Cognex Corp Q2 2024 10-Q Filing

TL;DR

**Cognex Q2 2024 10-Q filed. Financials and operations detailed.**

AI Summary

Cognex Corporation filed its 10-Q for the period ending June 30, 2024. The filing covers financial performance and operational details for the second quarter of 2024. Key financial data and business segments are detailed within the report.

Why It Matters

This filing provides investors and analysts with the latest financial performance data for Cognex Corporation, crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the underlying business performance and market conditions can introduce medium-level risk.

Key Numbers

• 20240630 — Period End Date (Indicates the end of the financial reporting quarter.)
• 20240801 — Filing Date (Date the report was submitted to the SEC.)

Key Players & Entities

• Cognex Corp (company) — Filer of the 10-Q
• June 30, 2024 (date) — End of the reporting period
• 20240801 (date) — Filing date

FAQ

Filing Documents

• cgnx-20240630.htm (10-Q) — 1313KB
• dennisfehr-relocationx10.htm (EX-10.1) — 8KB
• a6302024-10qxexhibit311.htm (EX-31.1) — 11KB
• a6302024-10qxexhibit312.htm (EX-31.2) — 11KB
• a6302024-10qxexhibit321.htm (EX-32.1) — 8KB
• a6302024-10qxexhibit322.htm (EX-32.2) — 7KB
• dennisfehr-relocationx10001.jpg (GRAPHIC) — 194KB
• dennisfehr-relocationx10002.jpg (GRAPHIC) — 95KB
• dennisfehr-relocationx10003.jpg (GRAPHIC) — 172KB
• 0000851205-24-000071.txt ( ) — 8733KB
• cgnx-20240630.xsd (EX-101.SCH) — 53KB
• cgnx-20240630_cal.xml (EX-101.CAL) — 85KB
• cgnx-20240630_def.xml (EX-101.DEF) — 236KB
• cgnx-20240630_lab.xml (EX-101.LAB) — 728KB
• cgnx-20240630_pre.xml (EX-101.PRE) — 506KB
• cgnx-20240630_htm.xml (XML) — 1246KB

FINANCIAL INFORMATION 3

PART I FINANCIAL INFORMATION 3 Item 1.

Financial Statements (interim periods unaudited)

Financial Statements (interim periods unaudited) 3 Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2024 and July 2, 2023 3 Consolidated Statements of Comprehensive Income (Loss) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023 4 Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 5 Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2024 and July 2, 2023 6 Consolidated Statements of Shareholders' Equity for the three-month and six-month periods ended June 30, 2024 and July 2, 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 4.

Controls and Procedures

Controls and Procedures 31 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 3. Defaults Upon Senior Securities 32 Item 4. Mine Safety Disclosures 32 Item 5. Other Information 32 Item 6. Exhibits 34

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

: FINANCIAL STATEMENTS

ITEM 1: FINANCIAL STATEMENTS COGNEX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three-months Ended Six-months Ended June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023 (unaudited) (unaudited) Revenue $ 239,292 $ 242,512 $ 450,089 $ 443,636 Cost of revenue 72,693 62,829 141,553 120,213 Gross margin 166,599 179,683 308,536 323,423 Research, development, and engineering expenses 34,962 33,585 72,067 72,127 Selling, general, and administrative expenses 93,180 83,423 183,808 166,460 Loss (recovery) from fire (Note 17) — ( 2,500 ) — ( 2,500 ) Operating income 38,457 65,175 52,661 87,336 Foreign currency gain (loss) ( 181 ) ( 1,605 ) ( 135 ) ( 1,211 ) Investment income 3,116 4,095 6,236 7,682 Other income (expense) 176 112 372 185 Income before income tax expense 41,568 67,777 59,134 93,992 Income tax expense 5,356 10,303 10,900 10,903 Net income $ 36,212 $ 57,474 $ 48,234 $ 83,089 Net income per weighted-average common and common-equivalent share: Basic $ 0.21 $ 0.33 $ 0.28 $ 0.48 Diluted $ 0.21 $ 0.33 $ 0.28 $ 0.48 Weighted-average common and common-equivalent shares outstanding: Basic 171,568 172,429 171,630 172,527 Diluted 172,733 173,622 172,699 173,791 Cash dividends per common share $ 0.075 $ 0.070 $ 0.150 $ 0.140 The accompanying notes are an integral part of these consolidated financial statements. 3 COGNEX CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Three-months Ended Six-months Ended June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023 (unaudited) (unaudited) Net income $ 36,212 $ 57,474 $ 48,234 $ 83,089 Other comprehensive income (loss), net of tax: Available-for-sale investments: Net unrealized gain (loss), net of tax of $ 336 and $( 584 ) in the three-month periods, and net of tax of $ 453 and $ 1,274 in the six-month periods, respectively 1,020 ( 1,706 ) 1,379 3,720 Reclassification of net realized (gain) loss on the sale

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles (GAAP). Reference should be made to the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a full description of other significant accounting policies. In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, adjustments related to losses and recoveries from the fire at the Company's primary contract manufacturer (Note 17), and financial statement reclassifications necessary to present fairly the Company's financial position as of June 30, 2024, and the results of its operations for the three-month and six-month periods ended June 30, 2024 and July 2, 2023, and changes in shareholders' equity, comprehensive income, and cash flows for the periods presented. The results disclosed in the Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year. NOTE 2: New Pronouncements Accounting Standards Update (ASU) 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by feder

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 3: Fair Value Measurements Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of June 30, 2024 (in thousands): Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets: Money market instruments $ 583 $ — $ — Corporate bonds — 316,342 — Treasury notes — 45,042 — Treasury bills — 26,394 — Asset-backed securities — 15,304 — Certificate of deposit — 7,601 — Sovereign bonds — 1,975 — Economic hedge forward contracts — 57 — Liabilities: Economic hedge forward contracts — 152 — The Company's money market instruments are reported at fair value based upon the daily market price for identical assets in active markets, and are therefore classified as Level 1. The Company's debt securities and forward contracts are reported at fair value based on model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. They use this information to structure yield curves for various types of debt securities and arrive at the daily valuations. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generall

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4: Cash, Cash Equivalents, and Investments Cash, cash equivalents, and investments consisted of the following (in thousands): June 30, 2024 December 31, 2023 Cash $ 141,508 $ 183,242 Treasury bills 26,934 — Certificate of deposit 7,601 — Money market instruments 583 19,413 Cash and cash equivalents 176,626 202,655 Corporate bonds 103,654 124,851 Asset-backed securities 5,346 3,551 Treasury notes 2,449 — Sovereign bonds 1,000 990 Current investments 112,449 129,392 Corporate bonds 212,688 183,965 Treasury notes 42,593 43,523 Asset-backed securities 9,958 15,763 Sovereign bonds 975 979 Non-current investments 266,214 244,230 $ 555,289 $ 576,277 Corporate bonds consist of debt securities issued by both domestic and foreign companies; asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; treasury notes consist of debt securities issued by the U.S. government; and sovereign bonds consist of direct debt issued by foreign governments. All of the Company's securities as of June 30, 2024 and December 31, 2023 were denominated in U.S. Dollars. Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets and amounted to $ 4,383,000 and $ 3,169,000 as of June 30, 2024 and December 31, 2023, respectively. The following table summarizes the Company's available-for-sale investments as of June 30, 2024 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Current: Corporate bonds $ 105,250 $ — $ ( 1,596 ) $ 103,654 Asset-backed securities 5,426 — ( 80 ) 5,346 Treasury notes 2,500 ( 51 ) 2,449 Sovereign bonds 1,001 — ( 1 ) 1,000 Non-current: Corporate bonds 217,537 73 ( 4,922 ) 212,688 Treasury notes 43,362 — ( 769 ) 42,593 Asset-backed securities 10,689 — ( 731 ) 9,958 Sovereign bonds 1,025 — ( 50 ) 975 $ 386,790

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the Company's available-for-sale investments as of December 31, 2023 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Current: Corporate bonds $ 128,150 $ — $ ( 3,299 ) $ 124,851 Asset-backed securities 3,637 — ( 86 ) 3,551 Sovereign bonds 1,012 — ( 22 ) 990 Non-current: Corporate bonds 189,326 506 ( 5,867 ) 183,965 Treasury notes 43,654 82 ( 213 ) 43,523 Asset-backed securities 16,773 — ( 1,010 ) 15,763 Sovereign bonds 1,037 — ( 58 ) 979 $ 383,589 $ 588 $ ( 10,555 ) $ 373,622 The following table summarizes the Company's gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of June 30, 2024 (in thousands): Unrealized Loss Position For: Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 93,328 $ ( 962 ) $ 203,251 $ ( 5,556 ) $ 296,579 $ ( 6,518 ) Treasury notes 22,107 ( 284 ) 22,936 ( 536 ) 45,043 ( 820 ) Asset-backed securities 9,599 ( 716 ) 5,705 ( 95 ) 15,304 ( 811 ) Sovereign bonds — — 1,974 ( 51 ) 1,974 ( 51 ) $ 125,034 $ ( 1,962 ) $ 233,866 $ ( 6,238 ) $ 358,900 $ ( 8,200 ) The following table summarizes the Company's gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of December 31, 2023 (in thousands): Unrealized Loss Position For: Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 30,770 $ ( 359 ) $ 226,643 $ ( 8,807 ) $ 257,413 $ ( 9,166 ) Treasury notes 20,725 ( 153 ) 2,441 ( 60 ) 23,166 ( 213 ) Asset-backed securities 17,062 ( 1,049 ) 2,252 ( 47 ) 19,314 ( 1,096 ) Sovereign bonds — — 1,968 ( 80 ) 1,968 ( 80 ) $ 68,557 $ ( 1,561 ) $ 233,304 $ ( 8,994 ) $ 301,861 $ ( 10,555 ) Ma

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month periods ended June 30, 2024 and July 2, 2023 (in thousands): Three-months Ended Six-months Ended June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023 Gross realized gains $ 6 $ — $ 8 $ — Gross realized losses ( 16 ) — ( 16 ) — Net realized gains (losses) $ ( 10 ) $ — $ ( 8 ) $ — Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders' equity as accumulated other comprehensive income (loss). The following table presents the effective maturity dates of the Company's available-for-sale investments as of June 30, 2024 (in thousands): <1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5-8 Years Total Corporate bonds $ 103,654 $ 59,638 $ 57,273 $ 61,410 $ 34,367 $ — $ 316,342 Treasury notes 2,449 987 18,909 22,697 — 45,042 Asset-backed securities 5,346 4,060 — — 2,162 3,736 15,304 Sovereign bonds 1,000 975 — — — — 1,975 $ 112,449 $ 65,660 $ 76,182 $ 84,107 $ 36,529 $ 3,736 $ 378,663 NOTE 5: Inventories Inventories consisted of the following (in thousands): June 30, 2024 December 31, 2023 Raw materials $ 97,031 $ 93,201 Work-in-process 4,344 5,747 Finished goods 55,880 63,337 $ 157,255 $ 162,285 NOTE 6: Leases The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its operations. All of these leases are classified as operating leases. Certain leases may contain options to extend or terminate the lease at the Company's sole discretion. As of June 30, 2024, there were no options to terminate and twenty options to extend that were accounted for in the determination of the lease term for the Company's outstanding leases. C

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The total operating lease expense for the three-month and six-month periods ended July 2, 2023 was $ 2,639,000 and $ 5,031,000 , respectively. The total operating lease cash payments for the three-month and six-month periods ended July 2, 2023 were $ 2,364,000 and $ 4,768,000 , respectively. The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month and six-month periods ended July 2, 2023 was $ 136,000 and $ 160,000 , respectively. Future operating lease cash payments are as follows (in thousands): Year Ended December 31, Amount Remainder of fiscal 2024 $ 6,876 2025 12,011 2026 9,944 2027 9,107 2028 8,659 2029 8,078 Thereafter 44,328 $ 99,003 The discounted present value of the future lease cash payments resulted in a total lease liability of $ 74,183,000 and $ 78,601,000 as of June 30, 2024 and December 31, 2023, respectively. The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of June 30, 2024. The Company leases a building in Singapore that serves as a distribution center for customers

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