Exhibit 99.1
Cognex Corporation Announces First Quarter Results
NATICK, Mass.--(BUSINESS WIRE)--April 24, 2006--Cognex Corporation (NASDAQ:
CGNX) today announced revenue for the first quarter ended April 2, 2006, of
$59,040,000, and net income of $8,800,000, or $0.18 per diluted share. These
most recent quarterly results are compared to the company's historical results
for the first and fourth quarters of 2005 in the table below.
Revenue Net Income Earnings
per
Diluted
Share
- ------------------------------------------------------------------------------
Quarterly Comparisons
- ------------------------------------------------------------------------------
Current quarter: Q1-06 $59,040,000 $8,800,000 $0.18
- ------------------------------------------------------------------------------
Prior year's quarter: Q1-05 $43,198,000 $5,294,000 $0.11
- ------------------------------------------------------------------------------
Change from Q1-05 to Q1-06 37% 66% 62%
- ------------------------------------------------------------------------------
Prior quarter: Q4-05 $60,818,000 $11,750,000 $0.24
- ------------------------------------------------------------------------------
Change from Q4-05 to Q1-06 (3%) (25%) (25%)
- ------------------------------------------------------------------------------
The company's reported results for 2006 include pre-tax stock-based
compensation expense of $2,956,000, or $0.05 per share, which Cognex was
required to include in its financial results beginning in the first quarter of
2006. To help readers compare its results on a consistent basis excluding
stock-based compensation expense, the company's Statement of Operations is shown
in Exhibit 1 (GAAP) and Exhibit 2 (Non-GAAP - Excluding Stock-Based Compensation
Expense), and a reconciliation of the quarter ended April 2, 2006, is shown in
Exhibit 3 (GAAP to Non-GAAP).
The reported results for 2006 also include DVT Corporation, which was
acquired on May 9, 2005, and the amortization costs related to that acquisition
($1,143,000 in the first quarter of 2006).
"Our results for the first quarter of 2006 were good, though not as good as
I'd like them to be," said Dr. Robert J. Shillman, Cognex's Chairman and Chief
Executive Officer. "We were highly profitable with net income equal to 15% of
revenue (or 19% excluding stock-based compensation expense) and the year-on-year
comparables showed significant increases at both the top and bottom lines.
However, revenue declined on a sequential basis and it was below our
expectations for the quarter. This was primarily due to lower revenue from the
Surface Inspection market, which was anticipated, and slower than expected order
trends in the automotive segment of our business."
Dr Shillman continued, "This temporary situation does not change our view
of the long-term potential for Cognex. In fact, we believe that Cognex stock is
attractive and we repurchased nearly 879,000 shares in the first quarter at a
cost of approximately $25 million. We intend to review opportunities for future
repurchases as well."
Details of the Quarter
Statement of Operations Highlights - First Quarter of 2006
-- Revenue for the first quarter of 2006 increased 37% over the first
quarter of 2005 due to higher revenue from the Factory Automation
market (including incremental revenue of approximately $5,400,000 from
the DVT acquisition) and the Semiconductor and Electronics Capital
Equipment market, which increased 60% from a cyclically low level a
year ago. On a sequential basis, revenue decreased 3% due to lower
revenue from the Surface Inspection market, which was anticipated, and
from the automotive industry.
-- Gross margin was 72% in the first quarter of 2006 compared to 68% in
the first quarter of 2005 and 72% in the prior quarter. Cost of
revenue for the first quarter of 2006, the first quarter of 2005, and
the fourth quarter of 2005 includes a benefit of $252,000, $118,000,
and $287,000, respectively, relating to the sale of inventory
previously reserved. Excluding this benefit from all three periods,
and excluding stock-based compensation expense of $355,000 from the
first quarter of 2006, gross margin would have been 72% in the first
quarter of 2006, 68% in the first quarter of 2005, and 71% in the
prior quarter. Gross margin increased year-on-year due to higher sales
of modular vision systems. The increase in gross margin on a
sequential basis is due to product mix; a greater percentage of
revenue came from the sale of modular vision systems in the first
quarter than from surface inspection systems.
-- Research, Development & Engineering (R, D & E) spending in the first
quarter of 2006 increased 25% from the first quarter of 2005 and 14%
from the prior quarter (or 13% and 3%, respectively, excluding
$782,000 of stock-based compensation expense in the first quarter of
2006). Spending increased year-on-year due to incremental costs
associated with the employees added from the DVT acquisition. The
increase on a sequential basis is due to higher employee-related
costs, primarily new employees, and higher outside service costs
related to new product initiatives.
-- Selling, General & Administrative (S, G & A) spending in the first
quarter of 2006 increased 36% from the first quarter of 2005 and 8% on
a sequential basis (or 25% and 0%, respectively, excluding $1,819,000
of stock-based compensation expense in the first quarter of 2006). The
increase year-on-year is primarily due to incremental DVT costs and
the company's investment in sales and marketing.
-- The company reported a foreign currency loss of $145,000 in the first
quarter of 2006, a gain of $99,000 in the first quarter of 2005 and a
loss of $286,000 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 $1,566,000 in the first quarter of
2006 compared to $1,470,000 in the first quarter of 2005 and
$1,531,000 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 27% in the first quarter of 2006, which is
an increase from 26% in the first quarter of 2005 and in the prior
quarter. The increase in the effective tax rate is due to the
expectation that more of the company's profits will be earned and
taxed in higher tax jurisdictions in 2006 than in 2005.
Balance Sheet Highlights - April 2, 2006
-- Cognex's financial position at April 2, 2006, was very strong, with
over $303,000,000 in cash and investments, and no debt. Cash and
investments decreased by nearly $9,000,000 from the end of 2005. In
the first quarter of 2006, Cognex generated positive cash flow from
operations of approximately $15,000,000, and paid out nearly
$3,800,000 in dividends to shareholders and over $25,000,000 to
repurchase approximately 879,000 shares of its common stock on the
open market.
-- Days sales outstanding (DSO) for the first quarter of 2006 was 63
days, and remains within the company's targeted range.
-- Inventories at April 2, 2006, increased by approximately $3,200,000,
or 17%, from the end of 2005, and inventory turns were equivalent to
3.2 times per year. Inventory increased due to the shift of a portion
of the company's manufacturing operations from Massachusetts to
Ireland. The company also increased inventory to better support
distributors.
Business Trends and Financial Outlook
-- For the first quarter of 2006, bookings increased over the prior
quarter due to higher orders from the Semiconductor and Electronics
Capital Equipment and the Surface Inspection markets. As a result,
Cognex expects revenue for the second quarter of 2006 to increase to
be between $62 million and $64 million. At that revenue level, gross
margin is expected to be in the low-70% range, including estimated
pre-tax stock-based compensation expense of $400,000. For the second
quarter, operating expenses (R, D & E and S, G & A), including
estimated pre-tax stock-based compensation expense of $2,800,000, are
expected to increase by approximately 5% on a sequential basis. The
effective tax rate is expected to be 27%. As a result of the above,
earnings are expected to be between $0.20 and $0.22 per diluted share
(or between $0.25 and $0.27 per diluted share excluding estimated
stock-based compensation expenses of $3,200,000).
Non-GAAP Financial Measures
This press release and its attachments contain Non-GAAP financial measures
which Cognex believes are helpful in allowing individuals to more accurately
assess and compare its results over multiple periods. However, these Non-GAAP
financial measures are not meant to be considered in isolation, nor as a
substitute for financial information provided in accordance with GAAP.
Analyst Conference Call and Simultaneous Webcast
Cognex will host a conference call to discuss its results for the first
quarter of 2006, 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 7216381.
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 sensors and systems, or devices that can "see." Cognex vision sensors are
used in factories around the world to automate the manufacture of a wide range
of items and to assure their quality. Cognex is the world's leader in the
machine vision industry, having shipped more than 300,000 machine vision
systems, representing over $2 billion in cumulative revenue, since the company's
founding in 1981. In addition to its corporate headquarters in Natick,
Massachusetts, Cognex also has regional offices and distributors located
throughout North America, Japan, Europe, Asia, and Latin America. Visit Cognex
on-line at http://www.cognex.com/.
Forward-Looking Statement
Certain statements made in this press release, 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 known and
unknown 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 reliance upon certain
sole-source suppliers to manufacture and deliver critical components for the
company's products; (4) the inability to design and manufacture high-quality
products; (5) the technological obsolescence of current products and the
inability to develop new products; (6) the inability to protect the company's
proprietary technology and intellectual property; (7) the 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, 2005. 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
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
Cost of revenue (1) 16,710 17,289 13,790
-------- -------- --------
Gross margin 42,330 43,529 29,408
Percentage of revenue 72% 72% 68%
Research, development, and engineering
expenses (1) 7,917 6,916 6,315
Percentage of revenue 13% 11% 15%
Selling, general, and administrative
expenses (1) 23,779 21,979 17,508
Percentage of revenue 40% 36% 41%
-------- -------- --------
Operating income 10,634 14,634 5,585
Percentage of revenue 18% 24% 13%
Foreign currency gain (loss) (145) (286) 99
Investment and other income 1,566 1,531 1,470
-------- -------- --------
Income before taxes 12,055 15,879 7,154
Income tax provision 3,255 4,129 1,860
-------- -------- --------
Net income $8,800 $11,750 $5,294
Percentage of revenue 15% 19% 12%
======== ======== ========
Net income per diluted common and common
equivalent share (2) $0.18 $0.24 $0.11
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,320 47,181
======== ======== ========
Cash dividends per common share $0.08 $0.08 $0.08
======== ======== ========
(1) Amounts include stock-based compensation
expense, as follows:
Cost of revenue $355 - -
Research, development, and
engineering 782 - -
Selling, general, and
administrative 1,819 - -
-------- -------- --------
Total stock-based compensation
expense $2,956 - -
======== ======== ========
(2) Net income per diluted common and
common equivalent share excluding
stock-based compensation expense $0.23 $0.24 $0.11
======== ======== ========
COGNEX CORPORATION
Statements of Operations - Non-GAAP
Excluding Stock-Based Compensation Expense
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
Cost of revenue 16,355 17,289 13,790
-------- -------- --------
Gross margin 42,685 43,529 29,408
Percentage of revenue 72% 72% 68%
Research, development, and engineering
expenses 7,135 6,916 6,315
Percentage of revenue 12% 11% 15%
Selling, general, and administrative
expenses 21,960 21,979 17,508
Percentage of revenue 37% 36% 41%
-------- -------- --------
Operating income 13,590 14,634 5,585
Percentage of revenue 23% 24% 13%
Foreign currency gain (loss) (145) (286) 99
Investment and other income 1,566 1,531 1,470
-------- -------- --------
Income before taxes 15,011 15,879 7,154
Income tax provision 4,053 4,129 1,860
-------- -------- --------
Net income $10,958 $11,750 $5,294
Percentage of revenue 19% 19% 12%
======== ======== ========
Net income per diluted common and common
equivalent share $0.23 $0.24 $0.11
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,320 47,181
======== ======== ========
Cash dividends per common share $0.08 $0.08 $0.08
======== ======== ========
COGNEX CORPORATION
Statements of Operations Reconciliation
(Unaudited)
In thousands, except per share amounts
Three Months Ended
April 2, 2006
Stock
Option
GAAP Expense Non-GAAP
--------------------------
Revenue $59,040 $59,040
Cost of revenue 16,710 355 16,355
-------- -------- --------
Gross margin 42,330 (355) 42,685
Percentage of revenue 72% 72%
Research, development, and engineering
expenses 7,917 782 7,135
Percentage of revenue 13% 12%
Selling, general, and administrative
expenses 23,779 1,819 21,960
Percentage of revenue 40% 37%
-------- -------- --------
Operating income 10,634 (2,956) 13,590
Percentage of revenue 18% 23%
Foreign currency loss (145) (145)
Investment and other income 1,566 1,566
-------- -------- --------
Income before taxes 12,055 (2,956) 15,011
Income tax provision 3,255 (798) 4,053
-------- -------- --------
Net income $8,800 $(2,158) $10,958
Percentage of revenue 15% 19%
======== ======== ========
Net income per diluted common and common
equivalent share $0.18 $(0.05) $0.23
======== ======== ========
Diluted weighted-average common and common
equivalent shares outstanding 48,419 48,419
======== ========
Cash dividends per common share $0.08 $0.08
======== ========
COGNEX CORPORATION
Balance Sheets
(Unaudited)
In thousands
April December
2, 31,
2006 2005
-------------------
Assets
Cash and investments $303,450 $312,258
Accounts receivable 42,200 42,051
Inventories 22,021 18,819
Property, plant, and equipment 24,240 24,175
Other assets 163,587 167,259
--------- ---------
Total assets $555,498 $564,562
========= =========
Liabilities and Shareholders' Equity
Current liabilities $59,434 $58,041
Shareholders' equity 496,064 506,521
--------- ---------
Total liabilities and shareholders' equity $555,498 $564,562
========= =========
COGNEX CORPORATION
Additional Information Schedule
(Unaudited)
Dollars in thousands
Three Months Ended
April 2, Dec. 31, April 3,
2006 2005 2005
--------------------------
Revenue $59,040 $60,818 $43,198
======== ======== ========
Revenue by division:
Modular Vision Systems Division 89% 86% 84%
Surface Inspection Systems Division 11% 14% 16%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by geography:
United States 33% 37% 37%
Japan 30% 28% 28%
Europe 27% 28% 29%
Other 10% 7% 6%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by market:
Discrete factory automation 56% 56% 56%
Semiconductor and electronics capital
equipment 33% 30% 28%
Surface inspection 11% 14% 16%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
Revenue by product:
Vision sensors 48% 45% 39%
PC-based vision systems 36% 34% 37%
Surface inspection vision systems 7% 10% 10%
Service 9% 11% 14%
-------- -------- --------
Total 100% 100% 100%
======== ======== ========
CONTACT: Cognex Corporation
Susan Conway, 508-650-3353
Email: susan.conway@cognex.com