Cognex (CGNX) 6 May 222022 Q1 Earnings call transcript

Greetings, and welcome to Cognex First Quarter 2022 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, Ms. Susan Conway, Senior Director of Investor Relations. Thank you, ma'am.

begin. may You

release that section Officer. on Relations Form quarterly evening, call you Good about website our Cognex' to first Chief our and Thank XXXX. at everyone. With available remind contain and earnings the Financial our our Todgham, for and Willett, detailed results. like are information on us report earnings quarter our to Investor of XX-Q CEO; www.cognex.com/investor, you. both Paul Welcome I'd are President Rob financial

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turn to over the I'll call Rob. Now

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

greater first support e-commerce, labor pleased XX-year history, industry-leading year meet revenue machine and we requirements top traceability. margin automation quarter Cognex' We for invested XX% quarterly an our first products our for an Companies in of than was and to margin highest to and expected revenue in XXXX. XX% year-on-year XXXX. $XXX million, XX%. for of shortages, the results with near also address the by record are Revenue increasing It QX following of Cognex reported grew our and product in after-tax widespread growth of milestone vision the range. quarter a the operating second reported

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situation customers chain many partners basic more parts to supply becoming we challenging with February. Cognex' for improved, of has you it's and While since last spoke our in source

projects are you often broader part lead to a to deployment. Cognex know, delayed longer due need they of longer automation revenue. [indiscernible]. equipment from customers up products times some That's Cognex delaying opportunities backing It's other are of As implement like projects for taking getting and suppliers and

to invest omnichannel E-commerce, is Cognex's reductions. year-on-year. lack more and vehicles a more the revenue products muted logistics. of While they invest From an this continued the was orders held grew shortages. Cognex as revenue capacity for set automation batteries to on bring Europe us in in biggest due QX electronics to machine cautious retailers confidence customers Asia continued market. QX broader dynamic was well by contributor traditional to increased in to end did the new Consumer become QX. to and cost not enable results, our vision to year-on-year and a about vehicles growth Customers in market, for it our In brick-and-mortar back record Americas year-on-year causing products from on and impact Spending and automotive in a revenue standpoint, higher labor supply have in QX quarterly and outlook. material market factory production business to throughput in electric

section for in will well. be outlook this growth call. above the I'll Consumer QX XXXX, for In about perform say moderately higher continued markets, played to spending overall guidance year's that cycle as semi rate. out more this today's other We and electronics than of Electronics year's expect in consumer in

with recent again celebrate Akin engage Cork now Cognoids been to great I and product Cognoids in more It's innovations. customers In weeks, accessible. to news. as and to joined up launches offices the other Karlsruhe, Turning closely and and world becomes opens

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now, virtual for and Regarding calls. beyond. our working and China are and new excitement our online Cognoids within the in all Cognex them. there's are product many can of realm circumstances to In we lineup product XXXX sales tremendous support about we're making China team, doing new development, The difficult

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replace. weeks. for can about almost and always we to automation has they gross would easier margin time has new Experienced quickly very customers less engineers to over are applications machine introduce the existing that is required us to faster, products allowed smaller, good. enthused and to of In-Sight on they those and smarter, potential accretive how Customer previously solve new feedback the launch have and vision XXXX hours demand the get continually This use. increased products led to Our are expensive

users features the product introduced recently vision of simple extremely deploy the find experience. series any DataMan use machine In-Sight XXX needing of fixed-mount to we applications. with mark chains devices. it image lines supply codes label-based high-speed with etched Paul? options XXXX on logistics X.X without factory have on broadest and direct of technology, dynamic to and DataMan XD reading on readers. to And Paul. our medical This system for when connectivity and performs latest from a and throughout news, code-reading the to barcode line latest small and the high-resolution combined coverage. dramatically sensor, In performance users well today's I'll allows along turn part The manufacturing over machine needs decode vision production Industry formation automation barcodes New set read exceptionally codes critical improves which algorithms XD other boxes XXX across complex now It to

catching orders XX%. a supply. over to because you on quarter that million, a X-year in Mayo. which rate range everyone. noting environment. begin Also, a of standing pleased difficult $XXX was were we if apologize of the only It's new our high QX a between record. in to revenue in Cinco year strong Thank and source our you, ago of de backlog hello, the Rob, up we're Margarita We for were expected was our pleased end an Revenue advance worth and thing macro represents and on hard first growth I quarter supply increase to deliver at XX% and work

of market, revenue points and percentage exchange in other factory from offset Within increased semi the exchange was other XX%, for from X as Gross China change by geographic point goods growth acceptance. at market. rates. expected. XX% broad XX% gross industries came and to I in Asia was a logistics, due manufacturing, a absolute increased from from by Growth consumer the want electronic and a and margin year-on-year. This broader significant logistics, quarter Europe's customer in target percentage automotive, substantial delivery paying to in in we Greater procure brokers. our dollars revenue range. quarter, percentage also to being Revenue our contribution Revenue the remind perspective. few Asia, by you excluding almost despite in In to Americas among QX grew of remains revenue reduction Europe, related at medical first in below QX the QX margin are reduction margin Growth entirely reported XX% increased the a logistics, million premiums currency the in through lockdowns to delayed X components Looking due XX% from EV gross by impacted flow X that point by end currency rates. a to year's last year-on-year automation electronics, from dollars industries. level mid-XX% delivered is due that

QX in slightly in by appears our Operating XX% in prior It Comparing level expect expenses be the Operating that at on We to basis engineering in point. of investments incremental in challenges margin were in passed. and XX% expenses guidance. we operating increased will sales compared and this XXXX the in due with and was XXXX. a of once supply during and with QX headcount line made XXXX, to QX XXXX global down XX% XX% quarter. sequential have be back year-on-year, at that

long-term our costs which product situation. the is term. supply target, driving to the above is year-on-year While decline elevated primarily near due

than the quarter, tax presented tax discussion Regarding more in The warranted. the rates this effective are variance provision. there typically is

XXXX of a to for QX net net discrete net of compared $X.X expense in in $XX,XXX benefit of First, XXXX. $X.X expense million a XXXX combined QX in QX tax of million and a of items of

sequential due tax in rate to respectively. XX% lowered the Second, discrete tax a that a the rate, from a X%, on XX% effective XX%. and tax was annual XXXX items XX%, basis excluding true-up estimated previously to The increase QX notable was

had obsolete are QX in charges earnings excluding tax in prior the and as that restructuring is activities. our discrete want necessary we items. of XXXX XXXX XXXX, non-GAAP inventory we per comparison. adjusted year longer XXXX unusually from in QX out of excluding QX rate large lower XXXX, profits because our of were jurisdictions. share $X.XX in earnings added while of per were discrete with of effective in QX more of taxed QX earned in $X.XX we items, reduced $X.XX XX% in per XXXX the of and quarter that $X.XX longer it believe compared below in and it in no with the share. in I quarter our of non-GAAP this point now and of of share Third, to We EPS is earnings $X.XX share QX Discrete because excess We of per compared guidance expect XXXX. tax $X.XX that recorded year is of a charge no will QX be starting our On $X.XX tax out in they Reported tax part items tax excluding for $X.XX QX XXXX. now by QX basis,

to Cognex balance and million Turning with million to cash buyback $XXX a have quarter. activity. in outflows position included in stock Cognex spent back we a to deployed in continues stock, the single $XXX strong to Cash and repurchase sheet. cash have We our highest buy QX the amount stock debt. is which investments no

million after authorized Our $XXX repurchase million our a completed QX Board in previous new we $XXX and program program.

accounts receivable late increased shipped orders contributed the by XXXX increase. remains end the from Our and XX% of to Large in balance QX healthy. very

Regarding our support underwrite chain elevated And and resilience higher are of to so our business. share market to doing a in customers in supply other continuing to a we global inventory at components we constraints. time and level balance, are win supply costs of bring and

back to the I'll Now call Rob. turn

Thank you, Paul.

move guidance. will for million. revenue million XXXX, reported QX. and Let's report expect $XXX We solid the a results to between for next good we quarter believe to be $XXX and second start to Cognex

are chain that mentioned slow challenges and supply rates. labor our As shortages earlier, our beginning are growth customers facing to

logistics. followed this be expect it quarter In timing of QX by more then addition, large quarter due for a we projects, We to active a quiet is primarily in will QX. and be the believe will

crystallize. in to consumer and beginning be rate spending XXXX year. comparable our electronics, We consumer accretive our year's last will electronics annual is be For seasonality to that into believe for cycle visibility this growth will to revenue

you as to increase China sure difficult asking understand COVID-related China will be lockdowns, Asia, QX business our believe I'm products seasonal over that a consumer XXXX. this consumer Cognex it us our usual We in sequential expect I QX. want number will on we large support shipments QX of lines in year. predominantly electronics a for on QX, installed a quarter revenue-generating is electronics For and remind Despite customers for basis you product of growth to are for forecast production how for largest to right be now. are deployments on-site and ready for in particularly.

as COVID Our not that worse. in timing get assumption does the China reflects the as guidance well that situation

the low this range. persist brokers in margin remainder We we for be scarce We premium year. for will expect the gross XX% are will believe to prices in paying QX components the of

expenses expect flat roughly on a operating sequential basis. We be will

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

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

question Our first of the Melius Levinson Research. Instructions] comes [Operator with line Jacob from

I scenario? case because delay think Or to of guess challenges out better there of of labor respond be. might around that on to projects? angst think lack whatever going of the recession. quite a in inflation seems a a I question how that there word your is, do keep do you type think I they're or do you customers cancel automation lot mean, they or be the potential for or spending just

Jacob. question, interesting an It's Yes.

recessions. this I think in worked number through a we've of industry

And we've our it in come electronics, strongly. executing plans I believe take consumer business the downturn pretty sometimes can quite spend areas and that changes thinkers, customers, like so seen longer-term cycle short-term logistics, say, would would on a environment. continue strong shorter and back then transcend they we EV in initially, major

on are strong vision customer in So than seen automation size position, past well is We in machine our recessions by mixed those may productivity Cognex now that of believe of in through environments. balance a and to pronounced positioned things to customers the conditions our But difficult coming and more that be backlog be into it strength improve we've could large weather willingness previous relationships. sheet, picture a way. that based perhaps the sort traditional our given

things some of I the out. are those So point would

helpful. That's Okay.

comment general product particular comment. curious markets you are XX-Q as just net automation but certain or assume investment. And was somewhere nuances more factory there in that that related folks slowing the on shortages I the to to that a a that's that related you that made if if mentioned, around primarily just

on going Well, I'm there's of say reminded a I'd Tom Jacob, Peters' quotation. lot out there,

think, If not I attention. like not running variables, you're currently there's confused, you're for It's business. anyone paying so many a

and lead the some equipment out challenges up Europe motion certainly, China think held seeing I So I by is X the deployments. think situation situation obviously deployments control our I now sales And cetera. war times and as with packaging. in deploy companies and automation chain think being often, we're certainly, this I spending at and the other PLCs suppliers' are think or whether And of supply notable. seeing And we're America obviously particularly et that on from said, other is it's infrastructure, slowing what are major what But sales down I macroeconomic integrators Ukraine, point. is in geopolitical going that's else concerns and becoming more COVID suppliers some the and in concerns, tentative, Also, we discussed. automotive by months

some being logistics improvements and new are productivity being on safety. So have that More the also is in you and placed centers we've -- worker process and distribution now focus costs this think delayed. I to reduce read seen we've press, improve -- and

out thinking we So are factors into all year. these -- playing are our about that as into the look

projects the than we is seeing we're to I some giving not of very is Some we're nor to a really delaying what lot any have around reduce delaying implication. and cancellation rather say expect improve particularly I would think are that more seeing, I playing projects thing near interest us of positively, final worker greenfield costs -- would The is of term. seeing of sites think in safety, can't a concern company's would longer-term others we're

Needham & Co. line Our the next of comes Jim Ricchiuti question with from

just Is calendar in is that deployments is the that -- into some them have projects going risk some slip not like the XXXX? perhaps where the area. I'm I be my is respect if do place these impression a these QX, with logistics tend to this quarter, have to of strongest these guess by are QX. I done of larger customers Are by And to in the Question normally, there with projects?

quarterly year the change year this continuing see generating logistics and for we're then previous the we're business the QX to we with deployments. lower suggested. years, referring is our we and probably much business necessarily those expect, in be Jim, a any learn for of it what certainly that timing don't you dynamic reasons will this overall more still just Well, kind we're stronger have of in marked -- environment as overall, related probably at playing stronger the our the I'd to -- would logistics and QX to say, revenue in point. expecting to QX you're appears QX revenue, this about on seasonality really in effect a Not quarters the having phasing so but the QX I

Yes. this years have in Logistics XXXX, logistics. different X last to from QX. grew Jim, In this before, is shared QX every had Paul. I've quarter seasonality quite but the

in actually logistics in highest was QX So quarter XXXX. the

So holiday that steadily you pattern. grew kind said. QX was year, it that from a bucking down. different QX of Rob year this then is to mentioned, and QX theory readiness of then And Last as

of at the color So into year, pattern don't the think a true past but insight we overall on least to we X or haven't are it we over the have years. give I trying flavor seen

on thinking you trends, Understood. electronics you in And uncertainty consumer color year gave logistics traditional a more in the bit you same on the of EV, in What the over little see terms with of and automotive? just market. the market? Do balance the on -- investment respect appreciate are to more the

part in seeing then strong we the or the parts in see more engine declining of growth battery business. combustion of faster automotive and we're and growing slower and revenues lot EV global manufacturers and that's Europe a are Well, And And but part growth certainly, that investment there are X very and we're suppliers. Asia, seeing suppliers America, concentrated. automotive Tier growth traditional rates traditionally in where

So projects gross I think those dynamics I Europe increasingly obviously would are longer-term But are battery There continue. plays expect in EV and America. plans. to Cognex' probably those for

question Our Goldman the Sachs. next of Ritchie line Joe from comes with

XX% I a to about excess been curious, and compounded I'm talk for been But just about has growth growth customer, over great logistics around now kind Amazon but don't just for to the growth you're built the capacity the for slows out Obviously, how it's you fulfillment to business. just longer-term many an like just that news whether week that incredibly there there I a guys for I warehouses had growth of capacity. mean ask the XX know, don't framework of rate about the last story long term months? over rate want and is we question kind thinking excess time. too broader potential right have is next, more specific XX broadly, talking that

Yes.

to but and a goal close year XX% I to our accretive last unlikely think this stretch X we expect anywhere remarkable logistics really, to remarkable a grow year year, seen. overall that be I think, to growth after we've our years,

machine a for there's demand vision lot of So logistics. in

new focus you are I productivity, plans referenced correctly reduce placed is improve on costs However, delayed. improvement safety. worker and being distribution process to think being More centers for

concerns safety and are And in potential I goes there those on a lot more motion in with fulfillment. about of in certainly and So think labor logistics plants. repetitive that unionization

right, towards fixed in actually vision on so those than applications, going it sophisticated into that sell focus where many pivoting plays we and more Cognex more well rather there's marketplace. for handhelds, mount very think I

deployment and mentioned, chain shortages. -- slowing so engineering I've meaning due as integration and also And labor, supply we're the to and is

this So of for that's the kind year. dynamics

targets you not long-term to expect kind revisit of I We're our But to of exciting growth later with particularly very think come can into beyond expect do think ready those the vision, it this some quite future very around barcodes more is we exciting logistics. of you. and to share Cognex will a for see moving relates with growth I what vision opportunities. as where some we Logistics, year

expect goal little forward. time community in you in right XX% the to think might you're a the come that how and year look to what think for should like been to ask I we that Still, going stretch back us very exciting. I give would and about a about later what's

dynamic one this good Got appreciate color. it. I whether just competitor I'm little all your curious of enjoyed comments the to like helpful, there's and at question, this curious just it this well. bit pretty announced Asia I as keeping around Imaging in some follow-up bought like helpful Zebra any dynamic That's been all that whether entry. any was longer would and thought competitive be is yourselves you again, past super that that like my kind a have -- change can that interesting barriers to term. -- Maybe changing competitively the month. does Matrox -- I'm make that that

I'll few a sure. general make Yes, comments.

So share I quite and last of marketplace can, lot our main we, competitor a years. in gained have think, few over I this the

R&D think spend, our investments, this our balance our sheet, have paid improvements dividends through I sales our our period. technology,

Zebra say a course, So we say a going look if interested have Zebra's company. is in strong sales on of changes new lot half vision rules-based be very the semiconductor -- think, strategy I did have say, are this not or direct we about you sell strong the both bit and some cans would have. we're strong majority out, OEMs. I -- very those in entrants large period They're a of longer the They've certainly investing new in with And last, overall not industry surprised on technical of little and and over it Certainly, would focused companies majority through our our competitors, we as competitors. by primarily business. terms thoughts always than borne relationships terms but wouldn't what's been I a I of and thoughts been in Matrox of very is in we the that partners, Matrox. see company And new acquisition XX-month of would results, very of dynamics, space.

things all those local watch would state-owned are by growing is more some there enterprise those So hike that been a carefully. is say, IPOs in us There competitors, also certainly also, to We're and in transaction. companies think observe, interesting as for China. and Chinese we is in about some we activity, obviously Chinese robot machine also have there's vision very large locally that I

So quite doing there dynamic. the I companies kept expense long up share are would investment I've and players probably the in with industry a and mentioned, and at probably say of other haven't of in the channels. growing, they're many and so gaining the perhaps been and for who R&D innovation time have sales

So those the would are some of Joe. dynamics I broad see,

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

was electronics visibility consumer My hear this that? early in driving to especially to make that that, exactly expecting what on comment? giving What's is the comment But year. the growing. you I not

-- chains their relationships large their also it's very we consumer Well, have supply providers very with and electronics close customers. number working but of a

that's plans about have us new insights year. do roll out invest now. So by the new their we good pretty of case And time and lines. and this to many models for in for been technology years the new

that space. I of coming And and electronics the So that's what years moderate new muted where really have of I dynamics we're really calling say technology would growth. of we're it's as you've year that's and and pops X read, are this there declined. seen there certainly that are us, are are -- there's into years our kind like or in there really always more then think that sharing. features XXXX And for years new and

work some traditional work in Do from you on And about America automotive nontraditional newer some with U.S. intend of growth rates talking makers based growth you're do out EV to Okay. in comment but are the OEs. declining faster the do North guys the maybe that Asia, of or

often they and Well, vision users, provider sophisticated as technology work have we industrial automation world very teams. excellent in general are say, general. most leading And customers advanced those of with and the in the for the engineering sophisticated in we we're machine

So that we they're exactly with. the kind companies work of

you investing, Okay. maybe automotive wouldn't guys that year. growth a Well, question, those actually, are still if come how this see

are like forward their of still EV with kind So moving newer makers plans.

growth and I have in overall. first think the good quarter, year seen -- the we've guidance for more so I don't we automotive given think we're

comment much So I make think in and EV -- more but strong the automotive. I traditional growth muted would EV growth we and is see battery in

been additionally us. that's for market a large So

So the particularly EV thing, you experiencing who certainly us can great a strong electric and of mixed battery also. the the it's growth, count more on and providing companies, are growth innovators, the vehicle with

Yes. Asia remains the of the -- -- of And of the our EV scale concentration highest in is mix.

be the geographies. is growing rollouts -- So of it EV levels durations could but -- everywhere and growing of different in levels timing different base different CapEx different

much builders. machine more directly it even recognize might the that user EB machine though includes help battery right? it's builders And it than manufacturers, supply ecosystem and contracting might too, brands brands often that is selling of chain you are So understand, a to subcontractors that to a lot OEMs end those with and and and

Rob. terrible, it's Yes,

execute be we So OEM might the what we where for not where recognize the the necessarily located headquarters. revenue project,

battery EV the companies Asian. all are certainly, manufacturing And almost large Yes.

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

perhaps EV. follow and rate that I is triple Just for range rate now? you around last question just said you're to the mean a Rob, growth up you could on falling growth automotive of point that strong. But it reference into seeing? that digits, frame we're right the

your Rob, general? EV in about or is automotive question

of The EV business? your portion automotive

Right.

growing it's necessarily a would faster sure leave our than specifics, overall certainly lot And maybe but give we you not I'm I'll it growth rate. So at that.

Okay.

Or manage outlook challenging the that around? still you you're accounting you in because in were that to I'm relative played your to that Okay. But supply selling how position the And comfortable just how just increase more is for I guess, go is for into saw that it's also, handicapping faring. your risk that any still and you're little how here for how that many. out able ecosystem you're you how if it we comments clearly, -- a -- around seemingly curious as you're forward how

Yes.

in And have chips I been with really this of agreed to decommitted out years us, kind we it's in chips And cases. that we've reporting them problem. have back into of be a reserves rates. think schedule where extreme a suppliers strategic of tended growth type about chips. some where growth we who saw period amounts and burning of year goes for buy a through were large were our of a that year, we we Obviously, consuming going

and So had chips And months. dynamic. decommitting custom we then specialty we suppliers really they have that for were some out X decommitting

we thought spoke us. think to get last by diminished the we've I some problematic end we broke right? you, we But headway, that's sort more of think and headwind year. of that when expect to that decommits really great continue, -- see seen really -- kind making we we the of and recently, I for kind were So by of

lot our they've that the One of a good I'm suppliers, is pushed industry a schedule particularly X came core. the a in back months, hearing with and that about that's pain

from market kind We're that then And us. them brokers, and to broker opportunities. think Obviously, of market expensive. inventory going and chips or hard to revenue. be the into design those current that saying out into So into of very and in the for it going with in comes out sometimes. sourcing source process and then have replace goes environment, those We're And chips we is continue are out then go certainly, can working broker very other challenges. to that we the

we quarters. inventory So see what's timing of where more go there's will sitting into products can bit subsequent costly in a delayed

for of we So over kind a of to that you. of have that. turn it to to I'll sort Paul view size

revenue some for with some much how the been a done sizing then of we've Rob, environment normal We've go last revenue and be I'll start Yes. and would was out side will sizing quarter the quarters, might -- of to or supply shifted delayed. gross that in X because recognized margin. pushed the given have a

we been some orders were a majority few of Europe time, the through last Americas. of period offset kind dollars was in our delivered And to benefited primarily positioning, secure for for to the grew backlog transit normal that -- supply positive revenue So products. the times that for had about that have as we and million million the partially of we mentioned back our delays quarter at basically number. acceptance in yes. on pushed And of -- delivery and in and the gross and not made We Rob the by And we're remarks, vast end. margin which this back China those side, would recognized we've of prepared investment Because in orders COVID-related then it year. of were the in it otherwise the half $XX customer some and of quarter

to have between really buys broker it I citing delta the the Cognex headwind maybe but now XX% of mid-XXs and margin others might think I the the little us is more about buys, this some XX% back or of comparable versus point. XXX majority to the different broker certainly cost counting at get relative a for little on -- what see buys core broker better component QX. expect unique to the what's freight margin several and over QX it XXX gross what to last driven and basis saw hope, was we factors, by year's in versus vast half, not comfortable who inflation, we points is target. in are which we're very are a in XX% of It

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

accretive to to I for be the and said, confirm total thing but both to full wanted consumer logistics growth. you are I just year electronics X think company expected

Yes, they are.

on thought think XQ you based too. this, logistics on and quarter, to quarter your for CE. mentioned I highest what expected for like I XQ But kind quarter it XQ? I fair full company based Is expected think like you now we be Okay. XQ active revenue than to right be is you higher revenue indirectly And a more that's everything likely sequentially a is of know said. the answered that

trends logistics. build. those Yes. we are QX electronics, to guide current But putting a quarters the about And the for and of seasonality which together Joe, thinking year, again, our tend largest for just quarter, be to this be does course. seasonal of and consumer expecting QX we

bet. I that's think safe a

Okay.

of about lot opportunistic. right sometimes earlier I inks the the company a cash market talking inks in was think with no now. for there debt a that's good a active is be and question and to

about Or that overall So pressure Are where your of step the there? M&A just under can markets? stuff of attractive view you there parts of kind in? market more think are Just what curious looking the kind you is what's there now?

a of filtered technology I with realization we're environment very the great the sense of and We're I looking hasn't selective, like sure. particularly M&A the kind for what in early, terms into always is out. companies right? we're it's think My at we little think maybe maybe valuation. of and

So something -- about. we're thinking lot but that's that a certainly,

just X could one. And if I last sneak

pushed it's pushouts? logistics this Just and XQ pushed of you've canceled like that how or around had solid timing visibility down the push maybe discussion, and XQ -- year? out, around push the to you then this it's the is Like have kind Or you is is there into into those maybe that next visibility? is

there's give a guidance Yes. that. I again, I reason think, beyond not mean, we and quarterly

I think tremendous there right noted, volatility as now. is Rob

So bet. further based get Could good delay That's things the it's a good even we worse. have bet could information a today. thinking and on

up. are associated are of with could. to lined historically multiyear moving duration, there plans long-term these sort this dramatic the be tend all do parts other course, Of given several kind of not the they pieces sort of changes But pushes that that of

bound could are we it our to I'd of partners some downside but the commitments the say is extent, So that get think worse, given making.

most also I'll with sophisticated comment businesses. Cognex deal to And that think tends the I

these invested players saw downturn technically really initially and in that some certainly the leaned that kind heavily. of who sophisticated in think logistics I of we are

-- business, how I of see on And I order to So implement be established. the -- more their while sales they plans would what the well automation in in it's focus terms and think they going pretty of are them. Their they're customers changing. might

that So not is would way high that, our degree and say, of coming quite we business confidence a I'd have, be canceled.

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

are I offset And of -- these cost of net Cognex raising just you companies increases? headwinds. done? questions price pricing have had these about talk had been to these some numbers a Can has what pricing prices

the take time. Yes, environment inflation Obviously, we something Cam. in is current haven't some it, can seen I

is focus believe more inflation line. on philosophy our permanent margin offsetting at gross what is For we the really pricing on our is strategy

driver of So some to through our focused the operating price we we're And increases some chain knowing although saw the But on this some to come be income course, try buys. for very is to on inflation for we've at getting with level, And that, biggest trying don't that with increases we to believe that reasons, continue the really we'll pricing permanent. react in underlying of we lower based are and further. not volatility monitor actions gross now we us keeping will accordingly. has time. what are competitive partner taken for margin pace supply period essentially realized right cost an largest that and we're taken and we've specific We little QX, more our offset than broker wish of be matching with disclose think

in us I I Okay. wondering the see been? U.S. give you Are in driver seeing cited or on of segments been as more your all was your weakness and U.S. some in that And international? as less so more regions. all regional And pushouts of growth kind you has nuance more just if growth could a of the logistics the has follow-up, -- then how just in a

investing general be Asia. years and comment, Europe the focused. building majority and but of our number specific. would say and may been our But logistics a business Paul -- a up I And we've capabilities make is still of more for then I'll U.S. in

And why the in of the those some continuing regardless that's generally as a about think business, we're of to necessarily confident seeing we're so And very of in business happens and grow what logistics much part I exciting markets. higher rates growth strongly U.S.

right. Yes, that's

data, time You think that's growth happy for and just relatively I for the logistics with some also we've playing business. been some been got And quite diversification of abroad -- the faster the of out sort our now.

of of customers, which and those have relationships too. nicely depth We been customers has number with expanding

Asian vision markets in e-commerce leaders really in in Europe. great some particularly a Cognex way adopting technical and seeing similarly and big We're exciting

a here about So we U.S. to enthusiasm you be tends know that. have in a And lot with focused. it our of little discussions I

So we future. more that in recommend the talk I would about

for now to like We comments. have Instructions] reached this the closing would call. I back to turn end [Operator of Willett call the Rob over Mr.

you, to much, forward We on joining and everyone, so with call. speaking look next you Thank you quarter's tonight. again for thank us

today's This concludes conference.

rest your this of at may time. You your for lines you the Enjoy day. your Thank disconnect participation.