|Revenue||Net Income from Continuing Operations||Net Income from Continuing Operations per Diluted Share|
|Current quarter: Q1-16||$96,205,000||$14,885,000||$0.17|
|Prior year's quarter: Q1-15||$101,373,000||$19,472,000||$0.22|
|Change from Q1-15 to Q1-16||(5%)||(24%)||(23%)|
|Prior quarter: Q4-15||$97,768,000||$18,854,000||$0.22|
|Change from Q4-15 to Q1-16||(2%)||(21%)||(23%)|
"I am pleased to report that our first quarter results were better than the guidance we gave to investors in February," said Dr. Robert J. Shillman, Chairman of Cognex. "This positive news was due to several factors in the quarter, including higher revenue from customers in the logistics market, a higher gross margin and lower-than-planned operating expenses. However, despite these favorable developments, I am not pleased to report that the slower business trends we saw in the second half of last year have continued.""The year started off on a stronger note than anticipated, and our guidance for Q2 reflects a significant sequential increase in revenue and substantial margin expansion due to an expected concentration of large orders in the consumer electronics industry," said Robert J. Willett, Chief Executive Officer of Cognex. "Nevertheless, our outlook for 2016 is not any more bullish than it was a few months ago." Details of the Quarter Statement of Operations Highlights - First Quarter of 2016
- Revenue for Q1 2016 decreased 5% from Q1 2015 and 2% from Q4 2015. Cognex experienced the typical seasonal decline from Q4 to Q1 in factory automation. The decline from last year's record first-quarter revenue was primarily due to lower revenue from the consumer electronics industry.
- Gross margin was 78% for both Q1 2016 and Q1 2015, and 76% for Q4 2015. Gross margin increased on a sequential basis due to revenue mix, with a higher percentage of revenue coming from product sales than service.
- Research, Development & Engineering (RD&E) expenses increased 21% from Q1 2015 and 17% from Q4 2015. RD&E increased year-on-year due to Cognex's investment in engineering resources and higher outsourced engineering costs. RD&E increased on a sequential basis due to support of potential high-volume opportunities and higher stock option expense.
- Selling, General & Administrative (SG&A) expenses decreased 4% from Q1 2015 and increased 2% from Q4 2015. SG&A decreased year-on-year as Cognex's investment in its sales and support organization was offset by lower patent-related legal fees. SG&A increased on a sequential basis due to higher stock option expense.
- Investment and other income was $1,344,000 in Q1 2016, $540,000 in Q1 2015 and $2,059,000 in Q4 2015. The increase year-on-year was due to a higher average invested balance. The decrease on a sequential basis was the result of a larger reduction in Q4 than in Q1 to the estimated liability for contingent consideration related to a recent acquisition.
- The tax rate was 15% in Q1 2016, 16% in Q1 2015, and 13% in Q4 2015. Excluding discrete tax items, the rate was 18% in Q1 2016 and Q1 2015, and 17% in Q4 2015 (tax adjustments are summarized in Exhibit 2).
- Cognex's financial position as of April 3, 2016, was very strong, with $649 million in cash and investments and no debt. During Q1 2016, Cognex paid out $6 million in dividends to shareholders. Earlier today, Cognex announced it will increase the cash dividend paid in Q2 2016 to $0.075 per share from $0.07 per share paid in Q1. The company also intends to repurchase shares of its common stock in Q2 2016, subject to market conditions and other relevant factors.
- Cognex expects revenue for Q2 2016 to be between $135 million and $140 million. This range represents substantial growth over Q1 2016, due primarily to large orders expected from consumer electronics customers, but a slight decline from Q2 2015 due to timing. In 2016, Cognex expects to recognize large consumer electronics orders in both Q2 and Q3, as opposed to last year when the majority was recognized in Q2.
- Gross margin is expected to be in the mid-to-high 70% range.
- Operating expenses are expected to increase by up to 4% on a sequential basis, and to be essentially flat year-on-year.
- The effective tax rate is expected to be 18% before discrete tax items.
- 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. In particular, non-GAAP presentations exclude the following: (1) stock option expense for the purpose of calculating non-GAAP adjusted operating income (because these expenses have no current effect on cash or the future uses of cash, and they fluctuate as a result of changes in Cognex's stock price), and (2) certain one-time discrete events, such as tax adjustments. Cognex does not intend for non-GAAP financial measures to be considered in isolation, nor as a substitute for financial information provided in accordance with GAAP.
- Cognex will host a conference call today at 5:00 p.m. Eastern Time (ET). The telephone number is (866) 256-9239 (or (703) 639-1213 if outside the United States). A replay will begin at 8:00 p.m. ET today and will run continuously until 11:59 p.m. ET on Thursday, May 5, 2016. The telephone number for the replay is (888) 266-2081 (or (703) 925-2533 if outside the United States). The access code for both the live call and the replay is 1670550.
- Internet users can listen to a real-time audio broadcast of the conference call or an archived recording on the Cognex Investor Relations website: http://www.cognex.com/Investor.
|COGNEX CORPORATION Statements of Operations (Unaudited) Dollars in thousands, except per share amounts|
|April 3, 2016||December 31,2015||April 5,2015|
|Cost of revenue (1)||20,968||23,400||22,344|
|Percentage of revenue||78||%||76||%||78||%|
|Research, development, and engineering expenses (1)||20,555||17,526||16,986|
|Percentage of revenue||21||%||18||%||17||%|
|Selling, general, and administrative expenses (1)||38,338||37,694||39,933|
|Percentage of revenue||40||%||39||%||39||%|
|Percentage of revenue||17||%||20||%||22||%|
|Foreign currency gain (loss)||(100||)||542||659|
|Investment and other income||1,344||2,059||540|
|Income from continuing operations before income tax expense||17,588||21,749||23,309|
|Income tax expense on continuing operations||2,703||2,895||3,837|
|Net income from continuing operations||14,885||18,854||19,472|
|Percentage of revenue||15||%||19||%||19||%|
|Net income (loss) from discontinued operations (1)||—||(108||)||1,030|
|Basic earnings per weighted-average common and common-equivalent share:|
|Net income from continuing operations||$||0.18||$||0.22||$||0.22|
|Net income from discontinued operations||—||—||0.02|
|Diluted earnings per weighted-average common and common-equivalent share:|
|Net income from continuing operations||$||0.17||$||0.22||$||0.22|
|Net income from discontinued operations||—||—||0.01|
|Weighted-average common and common-equivalent shares outstanding:|
|Cash dividends per common share||$||0.07||$||0.07||$||—|
|Cash and investments per common share||$||7.64||$||7.32||$||6.30|
|Book value per common share||$||10.00||$||9.73||$||8.80|
|(1) Amounts include stock option expense, as follows:|
|Cost of revenue||$||293||$||348||$||467|
|Research, development, and engineering||2,179||1,097||1,814|
|Selling, general, and administrative||4,332||2,759||4,382|
|Total stock option expense||$||6,804||$||4,204||$||6,946|
|COGNEX CORPORATION Reconciliation of Selected Items from GAAP to Non-GAAP (Unaudited) Dollars in thousands|
|April 3, 2016||December 31,2015||April 5,2015|
|Adjustment for stock option expense|
|Operating income (GAAP)||$||16,344||$||19,148||$||22,110|
|Stock option expense related to continuing operations||6,804||4,204||6,663|
|Operating income (Non-GAAP)||$||23,148||$||23,352||$||28,773|
|Percentage of revenue (Non-GAAP)||24||%||24||%||28||%|
|Exclusion of tax adjustments|
|Income from continuing operations before income tax expense (GAAP)||$||17,588||$||21,749||$||23,309|
|Income tax expense (GAAP)||$||2,703||$||2,895||$||3,837|
|Effective tax rate (GAAP)||15||%||13||%||16||%|
|Discrete tax events||(463||)||(910||)||(364||)|
|Income tax expense excluding tax adjustments (Non-GAAP)||$||3,166||$||3,805||$||4,201|
|Effective tax rate (Non-GAAP)||18||%||17||%||18||%|
|Net income from continuing operations excluding tax adjustments (Non-GAAP)||$||14,422||$||17,944||$||19,108|
|Percentage of revenue (Non-GAAP)||15||%||18||%||19||%|
|COGNEX CORPORATION Balance Sheets (Unaudited) Dollars in thousands|
|April 3, 2016||December 31, 2015|
|Cash and investments||$||649,463||$||621,531|
|Property, plant, and equipment||53,413||53,285|
|Goodwill and intangible assets||86,718||87,763|
|Liabilities and Shareholders' Equity|
|Accounts payable and accrued liabilities||$||40,949||$||41,132|
|Deferred revenue and customer deposits||11,862||11,571|
|Total liabilities and shareholders' equity||$||913,637||$||887,756|
|COGNEX CORPORATION Additional Information Schedule (Unaudited) Dollars in thousands|
|April 3, 2016||December 31,2015||April 5,2015|
|Revenue by geography:|
|Revenue by market:|
|Semiconductor and electronics capital equipment||6||%||5||%||6||%|