UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 30, 2018

Cognex Corporation

(Exact name of registrant as specified in charter)

Massachusetts

001-34218

04-2713778

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

One Vision Drive, Natick, Massachusetts

01760-2059

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code:    (508) 650-3000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

   


Item 2.02 Results of Operations and Financial Condition

On July 30, 2018, Cognex Corporation (the “Company”) issued a news release to report its financial results for the quarter ended July 1, 2018. The release is furnished as Exhibit 99.1 hereto. The information in Item 2.02 of this Current Report on Form 8-K, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

Item 8.01 Other Events

On July 30, 2018, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.045 per share. This dividend is payable on August 31, 2018 to all shareholders of record at the close of business on August 17, 2018.

Item 9.01 Financial Statements and Exhibits

(d)        Exhibits

Exhibit No.

Description

 

99.1

News release, dated July 30, 2018, by Cognex Corporation


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COGNEX CORPORATION

 

Dated:

July 30, 2018

By: /s/ John J. Curran

John J. Curran

Senior Vice President of Finance,

Chief Financial Officer and

Treasurer

Exhibit 99.1

Cognex Reports Results for the Second Quarter of 2018

NATICK, Mass.--(BUSINESS WIRE)--July 30, 2018--Cognex Corporation (NASDAQ: CGNX) today announced financial results for the second quarter of 2018. Table 1 below shows selected financial data for Q2-18 compared with Q2-17 and Q1-18, and the first six months of 2018 compared with the first six months of 2017. All periods presented reflect the two-for-one stock split in Q4-17.

 

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: Q2-18

  $211,264   $56,196   $0.32   $0.31
Prior year’s quarter: Q2-17   $178,080   $56,495   $0.32   $0.28
Change: Q2-17 to Q2-18   19%   (1%)   0%   11%
Prior quarter: Q1-18   $169,567   $37,217   $0.21   $0.18
Change: Q1-18 to Q2-18   25%   51%   52%   72%

Year-to-Date Comparisons

               
Six months ended July 1, 2018   $380,831   $93,413   $0.52   $0.49
Six months ended July 2, 2017   $317,119   $101,966   $0.57   $0.46
Change from first six months of 2017 to first six months of 2018   20%   (8%)   (9%)   7%

* The financial results for all periods presented reflect the retroactive adoption of a new revenue recognition standard (ASC 606, “Revenue from Contracts with Customers”) that became effective on January 1, 2018. This standard did not have a material impact on total revenue. For a historical perspective, Exhibit 4 of this news release includes the company’s quarterly Statement of Operations for 2017 adjusted for the impact of the new standard.

**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 results for Q2 of 2018 were rather good,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “Revenue was the second highest of any quarter in our company’s 37-year history. And operating margin was at our 30% long-term target.”

“I am pleased with our overall Q2 performance, which was slightly better than our expectations,” said Robert J. Willett, Chief Executive Officer of Cognex. “Revenue grew by 19% year-on-year despite significantly lower revenue from the OLED display market in Asia. Opportunities for machine vision in our other served markets continue to grow rapidly, and because of that, we plan to go on investing strongly in new product development and sales resources to position ourselves for success over the long term.”

Mr. Willett continued, “Looking at the second-half, comparisons will be more challenging, particularly for Q3, because of last year’s extraordinary sales into OLED display and smartphone manufacturing.”

Details of the Quarter

Statement of Operations Highlights – Second Quarter of 2018


Balance Sheet Highlights – July 1, 2018


Financial Outlook – Q3 2018

This financial outlook reflects the new revenue recognition standard (ASC 606, “Revenue from Contracts with Customers”) that took effect on January 1, 2018. Cognex does not believe this standard will have a material impact on total revenue. For a historical perspective, Exhibit 4 of this news release includes the company’s quarterly Statement of Operations for 2017 adjusted for the impact of the new standard.

Non-GAAP Financial Measures


Analyst Conference Call and Simultaneous Webcast

About Cognex Corporation

Cognex Corporation designs, develops, manufactures and markets a wide range of image-based products, all of which use artificial intelligence (AI) techniques that give them the human-like ability to make decisions on what they see. Cognex products include machine vision systems, machine vision sensors and barcode readers that are used in factories and distribution centers around the world where they eliminate production and shipping errors.

Cognex is the world's leader in the machine vision industry, having shipped more than 1.5 million vision-based products, representing over $5 billion in cumulative revenue, since the company's founding in 1981. Headquartered in Natick, Massachusetts, USA, Cognex has offices and distributors located throughout the Americas, Europe and Asia. For details visit Cognex online at www.cognex.com.

Certain statements made in this news release, which do not relate solely to historical matters, are forward-looking statements. These statements can be identified by use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” and similar words and other statements of a similar sense. These forward-looking statements, which include statements regarding business and market trends, future financial performance, customer order rates and the timing of related revenue, expected areas of growth, emerging markets, future product mix, research and development activities, further stock repurchases, investments, strategic plans and tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the loss of a large customer; (2) current and future conditions in the global economy; (3) the reliance on revenue from the consumer electronics or automotive industries; (4) the inability to penetrate new markets; (5) the inability to achieve significant international revenue; (6) fluctuations in foreign currency exchange rates and the use of derivative instruments; (7) information security breaches or business system disruptions; (8) the inability to attract and retain skilled employees; (9) the failure to effectively manage our growth; (10) the reliance upon key suppliers to manufacture and deliver critical components for our products; (11) the failure to effectively manage product transitions or accurately forecast customer demand; (12) the inability to design and manufacture high-quality products; (13) the technological obsolescence of current products and the inability to develop new products; (14) the failure to properly manage the distribution of products and services; (15) the inability to protect our proprietary technology and intellectual property; (16) our involvement in time-consuming and costly litigation; (17) the impact of competitive pressures; (18) the challenges in integrating and achieving expected results from acquired businesses; (19) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill; (20) exposure to additional tax liabilities; and (21) the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2017. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. Cognex disclaims any obligation to update forward-looking statements after the date of such statements.


 

Exhibit 1

 

COGNEX CORPORATION

Statements of Operations

(Unaudited)

Dollars in thousands, except per share amounts

 
  Three-months Ended   Six-months Ended
     

July 1, 2018

April 1, 2018

July 2, 2017

July 1, 2018

July 2, 2017

 
Revenue (1) $ 211,264 $ 169,567 $ 178,080 $ 380,831 $ 317,119
Cost of revenue (1) 54,169   40,198   42,164   94,367   74,696  
Gross margin 157,095 129,369 135,916 286,464 242,423
Percentage of revenue 74 % 76 % 76 % 75 % 76 %
Research, development, and engineering expenses (1) 26,888 31,076 23,377 57,964 46,147
Percentage of revenue 13 % 18 % 13 % 15 % 15 %
Selling, general, and administrative expenses (1) 66,752 63,697 52,518 130,449 99,039
Percentage of revenue 32 % 38 % 29 % 34 % 31 %
Operating income 63,455 34,596 60,021 98,051 97,237
Percentage of revenue 30 % 20 % 34 % 26 % 31 %
Foreign currency gain (loss) (195 ) (134 ) (184 ) (329 ) (447 )
Investment and other income 3,313   3,517   1,969   6,830   4,251  
Income before income tax expense 66,573 37,979 61,806 104,552 101,041
Income tax expense (benefit) 10,377   762   5,311   11,139   (925 )
Net income (loss) $ 56,196   $ 37,217   $ 56,495   $ 93,413   $ 101,966  
Percentage of revenue 27 % 22 % 32 % 25 % 32 %
 
Earnings per weighted-average common and common-equivalent share (2):
Basic $ 0.33   $ 0.21   $ 0.33   $ 0.54  

$

0.59  
Diluted $ 0.32   $ 0.21   $ 0.32  

$

0.52

 

$

0.57

 
 
 
Weighted-average common and common-equivalent shares outstanding (2):
Basic 172,370   173,280   173,278   172,825   172,960  
Diluted 177,149   179,641   179,228   178,418   178,904  
 
Cash dividends per common share (2) $ 0.0450   $ 0.0450   $ 0.0425   $ 0.0900   $ 0.0800  
Cash and investments per common share (2) $ 4.39   $ 4.65   $ 4.42   $ 4.39   $ 4.42  
Book value per common share (2) $ 6.27   $ 6.23   $ 6.08   $ 6.27   $ 6.08  
 
(1) Amounts include stock option expense, as follows:
Cost of revenue $ 557 $ 797 $ 454 $ 1,354 $ 884
Research, development, and engineering 3,154 4,815 2,715 7,969 5,325
Selling, general, and administrative 5,291   7,582   4,677   12,873   9,120  
Total stock option expense $ 9,002   $ 13,194   $ 7,846   $ 22,196   $ 15,329  
 

(2) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017.


 

Exhibit 2

 

COGNEX CORPORATION

Reconciliation of Selected Items from GAAP to Non-GAAP

(Unaudited)

Dollars in thousands, except per share amounts

 
  Three-months Ended     Six-months Ended
     
July 1, 2018   April 1, 2018   July 2, 2017 July 1, 2018   July 2, 2017
Adjustment for stock option expense and tax benefit for stock option exercises                  
Operating income (GAAP) $ 63,455 $ 34,596 $ 60,021 $ 98,051 $ 97,237
Stock option expense 9,002   13,194   7,846   22,196   15,329  
Operating income (Non-GAAP) $ 72,457   $ 47,790   $ 67,867   $ 120,247   $ 112,566  
Percentage of revenue (Non-GAAP) 34 % 28 % 38 % 32 % 35 %
 
Net income (loss) (GAAP) $ 56,196 $ 37,217 $ 56,495 $ 93,413 $ 101,966
Stock option expense 9,002 13,194 7,846 22,196 15,329
Tax effect on stock option expense (1,607 ) (2,347 ) (2,583 ) (3,954 ) (5,022 )
Discrete tax benefit related to employee stock option exercises (654 ) (4,935 ) (5,787 ) (5,589 ) (18,954 )
Net income (loss) (Non-GAAP) $ 62,937   $ 43,129   $ 55,971   $ 106,066   $ 93,319  
Percentage of revenue (Non-GAAP) 30 % 25 % 31 % 28 % 29 %
 
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) $ 0.32 $ 0.21 $ 0.32 $ 0.52 $ 0.57
Share impact of non-GAAP adjustments identified above (1) 0.04   0.03   (0.01 ) 0.07   (0.05 )

Net income (loss) per diluted weighted-average common and common-equivalent share (Non-GAAP) (1)

$ 0.36   $ 0.24   $ 0.31   $ 0.59   $ 0.52  
 
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) 177,149   179,641   179,228   178,418   178,904  
                               
 
Exclusion of tax adjustments                              
Income before income tax expense (GAAP) $ 66,573   $ 37,979   $ 61,806   $ 104,552   $ 101,041  
 
Income tax expense (GAAP) $ 10,377 $ 762 $ 5,311 $ 11,139 $ (925 )
Effective tax rate (GAAP) 16 % 2 % 9 % 11 % (1 )%
 
Tax adjustments:
Discrete tax benefit related to employee stock option exercises (654 ) (4,935 ) (5,787 ) (5,589 ) (18,954 )
Other discrete tax events         (143 )
Income tax expense excluding tax adjustments (Non-GAAP) $ 11,031   $ 5,697   $ 11,098   $ 16,728   $ 18,172  
Effective tax rate (Non-GAAP) 17 % 15 % 18 % 16 % 18 %
 
Net income excluding tax adjustments (Non-GAAP) $ 55,542   $ 32,282   $ 50,708   $ 87,824   $ 82,869  
Percentage of revenue (Non-GAAP) 26 % 19 % 28 % 23 % 26 %
 
Net income (loss) per diluted weighted-average common and common-equivalent share (GAAP) (1) $ 0.32 $ 0.21 $ 0.32 $ 0.52 $ 0.57
Share impact of non-GAAP adjustments identified above (1) (0.01 ) (0.03 ) (0.04 ) (0.03 ) (0.11 )
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP) (1) $ 0.31   $ 0.18   $ 0.28   $ 0.49   $ 0.46  
 
Diluted weighted-average common and common-equivalent shares outstanding (GAAP) (1) 177,149   179,641   179,228   178,418   178,904  
                               

(1) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017.


 

Exhibit 3

 

COGNEX CORPORATION

Balance Sheets

(Unaudited)

Dollars in thousands

 
  July 1, 2018   December 31, 2017
Assets
Cash and investments $ 754,883 $ 827,984
Accounts receivable 136,084 119,388
Unbilled revenue 3,603 7,454
Inventories 89,556 67,923
Property, plant, and equipment 87,893 78,048
Goodwill and intangible assets 124,859 126,397
Other assets 79,432 60,559
   
Total assets $ 1,276,310   $ 1,287,753
 
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses $ 71,242 $ 91,712
Deferred revenue and customer deposits 40,881 9,420
Income taxes 80,421 85,044
Other liabilities 4,634 5,904
Shareholders' equity 1,079,132 1,095,673
   
Total liabilities and shareholders' equity $ 1,276,310   $ 1,287,753
 

 

Exhibit 4

 

COGNEX CORPORATION

Restated Statements of Operations under ASC 606 "Revenue from Contracts with Customers"

(Unaudited)

Dollars in thousands

 
  Three-months Ended

April 2,
2017

 

July 2,
2017

 

October 1,
2017

 

December 31,
2017

 
Revenue $ 139,039 $ 178,080 $ 266,042 $ 182,922

Cost of revenue

32,532   42,164   68,061   44,532  
Gross margin 106,507 135,916 197,981 138,390
Percentage of revenue 77 % 76 % 74 % 76 %
Research, development, and engineering expenses 22,770 23,377 26,078 26,980
Percentage of revenue 16 % 13 % 10 % 15 %
Selling, general, and administrative expenses 46,521 52,518 61,054 60,635
Percentage of revenue 33 % 29 % 23 % 33 %
Operating income 37,216 60,021 110,849 50,775
Percentage of revenue 27 % 34 % 42 % 28 %
Foreign currency gain (loss) (263 ) (184 ) (127 ) (1,027 )
Investment and other income 2,282   1,969   2,030   2,923  
Income before income tax expense 39,235 61,806 112,752 52,671
Income tax expense (benefit) (6,236 ) 5,311   10,259   80,418  
Net income (loss) $ 45,471   $ 56,495   $ 102,493   $ (27,747 )
Percentage of revenue 33 % 32 % 39 % (15 )%
 
Earnings per weighted-average common and common-equivalent share (1):
Basic $ 0.26   $ 0.33   $ 0.59   $ (0.16 )
Diluted $ 0.25   $ 0.32   $ 0.57   $ (0.16 )
 
Weighted-average common and common-equivalent shares outstanding (1):
Basic 172,646   173,278   173,234   173,397  
Diluted 178,354   179,228   179,354   173,397  
 

(1) Prior periods share and per share amounts have been adjusted to reflect the 2-for-1 stock split of the Company's common stock that occurred in the fourth quarter of 2017.

 

Adjustments to certain financial data as a result of the implementation of ASC 606 "Revenue from Contracts with Customers on Jan. 1 2018"

  Three-months Ended

April 2,
2017

 

July 2,
2017

 

October 1,
2017

 

December 31,
2017

 
Revenue as reported $ 134,942 $ 172,904 $ 259,739 $ 180,365
Adjustments to revenue 4,097   5,176   6,303   2,557  
Revenue as restated $ 139,039   $ 178,080   $ 266,042   $ 182,922  
 
Cost of revenue as reported 28,225 37,471 62,360 40,642
Adjustments to cost of revenue 4,307   4,693   5,701   3,890  
Cost of revenue as restated $ 32,532   $ 42,164   $ 68,061   $ 44,532  
 
Gross margin as reported $ 106,717 $ 135,433 $ 197,379 $ 139,723
Adjustments to gross margin (210 ) 483   602   (1,333 )
Gross margin as restated $ 106,507   135,916   $ 197,981   $ 138,390  
 
Gross margin percentage as reported 79 % 78 % 76 % 77 %
Adjustments to gross margin percentage (2 )% (2 )% (2 )% (1 )%
Gross margin percentage as restated 77 % 76 % 74 % 76 %
 
Operating income as reported $ 37,426 $ 59,538 $ 110,247 $ 52,108
Adjustments to operating income (210 ) 483   602   (1,333 )
Operating income as restated $ 37,216   $ 60,021   $ 110,849   $ 50,775  
 
Operating margin as reported 28 % 34 % 42 % 29 %
Adjustments to operating margin (1 )% % % (1 )%
Operating margin as restated 27 % 34 % 42 % 28 %

CONTACT:
Cognex Corporation
Susan Conway, 508-650-3353
Senior Director of Investor Relations
susan.conway@cognex.com