Cognex (CGNX) 28 Oct 202020 Q3 Earnings call transcript

Greetings and welcome to the Cognex Third Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Susan Conway, Senior Director of Investor Relations. Thank you.

You may begin.

everyone. evening, Good joining for Thank us you today. are us Dr. Chairman, With Cognex’s and Rob Shillman; Chief Financial Bob and Officer, CEO, Willett; President Paul Todgham. I’d earnings release XX-Q out that report at point our Form website on are like on available Relations www.cognex.com/investor. and to quarterly Investor our highly our financial detailed results. about information contain Both

During we understand trends. it believe will a investors better may non-GAAP we business measure if we the it or is if results call, our or believe useful use financial to investors help

make items certain forward-looking from to You in can true results projected of those anticipated. differ upon see the that based as materially Any may reconciliation Exhibit in to release. the any of or of during statements GAAP today. X change call may be actual or believe a Things are non-GAAP made we and information from earnings that this often earnings release we we however

our our subsequent a list refer of risk factors, on XX-K and should you Form including SEC to quarterly XX-Q. recent For filings, Form reports detailed most

Now, to Dr. I’d Bob. call over the to turn like

gray why so it Thanks, to I along XX-year shown QX the left physically was our second team profitability. the beautiful Southern with here And in am remind colors. the to today, in for me reported this terrific as Sue, I history, results. does terrific time. many quarterly the fall Not everyone. here Well, earlier at California. ago years we news I’m release the with enjoying highest but actually experience happy hello rainy and weather, be happy revenue

demonstrates and growth current business share. $X.XX quarterly the Cognex’s prospects despite cash financial And strength Cognex’s to long-term addition, In increased in Directors environment. the increase dividend confidence of a the difficult our Board dividend

partner more just here my those, And for it CEO, hear Rob, the now going details. you’re those yours. Rob Now, is to microphone over And to to hear to turn Cognex’s Willett. you’re I’m -- here platitudes, that not

XX-point everyone. highly We operating evening, third $XXX reporting for and Cognex year-on-year. the to reported the we over was strong model. Bob, year-on-year the which quarter. The than have more per Dr. were doubled good business XX%. an Revenue quarter profitable share. increase Earnings growth you, Thank of of operating $X.XX substantial million, for XX% XXXX results margin represents in leverage QX our demonstrates

and revenue our that expected in large generating the particularly Also, from in demands successfully consumer disruption customers quarter expected QX. assembly QX we in our than We some the we delivery QX efforts gave world. delivered with customers QX. the expectations high Much of year. met to made accelerated of They it the by own or times. Revenue last we This and around Because relates customers market This of to annual orders during quarter. was existing Consumer efforts, during our supply quarter. be new these of requirements we Americas. in cycle from increased even about of QX. the related worked existing of the the impressive difficult our best hard exceeded their potential of And year, of in of win the in Cognoids revenue guidance QX, an the achievement possible more typically meet electronics to quarters growth has manufacturing to manage happened this electronics components. smartphones to concerned level won our that chain

orders another In in record strong laptops contribution. a where online in we retailers learning throughput are to devices big-box for distribution this connecting are due recent prepare on in and included the sector. medical-related Cognex meet need both more delivered smaller rapid higher reported although and of centers products. logistics, electronics is a investing manufacturing well We than demand of as e-commerce automation and and to important. on semi, has a vision contributor and world holiday for machine precise quarter backlog their to e-commerce a QX spots However, enabling wearable revenue making Major higher overall orders. as the tablets, dynamic online consumer virtually to those People both work-from-home the Other logistics. continued year, were become the they in bright industries upcoming for growth and demand notable even much season. and

inspection produce and kits. masks, report automated products. applied the to of being of machine that Cognex vials, manufacturing Regarding is a applications, growth from medical-related assembly in variety vaccines orders, the currently including vision COVID-related we’re testing of COVID-related pleased manufacturers of COVID

proud have In world. these improve a leaders revenue by factory broader the important products basis. chosen continues help been industry automotive to to bring on to market, We’re to the sequential automation and them

have difficult However, unclear recovery in of of orders winter in was Cognex, quest levels Business position. not is depressed good strengthen from from our recent is QX launched very our placing QX, it’s products excellence a excellence, have is catch-up whether innovative the In potentially we in expected. months at a enough, advance some in we start that leadership this season. saying a we but or will good good customers a for and believe

which to often of surface miss defects vision that inspection which Designed platform. year and launches tools other vision, rule-based existing April. on addresses learning inspectors human run this vision successful Cognex most whom were the scratches, of ever. too In-Sight Our reliably system in blemishes serve traditional can’t industry-leading is include machine difficult need with easy-to-use the customers to is rule-based applications important This our introduced DXXX many that as deep chips as to or for such Customers Cognex DXXX of It camera, previously vision most we product among our items well machine as users inspect detect. product new launch smart In-Sight tools. all first-time

task a variety on as materials. tiny and SUALAB color and The alphanumeric on is our well addressable the ViDi deep well. applications of progressing and New character decoding perform merging difficult recognition such optical and of DXXX learning technologies wide deformed the exceptionally broaden models by text

-- video on targeted learning very the have who available sophisticated tools Cognex In problems product tools Pro at customers is with This SUALAB together to fact, deep Cognex platform. complex vision solve. are Vision ViDi deep now

Now, over quarter. to our you. let’s third turn to Paul, details from

hello, Thanks, was Obviously headquarters. everyone. and Bay and a quarter in I Rob, a near to packed home home the our moved busy and and Cognex’s and new this wife Area kids both My San Francisco professionally up personally.

FaceTime see we it We plan went floor had well. to but arrived with a realtor, house based home we it. recommend a a physically when photos, buying seen are literally excited wouldn’t never I on generally the because call and

things all we I doing that we think expected we’re COVID never during do.

company revenue where year-on-year a sequentially a COVID-related few were pick-up Turning and e-commerce for stronger than an spoke represents so of higher And XX%, requests in in was for automation million about the demand of and higher just the excluding and an still was results. due than over excess mix logistics, considerably while significantly is anticipated previously nicely. QX. to the new margin delivery quarter from XXXX Revenue electronics leverage prior was even volume. guidance Gross we than third customer overall, from charge logistics, was In to sector and even that now successfully we accelerated large QX. we a the QX. fulfilled increase for than stronger expected. consumer factory to after expected contributed stronger And we million, less was both business which came customers you market, than that a and broader Automotive and The scheduled QX which quarter. product growth that inventory the both to last gave and dilutive Growth substantial our on performance improve. in higher quarter. Rob margin $XXX remained drag we $X took favorable was and Gross continues

one-time and write-down to at expect As charges ago, QX. $XX of QX the that million. modest intangible in three very charges in in we months and QX a for discussed were complete approximately $XXX,XXX restructuring a we recorded charges totaled assets Restructuring we

from is excluding $XX QX XX%, our impact X% of due we the and to items. savings taken given you combined benefit and year-on-year. Within expenses, strong Excluding those aware discrete compared in actions by is was XX moved Sualab ’XX, And to new IRS QX. make Under RD&E increased in US QX revenue. QX, the filed federal to I’d of able to to was million tax non-deductible operating expectations. demonstrating with taxes This X% in a which, we This we return, reduce liability a paid continue are we margin incremental slight consistent by operating expenses. which sequentially Operating The in to tax acquired related we from realize Rob like compensation in incentive XXXX than to higher for and XX% of tax as expanded tax the discrete we entertainment leverage when restructuring from noted, ’XX, our travel the have points reducing higher profit, QX this our revenue. month. charges, SG&A foreign rate Korea. and total higher we expect regulations, tax were decrease technology effective than more

savings tax accounting year for will We this recognize quarter. the purposes fourth in

share non-GAAP in Reported QX. On compared in charges compared QX of in excluding and were QX QX reported tax a with XXXX, doubled discrete QX in the share $X.XX $X.XX per to to XXXX. We earnings back basis, mentioned. $X.XX XXXX. earnings ’XX of per $X.XX Now QX of in with a in just $X.XX QX $X.XX loss items and of

was performing quarter’s growing region challenges due back decline revenue continue and for was to Europe, Notably, Asia in XX% Looking automotive. work, in largely are faster change a contribution Growth offset automation consumer roughly from substantial particularly year-on-year to Greater China market geographic In at in flat in with best in from this revenue increasing year-on-year. our the India. broad while factory logistics even electronics. Asia, customers perspective, a the in by QX elsewhere China year-on-year

up in You Americas, also more lines orders may by in our largely the year-on-year Asia. recognized Due revenue There companies products. products was recall now In that Europe procurement, COVID-related years, a in incremental assembly scaling Cognex helped than due from increased XX% on was consumer in electronics for in is production revenue that growth logistics. Asia industries, by used medical-related shift to including revenue to region. for past

with and billion investments QX ended We debt. $X sheet. balance in the no and cash to Turning

As quarterly dividend today has to The share. Board $X.XXX noted announced XXth our from XXth. November record on payable to is we shareholders November per that of of dividend $X.XX increased Directors on by Dr. Bob, cash the all

turn over to back the call I’ll Now, Rob.

believe we consumer between We we increase years. given is year. this by for QX. than logistics as of we we expect saving quarters revenue to in growth mid-single It degree Thank had reported and are mid-XX% $XXX also the would to high third range substantial Cognex remains is and and electronics a Gross million, increase and you, be and semi. total Paul. quarter, There due electronics, expenses percentage behind difficult digits until basis in an which a at the for in revenue strong be of a expected us costs. revenue but for cost likely due QX, be lower is summary, several today’s QX in to travel In level conditions on revenue as continues decline increase as revenue. million the year-on-year a measures did represent in industries report to QX but consumer logistics, overall. significantly a will entertainment than medical-related expected in sequential are be recent year-on-year margin Automotive to Operating environment and to lower business expected $XXX uncertainty in improving and high lower

tax rate Paul. expected excludes such tax effective is all the $XX be million described That the earlier Lastly, XX%. as discrete benefit to expected items by

Operator, Now, please up will open the we questions. for ahead. call go

first Our from Pokrzywinski comes Josh question line the with of Morgan Instructions] [Operator Stanley.

is I Yes, that your things this evening, do And and six, continue? the either. to good all. what pretty that consistent question expect I low ago, so would first notebooks. chain your not nine of lead PCs notable, constraints, how the seen heard anticipated, supply out you with told you Hi, of times that of they strength, guess we've something investments, kind was future on extended electronic months I customers they're question, and guess consumer like first out have about pretty long what which inventory guess, given

in reality electronics, type does, the I'd And some not a But like suggested think, Analyst this virtual XG it. why of more we is consumer dynamic ago, new say for changing XXXX. see vision, it's sort for and And year, always technology year in think coming, to challenging a year us electronics, technology you technologies to we sort technologies of good kind obviously, great coming need as of, sort and new and there's these rolling adopted. of, I great I about were of it's it Day, joined and we're innovation, a manufacture. they're consumer there's like we were out automation if And our that always to often do always that's starting the

lot that like regular So think these hitting that's And I on, products. a see. big don't OLED currently. cadence I and new think, into , I talked that as much great have technology. dynamics, in but the work the now drive changes, as of new I'm demand like we've unlike a orders from But the what I market higher you, we profile, high not I a this year's a model there's like case, lower dynamics level screens, And new new to roadmaps some home the companies make then great revenue that can about, screens actually really, fairly of insights or think, tell going can of or suppliers -- for market that of the years, obviously, features shifts next

Whether mode if And kind Understood, leverage I wants the the or I or think At I over follow getting just as revenue here done been in it's up good about ice quarter side of years, some all should just off cost medium are normal in it. Rob. growth good a clearly that map, expenses? containment past operating depending look we side the work expenses, get in sales of the term, it's how on a because either cost as whoever mind, think there's then environment. for that, cost to a containment? the second in about we the appreciate the a investment take back into level, If corporate target in think percentage growth, over that you growth few operating on guess,

I'll some And plan gross start long on quarters company Cognex give at high the think, support invite I'll then investing color. substantially are grow mean, well, Yes, I And have margins. in to to we and term I that as you revenue company growth R&D the Paul and salesforce to where we long can the necessarily as through tonight, to fall you the to over grow growth substantial see that -- Cognex, and bottom term. to many or grow see line. at

So that's kind of our model.

we QX. substantially have big believe our we're not for And of terms we we moment if headcount as revenue we well sized. XXXX business pretty significant size Now, were still the take the in we're capacity guidance to without in at of you additions, grow the as think

got So wise we're lot other adding factors think that sized as there I generally, pretty inevitably of of without think adding without well. things salary absorbed. plenty businesses have increases we course, to expense. and But well grow cost, grow but I have room is expense to detail and a of as your Paul? a more other lot And

around headcount are ensuring middle that growth, positioned while be right, Yes, all I the in continue have term And I is more term, we're in our balance we so longer we'll around operating for and to February Rob, that's mean, of expenses, of well share short related of with it to But disciplined budget disciplined on. our I disciplined in for growth. QX we expectations being you to very think think being the being cycle. that

annualized fairly entertainment more we conservative on able costs. we be be by and I travel to there'll year. end year. quarter that'll and customers Sualab next more, hope takes, some this see But assume have money of to course, this and right; saved puts travel be Of the often, our will

So be in that New about won't a to be variance will talking so. we'll great be which the Year,

Giordano with the of from line question comes next Joseph Our Cowen.

guys. a organization know, of of kind this successful Salesforce traveling? bit are of of huge not obviously Hey, and you part same a lines sale that's huge at that little point, those historically you're a But people I with your, to the part kind because kind Are think rethinking Along you it to or about people being customers. new things do connectivity? face remote, now How do of of world and it entirely different? are with face organizing the anymore? of ability you kind not with this and covering the like regional being

on the where over earlier did growth do the capabilities in we needed, years. Salesforce, did we around coming saw the some the more to in just restructuring potential areas Well, strong work align with we we them year, their

we've really spring, Background your works on of kind mean, a we've the It we noise and pretty we realignment; were pretty in our to online way call activity That changing the into as later. refresh the I pivoted And about seeing in some and marketing. think there's XX% successful much going well, been not that point background I and at as, So sales changing being works. work. online, on of it was sales very works. well. sales

kind a last it pretty and it And to sales, work. it works. and meet where and And are more call, on deep would people in little bit challenging in inspectors areas selling where work even more right. kind they're enjoy site Asia, for don't technology the have of works we have does person, selling or from sophisticated very a anyway, think on with very requires can about we model. well, they So learning that where the we require kind to often online we of be us, sometimes want on conference into see It be human technology. getting an found more of that, customers expected particularly they introverts engineers, online receptive to to replacing customer But technology site, hands that I in talked some

Fortunately able now, that. and much in Asia do things more to more, of up much are opening we're

So it's what way adapted that address pretty see well, salesforce us. kind long of in we've we a of reorganized we've I to saying, of our think front

you're acquisition pacing [PPO] what's or just FedEx logistics. retailers ask smaller the like I more like space? on makes whether some to companies as new are new wanted on customer mean, also that a you retailers, sense. customer types I on that smaller, or large channel, know I momentum that the it's UPS Curious looking at to and companies have customers omni type front, just core seeing into

market we've So years. been in this about five

And we where sold also certainly the Americas of revenue, so like nice instance, logistics players we're where we the technically in lot think online, very a market, in related we're we pet technology, that seeing in technology cosmetics some a one innovative well the up, know known, companies, think our they e-commerce so, startup certainly in companies customer to for sort to coming like work we're new are who that big the area. and this of this products growth market. in the space, And have of was had and kind of our us and but sophisticated respect new so quarter for of majority customer particularly way I one sort that I expanding

more think I or be we doing really business not in to a and the great feel moment. at place customers would like

and e-commerce that customers they're mortar and model do it, an struggling logistically whether haven't and or really developed bricks right. retailers to financially now Our

airport business handling. good But isn't you can baggage a in now. as had have right going anywhere imagine, also that We

up So customers really market new that down, parts the there are and us. definitely not for signing have logistics of some

Eastman of comes Robert next line W. the from Our question Richard Baird. with

the there the on that to a business season. a electronics, about you And the on business e- Yes. get fantastic we holiday congrats Hey just of logistics and a demand in Thank quarter. is commerce When referenced. seasonal think you. question consumer front

is those there in lots it's commentary orders that that into some upstream And there e-commerce the was there e-commerce? to XXXX? So falls square quarter, on the you run business, be for How players pattern enough footage of bookings by same QX does book into business of off big players second well That is logical in can to seasonally. XXXX. logistics logistics or that seasonal well the QX the But would by the panic and and how look there? backlog would, ship consistent the place? Or from some get

not comment the of know some year. Yes, obviously, were end give And some for we out year except logistics getting ago this, at And the that market. something on, color say, we hi, maybe we're still on Rick. would is generally periods. backlog the say did a would longer I orders going to I just larger

where it however, I market can see can hit. when consistent think lumpy it's And a revenue. orders larger quarters, we pretty be over

a lumpiness, quarter some out to and there's a forward. it's I growth me think we're not market, or but observed, take particular sort sequential we quarter, going this poor quarter is and to that logistics, as a cyclicality a stuff good particular draw there market that obvious set in market it's in not So very now your in in of that being seasonality or if we've general, that I great in see well lumpy I attention seen I think,

orders of we for related guidance balance, not so pull uncertainty just able of meeting in last And sort and the COVID beyond get deliver being instance, certain to of supply what's trying challenging is in, anticipation part might just to in I environment we've contributing how couple orders customer's or range that to quarters a our add expanded demands, on. had to

so revenue kind has bit And of us. timing to grown, added logistics for that the it uncertainty has a of

Okay more the customers and quarter? have one in did XX% you than

you. something we that's you the Rick, Again, of what can end the will disclose, year our XX-K read not tell at

impact have the consumer ask kind a tough I it applications. inspect in in for mean, just QX of electronics growth? market adopter recollection just the of those was Can some I that target the measurable around does first have back that spring? in then success. to DXXX that, you the first I significant introduced Could is My enough. ask DXXX fair that vertical Okay, or

I'd no. thing Well, say Rick, first is

specifically. misunderstood was a product consumer you thought if You electronics it

I in curve think to be going our very expectation is automotive. large

by we're that of inspection do that, having but things very the deployed of applications. the driven used, the and masks. of talked the it's will to vials some widely So I buoyancy like say COVID about success related DXXX isn't market I

Our next with Haskett. Gordon Lau Karen question comes of line the from

was I mute. on sorry. Hi,

was Good entering you pent-up that. an on everyone. afternoon, about projects still been customers plenty were to I that comment I would wondering you before? from placed Or up already? lead which extent are access if Sorry If guys caught to largely by of this period, sites can that catch demand to guess up restricted still just that. has were, orders they

have, are, Well, say of as about given know, suggests where like shutting some difficult or really And ones on mentioned supply remarks, right. the second demand, I products lot who of the then and, customers, kind of of had time, to projects. call really chain have resources a of you them wave my factories, you in access are opening you because sort the the a to kind and us of they're pulling worried if volatility hasn't causing quite in COVID other it's the I'd in going drive disruption, or

something quantify really can for it's I So you. not

less than XX% it's kind it activity XXX% varies is in in activity the say person. would of what less other sales good, it's of great it's of much before, in was Japan, parts around kind in I guns world, markets. sales person Something like, of going Europe, China,

those of that's clearly, expect kind to markets, certainly we in anxiety depressing I in get and would those business So sales, kind to of with spending that normal markets. along back think improve when of and kind I

up fee comment then foods improvement could been cadence kind still the you logistics, first then How I what the talk what's industrial been of sequential you're you you and and sort improvement of of those strong, steady obviously kind not? has Got activities the have kind which about all, are the the is you that going auto ramp out, big cadence were outside sequential beverage the more now year-over-year, somewhere general and in very if but and maybe of down wondering of like the seeing? was that cadence of and they can the much see or as of in in it. petering of of And on just improvement, and other markets steady like markets. seeing over improvement Did

think that call that was so get sit giving in last quarterly the sort Yes, bad was. right the it it much we biggest of conference think growth down less bad We business mentioned, think business our I second last a was I into industries, don't I around I I automotive our but last And quarter. all on but XX% on certainly quarter, was of than lot rates know automotive our market year. less

do electronics, but I science, and we're that to obviously, talked So would much actually we've food that's headwind substantial well, got may pretty lot and pretty pharmaceuticals, again seen we all quarter. have improved more as more as life beverage, would strong access things as growth not problems, in But the about into third around Consumer products that. a processing, with to factories overcome. starting like overall a were of medical to and have was terms industries of particularly food have showing growth, other we that maybe did to liked devices, say, and kind rates of

over in quarter? improvement, a it sometime it's course their been then of proven and the the big sort has of cadence the and like kind steady or out, ramp of summer, like Okay, just petering are you and seeing to of then sequential

there's, a to I it's volatility. Just, Paul, to I think difficult lot I say mean, of say, as do comment? you want

recovering lot improved was about weak since obviously that point. month see to a month time we've of soon shaped mean this of in April don't quite talking or then or orders of we we still and QX. color, to of again, pulling some Yes. from us the a a is depressed V do say I spend a for a whether recovery bit a kind but of kind And

comes Markets. Berenberg with the from line of Andrew question Buscaglia Capital next Our

evening, Good guys.

and QX a gave last So exceeded guide bit. you you for you quite a a quarter gave strong it by pretty

were and it pick out home consumer were So the out I'm you seems a I learning logistics, some e-commerce where of mostly where in surprised. like kind wondering guess, guys called you also electronics from working called up mean I where you you but surprised? activity, online that

Paul give also and quarter. were is But, geographically, off, stronger the electronics I through we certainly I quarter. fulfillment the kick better, Americans I'll move very, in e-commerce certainly can move consumer through think color very think we some first more strong and than as we came then did expecting Well, as

we're growth electronics mean, I steady improvements average Americas recovery. are our business of guidance, orders seeing kind higher we Those our of and we were had driven lot more drivers year, kind just was not we what regions. projected a time by sales across quarter, of pretty daily logistics prior just at that steady clearly of versus of quickly the out saw through than base kind used really the the obviously, converting big really well as kind versus of versus Yes, consumer performance the but based broad drivers showing, a which to again, thought there,

your on haven't quite --yes, that Okay. guidance. own we a Yes, bit it it's seen like quite

stronger And than those sometimes even so trends that you it's interesting are anticipated.

is results we're where versus of it proud predict. that revenue guidance business We're as , very difficult not the about to the proud a

I a wanted in? next up, you're what, model launch. more if It that most product year's assume it comment I And do what's automotive? too which deep get this, And statement? on a you markets year that in right learning, you follow guess to material doesn't we comes we I to the AI So try made now. was were material tying to imagine. What some seem impact behind a Yes, end where, DXXX to from that as successful to ask

it know they the And to of extra who in them a and is learning camera deep on Yes, technology smart the now to to In-Sight. tens available called powerful market really And platform DXXX. right. serve changing and or tools brings of best that's world for inspection, expanding In-Sight hundreds own of vision, all particularly how we DXXX these this users thousands has selling very techniques and have program the

what's spread serve. wonderful that's is the very much a there's that and product, we So markets all wide pretty

there, but to we expect so of that bringing the Asia, a used in other now which be be we DXXX interesting the player. Sualab. be I using PC in technology it we where it that two we would move growth tends almost big inspection. a factory. to kind PC computers a markets But and overall more Where that is think based way. not really in on less it's for yes, vision And very be in markets would we and is powerful software all useful of have used that's expect, the technology, loaded that fortunately, in And platforms, on acquired might serve, And the automotive, generally market, to powerful

millions the So see product, don't a when you hundreds is first a Cognex, you of this of right. new dollars launch like in not consumer year, market,

to third So it can ramp a in -- the can and tend year. we can normally, it approach peak

the customers applications with before. do what but like we couldn't now about new attempt in couldn't I it of or would first to the I we initial signs difficult, them any who do couldn't it existing seen, are it's or do good ramp terms And the vision the as of, So tasks for currently months because us getting or going can really it expectations, is, six I to use, either too it's customers in to who inspection its was and use as your I've DXXX. would sort they that see machine they have

our and about learning machine deep with at point, of about vision joined thought globally analysts were we and we're us market the sized you was XX%, million year, kind our -- give if at market. another at that to you point right. meeting $XXX at last So we we expanding data serve if excited it growing you Then said

ease of helping about use XX% the of of scale a broaden speed helping So application The the use technology ease you sense may what certainly overall to the that. is that that adoption and like and give annually. annually, opportunity served is for you is of

of from Blake Gendron Our comes Wolfe question Research. line next the with

to everybody. leg the on want automotive. Hey, still thanks I back being circle third that

USR working going know I Somewhat you your the time, of had cadence three upside, us all recovery you're to of major the to surprising at if same scary give not think exact there's we've guess the and I Tesla particularly looking market. past pent-up that technology like breakthroughs be, others. optimism, things in around pandemic, battery that the seen some seem electric to vehicles markets from

where stand technological intensity we demand? what an see are really here, my question could Cognex considering to EV I transition? your just the inflections guess standpoint does that drive is So ice on sort of sort from uplift What of

of to of big well, in the manufacturer, referring particularly But question. battery a for area can keeping But vehicles engine the around wheel. mind applications, performance all, Yes, see that we machine where Asia, talk difference it. activities. for thanks will wouldn't and of challenging manufacturers kind in back and really and for Yes, in capital vision I'd is that and I type being point to third as right if say a business leg, internal we automotive terms was automotive, a been you're combustion to work very electric where the be majority Blake, space, has third investment, has techniques a the us the up I battery for make yield quite about and happen. to first say, of that market our that while, and scaling huge in where

on be small, So I'd while think it'll And a It's customers. EV it's I a quickly. a product automotive our our still see and of based growing the overall say is what from business a but part very plans of revenue. before, majority I small very new

input? it forward? capital, structural going of collections. software working of from capabilities moving impact Is and it the circle on great free are some cash a particularly want can I puts Is the in Where what to quarter, in takes the to working working you. here? segment capital conversion? execution go Got And back input? of centric business? capital to Is a sort have mix of a the deep the a be get part bigger to maybe that on customer learning and mix As some

lot Yes, working changes of in I don't capital structurally in see already. a

surprised we're the very you for good how by thank also So been. has environment collections the but compliment, happy, pleasantly

partnership working and with too Our good on. our team just so also customers has hard, been really but

the helps customers terms to to in takes, might where we generally tremendous expected balance fewer are we we've opportunities they be, some it partner that we need from changes So don't we with challenging in they us more have relationship. we and sheet, look we But customer kind for advantage put think speaking, them. I I them, going yes, competitive we than them, for are I get sometimes with And given have But forward. pay with work where have source each of seen be need it a of great of see think mean, they I investment And times. issues a can do us. pandemic, priority a collection a products can't big they for until obviously

roadmap. sure long I'll keeping relationship support here. something. on while, have best on the plenty just, And to you supply a for really it's that best of paying the followed not company, technologies we I'll getting having normal quite we build in I believe Cognex we with and Rob them. have if like strongly inventories mean, that suppliers and just we're make our a time the can

capital, to our optimize So and the working looking growth we're looking we're of to high quality not company. optimize margin

would some And concern. cover the to very term are into The pull right. without long do them any of sheet dealing say, in with that these as our us balance thing other I of that pull some really customers, a air very large gives payers

next of from a Giordano line comes with Joseph Our Cowen. question

Hey, thanks.

by So said. in, just just, let you to back I me quickly well comment jump something want

beginning I of it. think the I missed

Was that hear that in were referring I particular Or a application? to in use to. said cases didn't exactly some are there you Asia inclined You for there, what customers more there are PC vision.

the in quality powerful customers in Vision have No, lot more And right. best engineers a There's and Pro. dynamics the the who capable those to suite in expensive PC China eager of are for high called vision. and vision market less world particularly, it's general, think very we most I deploy

a them manufacturers have use So of them very a who lot lot using big that. of it And favor effectively. very

Got it, thanks.

Joe.

were Or vision deep you about general? about Sorry asking were to learning? asking clarify. you And in

I PCBs was against for I didn't like, just the electronic consumer like, case. there? vision something? curious, competing is that Are was this you think inspection like traditional,

where as tech are just that So curious more often? to competing like against

Yes.

big, share PC of big a vision market there. is see based the you So in larger electronics Asia and

turn it Dr. I to We have reached over the for of closing back end the like Bob, call. to would now comments.

all want asked who called And thank you in I have thank very of questions. much. to Well, those and

the despite remain you what In business tracking current to an we conditions, going view that results. increasingly of of bullish in forward on items, talking Thank of even plays good automating I and the While prospects long-term the view again. be and vision items, of Cognex and items. very delivery role of are machine reporting in to quarter those leadership you difficult we and next to important look hope position, with the those our manufacture today,

concludes today's conference. This

Thank time. you this at your of lines rest your evening. your disconnect may You for a participation. Have great