Cognex (CGNX) 6 Aug 212021 Q2 Earnings call transcript

Greetings, and welcome to the Cognex Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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 ma’am. you, Thank

You may begin.

Chief information to section you. are to earnings quarter and evening, then Todgham, Rob prepared Both you start Form Welcome Good everyone. in available XX-Q our our our Paul conference and Cognex's open and second Officer. remarks questions. our of website release President www.cognex.com/investor. earnings We'll with Thank Willett, CEO; about Relations Financial call. the at With our for detailed call remind and results. I'd contain are the like that quarterly on financial Investor report us

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

certain release a statements we Any any release. be items GAAP see the X believe today. we earnings to forward-looking may true Exhibit upon during can call reconciliation as to the non-GAAP or of of in from are in You based this information earnings that make that we made of

and results However, change, those actual anticipated. can may from differ projected things or materially

For a refer our our Form should recent factors, detailed risk including and tonight filings, XX-Q list Form XX-K filed for you most we SEC QX. to of

the I’ll Now turn Rob. call over to

joining Hello, Thanks, Thank for Sue. us. you everyone.

worked it also QX. grew in history, making of made largest was high achievement in Logistics last recorded have quarter. more today’s hard Revenue was guidance terrific our growth rates with along from to of profitability row range by the and XX-year again increasing They the quarterly highest fourth of we XX% very QX for customers the our around XXXX. efforts order than market supply in was expected shown XX%. the As second which end level meet as in This news release, difficult a the top by Cognex world. Revenue in quarter Cognoids a environment. XXXX, revenue gave the quarter of of revenue support reported the in year-on-year of possible we at

another in due for demand reported us. improved Plus Consumer XXXX, as plans. business and record large we restarting companies a automation electronics leader sector. we from contributor as because some sectors such than technology to logistics was than also to that We a throughput. quarter retail QX. in continued That’s struggled for brick-and-mortar for Cognex by customer happened in growth was earlier to is the the productivity broadening investing base leading strong their higher expected anticipated. revenue recognized e-commerce Revenue are logistics

consumer it the While change for overall highlights this year. for view our of electronics not quarter, does the

will due believe manufacturing levels consumer included to from smartphone well depressed after working highlights a year learning from and industries electronics modestly lower of hit from substantially revenue Semi ago. and record increased set did home and year-on-year, last below QX in manufacturing also and year. the recorded Automotive XXXX. food to beverage. for be hard year. we revenue products last from in compared level This levels new medical-related too. grew being Revenue continue consumer is to needed a investment of devices We XXXX online when for in industries quarterly Other

Moving to now supply our chain.

the or throughput worldwide we lead and a never like vendors labor to supply concerns. we’re times, use inventory labor in the environment are improve growing parts, suppliers this, at At time, my as most respond manufacturers squeezed record for implementing their They’re products. Cognex At shortages their time XX from demand. experienced and I’ve of delays to The supply to many and short-term is freight of just-in-time Cognex gains. COVID the machine shortages chain vision increasing our consumer and products other pressure same under quality facing constraints, thankful We’re component years capacity companies and focused difficult Cognex. struggling on long

so, fast intensified situation to QX, certify components we continue through parts Our close we helping as our relationships strategic have long-term with aggressively been to we shortages. secure move us. and the suppliers where see Even move alternative

understand appreciate suppliers that, Our their customers we’re and doing accommodate our to what requests.

the some Let’s leadership product summer favorite of Cognex. us. weeks about growth exciting of when key excitement the in a years The the the industry-leading next year. for most together and spring These ahead our within sales differentiator Cognex tools technologies There’s and new talk for over applications. new customers’ tremendous an vision a us next about and of strategic solving and technical to at Cognex’s It’s opportunities few development. challenging introduce expect are our bring we products we planning. time are are my

challenging update Cognex semiconductor alignment Our development our runs complex and our to and learning. with capabilities are is in Learning deep to high-precision VisionPro manufacturing the vision adds accessible demanding valuable PC-based detection XX, industry’s X.X electronics more XX, stronger, use. assembly This blemishes, solves enable from in learning easier vision is deep example customers introduced use in combines more applications. the XX long-term smart that with and traditional tools progressively of learning scratches, applications cracks new accuracy PC and to hybrid RD&E major which alone. medical VisionPro and easily electronics other the we VisionPro XX, defects. environment. SmartLine, software new continue measurement investment our release line software of and VisionPro that XD first with for make that high-precision vision the SmartLine Furthermore, enables vision high platform. VisionPro for a our too processes vision An vision recent flexibility in quickly rules-based of for consumer particularly to development Cognex Deep Along technology deep together powerful tool

see hands gratifying continue to from this Cognex. move the In higher are require easily good report will shorter of RD&E. the and our long-term lens investments us steerable progress of new view continue which pharmaceutical with the barcodes our DataMan make to XXX solutions. as working engineering large leveraging Both We such also fast These make for ingenuity steerable we and in vision decisions powerful hard view distances high-resolution transitioning advantage An from fixed-mount barcode is on across from scale work reading as packaging logistics over play news, cameras. serve easier the on solutions well. new at in our our mirror us enable of It’s product in high a next-generation integration long-term. work optics support programming Cognoids expand fields we They as pallet applications we’ve high-speed approach to We’re for large a of market ideal margin mirror, liquid made software previously required in of on believe a and example technology multiple to logistics business come of to significantly innovations like and in other deploy the and reader. customized invest either less in The to as PC formation. barcodes of standard to such to aggregation image The or value warehouse. business standard where to well many gross reading our quickly the field features more is volume investments technology readers underscore the hard, many these. hard, to

for to the quarter. the call will I over Now, of hand Paul details

Thanks, Rob, and hello, everyone.

two revenue demonstrates for deliver revenue revenue XX% over were and quarter weak to in QX COVID $XXX year our helpful at of environment. It’s of We unusual expected pleased XXXX comparison. a navigating restructuring the success actions. range. in ago. years million, visibility that period QX year’s noting new believe pre-COVID was improved supply XXXX increase that an XX% our QX which time provides another difficult mentioned, was due this quarter ago a Revenue top own our was As this record. worth above to a We represents and a QX and all the of potential of

made and new level markets, range. good our largest Gross particularly a many XX% year-on-year to logistics, record. contributions pleased automotive target and growth. sectors that We pre-COVID at within margin to consumer was highest growth end quarterly in speaking, running a electronics, exceeded set all is strong our three Broadly automotive Our clip. were

substantially declined as margin year-on-year charge of year’s in because of $X due last an basis, excess expected resulting sequential increased inventory XXXX million revenue margin gross from a we QX mix. gross economic Our to disruption. On

environment. We supply are beginning the to experience cost increases associated with current

acquired modest intangible Given $XX our gross to it write expenses million, QX program prioritizing of that rightsize software a the of like P&L. to we million remind our to $XX operating restructuring primarily hit customer philosophy, short-term even charge noncash portion you customer-first the are included I a to demand, a a want of down impairment from means in of XXXX, undertaken team margin and if a assets. charge and

and write-down. The restructuring income, restructuring activities QX by weaker X% basis, compares lower QX margin XX% on increased rate, XX%, from QX were which investment year, primarily we of resulting excellent compared non-GAAP impact in $X.XX million actions, investments, the revenue Excluding That related these higher incentive other year-on-year, leverage to last tax combined of a by QX of our environment. and that QX, the dollar. charges Operating $X.X a loss the expectations. and in of was portfolio also QX was and XXXX with year-on-year effective in reported SG&A our for compensation, income Travel charges, growth. XXXX, of items share this higher $X.XX year’s year’s RD&E in on current expenses we the from and are these the stock-based marketing charges revenue. total translation earnings benefit favorably XXXX compensation of was mentioned. XXXX have operating commissions both line of offset the and and to inventory in was in higher primarily QX incremental a sales XXXX. because primarily $X.XX of expense impairment operating tax sales of just Below have driver company compared decreased Savings, in discrete discrete intangible and items, growth excluding very from consists in increases. of reflecting to bonus On increase of One the per and three with in partially the yields excluding and XX% asset last activities QX tax approximately and the

in substantially led due XX about rate XX% contribution Europe’s increased products ago. automation fluctuations market. and factory and Americas to of the continued other higher drivers Consumer Growth more the revenue by timing broad Automotive The the percentage for Looking points due region, and growth more was Revenue this from by helped nicely. increase. the in growing at Asia the change Automotive, by increased delivered spending to our to XX% a grew Asia’s a Revenue rates. more medical-related exchange Currency all Asia and year-on-year XX% from challenging Japan. regions. in outside over year-on-year. logistics, the revenue electronics exchange contributed currency in growth. largest increased dollar. logistics a dollars. automotive, quarter absolute than also broadened Europe from also included of Substantially market than the of increase particularly perspective, U.S. percentage grow particularly well, to broader year’s semi, geographic year cycle. points contributed weaker consumer was QX X fastest industries in industries year-on-year than by

to debt. to Turning We with regular a million to year-to-date. $XXX plan of continues cash opportunistic. in to have Cognex a $XX in spent strong while buy cash sheet. no stock a pace be more QX flexibility QX million investments position at to and million balance back stock We in continue $XX maintaining to and total Cognex and repurchase the

XX. As payable of tonight, a dividend of we per quarterly Board as on declared September to announced $X.XX record all August Directors share cash X our of of shareholders

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

in believe growth our you, In which XX% quarter row high, had strong We very is back Cognex Paul. quarter the of a revenue. summary, we It and growth that expect year-on-year. moderate Thank exceeding was will half. reported revenue record in comparisons unsustainably fourth second also a in

we we QX, continue factory be $XXX about detail, $XXX the driver At some million. midpoint, summer automotive months QX, softness seasonal usual. the contribute will and revenue For expected believe both be million broader represents and The growth during year-on-year. more expect to this expect logistics it XX% Breaking market year-on-year the range down in We a nicely. will should of between sequentially. as do and automation growth in

expect electronics be headwind We in will consumer a QX.

believe revenue expect the year’s year, split growth be You for a recall and for the We low electronics total consumer quarter heavy company will may be gross in that we in substantial between range. year-on-year electronics drove last that QX, concentration in a third mid-XX% that QX year. will decline included the to QX This overall. evenly show of revenue and more margin will modest

As potential we discussed the a early phase making customer strategic investment as adopting logistics QX in and our a of we’re in call, products. Cognex in it’s high

a on of deployment we them by substantially the major working We’re complete that end quarter. the third will with

to costs. higher on go and paying component also expect We customer expediting orders

operating will expect expenses by on basis. We a single-digits increase mid sequential

We’re adding sales. in both resources engineering and

We’re supporting we’re domestic certain product products, expenses Cognex some such deployments seeing upcoming large of as of travel and the preparing for resumption geographies. we’re in launches,

tax rate XX%, excluding Lastly, we items. be tax expect discrete the will effective

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

Our comes Giordano [Operator line first Cowen. Joe question the from Instructions] of with

question. your with may You proceed

Good guys. Hi evening.

Joe. Hello,

that not get you’re paying Or cost sales things that. great, the would and mean, like – if not extra the But and they expediting sales because you’re on talk with the know you out these supply of door just for have higher there that? chain, to are are I been able sales, issues. I Can like given but

discussed faster with were a certainly, material issues struggling some longer can backlog supply a X% we the that point times the increase getting think grown don’t we’re and call. seeing we we probably been environment. But like out would chain delays losing been any the But if in we to. lead the the in any we We large quarter have in door. all would would we’d And So have business, companies normal that as in X% larger. we’re business size and orders of in

helpful on very That’s sizing that.

the can are chain, low-to-mid that that if back customer, the are of right in large for like keeping terms to to-high mid- to it things this isolated you and Is we supply very margin, like In you were XXs? now? point normalize it to

in Joe, for Yes, some given of That’s Paul. market uncertainty this our really range Yes, there factors. major but the quarter, two next right. is we are broadened supply the

QX, to good we The recognize commodity we deployment and And in QX, freight than of the customer. the high but strategic expect seeing, we’re logistics average of first costs last potential that component on beyond being, overall, that still pricing started on, of stick a be We and bulk do kind I again, for may is margins think, the to concentrated But that our increases us. then of cost really, with model. so chain in that and predicated a longer quarter. some that. would common don’t really supply in the a that on think And investment benchmark much operating little we QX, XX% operating is secondly

a automation like could be it’s their kind had Perfect. early like just with like distribution conversations And then untapped. that gigantic real that the market. terms in that just some people lastly. seems And market. we in it market pharma sense is of like Yes, extremely And deployment of and that’s in vision

you like of and there you others about and of how as relative how curious maturity? that the terms think Just some play is in market where think you like that you that to play to

Yes, it’s interesting an question.

Let me clarify.

pharmaceuticals about talking medical You’re or specifically.

in about like of one, and that? this things So talking like pills medicines we’re distribution and

these Obviously, Yes. we many has I I market an that many, fast on that need markets that us, similar tracked items level. in are serve. for a dynamics be growing see to it mean, but item that’s high-value

coming. lot a regulation So of

is ways, for see unique that those globally, So this in some do even on our things have that license we through supply where and to anybody And everywhere, reading, almost trends bar pills, say, rolled have specific the specific increasing Like else’s. sure. and been have to been been can I’d we the out with time right? help and track common momentum. links technology than vision where item-level for trace better positioned – like valuable identifiers, some all code customers way That’s plates cars well that chain, products, Our

X.X. items then today, sorry, in counterfeit lot capturing it These a one be the of and Industry are seeing while, real of update what components, one on. observing potential the and just see the of It’s you that that. more – been electronic moving another particularly of that to the improve plays But and might think the through large. made time. subject I things So call for in lot them in industry high-value is might supply And a to trend images, A I that data gaining chains we’ve wow, we that stuff to the take statement that they’re the think just I’m apply chain, I using might certainly right? housing cloud, and supply broadly see certainly components you momentum going is very almost same consumer electronic in

the again, to bar effectively. go codes be with the reprinted of value industries similar applies Vision other reliably kind I – of the it customers overview. dynamics more kind chain and and to – supply That that manage and So tiny to of Cognex help and same to the through may print on could and

So yes, not but it’s just pharma.

guys. Thanks

next with line Our Jacob comes Melius from question Levinson of the Research.

with You your proceed may question.

everyone evening Good

Good evening.

product that, customer higher applications some in saying touched the that coming earlier have biggest characterize the you up advantage I are regards you that? to it products on the portfolio. of brought mean, your would or been know in it. I working opening to mean, out call throughput guess learning, cost? I product that just folks it new been deep question is, new allowing what you how on the in I has is that’s the Is facilities.

of looking like and reading lot on leading do just the perhaps is a scratches we’re difficult-to-read seen automotive letters things develop numbers at before more up it opening cost really or it’s in a the effectively scratches in humans couldn’t it, we that part, areas doing particularly relied inspection broader in in some effectively lot we’re past. that is and initial are or reliably, but on noisy we’ve applications its and we had background, a – application very of is. But the where more to companies technology the learning an deep things Yes, value, really manufacturing, do that invested not like

bit I new the little was seen there. very, sort certainly, we’ve deep of But Line So our powerful for Smart starting applications a today technology. learning example talking in very in about

the the itself different the and of edge be the material example lives, of align you where different being are aligned lines own substrates differentiate of lines and manufacturer where We’re put phone screen, pieces smartphone, wrong that proof of doing right? thing And we’re of the kind that able on can an different or have our brought where manufacturing Lots trying in and find a right try pieces with aligned press that a that to smartphone a up the I of this that, together. line take cover new down in to material you cover, and that down, experience another happening can scratch is a misconstrue think problem edge is with clear sort one to we are the you gone through have together. of of are are instance you to be that a the to lines you sort to not being in of the it, for or align a of piece line of bought all if there

well it we’re adopted and tools seeing a more. haven’t those spaces generally, we’re many past. technology, those of with really and that sometimes is haven’t where extremely selling where But applications could vision rules-based type served and So superior on more that the tools I is served been by like a example different deep And capabilities just been really or learning deep that’s premium machine in do application. an to for far get able powerful. learning that vision in go

on. pass That’s super Thank interesting. it you. I’ll

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

You may proceed with your question.

guys. evening good Hi,

Hi, Josh

context driver? quarter. you the margins. that drivers was of might a in sort Can XQ, in in pretty coming think bit dissipates new But the I have logistics are terms the sequential of chunky fairly talk that that gross you has shipment pilot of Because you increase? little the I mentioned how about in the in of guys think, just off XQ important solid kind is a Paul, and of a customer

right, You up. electronics, big said bit you can if pretty add little of pull forward a XQ you in is heard I step

trying to out that So incremental comes just bump where from? figure

Yes.

sequential So would the consumer be from biggest drivers, a to QX QX electronics.

those year, more regular, a with quarter, quarter second a you given is do in step historically a we’ve in COVID. record quarters major revenue hey, step in electronics Logistics Last more modest still is as up. QX that’s though we’re some even are year kind consumer a noted logistics in but largest – we of expect it the two electronics. So to revenue little as have coming contributor, is was recognized do consumer dramatically again, for QX, nice a factors. the but off, more the delays row, a we This up. it in higher, looks little

expect the where kind bit quarters sort of maybe function of next the Is of is modest what sort guess just just here several some a rates been near-term really are out you because and of getting plateau the little over of talking much that that pig then the think about it. in more a XX maybe would physical so guys the months growth of integration python the in running these so the is bigger demand Got as of through busy over big I sticking on bottlenecks. the integrators projects? activity, past there industry there the a with logistics, kind some just I is And

delivery, real in packaging, I and deployments. parts you’re in in industry, certain that’s That’s of true. big about perhaps what think think, the talking I and there parcel package is is e-commerce a

But What got lot think, I also they then the that coming airport run see, to enthusiasm other actually in still like, the to also the brick-and-mortar the to to starting of table, they’ve customers has and if python. accelerate see handling we gives of in us digest you back think pick in we that long see, that imagine baggage way and pig, I revenue P&L. particularly through big a a coming starting terms potential backlog a into So smaller activities up. or to I

So big some as we while of of medium but term. forward work might a to in I’d markets the go those say deployments see take other coming the that we’re have to seeing have kind through, over compensate time we potential in to

it. Thanks, color. Got Paul. Good Thanks, Rob.

question the Mason Rob next Our with from of comes line Baird.

You may proceed your question. with

sit Yes. put Good probably the with today record the to months platforms then you will an your be in time in and of to have and versus XX suggest know seeing maybe that bit little ago, the traditional But speak now. Certainly, investment? the better wanted all this often around automotive kind of prospects same where of about right maybe drive would evening. if EV not that, intermediate traditional I speak the we context. just And a just just could so what products it’s may there as around easy expected context that automotive demand you’re platforms, just some we it’s where enough lines. to for along growth those to it going ask And to term you today automotive. growing that be go quarter. forward. model today be those, EV investment record terms in again, reporting just also it’s new faster to But of speak are to mix given business I of the maybe quarter that changes – in

Sure.

end growing the in So quarter. right. And second market automotive fastest absolutely our was you’re major

to the kind we But the concentration into back, this half. see second when expect and did for strongly We shifting, activity recovery expect think in I automotive the until the in in we to not see global is experienced of didn’t growth China automotive EV of coming this due part Asia, it came fastest where particularly really this perhaps year, we quickly. to suppliers.

shutdowns Of all EV certainly course, the EV the drivers. vehicle the whether and it’s of from or new say the plant driving the growth. our of be of drivers a Europe don’t is lot in execution appear for Americas business requires, kind Automotive revenue more outside, chip And and in the And reducing second would manufacturing quarter. then currently. also demand in that were battery growth inside shortages to automotive good technology generally, I certainly related our projects

industry new of more the So lot into is coming sophisticated becoming lot and the innovation new a market. with players a

increasing in deep for vision vehicles. use our seeing large who inspection and being Cognex, we’re haven’t Cognex in much certainly, users or of applying traditional customers now think also So we learning larger years been then, technology. the electronics ago customers our the includes now, long-term automotive for three say, five And of and for potential automotive in

So are it. those driving all

But general is EV revenue, getting becoming EV, sure, significant it’s in kind larger what at than also very XX% and a think is growth. our growing I trend That’s larger for certainly obviously the of you’re of industry. automotive fastest less still related. part, the

see. I

Okay.

the you of – also it Just elevate between you expenses higher, operating products you’re case – bit to the up third, you the year? in this also that that expect quarter given But from – around new like fourth there’s would guided typically, little on that the those your that it. your the question a still have sound in be going that working helps one dynamics – would expenses expenses on, you go quick projects and third does some that

last had half the second of stick one we of yet. last own A was quarter would ahead great to would We I a against kind of couple having like factors, year, a our stronger. I with we’re to And this and not year year kind year say say, sure good metrics. guidance. our year of

is there last of an So incentive year of our compensation year. more this element was backloaded than

at there this I QX rates growth of QX, on speculating sequential we But are to impact some time. to think So of be do from not that. will kind prepared

Okay. Thank you.

[Operator Instructions] the line Andrew Our with Buscaglia comes Berenberg. question next from of

You may with your proceed question.

guys. evening, Good

Hello.

down that that electronics, it consumer or worse same? you Do kind will year, of the about Or the Regarding did this last be than better kind is you market quarter? you sales. reiterated feel of

think right. I same, the in general,

as and I market and has think years is much smaller that expected we last this I we years. think as told it’s together that and And recognize bigger we quarter. coming you and cycles trends a

Okay.

how talk out, talk about well, is areas. more shaking like bunch doing around you of or like a So a – And and your got was be is electronics given of of a slightly. of year like doing kind it, kind pretty that. probably your – consumer question right must I hodgepodge what What’s on you that? the when call no Logistics driving the really shortages can the like component – ton checking that seems that? sales got had change – down now. there, just be don’t segment kind Or on but you areas math your driving are really well. a the still I real you about, sales what of of so But well. you all Automotive of quarter doing that quarter And to really business that do is best quarter your is market

for the talking I being of ways, the we perhaps time. big on end user of It’s I I for global our changes are customers been them mean, them mentioned very the XX% so right, get great a we a are very food across certainly, excess labor a are accelerated look has medical in the are think opening long we’ve And related. general beverage, seeing labor, challenges Is investments. basis. by it need we in And think I just seeing just investment. vision mean really machine demand trends, of semiconductor, and in so in I to very, them And economy, about and remarks. do seeing of early certainly productivity with when going for really to broad-based. some some just a and about broad pharmaceutical, growing many lot more strong a markets, think, environment shortages broad-based I my and medical-related

we as I that into pretty broad-based the certainly, about vision manage also, discrete in any effectively X.X. more that very digital I the playing think securely. much manufacturer to mean and serious those that. mean, I to businesses use days seeing think products are demand. we I talked they these of is interest And And data has Industry really it strongly want think their more So

Yes.

in seeing already the Or XXXX. Okay. impact that And maybe kind about, today? your we Is learning lastly, stuff. I’m about talked the that AI of already product new is talking – you influencing that deep revenues more – that or yourselves are

what’s It’s recent probably a a journey three-year lot a pretty launch. It’s product to of some been work, very of release. a been major

we So be those users on the major are are to customers. working products of more going generally, customers this already But deployment. with OEMs, sophisticated

major very some old. from It’s release. revenue us. product then advantage to itself is wouldn’t is years expect for that a about, a it’s major major see The source I VisionPro quarters contribution that the probably The So XX But tenth we product until release. out. this product competitive of talked

So of use vision lot period. to know powerful deployed very platform to on users better over manufacturing. them most and quite giving it’s and And user a capabilities. lot software the are it some and a it. so sophisticated it’s generally, how in product, it tools many trained a more But we established It’s tends of be industrial are

it. Got

Yes.

sort more biggest to are accretive Learning of learning VisionPro we of we’re basis. meaningful the excited deep X.X. X.X, The uptake to Deep products. is launched now And both growth deep rate, we are our think VisionPro launch products year-on-year those and contribution and I the DXXX a learning sequentially that, of seeing that last And it’s right. on to probably year

you both. Thank right. All

question from Jairam Nathan the next Markets. of Daiwa Capital with comes line Our

your with You may proceed question.

Are Hi. a taking you autos. with From Thanks OEMs. after with for I more is, X a exposure one I just And your the seeing change in say, I kind my bigger I’m that. what had wondering, of question. understood, to than the I – I stronger Cognex OEMs just interest deeper battery on suppliers, just a little manufacturing. suppliers taking and Tier presence dig autos? within EVs in the wanted

describing. same really that a the I going are interesting question. you observed on things It’s

right. all that’s Tier drive the trend area brands certainly, as of seeing trend and of what walls and go their that’s brands. think replicate. but suppliers, last there’s about OEMs, – where on, the the up, a countervailing described to not part for was and technology technology really more the if The outstanding four big have brands to who in. big a we we manufacturing years, – I into less you and have are going X and be was business two-thirds of of inside in going some shaken you particularly certainly Tier be around get thing, potential kind part few And we component intending going brands, those have technology which is partners, difficult I to to think the can with and big you X see That players, the back very automotive over perhaps with component it’s our the is strong then to business battery outsourced and is of historically, OEMs automotive a that third are

So definitely, would into also, And then going a up. shaking of it’s cars. say, of I electronics kind there’s lot as

we’re of where the think being in part see really of bigger that automotive. see traditionally, some So as thought electronics more we of technology going more their to materials things happen of of I bill going brands, interesting companies consumer we of and probably space to a are types

really really with So and good recognized. is is, of I those news positioned exciting, really well all Cognex groups well think the

call, the end, So I the pretty say. hard in think industry But out. more do the owners versus well brand the suppliers, that dollars I to we’ll shakes as would

on another question And of Okay. outside Asia. was growth

any I are And of wondering some there. kind was semiconductor in semiconductors is of if out mentioned manufacturing driven China? diversifying – of of you – You by or the that seeing expanding China out

small X% than Cognex’s is in of business years, now overall semi, recent certainly XX% relatively part so. or a around less in Well,

technologies capacity and of through semiconductor as But in investment are demand very we’re reading a that I strong tied and think going are the the what pretty always, and moving put new the seeing production. context. to the – consider, into I really on think it its new we in we to that’s have about so shortage And those markets. – I And semiconductor

those certainly, So companies seeing demand that in we as are very area. invest strong

if I may. last And one one,

chip are about subcontractors I a are handicap in your out lockdown Indonesia We that so But just kind more extended do based hurting risk in I hearing or restrictions And think supplies. COVID Indonesia. Malaysia wanted of how of of you something? to –

right. you’re So

subcontract free a which who of on of just island our manufacturing well-managed in of based does lot largest to our have the a Singapore We zone, trade country connections significant partner the very a small Singapore. is products off It’s has Indonesia.

with We experienced in by by are and well haven’t among being trade that managed both very area, of free zone testing our situation COVID that on right feeling vaccination good seeing it’s challenges, and chain high supplier, it’s and supply changes confident that employees we being significant very news course, of that. risk It’s to at and on. any But very report about But the we’re supply from that the rates at now, way managed. moment. like chain go

very the of the monitoring closely. terms Obviously, chips, that’s availability of situation in And Yes. we’re

to reflected guidance part I pretty through feel gross right, component overall, parts. like and our well. we aggressively that buying manage what’s are of in It’s secure monitoring this But margin continue situation. to We

Okay. you. Great. Thank

next [Operator the comes line question of Joe Instructions] from Our Cowen. Giordano with

with proceed may your You question.

in, letting me for a here. thanks follow-up Hey,

vision internal would is if X.X, be runway? – according to sales like go look now that years an one. five Like basis? be looks can to at percentage If target roughly VisionPro big deep on for now guys as sales good your for as how And learning your quick big things like of a like DXXX of a a like a what percentage annual that and Just an was basis? how from entire what portfolio you I PC the

it’s interesting to still year. goal. – close I reasons. about of an our And don’t That’s aspire question. be growing per to competitive to too Yes, It’s we business. stretch that XXX% from want a specific at XX% overall less for than

for that aggressive it and potential. look the demand of Cognex, at but we as continuing kind think last very We’re strong we year it we’re year, this And certainly, has seeing out. growth really

helpful. That’s you, Thank guys.

of and question-and-answer turn back to closing reached I today’s remarks. for session. Mr. call Ladies gentlemen, over to Rob we Willett the like have end would this

long-term on We call. apply us wrap of so outstanding see quarter’s tonight. you lot We you Thank To XXXX. joining core technology we excited Cognex we first our up, forward of and a again for our half are potential speaking look business. the can where for an had you with to about next much. Thank opportunities

concludes This Thank you today. today’s joining us for conference.

You evening. your may this lines time. at your disconnect of rest Enjoy the