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Cognex sales up 19 per cent, but decline expected from electronics customers

Cognex has seen a 19 per cent increase in revenue in the second quarter of 2018 compared to the same period last year. Revenue for the quarter was $211.3 million.

Revenue from most of Cognex’s end markets grew worldwide, both year-on-year and sequentially. An exception was consumer electronics – Cognex’s largest end market – where revenue was flat with Q2 2017.

Cognex also expects substantially lower revenue from large customers in OLED display and smartphone manufacturing going into Q3 2018. Because of this, the company predicts revenue for Q3 2018 to be between $220 million and $230 million, a decline year-on-year.

Cognex’s gross margin was 74 per cent for Q2 2018, which was at the lower end of the company’s target range compared with 76 per cent for both Q2 2017 and Q1 2018. The decrease was primarily due to revenue mix, with a higher percentage of revenue coming from application-specific customer solutions in Q2 2018.

Research, development and engineering (RD&E) expenses increased 15 per cent from Q2 2017 and decreased 13 per cent from Q1 2018. The year-on-year increase in RD&E reflects Cognex’s investment in engineering resources and employee-related costs for the development of new products. The sequential decrease in RD&E reflects development efforts related to large opportunities in Q1 2018 and lower stock option expense.

Cognex’s financial position as of 1 July 2018 was $755 million in cash and investments, and no debt.

Cash and investments decreased by $73 million from the end of 2017. Cash outflows included $121 million spent to repurchase Cognex common stock, $22 million paid for capital expenditures, and $16 million in dividends paid to shareholders. Cash inflows consisted of $73 million generated from operations and $15 million received from the exercise of employee stock options.

Cognex intends to continue to repurchase shares of its common stock in Q3 2018, subject to market conditions and other relevant factors.

Inventories decreased by $7 million, or 7 per cent, from the end of Q1 2018 and increased by $22 million, or 32 per cent, from the end of 2017. The increase from year-end reflects strategic purchases for anticipated large customer shipments in the coming quarters and planned new product introductions.

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