Cognex Reports Sequential Growth

Cognex Corporation (CGNX: 18.80 0.00 0.00%) reported revenues of $51.3 million, down 1% year-over-year but up 25% sequentially, driven by high customer demand in each of the three primary markets that the company serves.

 

The customers for the company are classified into three primary markets: the semiconductor and electronics capital equipment (SEMI) market, the discrete factory automation market and the surface inspection market.

 

The year-over-year decline was primarily due to lower revenue from Factory Automation customers based in Europe. This decline was partially offset by the positive impact of foreign exchange rates as well as higher revenues from North American customers in the Factory Automation and Surface Inspection markets, and Asian customers in the SEMI market.

 

Gross margin came in at 69%, compared to 71% in both the year-ago quarter and the previous quarter. Operating margin came in at 1% compared to 2% in the previous quarter. Earnings per share (EPS) came in at 2 cents (including stock-based compensation expense), in line with the Zacks Consensus Estimate of 2 cents.

 

During the quarter, Cognex generated $11.5 million of cash from operations, of which it used $9.0 million to purchase stock options and $2.0 million to pay dividends to shareholders. As of December 31, 2009, Cognex had approximately $202.0 million in cash and investments and no debt.

 

For 2009, Cognex reported revenues of $175.7 million, down 28% from a year ago. EPS came in at 4 cents.

 

Going forward, management expects business conditions to remain challenging and visibility to stay limited due to a continued pickup in customer demand, incremental revenue from new product introductions and traction from its Mitsubishi collaboration. Management will continue to keep a tight rein on spending and operating expenses are projected to be flat year-over-year.

 

Revenues are expected to increase by 5% on a sequential basis due to higher revenue from the Factory Automation and SEMI markets. Earnings are also expected to increase over the prior quarter due to the higher-than-anticipated revenue and significantly lower stock option expense.

 

Cognex is a leading provider of machine vision products that capture and analyze visual information in order to automate tasks, primarily in manufacturing processes where vision is required. A lot of manufacturing equipment requires machine vision because of the increasing demand for speed and accuracy in manufacturing processes.