Cognex reports Q2 results, sees weakening Q3

JULY 29, 2008--Cognex Corporation (Natick, MA, USA) has announced its financial results for the second quarter, ended June 29, 2008.

Jul 29th, 2008

JULY 29, 2008--Cognex Corporation (Natick, MA, USA; www.cognex.com) has announced its financial results for the second quarter, ended June 29, 2008. "I am pleased with our operating results for the second quarter of 2008," said Robert J. Shillman, chairman and chief executive officer of Cognex. "From an operations standpoint we executed well and grew our business significantly at the top and operating income lines on both a sequential and year-on-year basis. And, this growth came with a higher level of profitability; our operating profit margin increased to 16% in the second quarter, compared to 13% in the prior quarter and 8% a year ago. And, we were able to accomplish this even with additional investments in headcount to support new product development and sales initiatives," Shillman continued

"For Q3 of 2008, we expect revenue to be down on a sequential basis, primarily because of the seasonal softness in both factory automation (which is our largest market segment) and throughout Europe, which accounted for much of our growth in the second quarter. In addition to the effect of seasonality, we now expect that the slowing economic conditions that we have been experiencing in the United States will be spreading internationally, starting in Q3."

Revenue for the second quarter of 2008 increased 23% from the second quarter of 2007 and 11 % from the prior quarter due to higher sales to the factory-automation and surface-inspection markets. Factory-automation revenue increased both year-on-year and sequentially primarily due to higher revenue from Europe. In the surface-inspection market the increases in revenue are due to higher sales to the metals market, primarily in Asia.

Gross margin was 72% in the first and second quarters of 2008 and 67% in the second quarter of 2007. Gross margin was flat on a sequential basis despite higher revenue primarily due to product mix; sales of surface inspection systems represented a higher percentage of total revenue in the second quarter of 2008 than in the prior quarter. The increase in the gross margin percentage year-on-year is due to the 2007 charge of
126 000 in cost of goods sold related to excess inventory.

Research, Development & Engineering (R, 0 & E) spending in the second quarter of 2008 increased 18% from the second quarter of 2007 and 4% from the prior quarter. The increase in R, 0 & E spending, both year-on-year and sequentially, is due to additional headcount and a higher bonus accrual.

Selling, General & Administrative (S, G & A) spending in the second quarter of 2008 increased 14% from the second quarter of 2007 and 6% from the prior quarter. The increase in S, G & A spending year-on-year is due to additional headcount, primarily in sales and marketing personnel, and their related commissions and travel costs, a higher bonus accrual incremental legal fees, and the impact of foreign exchange rates on the company international operations. On a sequential basis, S, G & A spending increased due to the items noted above as well as higher stock option expenses as the first quarter had a credit for stock option forfeitures. These increased costs were partially offset by lower sales meetings and outside service fees.

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