APRIL 19--Cognex (Natick, MA, USA; www.cognex.com/) has announced its financial results for the first quarter, ended April 1, 2007. Beginning in 2006, Cognex has included stock option expense in its results. "Our results for the first quarter of 2007 were very disappointing," said Robert J. Shillman, Cognex chairman and chief executive officer. "Revenue was significantly below our expectations, and, because of that, earnings fell far short as well. The major cause of the shortfall was in the factory automation market, where orders were significantly lower than planned in each primary region. Bookings were very slow leading up to our sales kick-off meetings in February, where everyone was fully informed about the change in sales strategy implemented by Eric Ceyrolle, our new executive vice president of worldwide sales and marketing. Afterward, business picked up nicely, but not enough to offset the earlier shortfall."
Shillman continued, "In spite of the disappointing first quarter results that we have announced, I believe that 2007 will still be a good year for Cognex; both the direct sales channel and distributors now fully understand what is expected of them, and we are starting to see increased quotation levels coming from the direct sales force."
Details of the quarter
* Revenue for the first quarter of 2007 decreased 14% from the first quarter of 2006 primarily due to lower sales in the Factory Automation market as well as in the semiconductor and electronics capital equipment market. On a sequential basis, revenue decreased 13% due to lower sales in all three of the company's primary markets; factory automation, surface inspection, and semiconductor and electronics capital equipment.
* Gross margin was 72% in the first quarter of 2007, in the first quarter of 2006, and in the prior quarter. Excluding stock option expense, gross margin was 72% in the first quarter of 2007 compared to 72% in the comparable quarter of 2006 and 73% in the prior quarter. Gross margin excluding stock option expense was flat year-on-year despite lower revenue due to lower manufacturing costs. The decline in gross margin excluding stock option expense on a sequential basis is due to lower revenue offset by favorable product mix.
* research, development, and engineering spending in the first quarter of 2007 was essentially flat with the first quarter of 2006 and decreased 2% from the prior quarter. Excluding stock option expense, R,D,&E spending was essentially flat both year-on-year and sequentially.
* The company reported a foreign currency loss of $118,000 in the first quarter of 2007, a loss of $145,000 in the first quarter of 2006 and a gain of $374,000 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.
Financial outlook
* For the second quarter of 2007, Cognex expects revenue to be between $50 million and $55 million. Gross margin is expected to be in the low-70% range.
In other news, the company has announced that its board of directors declared a quarterly cash dividend of $0.085 per share. This dividend is payable on May 25, 2007, to all shareholders of record at the close of business on May 11, 2007. This is Cognex's 16th consecutive quarterly cash dividend.
