Cognex Corporation (NASDAQ: CGNX) stock lost over 10.7% on 30th April, 2019 (as of 10:00 am GMT-4; Source: Google finance)
The company in the first quarter of FY 19 has reported 2% rise in the revenue from Q1-18 and declined 10% from Q4-18. The growth year-on-year in logistics was partially offset due to lower revenue from customers in Greater China and in the automotive industry in the Americas. It was also impacted by an unfavorable change in currency exchange rates. On a sequential basis, CGNX experienced a steeper than usual seasonal decline from Q4 to Q1 due to slowing business conditions. Gross margin was 73% compared with 76% for Q1 of ’18 and 73% for Q4 ’18. The year-on-year decline was primarily due to the unfavorable absorption of manufacturing overhead costs. Operating margin was 17% in Q1 of ’19 compared with 20% in Q1 of ’18. The dip in gross margin was the largest contributor to this decline. Also, the 2% increase in operating expenses had a slight negative impact.
Moreover, during the first quarter, the market conditions were generally in line with the expectations. Europe grew by low double digits year-on-year and delivered the largest contribution to growth both in absolute dollars and in percentage terms when excluding a 6-point negative impact from currency exchange rates. Growth came from several industries and was led by logistics and consumer products. Americas also grew by low double digits. Growth was led by substantially higher revenue from logistics customers, which was partially offset by lower revenue from automotive as the customers are deferring spending. In Greater China, more so than anywhere else, the company see customers deferring their capital spending plans. Continued weakness across the region resulted in lower revenue year-on-year. The negative impact of currency exchange rates contributed 6 percentage points to the decline. Revenue from other Asia declined due to lower spending by consumer electronics and semiconductor capital equipment manufacturers. Otherwise, underlying demand in the region remained solid.
CGNX has as of March 31, 2019, $864 million in cash and investments and no debt. Cash and investments rose by $66 million from the end of 2018. Cash inflows includes $61 million in cash generated from operations and $14 million in cash received from the exercise of employee stock options. Cash outflows included $9 million in dividends paid to shareholders and $5 million for capital expenditures. Cognex plans to repurchase shares of its common stock in Q2-19.
Meanwhile, the revenue for the second quarter is expected to be between $190 million and $200 million.