Cognex (CGNX) 12 Feb 212020 Q4 Earnings call transcript

Greetings and welcome to the Cognex Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. of Director Senior Conway, Investor Relations. Susan ahead. go Please

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

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

our fourth Sue, hello Welcome earnings everyone. Thanks, conference call. and quarter to

purchase. for very but for not anniversary continue We've we XX This a as work for of hard the in its quite milestone revenue in leading role As field. of our accurate a playing well. is XXXX. And invest delivery industrial, a existence be in we logistics emerged fourth where advanced that but achieve. companies quarter continue the world's systems. of It And in today, and in a we automation by leader Machine a release revenue vision been technology, in lot news XXXX shown it to the good well did vision virtually you critical intend annual provider important was Cognex was both in year, to now and years, that for in record few a we wisely is earlier to machine infancy issued everything the only XXXX. reported with significant but technology for record quality it also and very and year challenging ensures marks barcode set in continuing shape Cognex. be to This

of announced earlier the company. my also we from to last of this will Chairman retire decided an also as I've of as be be executive and as the as Cognex Cognoid Finally, officer years of to company. conference advisor directors, will the today, Cognex. an After as I to call helm, XX board a continue

a point Rob's in our capable company customers gives our our leaving it the I'm of special leadership Of course, and the me hands. it this and I business, I'm of at be my have life, Cognex. at also make time I'm happens in it in to about transition comfort culture. team's that strength but great unusual of confident very very mixed very helm knowing in emotions that and to this understanding And

Now over Rob super and my turn Rob, I'll Willett. is partner, microphone yours. the to Cognex call is capable the CEO

evening, you Dr. Good Thank Wow. everyone. Thank Bob. you, and

of a thank is unique the instilling the Dr. discuss the for entrepreneurial minute results, we Dr. forever part to and financial Bob, and culture immense Cognex, that over built past he four company. a want contributions decades, our be Before hallmark our take for of I and Cognex. to will Bob enthusiastic the his spirit

in markets, has challenging optimistic spending automotive Cognex. growth. which our We two customers resulted entered our about by revenue and Now our a us decline year XXXX financial a been in was lower in electronics nine XXXX for for first years. roller coaster certainly for ride, largest world results; both the XXXX and at consumer in

after However, XXXX started pullback, longer the shutdowns investment had expected recognize related the the when and outbreak broad-based the outlook disruptions, year. that we business and would COVID-XX bring we in capital no XXXX, changed. we believed We supply strength March for the global XXXX had

steps Given our our investments growth. align the opportunities, circumstances, operating and better realignment priorities. steps difficult we modest a quickly to reduction, operational to These and more an which organizational was important growth high on took that with internal adjust expenses included us, workforce focused for

and XXXX better a able was As From through a related of second expected. these difficult than half perspective, more positive changes, result of much Cognoids own initially our customers to been challenges. we've support business pandemic the

the think first of surprising the half. two a of year the of tale You second it was can XX% over in as half a hogs. Revenue up

the learning sector. It represented due revenue relative grew the the larger a production during broader in Consumer revenue Electronics from in In also e-commerce result, XX% from components. and XX% our from benefited with XXXX, the Logistics levels and results for by grew necessary thanks assembly XX-year other partnerships has annual leaders related financial market automation the XX% Electronics, XXXX, work-from-home pandemic. of In record roughly growth year-on-year. that of approximately depressed Revenue a in reported of technology devices also customers Much to highest QX. strong for setting revenue. year-on-year, online to and by there dynamic. As good for we factory Consumer fed the in revenue in improved where Electronics spending over total market. Consumer was and contribution increased largely largest Spending relates well also electronic by of a smartphones by XX% XXXX we became revenue approximately our to market Logistics, and

specifically public. machine worldwide deep component surpassed traceability ensure which manufacturers ensuring are retailers and healthcare grew on vaccines We bricks to approximately That's of Further largest and double-digits become of include that More cost the and standards benefited revenue, both airport bright Cognex and a full for are filled representing year-on-year. from omnichannel baggage e-commerce to the in help handling to a vaccine machines vaccines and automation of spots available quality throughput sectors Automotive inspecting in We're XX% integral are Now the kits major and such contaminants higher retail Logistics and of industries vials and Cognex to relying enable second productions. in production proud correct vaccines. market. that COVID of vials defects; to of the an medical-related correctly. of highest make ensuring industry to Other struggled Applications semi, Logistics total the as included vision news. COVID level mortar XXXX. good serving are and investing packaged free most learning

revenue worsened side, XX% On already automotive approximately fundamentals. business the as negative by year-on-year, declined shutdowns weak further

third dropped year-on-year first XXXX, somewhat in result, As a several the increased was for market is improving time quarters. our place in largest Automotive market its XXXX. in which the from and most QX depressed automotive in to QX, levels

However, than significantly lower it remains at in a years. recent level

Let's talk now about Cognoids, our people.

world. camera. environment result demands product traditional introduction scratches, of of in working increased In-Sight our of both culture and achievements most Popular recognized easy around users In-Sight's of smart our the XXXX XXXX learning chip and to customers new the interface, applications launches dedication ever DXXX from the enables exemplified detection were They Cognex in too by strong meet a Our of most the vision. on important few a wider fast Cognoids volatile in tools significantly rule-based a were our Superior hard tools existing launched the that new supply apply chain. powerful customers our was and for customers us our DXXX Vision surfaces machine available The to tend successful we to widely of easier Leveraging include builder audience. have and to manage difficult successfully made previously the solve Because use, efforts, our new defects. vision using deep to to one of inspect to products surfaces therefore that to existing win moving

complex Revenue we We software techniques problems. XXXX. adopted acquired utilizing also technology that learning and year-on-year most their with technology vision our in doubled applications being on platform customers are SUALAB. to sophisticated running deep These Deep the integrated Pro Vision sold together deep than solve Learning from by with ViDi now Cognex tools widely are more our more learning

As we believe be intended, major learning ahead. the opportunities We contributors can deep will of what the to growth we we are accomplish. no we surface the scratching Logistics believe pun and just years ahead, look at in

it believe and of Exciting available a that and features as a to the breakthrough XD-LXXXX image easy XD vision Under Last separate for about makes include for we system. development growing product technology easy our range industrial superior time, In-Sight-intuitive interface, use patented capabilities quality, need We as the pipeline. is talk XD successful XD customers an broadest true the the tools vision. about packs novel PC. factor a customer a use tools and competitors are optics Both inspection. compact new base to broad in powerful for form the smart let's created vision vision XD-LXXXX very excited camera this and The insight against It have us XD month, we some have spreadsheet significant our area. Cognoids XD. who without effectively our for into XD-LXXXX, new the in others making launched positions for for profits Now XD-LXXXX in market. leverages these sales exciting products XD In-Sight fast platform vision new

fourth call the details quarter. Now the over turn for I will Paul to of

stronger while compared down stronger XX% our guidance. margin nicely Gross we basis beat sequential fourth on record million. favourable of revenue, expected. biggest expected. grew Electronics QX up and margin Thank momentum also product of grew Final everyone. first In in year-on-year. growth was hello QX, mix gave $XXX the been quarter was performance was was factory quarter. The than It overall, recorded experienced a $XXX still spring volume. QX pleased contributor the than totalling to report logistics and a to was XX% XXXX. XX%, in Cognex's was $XXX,XXX anticipated driver fourth last better QX. to company in e-commerce the to guidance year-on-year Logistics, charges improve. to The to market, were to we At as we sector we you you, held due Consumer the than we Gross was continues completed. which dilutive of The Rob. million, greater quarter revenue announced And program last I'm the biggest broader higher the above positive and has in restructuring automation

higher the Cognoids and they've increased increase tell year-on-year. to charges, those expected, can that I due sequentially to in earned RD&E than earned XXXX. and roughly you, encouraged was sales commissions I'm our of XXXX. more by strong we combined related was Excluding in and costs XX% SG&A sequentially, bonuses compensation flat performance incentive The total it.

our as fully sorry, reminder, XXXX bonus fully a we in -- a a XXXX. As after pool we funded paying result, bonus funded in not company

and entertainment Operating higher margin below the which and the travel in basis was quarter, prior of savings realize from restructuring level to in XXXX. QX, the QX continue we We exceptional but was points XX% actions. in reported than XXXX

was There benefit Turning of million. was XXXX, treatment recorded on of periods comparisons now foreign savings liability we subject, that our discrete everybody's largest a to U.S. October in discrete filed regulations substantial for Technology. items net tax to return in related difficult. when taxes tax combined our favourite paid all taxes. on In SUALAB of realized QX the new tax made $XX acquired IRS we The federal items on

tax guidance periods tax of in a QX Reported share our in of slight The restructuring the share were and of On QX profit earnings were XX% non-GAAP QX, XXXX. $X.XX per $X.XX QX XX% compared earnings $X.XX XXXX QX, XXXX a in -- and in charges. compared discrete of XX% other QX rate compared overseas. prior in with $X.XX XXXX $X.XX we effective XXXX of QX and and earned and sorry decrease $X.XX of in excluding greater in of discrete items, XXXX, per of QX because basis, all in was to and was share XXXX. QX tax QX of cents in the with Excluding XXXX, items,

strong reported about a change logistics related over operating perspective, many medical the geographic related significant for including In growth for growth Logistics, and revenue broad COVID increasing market electronics in industries, businesses from 'XX. the and Europe, one at increased saw regions production based in third year-on-year. revenue factory all The QX products. across consumer automation companies growth, we to Americas by by from broader due third one under restrictions. also QX Looking incremental revenue despite scaling-up grew

XXX more about market. from growth. and contributed exchange than by Revenue Foreign from consumer to year-on-year that basis increased XX% to due electronics, points growth the Asia logistics broader

balance special Dr. is the QX cash likes in we and share end to $XXX $X or QX, debt. per no million a dividend. Turning very the special both and to the of a below sheet, dividend paid as XXXX say, to balance XXXX and with due ended in of This investments Bob end

remains allocation capital to approach unchanged. Our

sharing for to continue Cognex shareholders. manage We the success long-term while with

well it was rates. current potentially conditions, return economic the how of weathering fact decided ahead in our best tax to are and that excess Given interest cash board have higher shareholders no we serious we the of debt, the

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

summary, guidance be a for note Paul. continues XXXX In positive. our on the difficult you, ended Cognex also environment Even so, volatile. Thank and QX strong business is and to very

the be we which in less QX for believe revenue growth, was than more half broad at and experienced midpoint. strength million, represents $XXX we'd second XX% $XXX the like. the addition, In will is based year-on-year We than between million

logistics. which grow than orders that backlog QX. convert expected the half, third expenses to be will be we range, to predominantly in slightly revenue expected in revenue in mix given result revenue year-on-year. Gross be intend to QX in the the mid margin as from expected of are Operating logistics expect XX%, quarter of a higher to will row down XX% unlikely QX, than substantial in to flat more a reported gross by we is of margin We in first the the lower

restructuring strong by lower travel revenue from entertainment for quarter. We our costs projecting the we the expect are due offset and actions, higher growth savings to and commissions

items. tax effective excluding is tax the expected XX% Lastly, to rate be discrete

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

comes question Jim Company. of first with line Instructions] Ricchiuti the Our and from Needham [Operator

you Good thank Bob, you. best. the afternoon. Hi, wish And I Dr.

you, Thank Jim.

the So little normally of that in bit activity backlog the been order you're is logistics would mix Fair that like because toward sounds going QX. than say, skewed see on more the It to have outlook. in quarter? of into you business which Rob, the suggesting a the to

Yes. it Yes, Hi, Jim. is.

in majority we're of seeing I backlog. logistics result first in growth to already the of orders but to going the most quarter, think across growth the in we a the see industries going is we're serve have and QX of we the that be

speaking your that respect another in XX% And that revenues. I appears you're Can line for customer, your us give just sense, business, logistics, customer disclosing and logistics now just K, it you in business? with about that 'XX, officially outlook believe a the identifying as into large but perhaps think you're you sight this of broadly with your of you the have customer, visibility, it's although to not

Yes.

now, that of business. having So do XX% you we strong for that Cognex time is And have correctly about one. customer another market. a point visibility logistics. lot the out in We're asked customer second you first over a on logistics growth it a the in large And seeing

in XX% year about growth revenue last reported we see can quarter. substantial growth You deck and on here in very first the

that than quarter first think obviously in highest while. larger be the think think move subsequent a base we a growth whole strength will online and as our in other that coming across we through is area probably of quarter lot good reporting It on -- a will revenue and But see number revenue be reporting of quarters. the logistics customers we the I be will we broad year. we

our we're do, kind on up and that backlog. at. dynamics sometimes into shows books half than terms probably then turns bookings there's That's be then cycle after tend larger two, from And the some some that which and -- revenue, of so looking three in it more are is revenue. quarters we of less that our business In turning quickly there short into then that and to of books logistics deployments visibility, it in

from of comes Our Stanley. line Josh with question Morgan Pokrzywinski next the

successful again folks. career. solid good Bob, a And Hi, evening, congrats on and

you, Thank Josh.

risk first look So description, it's that a scanned XX-K kind competition on as business aware going But it, Anything in shift wouldn't same. see new China mean, you that well. I here. as pointing noticed still it's is I Rob, the we time year because a line. think that should market certainly first dive my but there front, mentioned I I question, of the all indicate year. the kind but in we I out, every there be language growing up haven't seems last last I guess bears of? single didn't for of pretty China new like

Yes, hi, too Josh. on there's I anything don't radical think there. dramatic going or

and sort I competitors aggressive think into being the from competitors years market. of more a over and switched of China competitors seeing a number on going our we've seen local in more global coming

I try we're the of price, lot we're there's think And, a better. think monitor can them machine some that, and certainly, situation that. I carefully. compete which we getting So very they're aware And vision required. keenly on difficult But of be and seeing technical to expertise where of

and watch I them we a business. the more And yes, take So, seriously risk them future we and more them closely. to would of the consider

those times touched still seen as has think strength in the lean really a so, it, automation lot Got the XQ commentary you electronics your are Electronics, and on particular. guide other that the And we Auto, from visibility know lot given with know or logistics. XQ for on focusing I there’s of broader hear weren't touched then, markets just still on space. two it's is helpful. of we inventories factoring long. in China cohort how of into in other consistent guess really some How it's I rightfully are those I the auto. peers of much? what low, But, markets big that the that are haven't some

May logistics. big the a growth electronics, in tend QX I generally, QX like, I grow most I a same would more year we a year-on-year. the QX be we of I quarter of visibility. market. see looking is expect which see or electronics we often share it to until expect and have give answer last to really give really electronics? all markets still saw consumer get growth for is for the a with consumer year that quarters. call. from But think, coming QX that not think of And be year, tends some in year don't And I to how QX year, So But electronics. We we the It's big can sort you and asked low this to every we consumer big is time consumer conference big our see

a we'll think that get sense better I overall. So of

some And of if think in still most conditions it near difficulty we I most in QX electronics at see year. component and healthy the and We much back back was last we in saw QX. saw didn't the of China the in it the elsewhere to of look that coming inventory QX we and revenue up than consumer end think year, getting consumer revenue standing spring. electronics from due out serious lines I in in COVID the

the So that was the kind there. dynamic of

down electronics up. help year fair didn't I year a as it bit unknown. probably still last the into up market. lot an certainly this and would also market going one year. a of faster think think, happen which But last next year, schedule that's the coming but builds more of and year, then market. we that's relatively up an to year, aggressive I some a technology Anyway, we we of come expect and up and can be a lot XG one a and see should we're phones into deployment was up now and see say, more and were of I of in other come into And to will think expecting next down we hope electronics this

moderate have expectations. we So,

all fourth about that that, seeing well. the was certainly we in did automotive we quarter saw asked China. year-on-year I And of automotive. that You you And say just markets, quarters including reported number pretty that in we're the growth broadly first as across know, a

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

afternoon, Dr. best of Yes. Good luck. Bob,

While left. the be same, we you won't

Thank you, Richard.

just been story. with stay You'll a been done fabulous with have and company you've impressed Cognex I've just public it's just so what to visible.

luck. of best So

much strategic rate, Thank I'll built the capabilities team and of that that take the you. credit to part And at operational gain of is so any due partner, he's thank that tremendous and you. my Rob

and the around Rob, welcome. just of just business, around press -- you I'm You're kind see globally? from to chain, supply from semi there's -- not that, we're to Just impact the lately. going curious that so scenario very approach how increasing chip both thoughts decreasing on seem be challenges the shortages but that are this that speak your on might customers to, could just increasing, your here you just shortage seeing both your own own for 'XX? And much also

of in and really Yes, of inventories we're and significant We're terms afraid having at a hi, very key of plenty not of first chips, Rick. having capable Well, component inventory, components all, of Cognex. Cognex, that. pretty of part

feeling time we're on foreseeable at moment about on comfortable to our supplying go So for future. ability the the

around what and of forward an that's market that there large in are read in press degree that plants can't degree they too. get OEMs buying impact customers the of Cognex, out the perhaps it's an year, So, specifically demand uptick at certainly, in panic overall. I'd that Later our don't really orders to on the in that's accepted the America, confusion. good suppliers At to filling might from and are part from found bit and the because lead not closed, that automotive, a of we're moment. expected components obviously, was doing in on that But our to that to concerned particularly really in wonders that automotive. de-commitment moment, ordered massive trouble, from in can and But be we're but go of say very own the to what we who or team about respect. area if or from then need seeing it we'd more already stronger And is other customers, the and you so we're shape automotive buying

interaction automotive. our I'm So, growth good of be our well much in semi basic terms seeing continuing, in currently. seen up right then itself we're mostly, and where that appears And seeing seeing we're is certainly year, is business. good putting now. of business last as it electronics not Automotive to semi with that that numbers We've affecting

just the dovetail automotive to on And to question. Okay.

and Just aggressive you push EVs the to of to really again, bounce maybe see somewhere of about 'XX of Is when traction? the do start numerous schedules timing of get really uptick vehicles. there? really trough off it's some little EV and in pretty kind bring how you? But 'XX, And market, seeing here, around we're kind timeframe. ICE sight some question maybe including a probably a bit to to line on 'XX around think probably battery is more that That's Or, do for to expect of market focused 'XX the to you capacity. of kind my

in a time. relative of of business I all in that a on relatively lot first that's well the improving a a Yes. manufacturer, and really a And but about material very in and definitely term, while with and I see -- demand that we short all, and can with whole positioned in be very for products. in yet say worked but of think we've vision see it we -- think period particularly a we the market market. really for range that we business, our the learning, that Rick, battery medium Well, our do it's it's of demand we're see And to with deep players of major business a space, wouldn't I strong now.

that So electric vehicles. really to years major you with we a we're vehicle, bringing signs introducing market launch scale way XX brand visibility And certainly seen they're a not if small major is to of And like a line seeing in electric of in OEM couple see see in the on you. the of and way. both builder vision like about major course, last well, their advance. to to up. larger some And plans we're customers in that. certainly, to but months We Then that our have we generally probably planning bring specking starting the there, that owner, that beginning, and relatively vision they're we it in of us the over as to see see

different the minimized, it's a around combustion we're that investment on wheels headwind even things the vehicles being and things tires whether other and and of kind to of electric side, the it. like internal I of powertrain obviously a opportunities certainly, things with product, just and internal more is cars. going what enough, lot to sensors on. engine as seeing side of think which positive switch. the Obviously, that there's that's result So combustion a is we the used they other that engine And see then of a interestingly lot changes vehicles have a lot in And in But market there's too.

the the Understood. define XD there? sales as and you of than to The And it to more X% all of it last in, with Is puts XX% grown sales in yet question. markets? other one consistently, just vision, it sneak has takes

did it healthily pretty grow than less and year. XX% last It's

few recently. the have think given in of higher we've announced years, next it we launches expectations much the I product

and from the comes question next with line Joe of Our Company. Giordano Cowen

year Hey, guys. the sadly Dr. you Bob, than in me, I was for lot Cognex, and have. the in a guys same I've last accomplished you founded born less year

missed. congratulations So and you'll be

much. Thank your I And you, more XX Thank is you productive than hope first than. your Joe. XX next very

year. XX% logistics categorized you've on a average, potential, always as Rob, too. Me

customer much material; a you That's big that Now larger there. very it's business. a have

customer is least XX% doable that the without growing that doable this -- grew year. that pace? You that it Is unless large that at within still expectation normalized and is with or it, your at context,

Joe, very we're Cognex, all, stretch goals. we of first and have ambitious Well,

year, or as to that stretch I've to but years baggage here the number, grew year, been expected close hoping for markets, or We achieve other logistics. mortar when the of come some with think number the retailers of airport have growth have the a into and to. we XX% about XX% described hit strong that we So we've up notably a would but exceeded goal more to put logistics very coming numbers I XX% last able were and handling bricks and we number, from

So case. And of the customers certainly, our diversification that's then in a do we lot see general. of

are omnichannel e-commerce to many their platform in have an complements more a investing have big stores. way We who that retailers

in of to but a is expect -- other we obviously, and years not our it one automation that up with. global and as small large investor I customers, to big I expect customers obviously can to customer the through it ahead. move aspirations that think maybe see overall XX% And market that we the we're a keep major address still share then very So, and large think has there hoping

certainly it's technology within the to there quarters in the and it place particularly But serve Yes. business. potential the along be infrastructure put are in there. that is the So clearly there we may volatility and way, --

Understood. we when forward? for were guys, think fundamentally world structurally year business Paul, the you of able of respects? you to a people of we to you in traveling and SG&A some accomplish sales start what going think Is different this percentage like come as lower back in. even about way aren't in Should where doing a

mean, I yes no. and

technique reducing to come out is finance a for braiding try people been T&E actually every forecast turns more or to I've global effective would people And in and and squeeze some entertainment and time. a travel profitability. pandemic while, we year it budget finance think, I drive a

we've planning T&E for for So about year. this conservative our fairly been

clearly other But like nicely value to clear, Cognoids, we and, customers be with Although, that do to more relationship we to more, would pivoted and our be to travelling be visiting, sales would we too. online with activities. face-to-face we've customers really like

So, fairly that on We're savings pre-COVID world I will the that it's But of the to anniversary, slowly. QX, QX. going part of a I we're in back some expect get ramp more. a half year, that the, up little largely in hope see we'll because in would a

will we different. I nature think of be the activities our do

have year. people with this product, sales to timing. holding that. launch we're meet we of entirely product estate real making there being DXXX be bag not left And One for actually, the some will whole one done sales actually, decide to you hold think that I our launched forward. And more to of real we from going we benefits of different on of kind We kind And when we kind of at if difficult before. don't decisions. that example we've want would some bunch And that world, largest month; were depending or tickets doing maybe product around launches, a product virtually look the the to launches. non-refundable obviously choose than certain then, extent

will Cognex always restructuring where solution But think collaboration, our particularly close for place I downsize offices our we face-to-face as and a of again, portfolio our real estate XX course the providers. our we the to be the obviously, or at value well. Although, did engineers, margin, look on

comes Our the from next question Summerville line with Davidson. Matt D.A. of

Dr. to well. Congrats Bob as

You year? versus about Just differently in guide seasonality have one comes we Rob, the about for moving question hard kind parts as helpful? world here. And cadence easy other cadence we you're XQ the to China, due kind thinking revenue of lockdown. of of comes logistics of thinking maybe some sequential we should to that sequential end, might have if the sort CG. give from to it's know quarter, how year but one you be loaded quarter maybe with think be And I us and that year? out throughout this second front of then be kind beyond about able sense When easy move the a Should you pieces

I or the Yes, talk revenue. to a food, logistics it's is that turning business a but purchasing putting would always of consumer for at quarter have electronics, of numbers. years QX similar that, things. more very what timing to is hi, growth logistics now. or That's continuing that general, when we've a for strong in the we that good large medical. sense a Cognex, on quarter first conference growth markets, growth of been QX of expect a pretty or healthy reliable, QX of And is We'll to gone both. And QX, expect contributor then, year, general I backlog many see I here's degree May. up as from pharmaceuticals, It we you great we're tends lot automotive, will we Cognex. markets can to factory think be our year-end the annual In in call But then be And have and seen next an for early like business. this, a a result other large automation say said expecting have give large, what into unusually we to guidance. great, do Matt. don't the not through And unusual And beverage,

flush particularly often, a goes that where as phenomenon kind budget in So on. U.S., there's of the

I'm give I this of think to revenue, us. hit the is obviously And you, to be logistics I I to going large that's QX large to able that's going but think would specific not so very unusually due expect. kind And cadence

in of repurchases? Thank pipeline pretty about follow we what of the and maybe active of You you. you. may And to maybe up. be XXXX? as the a things then thinking in comment how kind then as balance Can Thank tabled you M&A and you have were share for actionability the should QX guys

talk I'll And about and stuff. balance then I'll M&A have about issues. type talk the sheet Paul

seen So, Enshape or technology last other can SUALAB acquisition years great to opportunities, and purchase engineers with at at And and that KRO the over and Cognex. five like acquired it looking companies with we're that do really and to and always bring we've businesses us technology so. that ViDi, Cognex, we we've and

happen working that. those they always we're deals So, happen, when they're And when and actionable. on

can speak of to I to. that's Paul there. specifically the sheet. balance But nothing And aspects of there's other how can outlook point So, kind the is

to from we've that, primarily And the offset our purpose Matt, before, dilution said stock as think of thanks. is program compensation. stock-based I Yes buyback the

don't last grant you constraint of annual year it view if doing million so sort our the I repurchase year, of over, as we to quarter. buyback happen from through would looks right million our be in that is extent, maybe is happened so board broadly, And repurchased annual spent So, time dilution we we view. as back that within our in our $XX philosophy. X.X which majority to from quarter, or looked XXXX, buy mandate to We price of issue the point broad. that quite with grant first to take the to or now shares QX would noted cover from a did dilution during XXXX $XX, of of actually a that some really good of kind year. average We equity do really But little tend but aspire do all the programs. to carry opportunistic We of first in consistent more. do it and timing by as that an

our million $XXX have in remaining do we repurchase roughly So, program.

feel like we've in got dry powder. cash So,

quite decisions use will quarter the shortly. when those as and get issuing of equity And with well. to partnership aggressive kind quarter to about, We make in and plans be to trading be when as of XXbX-X board ahead dilution the appropriate we'll more

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

Hi, my good his as Bob congrats afternoon, everyone. well. Dr. on to retirement And

because I the reduction promise the, Rob, milestone has cost pandemic. So, that $X quarters I billion sales the the pushed was you action out of guess, initiated think been ago, two your

have to milestone. If wouldn't very rate, keep growing to that you long wait you reach at that

you in people strong back is point or quarter So, guide. I cost? do XQ incremental to think And you we margins very the add fourth guess at what question saw have obviously,

new have be so previous for is new about so, add And that of ways perhaps itself there more than operating you So back cycles salespeople might way lend something to back? curious, what may productive was much come to at not just point have selling quickly? of to the or does cost

Yes. Hi, Karen.

exceeded you see you and level look our of if I revenue strong when then headcount and well, investment investments into have since think, COVID So, I Cognex's And the we're additions out. perhaps that can back years, into three this going that growth XXXX, and think and that at coming our our pushed increases headcount go realized hit, be was we expecting over significantly. our growth last XXXX, to you

needed obvious our we saw growth we So, forward. saw of opportunities stronger areas that But it to headcount. to became we also where headcount shift adjust into kind going

very it's volatile and being think obvious a logistics So been just deep And situation. learning then, examples. I

restructured we going I in I on revenue of history. more to healthy. things the I we And certainly its any engineering have develop the spent see to company's what company without year we've we'll So than percentage to more of future year is rates growth and capacity significant which where have growth. point We of and a have need future. good the spent a But business kind our, forward, headcount. adding of in very what in -- would lot healthy think think growth and headcount for we last absorb still way for high in the our relatively R&D spend, is in how

engineering we're way. -- certainly and haven't not certainly, we in product curtailed So plans any our launch R&D our

of terms in that need numbers or doesn't in it look most the you But if areas short-term. our the we're overall, in So, in of at it constrained capacity, Salesforce. be where the may capacity we more imply business, may understaffed least at

Okay.

now process, right? see, towards and add going pretty and have recovery additional to then, we sustainable. the you year middle margins as trajectory the incremental be have the re-evaluate of the the part how salespeople for should is So, And of to is

Yes, I think carefully. very we're situation watching the

as relates I correct. You that's to that said probably margin, expense, think

gross improving margins I time, which be it think, QX lower business, still more point as our we generally, but did that out result little margins its to in over diluted our of to we a is expect margin. gross a nicely logistics are

I'd be only would on you that said. put So the qualification what

I could add. Yes. Rob, And,

year. deferred learning in just team as any a portion of a which XXXX, engineers in component the the we going period. point and cost then year the sort a there, of over incremental ago, our a We that annual hits well view that like out, major deep current of portion full of year which adds roughly plans, which OpEx were as of having is has a expenses XXXX into don't four see and On not with the compensation and is associated expense structure acquisition, calling people our a in reset sales of of base compensation OpEx year SUALAB in $XX million a our a bonus operating the kind of of the paid

and puts some are takes. there think I

quarter the little hope will I on in will T&E; be a little half This a low be higher. back

up a to relationship CRM expect be For cited a XX-K, in the customer new and which and management from a We're year Configure making around our price T&E headcount. slightly we quote, major investment, CPQ. system. our we

I that think of Much bringing. OpEx in of to up year, spend. million some that about we've this that referenced we're but $XX CapEx

any should was think So we going from two QX and course, large, more takes, of seeing I we there's but quarters of QX into took healthy and don't restructuring by and let's be have XXXX. actions benefit of where a from XXXX sort say have some then there we And resets, puts like May. major the last we

you. Got it. then the color. helpful follow-up I Thank very auto And want to discussion. That's on

chain. little you X like, the about you're differences competitive on different EV versus a like EV strong the how So in If of like and very your components with And your versus different the How color the positioning Tier different on talked suppliers auto give side? you is has exposure EV, Historically supply across things us that? Rob, different competitive ICE the -- relationship sort bit component exposures? seeing positioning are dynamics coming historical a can competitors, of you a exposure.

replaced of scaled batteries obviously, has being the and to with point some technology been the work one is, very Yes. has developed of suppliers combustion very And companies. their is automotive being really battery and I X that I is of up lot a of of has making a the them. kind obviously with is of I'd into had the declining Karen, Asian our business, majority power of think Tier thing EV parts Cognex and business. goes But EV lot that train we been type think by internal to I closely think strong continue business

some shift. they're well very in of capable, are sales Asia problems that with. to different. there force deal a is areas equipped the Technology fortunately, are So substantial very And and kind on that's working been in and But ways Cognex very

ways Korea in their very is using in able we originally this where, business an working and to those thought been We've with battery it's and needs area some our perhaps in China, had would use technology capability and manufacturers, been some sophisticated EV electronics. to in we've more that meet notably So pivot like we electronics.

well pretty positioned. we're think I overall, So,

that are of of the that notably and long some more EV of run Tier who plays probably the names big of substantial manufacturers are Cognex customers at maybe You a in starting to and expense shift making see also themselves X batteries, much the who in EV over to some those suppliers, suppliers losing car share business. going Europe in be that's on

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

Congrats, and luck. good Dr. Bob,

Andrew. Thanks,

important had out? question guys for spread a that Actually, go you you and But put what reports though, annual known departure you is really data entertaining I yet. for before really your mean those

no an expect my XXXX going made in as involved if the release Cognoids. and -- I press to advisor, taking going And Well, the input and board philosophy but there's to work clear for don't one And future taking be I But they change my input the seriously, in to of a on I and the reports. will that was I'm continue like that advisor one. that call for I certainly into that company. know still hope our to I annual seriously. me our you're creative not ourselves think

That's great to hear.

Is be our markets see should And popping still then going up this both? revenue or is to meaningful we some expect movement to deep or on interesting Rob, yourselves. how that up have. I to questions AI the XXXX? us Now about you some other give context some a you starting commentary learning margins or fast touring be to as sort couple in deep to think in of going Can on what AI, additional and perk from you learning? end cited around this

to Yes, thanks. add that, for the than just there's report. Thanks, one Andrew. creative no, got no Bob annual more to Dr. And tap I

that. done So key roles I of he's his with with think advising one

an than that's highly that. it's it's is ever leading available. launched changing a and We but technology it and our of we're last that is software-driven. in In-Sight my primarily we in really successful learning, product deep that XX% are make than growth about had making two launch, using see and commentary happening as It's most it So that and that said some and putting the most camera taking still It's of and it vision on good space, kind in is a platform I'll accretive year, technology technology The investing smart big product the be area We business. driver. business it gross easily lot. if One very overall, one it DXXX launches, more margins of our doubled into have fronts. on to the we're not successful we we've less

particularly modular you space requirement And a serve. lot then vision expect vision go camera that it's to business, know, on that it's And of also, area. processor value, that the around smart bringing high change can we of providing the so a performance, now. the very, space And software a type and our system, really high into to is more inspection of you business. adding lot particularly And the that's a electronics technology, lot I

acquired is customers. from in is we get this and with to technology SUALAB highly space, the of traction relevant beginning Some

the seeing, products we're if back to on And to using many XXXXs COVID replace hopefully was software. not is customers hundreds that there space the we inspectors. human are a to opportunity think visually held I vision little introduction get being on of think, hundreds, are real that XXs, in working are there And inspecting able bit end of not its technology during situation. by Some engineers that. an to site But who

are are of large some customers and the And this see with who us. on it sophisticated very potential, technically working

are we over there see leads space, the and in avenues growth to I to the solid product more years. really deep as capability expecting learning into we're have two we that great line continue changing. engineering that So think our see And more

to sense you out Or to everything's going And a But -- each the first are automotive believe, over. sales picked from say okay. I of break us Interesting, two? you Because give are the did third, of that do guys able you I percentage market? hear

can what I too. we said in think here, and come Paul

of was our I approximately said think XX% electronics business we overall.

I think automotive, mention said did that we we Paul?

Yes.

of portfolio, XX% beverage was would logistics comprise consumer slightly remainder Automotive than about XX%. XXXX, then products, remaining would than medical So also the kind lower second but -- lower at for which include was our And semiconductors food and of logistics. that about XX%. the

Thanks. Okay.

is down you and Nothing, report, very it coming our charts exciting a breaks as well. to few pie but little up, that I read annual need reason think which there

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

company Dr. Yes, that an high. founders to strength evening. a all thanks. with time and a sticking Good least Thanks here. degree shortlist around retire Bob for company And at of probably

So congrats.

any You and maybe talked outlook semi-shortages the some of I'm there. And on costs the in or consumer tech, input we're put chain. meaningful seeing you just that in but tech; on side about if this the it terms your degree? bottlenecks question, wondering, the How in supply And, about impacts qualitative of of impacts consumer to either throughput terms more demand or takes. what talked periphery the

our later not to Yes. don't business with think we means in that seeing own earlier automotive we moment that's our Hi. clear electronics, it. having year. bit in any whether that unclear related. impact. we're But question at I as we're But We supply little scales forward. pulling doesn't a the consumer as shortages In spoke Well, that to where, that the it struggle know that it me customers chain see it's

next to think, have going question answer really to when we're better So a that time. report I we

little then exciting like avenue that that. an bit sense. growth And sounds just Okay, here, XD of makes a for. to dig into It's

the just applications there Is the XD cannibalization, other in interplay sales other maybe market we or wondering vision. and cross I guess I'm is manufacturing, with buckets XD there any of cross machine XD vision? popular gets communication versus more Your talk the here of How specifically major XD machine broader should vision. as think here. any one grow a about bit as between

XD you processor because do required. say optics would less and probably do expensive, that required, less in less in it's things easier you could wouldn't XD I

additive, certainly those XD together think are XD we're is in to have and customers them. and of we capabilities And going right lots see and and applications. XD more we using So I of our more

do customer it more So lead And perhaps grow is about to with going think the it's sophisticated to more to market. things it's the and to higher per way application. our to going spend

the for Thanks sense. makes time. It

the Thanks. hour. top And I near we're of think the

Dr. I over you. think turn will it to -- we'll Bob, I think

years. and Cognex neighborhoods play for night. the and who offices and maintained which tough neighbors times. attractive I grow us want move want want culture. for Okay, not and present, and on to to years. has prices, to you to during And but work its for hard thank safe I Cognex's our for thank I vision. to to customers, of and thank where thank over shareholders customers and through during our here thank we've vendors, past is our mission. tonight joining least, in understand company, around us past Cognex our through our to last to to fantastic the dedication you. world our at our components And their delivering enhance XX park continue vendors us years employees, succeed preserve our Cognoids even which we And fast neighbors for us I our helping in to And providing to with to us partnering again our XX our of work time can unique hard I Good thank time, quality another want will these all and us want thank took I Thank want the high play. stakeholders, for that and our trust shortages. fair shareholders

This concludes today's conference.

disconnect lines your enjoy you rest at of may evening. your You Thank participation. for time. your the And this