Exhibit 99.1
Cognex Corporation Announces Third Quarter Results
NATICK, Mass.--(BUSINESS WIRE)--Oct. 17, 2005--Cognex Corporation
(NASDAQ:CGNX) today announced revenue for the third quarter ended
October 2, 2005 of $58,256,000, and net income of $10,858,000, or
$0.22 per diluted share. These most recent quarterly results are
compared to the company's historical results for the third quarter of
2004 and for the second quarter of 2005 in the table below. Also
provided in the table below are revenue, net income and earnings per
share for the nine months ended October 2, 2005, as compared to the
company's historical results for the same period in 2004.
Revenue Net Income Earnings
per
Diluted
Share
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Quarter Comparisons
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Current quarter: Q3-05 $58,256,000 $10,858,000 $0.22
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Prior year's quarter: Q3-04 $55,412,000 $11,655,000 $0.25
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Change from Q3-04 to Q3-05 5% (7%) (11%)
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Prior quarter: Q2-05 $54,603,000 $7,800,000 $0.17
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Change from Q2-05 to Q3-05 7% 39% 35%
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Year-to-Date Comparisons
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Nine months ended October 2, 2005 $156,057,000 $23,952,000 $0.50
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Nine months ended October 3, 2004 $158,048,000 $31,100,000 $0.66
- ----------------------------------------------------------------------
Change from first nine months of 2004
to first nine months of 2005 (1%) (23%) (23%)
- ----------------------------------------------------------------------
The company's reported results for 2005 include the results of DVT
Corporation (since May 9, 2005), and also include the amortization
costs related to that acquisition ($1,143,000 in the third quarter and
$1,905,000 year to date).
"The third quarter of 2005 was another good quarter for Cognex,"
said Dr. Robert J. Shillman, Cognex's Chairman and Chief Executive
Officer. "Revenue increased on a sequential basis in the three primary
markets we serve: Semiconductor and Electronics Capital Equipment,
Factory Automation, and Surface Inspection. And, our net margin
improved dramatically quarter-to-quarter due to higher revenue and
synergies realized from our acquisition of DVT Corporation in May of
this year."
Dr. Shillman continued, "Q4 is shaping up nicely. With our current
estimates of Q4 revenue in the range of $61 million to $64 million and
earnings per diluted share between $0.24 and $0.27, we expect to show
growth in both the top and bottom lines...both year-on-year and
sequentially."
Details of the Quarter
Statement of Operations Highlights - Third Quarter of 2005
-- Revenue for the third quarter of 2005 increased 5% over the
comparable quarter in 2004 despite a 40% decline in revenue
from customers who make capital equipment for the
semiconductor and electronics industries. Revenue increased
year-on-year primarily due to record revenue from discrete
manufacturers in the Factory Automation area as well as to
record sales of SmartView(R), the company's surface inspection
product. On a sequential basis, revenue increased 7% due to
higher sales to customers in all three of the primary markets
we serve, but primarily to those who make capital equipment
for the semiconductor industry.
-- Gross margin was 73% in the third quarter of 2005 compared to
73% in the comparable quarter in 2004 and 71% in the prior
quarter. Cost of revenue for the third quarter of 2004, as
well as the second and third quarters of 2005, includes a
benefit of $422,000, $169,000, and $185,000 respectively,
relating to the sale of inventory previously reserved.
Excluding this benefit, gross margin would have been 73% in
the third quarter of 2005, 72% in the third quarter of 2004,
and 70% in the prior quarter. The increase in gross margin on
a sequential basis is due to the higher revenue in the third
quarter.
-- Research, Development & Engineering (R, D & E) spending in the
third quarter of 2005 increased 10% from the comparable
quarter in 2004 and 1% from the prior quarter. The increase
year-on-year is due primarily to higher expenses in the third
quarter of 2005 relating to the new employees added from the
DVT acquisition.
-- Selling, General & Administrative (S, G & A) spending in the
third quarter of 2005 increased 18% from the third quarter of
2004, and decreased 1% on a sequential basis. The increase
year-on-year is due to incremental DVT costs. S, G & A
declined 1% on a sequential basis despite an additional month
of DVT costs due primarily to cost reductions implemented as
part of the acquisition integration. In addition, the company
also received a benefit from the positive impact of foreign
exchange rates on the company's international operations.
-- The company reported a foreign currency loss of $410,000 in
the third quarter of 2005 compared to a loss of $502,000 in
the comparable quarter of 2004 and a loss of $291,000 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 $1,156,000 in the third
quarter of 2005 compared to $1,043,000 in the third quarter of
2004 and $973,000 in the prior quarter. The increase in
investment and other income, both year-on-year and
sequentially, is due to higher yields.
-- The effective tax rate was 26% in the third 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 - October 2, 2005
-- Cognex's financial position at October 2, 2005 was very
strong, with nearly $313,000,000 in cash and investments, and
no debt. Cash and investments decreased by approximately
$78,400,000 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 nine months of 2005,
Cognex generated positive cash flow from operations of over
$28,000,000 and paid out over $11,000,000 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 over $29,000,000 in dividends.
-- Days sales outstanding (DSO) for the third quarter of 2005 was
58 days, and remains within the company's targeted range.
-- Inventories at October 2, 2005 increased by approximately
$500,000, or 3%, from the end of the prior quarter and
inventory turns in the third quarter were equal to a rate
equivalent to 3.5 times per year.
Business Trends and Financial Outlook
Bookings:
-- For the third quarter of 2005, bookings were essentially flat
on a sequential basis as higher orders from the Semiconductor
and Electronics Capital Equipment market offset the seasonally
soft Factory Automation market. The company's book-to-bill
ratio was slightly less than 1.0 for the quarter due to record
SmartView revenue, which had an unsustainably-high level of
orders earlier in the year, and summer seasonality in the
Factory Automation market.
Financial Outlook
-- For the fourth quarter of 2005, Cognex expects revenue to
increase on a sequential basis to between $61 million and $64
million. At that revenue level, gross margin is expected to be
in the low-to-mid 70% range. For the fourth 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
fourth quarter are expected to be between $0.24 and $0.27 per
diluted share.
Analyst Conference Call and Simultaneous Webcast
Cognex will host a conference call to discuss its results for the
third quarter of 2005, as well as its financial outlook, on Tuesday,
October 18, 2005 at 9:00 a.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 at approximately 11:00 a.m. eastern time on Tuesday,
October 18, 2005 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 6574105.
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 275,000 machine vision systems, representing over $1.9 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, Latin 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.
COGNEX CORPORATION
Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
October July October October October
2, 3, 3, 2, 3,
2005 2005 2004 2005 2004
----------------------------- ---------------------
(unaudited) (unaudited)
Revenue $58,256 $54,603 $55,412 $156,057 $158,048
Cost of revenue 15,755 16,065 14,886 45,610 45,580
----------- -------- -------- ----------- ---------
Gross margin 42,501 38,538 40,526 110,447 112,468
Percentage of
revenue 73% 71% 73% 71% 71%
Research,
development, and
engineering
expenses 7,224 7,185 6,552 20,724 20,105
Percentage of
revenue 12% 13% 12% 13% 13%
Selling, general,
and administrative
expenses 21,351 21,494 18,099 60,353 51,981
Percentage of
revenue 37% 39% 33% 39% 33%
----------- -------- -------- ----------- ---------
Operating income 13,926 9,859 15,875 29,370 40,382
Percentage of
revenue 24% 18% 29% 19% 26%
Foreign currency
gain (loss) (410) (291) (502) (602) 73
Investment and
other income 1,156 973 1,043 3,599 3,348
----------- -------- -------- ----------- ---------
Income before taxes 14,672 10,541 16,416 32,367 43,803
Income tax
provision 3,814 2,741 4,761 8,415 12,703
----------- -------- -------- ----------- ---------
Net income $10,858 $7,800 $11,655 $23,952 $31,100
Percentage of
revenue 19% 14% 21% 15% 20%
=========== ======== ======== =========== =========
Net income per
diluted common and
common equivalent
share $0.22 $0.17 $0.25 $0.50 $0.66
=========== ======== ======== =========== =========
Diluted weighted-
average common and
common equivalent
shares
outstanding 48,469 47,141 46,415 47,703 47,424
=========== ======== ======== =========== =========
Cash dividends per
common share $0.08 $0.08 $0.08 $0.24 $0.20
=========== ======== ======== =========== =========
COGNEX CORPORATION
Balance Sheets
(In thousands)
October December
2, 31,
2005 2004
---------------------
(unaudited)
Assets
Cash and investments $312,716 $391,076
Accounts receivable 38,063 33,816
Inventories 18,579 20,091
Property, plant, and equipment 24,100 23,995
Other assets 166,723 64,330
----------- ---------
Total assets $560,181 $533,308
=========== =========
Liabilities and Stockholders' Equity
Current liabilities $59,134 $70,501
Stockholders' equity 501,047 462,807
----------- ---------
Total liabilities and stockholders' equity $560,181 $533,308
=========== =========
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended Nine Months Ended
Oct. 2, July 3, Oct. 3, Oct. 2, Oct. 3,
2005 2005 2004 2005 2004
----------------------------- ---------------------
(unaudited) (unaudited)
Revenue $58,256 $54,603 $55,412 $156,057 $158,048
=========== ======== ======== =========== =========
Revenue by
division:
Modular Vision
Systems Division 84% 83% 88% 84% 87%
Surface
Inspection
Systems Division 16% 17% 12% 16% 13%
----------- -------- -------- ----------- ---------
Total 100% 100% 100% 100% 100%
=========== ======== ======== =========== =========
Revenue by
geography:
United States 37% 37% 30% 37% 30%
Japan 30% 26% 41% 28% 41%
Europe 27% 31% 24% 29% 24%
Other 6% 6% 5% 6% 5%
----------- -------- -------- ----------- ---------
Total 100% 100% 100% 100% 100%
=========== ======== ======== =========== =========
Revenue by
market:
Discrete factory
automation 57% 60% 42% 57% 41%
Semiconductor and
electronics
capital
equipment 27% 23% 46% 27% 46%
Surface
inspection 16% 17% 12% 16% 13%
----------- -------- -------- ----------- ---------
Total 100% 100% 100% 100% 100%
=========== ======== ======== =========== =========
Revenue by
product:
Vision sensors 41% 41% 27% 40% 28%
PC-based vision
systems 37% 35% 51% 37% 50%
Surface
inspection
vision systems 12% 13% 9% 12% 10%
Service 10% 11% 13% 11% 12%
----------- -------- -------- ----------- ---------
Total 100% 100% 100% 100% 100%
=========== ======== ======== =========== =========
CONTACT: Cognex Corporation
Susan Conway, 508-650-3353