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Cognex Reports Fourth Quarter and Full Year 2023 Results

Cognex Corporation has reported financial results for the fourth quarter and full year 2023.

Fourth Quarter of 2023

Revenue decreased by 18% from Q4-22 or 19% in constant currency. Revenue was flat compared to Q3-23 on both a reported and constant currency basis. The acquisition of Moritex contributed 3% to year-on-year growth and 4% sequentially. Excluding both the impact of foreign currency translation and the contribution from Moritex, revenue decreased 22% from Q4-22 and 3% sequentially. A substantial year-on-year decrease was driven by the recognition of approximately $20 million of revenue in Q4-22 that was delayed from the third quarter due to business disruption caused by a June 2022 fire. Additionally, revenue in nearly all end markets decreased year-on-year, reflecting continued challenging business conditions.

2023 Summary

As a result of consistently challenging market conditions in 2023, annual revenue declined by 17% from 2022. The slightly stronger U.S. dollar was a 1% headwind in the year while the acquisition of Moritex, which closed in October 2023, contributed 1% to revenue. Revenue declined in nearly all end markets in the year, with the steepest decline in Consumer Electronics, Logistics, and Semiconductor end markets. Automotive and Packaging end markets, such as Consumer Products and Food & Beverage, were the best performing end markets.

Gross margin of 72% was unchanged from 2022 and below the mid-70% long-term target. Adjusted gross margin was 72% in both 2023 and 2022. Gross margin was favorably impacted by lower purchases of scarce components through brokers as supply chain constraints eased. Offsetting this, however, was de-leverage due to a lower volume of sales, unfavorable revenue mix, and $3 million of acquisition costs primarily related to Moritex recorded in cost of sales.

Operating income was 16% of revenue compared to 24% for 2022. Adjusted EBITDA was 18% of revenue compared to 29% for 2023. Cognex continued to invest for long-term growth despite the challenging conditions in 2023. Sales, General & Administrative expenses increased by 9%, primarily driven by investment in our Emerging Customer initiative. Acquisition costs added $7 million of SG&A expenses in the year. The increase in expenses was partially offset by close cost management and an $8 million pre-tax gain resulting from insurance proceeds in connection with the fire at our primary contract manufacturer in June 2022.

“Our fourth quarter results reflected a challenging, but stable business environment,” said Robert J. Willett, CEO of Cognex. “Revenue across most of our end markets was down year-on-year in the quarter, and our largest customers continued a pause in significant capital expenditures.”

“We remain focused on strict cost management, while continuing to invest in our long-term growth prospects. We launched a record number of new products in 2023 and commenced a multi-year investment in our Emerging Customer initiative to expand our customer base. We believe these actions position us well to capitalize on exciting industry trends as growth returns.”

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