deliver critical components for the company's products; and (7) 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, 2004. 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
(In thousands, except per share amounts)
Three Months Ended
April 3, Dec. 31, April 4,
2005 2004 2004
----------------------------
(unaudited)
Revenue $43,198 $43,909 $48,169
Cost of revenue 13,790 11,791 14,789
---------- -------- --------
Gross margin 29,408 32,118 33,380
Percentage of revenue 68% 73% 69%
Research, development, and engineering
expenses 6,315 6,958 6,898
Percentage of revenue 15% 16% 14%
Selling, general, and administrative
expenses 17,508 18,693 16,314
Percentage of revenue 41% 43% 34%
---------- -------- --------
Operating income 5,585 6,467 10,168
Percentage of revenue 13% 15% 21%
Foreign currency gain (loss) 99 1,568 625
Investment and other income 1,470 1,322 1,274
---------- -------- --------
Income before taxes 7,154 9,357 12,067
Income tax provision 1,860 2,713 3,500
---------- -------- --------
Net income $5,294 $6,644 $8,567
Percentage of revenue 12% 15% 18%
========== ======== ========
Net income per diluted common and common
equivalent share $0.11 $0.14 $0.18
========== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 47,181 46,157 46,752
========== ======== ========
Cash dividends per common share $0.08 $0.08 $0.06
========== ======== ========
COGNEX CORPORATION
Balance Sheets
(In thousands)
April 3, Dec. 31,
2005 2004
---------------------
(unaudited)
Assets
Cash and investments $394,455 $391,076
Accounts receivable 29,303 33,816
Inventories 17,799 20,091
Property, plant, and equipment 23,573 23,995
Other assets 59,582 64,330
----------- ---------
Total assets $524,712 $533,308
=========== =========
Liabilities and Stockholders' Equity
Current liabilities $58,285 $70,501
Stockholders' equity 466,427 462,807
----------- ---------
Total liabilities and stockholders' equity $524,712 $533,308
=========== =========
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended
April 3, Dec. 31, April 4,
2005 2004 2004
-----------------------------
(unaudited)
Revenue $43,198 $43,909 $48,169
=========== ======== ========
Revenue by division:
Modular Vision Systems Division 84% 83% 88%
Surface Inspection Systems Division 16% 17% 12%
----------- -------- --------
Total 100% 100% 100%
=========== ======== ========
Revenue by geography:
United States 37% 36% 28%
Europe 29% 29% 26%
Japan 28% 29% 41%
Other 6% 6% 5%
----------- -------- --------
Total 100% 100% 100%
=========== ======== ========
Revenue by industry:
Semiconductor and electronics capital
equipment 27% 27% 47%
Surface inspection 16% 17% 12%
Electronics other 14% 10% 9%
Automotive 13% 14% 8%
Semiconductor other 4% 6% 5%
Other 26% 26% 19%
----------- -------- --------
Total 100% 100% 100%
=========== ======== ========
Revenue by product:
PC-based vision systems 39% 37% 51%
Vision sensors 37% 36% 28%
Surface inspection vision systems 10% 13% 9%
Service 14% 14% 12%
----------- -------- --------
Total 100% 100% 100%
=========== ======== ========
Number of new customer accounts:
End user 214 268 191
Original equipment manufacturer 32 15 37
----------- -------- --------
Total 246 283 228
=========== ======== ========
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