Exhibit 99.1
Cognex Corporation Announces Third Quarter Results;
Machine Vision Company Reports Increases in Quarterly Revenue and Net Income
NATICK, Mass.--(BUSINESS WIRE)--Oct. 18, 2004--
Overview of the Quarter
Cognex Corporation (NASDAQ: CGNX) today announced revenue for the
third quarter ended October 3, 2004 of $55,412,000, and net income of
$11,655,000, or $0.25 per diluted share. These results compare very
favorably with both the comparable quarter in 2003 and with the prior
quarter, as shown in the table below:
Earnings per
Time Period Revenue Net Income Diluted Share
- ----------------------------------------------------------------------
Current quarter: Q3-04 $55,412,000 $11,655,000 $0.25
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Prior year's quarter: Q3-03 $38,704,000 $5,138,000 $0.11
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Increase from Q3-03 to Q3-04 43% 127% 119%
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Prior quarter: Q2-04 $54,467,000 $10,878,000 $0.23
- ----------------------------------------------------------------------
Increase from Q2-04 to Q3-04 2% 7% 9%
- ----------------------------------------------------------------------
For the nine months ended October 3, 2004, Cognex reported revenue
of $158,048,000, a 46% increase over revenue of $108,214,000 reported
for the same nine-month period a year ago. And, net income for the
nine months ended October 3, 2004 increased 204% to $31,100,000, or
$0.66 per diluted share, from $10,237,000, or $0.23 per diluted share,
for the comparable period in 2003.
"I am pleased with the results we reported for the third quarter
of 2004," said Dr. Robert J. Shillman, Cognex's Chief Executive
Officer and Chairman. "Quarterly revenue and profits increased on both
a sequential basis as well as year-on-year. And, our reported net
income for the quarter of $11,655,000 is in excess of 20% of revenue,
which is a long-standing goal for Cognex."
Dr. Shillman continued, "We would normally celebrate this
quarter's superb results, but the significant softening in bookings
that we experienced during the quarter from our OEM customers in the
semiconductor and electronics industries has dampened our spirits.
And, the slowdown in those industries will not be entirely offset by
the increasing demand from our customers in other market segments. In
view of that, our fourth quarter results will likely be quite good,
but not as high as our earlier internal estimates."
Details of the Quarter
Statement of Operations Highlights - Third Quarter of 2004
-- Revenue for the third quarter of 2004 increased 43% over the
comparable quarter in 2003, and 2% on a sequential basis. The
increase year-on-year is due to higher sales to capital
equipment customers as well as end-users in the semiconductor
and electronics industries. On a sequential basis, the
increase is due to higher sales to customers who make capital
equipment for the semiconductor industry.
-- Gross margin was 73% in the third quarter of 2004 compared to
66% in the comparable quarter in 2003 and 71% in the prior
quarter. Cost of revenue for the second and third quarters of
2004 as well as the third quarter of 2003 includes a benefit
of $234,000, $422,000, and $296,000, respectively, relating to
an inventory reserve recorded in the fourth quarter of 2001.
Excluding this benefit, gross margin would have been 72% in
the third quarter of 2004, 65% in the third quarter of 2003,
and 70% in the prior quarter. The increase in gross margin,
both year-on-year and sequentially, is due to higher sales
volume as well as product mix.
-- Research, Development & Engineering (R, D & E) spending in the
third quarter of 2004 increased 5% from the comparable quarter
in 2003, and was essentially flat on a sequential basis. The
increase year-on-year is due to the accrual of anticipated
company bonuses for 2004.
-- Selling, General & Administrative (S, G & A) spending in the
third quarter of 2004 increased 32% from the comparable
quarter in 2003, and 3% on a sequential basis. The increase in
S, G & A, both year-on-year and sequentially, is due to higher
employee-related costs, including higher commissions resulting
from the higher revenue level, the accrual of anticipated
company bonuses for 2004, as well as investments in additional
end-user sales personnel and marketing activities. Also adding
to the year-on-year increase in S, G & A spending is the
impact of foreign exchange rates on the company's
international operations.
-- The company reported a foreign currency loss of $502,000 in
the third quarter of 2004, and a net gain of $73,000 for the
first nine months of the year. The third quarter loss compares
to a gain of $828,000 in the comparable quarter of 2003 and a
loss of $50,000 in the prior quarter. The company recognizes
foreign currency gains and losses on the revaluation and
settlement of accounts receivable balances that are reported
in one currency and collected in another.
-- Investment and other income was $1,043,000 in the third
quarter of 2004 compared to $1,145,000 in the comparable
quarter of 2003 and $1,031,000 in the prior quarter. The
decrease in investment and other income year-on-year is due to
lower yields on cash and investment balances as well as lower
realized gains on investments. Investment and other income
increased slightly on a sequential basis due to the net effect
of higher cash and investment balances offset by lower
realized gains on investments.
-- The effective tax rate was 29% in the third quarter of 2004 as
compared to 31% in the comparable quarter of 2003 and 29% in
the prior quarter. The decrease in the effective tax rate
year-on-year is due to more of the company's profits being
earned and taxed in lower tax jurisdictions in 2004 than in
2003.
Balance Sheet Highlights - October 3, 2004
-- Cognex's financial position remains strong at October 3, 2004,
with over $380,000,000 in cash and investments and no debt.
Cash and investments increased nearly $80,000,000 from the end
of 2003, the net result of positive cash flow from operations
and cash received from the exercise of employee stock options,
less dividend payments of approximately $9,000,000.
-- Days sales outstanding (DSO) for the third quarter of 2004 was
60 days, and remains within the company's targeted range.
-- Inventories at October 3, 2004 increased by 8% from the end of
2003, and inventory turns in the third quarter were equal to a
rate equivalent to 4.2 times per year.
Business Trends and Financial Outlook
-- For the third quarter of 2004, bookings decreased by 22% on a
sequential basis, and the company's book-to-bill ratio was
below 1.0 for the quarter. This decrease in bookings was due
partially to the expected decrease in the end-user market
during the seasonally soft summer months, and more
significantly to a dramatic slowdown in orders from customers
who make capital equipment for the semiconductor and
electronic industries. As a result, Cognex expects revenue for
the fourth quarter of 2004 to decrease on a sequential basis
to between $42 million and $46 million. At that revenue level,
gross margin is expected to be in the high 60% to 70% range.
For the fourth quarter, operating expenses (R, D & E and S, G
& A) are expected to be relatively flat on a sequential basis.
The effective tax rate for the fourth quarter of 2004 is
expected to be 29%. As a result of the above, earnings for the
fourth quarter are expected to be between $0.10 and $0.14 per
diluted share.
Analyst Conference Call and Simultaneous Webcast
Cognex Corporation will host a conference call to discuss its
results for the third quarter of 2004, 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). 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 5230486.
Internet users can listen to a real-time audio broadcast of the
conference call, as well as an archive 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 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 $1.6 billion in
cumulative revenue, since the company's founding in 1981. Cognex's
Modular Vision Systems Division, headquartered in Natick,
Massachusetts, 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, 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 also has regional offices located throughout
North America, Japan, Europe, and Southeast Asia. Visit Cognex on-line
at http://www.cognex.com.
Forward-Looking Statement
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 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 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 for the fiscal year ended December 31, 2003. 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 Nine Months Ended
Oct. 3, July 4, Sept. 28, Oct. 3, Sept. 28,
2004 2004 2003 2004 2003
---------------------------------------------------
(unaudited) (unaudited)
Revenue $55,412 $54,467 $38,704 $158,048 $108,214
Cost of revenue 14,886 15,905 13,190 45,580 36,905
---------------------------------------------------
Gross margin 40,526 38,562 25,514 112,468 71,309
Percentage of
revenue 73% 71% 66% 71% 66%
Research,
development, and
engineering
expenses 6,552 6,655 6,246 20,105 18,492
Percentage of
revenue 12% 12% 16% 13% 17%
Selling, general,
and administrative
expenses 18,099 17,568 13,761 51,981 40,954
Percentage of
revenue 33% 32% 36% 33% 38%
---------------------------------------------------
Operating income 15,875 14,339 5,507 40,382 11,863
Percentage of
revenue 29% 26% 14% 26% 11%
Foreign currency
gain (loss) (502) (50) 828 73 (963)
Investment and
other income 1,043 1,031 1,145 3,348 4,054
---------------------------------------------------
Income before taxes 16,416 15,320 7,480 43,803 14,954
Income tax
provision 4,761 4,442 2,342 12,703 4,717
---------------------------------------------------
Net income $11,655 $10,878 $5,138 $31,100 $10,237
Percentage of
revenue 21% 20% 13% 20% 9%
===================================================
Net income per
diluted common and
common equivalent
share $0.25 $0.23 $0.11 $0.66 $0.23
Diluted weighted-
average common and
common equivalent
shares outstanding 46,415 47,241 44,890 47,424 44,120
Cash dividends per
common share $0.08 $0.06 $0.06 $0.20 $0.06
===================================================
COGNEX CORPORATION
Balance Sheets
(In thousands)
October 3, December 31,
2004 2003
---------------------------
(unaudited)
Assets
Cash and investments $382,193 $303,502
Accounts receivable 37,495 26,697
Inventories 16,715 15,519
Property, plant, and equipment 23,835 24,980
Other assets 57,259 61,835
---------------------------
Total assets $517,497 $432,533
===========================
Liabilities and Stockholders' Equity
Current liabilities $60,035 $47,287
Other liabilities 248 252
Stockholders' equity 457,214 384,994
---------------------------
Total liabilities and stockholders' equity $517,497 $432,533
===========================
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended Nine Months Ended
Oct. 3, July 4, Sept. 28, Oct. 3, Sept. 28,
2004 2004 2003 2004 2003
--------------------------------------------------
(unaudited) (unaudited)
Revenue $55,412 $54,467 $38,704 $158,048 $108,214
==================================================
Revenue by division:
Modular Vision
Systems Division 88% 85% 82% 87% 81%
Surface Inspection
Systems Division 12% 15% 18% 13% 19%
--------------------------------------------------
Total 100% 100% 100% 100% 100%
==================================================
Revenue by
geography:
Japan 41% 41% 35% 41% 35%
United States 30% 31% 35% 30% 33%
Europe 24% 22% 24% 24% 24%
Other 5% 6% 6% 5% 8%
--------------------------------------------------
Total 100% 100% 100% 100% 100%
==================================================
Revenue by industry:
Semiconductor
capital equipment 32% 29% 21% 32% 19%
Electronics
capital equipment 14% 15% 14% 14% 15%
Surface inspection 12% 15% 18% 13% 19%
Electronics other 9% 12% 9% 10% 9%
Automotive 9% 8% 11% 8% 12%
Semiconductor
other 5% 6% 5% 5% 4%
Other 19% 15% 22% 18% 22%
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Total 100% 100% 100% 100% 100%
==================================================
Revenue by product:
PC-based vision systems 51% 50% 46% 50% 45%
Vision sensors 27% 27% 29% 28% 27%
Surface inspection
vision systems 9% 11% 13% 10% 14%
Service 13% 12% 12% 12% 14%
--------------------------------------------------
Total 100% 100% 100% 100% 100%
==================================================
Number of new
customer accounts:
End user 229 257 226 677 655
Original equipment
manufacturer 26 32 30 95 89
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Total 255 289 256 772 744
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CONTACT: Cognex Corporation
Susan Conway, 508-650-3353