Exhibit 99.1
Cognex Corporation Announces Second Quarter Results
NATICK, Mass.--(BUSINESS WIRE)--July 19, 2005--Cognex Corporation (NASDAQ:
CGNX) today announced revenue for the second quarter ended July 3, 2005, of
$54,603,000, and net income of $7,800,000, or $0.17 per diluted share. These
most recent quarterly results, which include results from the acquisition of DVT
Corporation since May 9, 2005, are compared to the company's historical results
for the second quarter of 2004 and for the first quarter of 2005 in the table
below.
Earnings per
Diluted
Time Period Revenue Net Income Share
- ----------------------------------------------------------------------
Current quarter: Q2-05 $54,603,000 $7,800,000 $0.17
- ----------------------------------------------------------------------
Prior year's quarter: Q2-04 $54,467,000 $10,878,000 $0.23
- ----------------------------------------------------------------------
Change from Q2-04 to Q2-05 0% (28%) (28%)
- ----------------------------------------------------------------------
Prior quarter: Q1-05 $43,198,000 $5,294,000 $0.11
- ----------------------------------------------------------------------
Change from Q1-05 to Q2-05 26% 47% 47%
- ----------------------------------------------------------------------
Revenue, net income and earnings per share for the six months
ended July 3, 2005, which include results from the acquisition of DVT
Corporation since May 9, 2005, are compared to the company's
historical results for the comparable period in 2004 in the table
below.
Earnings per
Diluted
Time Period Revenue Net Income Share
- ----------------------------------------------------------------------
Six months ended July 3,
2005 $97,801,000 $13,094,000 $0.28
- ----------------------------------------------------------------------
Six months ended July 4,
2004 $102,636,000 $19,445,000 $0.41
- ----------------------------------------------------------------------
Change from first six months
of 2004 to first six months
of 2005 (5%) (33%) (33%)
- ----------------------------------------------------------------------
To help readers understand the company's performance excluding the
acquisition of DVT, the company's Statement of Operations is shown in
Exhibit 1 (Including DVT) and Exhibit 2 (Excluding DVT), and a
reconciliation of the quarter and six months ended July 3, 2005,
including and excluding DVT is shown in Exhibit 3.
"The second quarter of 2005 was a good quarter if you look at it
on a sequential basis, but not so good on a year-on-year comparison,"
said Dr. Robert J. Shillman, Cognex's Chairman and Chief Executive
Officer. "Revenue increased significantly on a sequential basis due to
higher sales to customers in the surface inspection and factory
automation markets, each of which had record revenue in the second
quarter of 2005, as well as from revenue from our acquisition of DVT
Corporation, which did better than expected. And, our net margin
improved as we began to see a return on the investments we made during
2004 in end user sales and marketing personnel to help drive future
revenue."
Dr. Shillman continued, "However, the year-on-year comparables are
disappointing due to lower demand from customers in the semiconductor
and electronics capital equipment industries, and due to the
incremental costs of our investments outside of this cyclical sector
to generate growth for the future."
Details of the Quarter
Statement of Operations Highlights - Second Quarter of 2005
-- Revenue for the second quarter of 2005 was flat with the
comparable quarter in 2004, and that was quite an
accomplishment given that the revenue from customers who make
capital equipment for the semiconductor and electronics
industries declined by 49%. That shortage was completely made
up by higher revenue from discrete manufacturers in the
factory automation area (including $5,500,000 from DVT
Corporation) and higher sales of SmartView(R), the company's
surface inspection product. On a sequential basis, revenue
increased 26% due to higher factory automation revenue and
higher sales of SmartView.
-- Gross margin was 71% in the second quarter of 2005 compared to
71% in the comparable quarter in 2004 and 68% in the prior
quarter. Cost of revenue for the second quarter of 2004 as
well as the first and second quarters of 2005 includes a
benefit of $234,000, $118,000, and $169,000, respectively,
relating to an inventory reserve recorded in the fourth
quarter of 2001. Excluding this benefit, gross margin would
have been 70% in the second quarter of 2005, 70% in the second
quarter of 2004, and 68% in the prior quarter. The increase in
gross margin on a sequential basis is due to the higher
revenue in the second quarter.
-- Research, Development & Engineering (R, D & E) spending in the
second quarter of 2005 increased 8% from the comparable
quarter in 2004 and 14% from the prior quarter. The
year-on-year and sequential increases are due primarily to the
new employees added from the acquisition of DVT during the
second quarter of 2005.
-- Selling, General & Administrative (S, G & A) spending in the
second quarter of 2005 increased 22% from the second quarter
of 2004, and increased 23% on a sequential basis. The increase
year-on-year is due to additional end-user sales personnel
hired by Cognex as well as costs from the DVT acquisition,
including new employees and the amortization of
acquisition-related costs (which were approximately $660,000
pre-tax in the quarter). The sequential increase is due to
higher marketing communication costs and company bonuses in
the second quarter as well as the incremental DVT costs.
-- The company reported a foreign currency loss of $291,000 in
the second quarter of 2005 compared to a loss of $50,000 in
the comparable quarter of 2004 and a gain of $99,000 in the
prior quarter. The company recognizes foreign currency gains
and losses on the revaluation and settlement of accounts
receivable and payable balances that are reported in one
currency and collected or paid in another.
-- Investment and other income was $973,000 in the second quarter
of 2005 compared to $1,031,000 in the second quarter of 2004
and $1,470,000 in the prior quarter. The decrease in
investment and other income, both year-on-year and
sequentially, is due to a lower average cash and investment
balance in the second quarter of 2005 due to the acquisition
of DVT during the quarter for approximately $115,000,000 in
cash.
-- The effective tax rate was 26% in the second quarter of 2005
as compared to 29% in the comparable quarter of 2004 and 26%
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 2005 than in
2004.
Balance Sheet Highlights - July 3, 2005
-- Cognex's financial position at July 3, 2005 was very strong,
with over $285,000,000 in cash and investments, and no debt.
Cash and investments decreased by nearly $106,000,000 from the
end of 2004 as the company paid out approximately $115,000,000
of cash in the second quarter to acquire DVT Corporation.
During the first half of 2005, Cognex generated positive cash
flow from operations of nearly $13,000,000 and paid out over
$7,400,000 in dividends. Cumulative to date, the company has
paid out nearly $70,000,000 in repurchases of its common stock
on the open market and $25,000,000 in dividends.
-- Days sales outstanding (DSO) for the second quarter of 2005
was 59 days, and remains within the company's targeted range.
-- Inventories at July 3, 2005 increased by $258,000, or 1%, from
the end of the prior quarter and inventory turns in the second
quarter improved to a rate equivalent to 3.6 times per year.
Business Trends and Financial Outlook
Bookings:
-- For the second quarter of 2005, bookings increased by 15% on a
sequential basis (4% excluding DVT) and the company's
book-to-bill ratio was above 1.0. This increase was primarily
due to higher demand from discrete manufacturers in the
factory automation area (where bookings increased by 31%, or
10% excluding DVT) and from customers who make capital
equipment for the semiconductor and electronics industries
(where bookings increased by 21%). Although orders for
SmartView declined from the prior quarter's record, the second
quarter of 2005 represented the second highest level for that
product line.
Financial Outlook
-- For the third quarter of 2005, Cognex expects revenue to
increase on a sequential basis to between $57 million and $60
million. At that revenue level, gross margin is expected to be
in the low-to-mid 70% range. For the third quarter, operating
expenses (R, D & E and S, G & A) are expected to increase by
5% to 10% on a sequential basis. The effective tax rate is
expected to be 26%. As a result of the above, earnings for the
third quarter are expected to be between $0.19 and $0.23 per
diluted share.
Analyst Conference Call and Simultaneous Webcast
Cognex will host a conference call to discuss its results for the
second 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 U.S.). 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 U.S.) and the access code
is 6156886.
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 250,000 machine vision systems, representing over $1.8 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 has regional offices and distributors 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; (7) 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 for the fiscal year ended December 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.
Exhibit 1
COGNEX CORPORATION
Statements of Operations - Including DVT From May 9, 2005
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
--------------------------------------------
(unaudited) (unaudited)
Revenue $54,603 $43,198 $54,467 97,801 102,636
Cost of revenue 16,065 13,790 15,905 29,855 30,694
-------- -------- -------- -------- --------
Gross margin 38,538 29,408 38,562 67,946 71,942
Percentage of revenue 71% 68% 71% 69% 70%
Research, development, and
engineering expenses 7,185 6,315 6,655 13,500 13,553
Percentage of revenue 13% 15% 12% 14% 13%
Selling, general, and
administrative expenses 21,494 17,508 17,568 39,002 33,882
Percentage of revenue 39% 41% 32% 40% 33%
-------- -------- -------- -------- --------
Operating income 9,859 5,585 14,339 15,444 24,507
Percentage of revenue 18% 13% 26% 16% 24%
Foreign currency gain
(loss) (291) 99 (50) (192) 575
Investment and other
income 973 1,470 1,031 2,443 2,305
-------- -------- -------- -------- --------
Income before taxes 10,541 7,154 15,320 17,695 27,387
Income tax provision 2,741 1,860 4,442 4,601 7,942
-------- -------- -------- -------- --------
Net income $7,800 $5,294 $10,878 $13,094 $19,445
Percentage of revenue 14% 12% 20% 13% 19%
======== ======== ======== ======== ========
Net income per diluted
common and common
equivalent share $0.17 $0.11 $0.23 $0.28 $0.41
======== ======== ======== ======== ========
Diluted weighted-average
common and common
equivalent shares
outstanding 47,141 47,181 47,241 47,269 47,317
======== ======== ======== ======== ========
Cash dividends per common
share $0.08 $0.08 $0.06 0.16 $0.12
======== ======== ======== ======== ========
Exhibit 2
COGNEX CORPORATION
Statements of Operations - Excluding DVT
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
--------------------------------------------
(unaudited) (unaudited)
Revenue $49,142 $43,198 $54,467 92,340 102,636
Cost of revenue 14,896 13,790 15,905 28,686 30,694
-------- -------- -------- -------- --------
Gross margin 34,246 29,408 38,562 63,654 71,942
Percentage of revenue 70% 68% 71% 69% 70%
Research, development, and
engineering expenses 6,564 6,315 6,655 12,879 13,553
Percentage of revenue 13% 15% 12% 14% 13%
Selling, general, and
administrative expenses 18,578 17,508 17,568 36,086 33,882
Percentage of revenue 38% 41% 32% 39% 33%
-------- -------- -------- -------- --------
Operating income 9,104 5,585 14,339 14,689 24,507
Percentage of revenue 19% 13% 26% 16% 24%
Foreign currency gain
(loss) (291) 99 (50) (192) 575
Investment and other
income 967 1,470 1,031 2,437 2,305
-------- -------- -------- -------- --------
Income before taxes 9,780 7,154 15,320 16,934 27,387
Income tax provision 2,456 1,860 4,442 4,316 7,942
-------- -------- -------- -------- --------
Net income $7,324 $5,294 $10,878 $12,618 $19,445
Percentage of revenue 15% 12% 20% 14% 19%
======== ======== ======== ======== ========
Net income per diluted
common and common
equivalent share $0.16 $0.11 $0.23 $0.27 $0.41
======== ======== ======== ======== ========
Diluted weighted-average
common and common
equivalent shares
outstanding 47,141 47,181 47,241 47,269 47,317
======== ======== ======== ======== ========
Cash dividends per common
share $0.08 $0.08 $0.06 0.16 $0.12
======== ======== ======== ======== ========
Exhibit 3
COGNEX CORPORATION
Statements of Operations Reconciliation -
Including DVT From May 9, 2005
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, 2005 July 3, 2005
------------------------- ---------------------------
Cognex Cognex
Excluding DVT Consol- Excluding DVT Consol-
DVT idated DVT idated
------------------------- ---------------------------
(unaudited) (unaudited)
Revenue $49,142 $5,461 $54,603 92,340 5,461 97,801
Cost of revenue 14,896 1,169 16,065 28,686 1,169 29,855
-------- ------- -------- --------- ------ ----------
Gross margin 34,246 4,292 38,538 63,654 4,292 67,946
Percentage
of revenue 70% 79% 71% 69% 79% 69%
Research,
development, and
engineering
expenses 6,564 621 7,185 12,879 621 13,500
Percentage
of revenue 13% 11% 13% 14% 11% 14%
Selling, general,
and
administrative
expenses 18,578 2,916 21,494 36,086 2,916 39,002
Percentage
of revenue 38% 53% 39% 39% 53% 40%
-------- ------- -------- --------- ------ ----------
Operating income 9,104 755 9,859 14,689 755 15,444
Percentage
of revenue 19% 14% 18% 16% 14% 16%
Foreign currency
gain (loss) (291) - (291) (192) - (192)
Investment and
other income 967 6 973 2,437 6 2,443
-------- ------- -------- --------- ------ ----------
Income before
taxes 9,780 761 10,541 16,934 761 17,695
Income tax
provision 2,456 285 2,741 4,316 285 4,601
-------- ------- -------- --------- ------ ----------
Net income $7,324 $476 $7,800 $12,618 $476 $13,094
Percentage
of revenue 15% 9% 14% 14% 9% 13%
======== ======= ======== ========= ====== ==========
Net income per
diluted common
and common
equivalent
share $0.16 $0.17 $0.27 $0.28
======== ======== ========= ==========
Diluted weighted
-average common
and common
equivalent
shares
outstanding 47,141 47,141 47,269 47,269
======== ======== ========= ==========
Cash dividends
per common share $0.08 $0.08 0.16 0.16
======== ======== ========= ==========
Exhibit 4
COGNEX CORPORATION
Balance Sheets - Including DVT at July 3, 2005
(In thousands)
July 3, December 31,
2005 2004
------------ --------------
(unaudited)
Assets
Cash and investments $285,490 $391,076
Accounts receivable 36,283 33,816
Inventories 18,057 20,091
Property, plant, and equipment 24,216 23,995
Other assets 168,064 64,330
------------ --------------
Total assets $532,110 $533,308
============ ==============
Liabilities and Stockholders' Equity
Current liabilities $58,967 $70,501
Stockholders' equity 473,143 462,807
------------ --------------
Total liabilities and stockholders' equity $532,110 $533,308
============ ==============
Exhibit 5
COGNEX CORPORATION
Additional Information Schedule - Including DVT From May 9, 2005
(Dollars in thousands)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
-------------------------- ------------------
(unaudited) (unaudited)
Revenue $54,603 $43,198 $54,467 $97,801 $102,636
======== ======== ======== ======== =========
Revenue by division:
Modular Vision Systems
Division 83% 84% 85% 83% 86%
Surface Inspection
Systems Division 17% 16% 15% 17% 14%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by geography:
United States 37% 37% 31% 37% 30%
Europe 31% 29% 22% 30% 24%
Japan 26% 28% 41% 27% 41%
Other 6% 6% 6% 6% 5%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by market:
Discrete factory
automation 60% 57% 41% 57% 41%
Semiconductor and
electronics capital
equipment 23% 27% 44% 26% 45%
Surface inspection 17% 16% 15% 17% 14%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by product:
Vision sensors 41% 37% 27% 39% 28%
PC-based vision systems 35% 39% 50% 37% 50%
Surface inspection
vision systems 13% 10% 11% 12% 10%
Service 11% 14% 12% 12% 12%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
CONTACT: Cognex Corporation
Susan Conway, 508-650-3353
Director of Investor Relations