Cognex Reports Lower Sales Results for Q2-2019, Cites Market Softness

Cognex Reports Results for the Second Quarter Of 2019

NATICK, Mass.--(BUSINESS WIRE)--Cognex Corporation (NASDAQ: CGNX) today announced financial results for the second quarter of 2019. Table 1 below shows selected financial data for Q2-19 compared with Q2-18 and Q1-19, and for the six months ended June 30, 2019 compared with the same period in 2018.

Cognex reports results for the second quarter of 2019

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: Q2-19

$199,047

$48,749

$0.28

$0.27

Prior year’s quarter: Q2-18

$211,264

$56,196

$0.32

$0.31

Change: Q2-18 to Q2-19

(6%)

(13%)

(13%)

(13%)

Prior quarter: Q1-19

$173,484

$33,104

$0.19

$0.17

Change: Q1-19 to Q2-19

15%

47%

47%

59%

Year-to-Date Comparisons

       

Six months ended June 30, 2019

$372,531

$81,853

$0.47

$0.44

Six months ended July 1, 2018

$380,831

$93,413

$0.52

$0.49

Change from first six months of 2018 to first six months of 2019

(2%)

(12%)

(10%)

(10%)

*Non-GAAP net income per diluted share excludes tax adjustments. A reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this news release.

“Our Q2 results were in line with our guidance and we were highly profitable, reporting an operating margin of 26%,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “But, as expected, revenue declined year over year due to persistent softness in our two largest markets, consumer electronics and automotive.”

“Despite continued strong growth in logistics, the slowdown in spending by customers in our two largest markets resulted in lower overall revenue for Cognex,” said Robert J. Willett, Chief Executive Officer of Cognex. “Because of that slowdown we have reallocated resources to faster-growing areas.”

“Our long-term positive view notwithstanding, our outlook for the near term has worsened due to a further deterioration in business conditions we are seeing in Europe and Asia,” concluded Mr. Willett.

Details of the Quarter

Statement of Operations Highlights – Second Quarter of 2019

  • Revenue decreased 6% from Q2-18 and increased 15% from Q1-19. The year-on-year decline in revenue was expected and reflects lower sales to customers in consumer electronics and automotive. The decrease was partially offset by continued growth in logistics. The sequential increase in revenue was due to higher revenue from logistics and the usual seasonal increase in sales to customers in the consumer electronics market. In constant currency, revenue decreased 3% year-on-year and increased 15% sequentially.
  • Gross margin was 74% for Q2-19 compared with 74% for Q2-18 and 73% for Q1-19. Gross margin increased on a sequential basis primarily due to revenue mix.
  • Research, Development & Engineering (RD&E) expenses increased 4% from Q2-18 and decreased 7% from Q1-19. The year-on-year increase in RD&E reflects the addition of new Cognex engineering resources over the past year. The increase was partially offset by a reduction in incentive compensation costs. The sequential decrease in RD&E is due to the timing of application engineering for large deployments in consumer electronics. In constant currency, RD&E increased 6% year-on-year and decreased 7% sequentially.
  • Selling, General & Administrative (SG&A) expenses increased 2% from both Q2-18 and Q1-19. The year-on-year and sequential increases in SG&A are a result of Cognex growing its sales and support organization. The increase year-on-year was partially offset by a reduction in incentive compensation costs and lower costs incurred related to the company’s new ERP system, which was placed into service in mid-2018. In constant currency, SG&A increased 5% year-on-year and 3% sequentially.
  • The effective tax rate was 14% in Q2-19, 16% in Q2-18, and 7% in Q1-19. Excluding discrete tax adjustments, the rates were 17%, 17%, and 15%, respectively (tax adjustments are summarized in Exhibit 2). The tax rate for 2019 was adjusted in Q2-19 to reflect the expectation that more of the company’s 2019 profits will be earned and taxed in higher-tax jurisdictions than anticipated.

Balance Sheet Highlights – June 30, 2019  ... click for more

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