8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 4, 2022

Cognex Corporation

(Exact name of registrant as specified in charter)

Massachusetts	001-34218	04-2713778
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Vision Drive, Natick, Massachusetts	01760-2059
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (508) 650-3000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.002 per share	CGNX	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company       ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition

On May 5, 2022, Cognex Corporation (the “Company”) issued a news release to report its financial results for the quarter ended April 3, 2022. The release is furnished as Exhibit 99.1 hereto. The information in Item 2.02 of this Current Report on Form 8-K, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

Item 5.02 Departure  of  Directors  or  Certain  Officers;  Election  of  Directors;  Appointment  of  Certain Officers; Compensatory Arrangements of Certain Officers

On May 4, 2022, the Board of Directors (the “Board”) of the Company authorized an increase to the number of directors on the Board from seven to eight and appointed John T.C. Lee as a director of the Company, both actions effective immediately. The Board appointed Dr. Lee to the class of directors whose term ends in 2025 to serve in accordance with the bylaws of the Company and until his successor is duly elected and qualified. Dr. Lee shall serve on the Audit Committee and the Compensation/Stock Option Committee of the Board of Directors. A copy of the press release announcing Dr. Lee’s appointment is attached hereto as Exhibit 99.2 and is hereby incorporated by reference.

Dr. Lee, 59, is currently the President and Chief Executive Officer of MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of instruments, systems, subsystems and process control solutions for advanced manufacturing processes.  Dr. Lee has held this position since January 2020. He has also served on the MKS board of directors since January 2020.  From October 2007 to January 2020, Dr. Lee held a series of progressive leadership roles at MKS, including Chief Operating Officer from 2016 to 2019. Prior to joining MKS, Dr. Lee served in various capacities in various technology industries, including semiconductor and solar as well as plasma processing research, at leading technology companies, including Applied Materials, Lucent Technologies and AT&T Bell Labs. He has served as Vice Chair and a member of the Executive Committee of the Board of Directors of the Massachusetts High Technology Council since 2021. Dr. Lee holds a B.S. from Princeton University and both an M.S.C.E.P. and a Ph.D. from the Massachusetts Institute of Technology, all in Chemical Engineering.

Dr. Lee’s qualifications for sitting on the Board of Directors include his executive leadership experience within technology companies, his operating experience, his public company board experience, his knowledge of optics and the semiconductor industry, and his technological background.

For his service on the Board, Dr. Lee will receive an annual stipend of $50,000, and for his service on the Audit Committee and Compensation/Stock Option Committee], Dr. Lee will receive additional annual stipends of $10,000 and $8,000, respectively.  Further, subject to Board approval, Dr. Lee will receive annual equity awards under the Company’s 2007 Stock Option and Incentive Plan (the “2007 Plan”) consistent with the Company’s other non-employee Board members. Dr. Lee will receive an initial equity award under the 2007 Plan of restricted stock units (“RSUs”) having an economic value of approximately $181,600 on the date of grant. These RSUs will vest over three years: 20% on the first anniversary of the grant date; 30% on the second anniversary; and 50% on the third anniversary. Dr. Lee will enter into the Company’s standard indemnification agreement, which has been previously entered into with each of the Company’s directors, and the form of which has been filed by the Company with the SEC.

There is no arrangement or understanding between Dr. Lee and any other person pursuant to which he was selected as a director, nor is the Company aware, after inquiry of Dr. Lee, of any related-person transaction or series of transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Item 8.01 Other Events

On May 5, 2022, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.065 per share. The dividend is payable on June 3, 2022 to all shareholders of record at the close of business on May 20, 2022.

Item 9.01 Financial Statements and Exhibits

(d)            Exhibits

Exhibit No.	Description
99.1	News release, dated May 5, 2022, by Cognex Corporation (furnished herewith)
99.2	News release, dated May 5, 2022, by Cognex Corporation regarding appointment of new director (filed herewith)
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COGNEX CORPORATION
Dated: May 5, 2022	By:/s/ Paul Todgham
	Paul Todgham
	Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Cognex Reports First Quarter 2022 Results

NATICK, Mass.--(BUSINESS WIRE)--May 5, 2022--Cognex Corporation (NASDAQ: CGNX) today reported financial results for the first quarter of 2022. Table 1 below shows selected financial data for Q1-22 compared with Q1-21 and Q4-21.

Table 1
(Dollars in thousands, except per share amounts)
	Revenue	Net Income	Net Income per Diluted Share	Non-GAAP Net Income per Diluted Share*
Quarterly Comparisons
Current quarter: Q1-22	$282,407	$67,333	$0.38	$0.42
Prior year’s quarter: Q1-21	$239,027	$69,848	$0.39	$0.36
Change: Q1-21 to Q1-22	18%	(4)%	(3)%	17%
Prior quarter: Q4-21	$244,065	$53,535	$0.30	$0.30
Change: Q4-21 to Q1-22	16%	26%	27%	40%
*Non-GAAP net income per diluted share excludes discrete tax adjustments. A reconciliation from GAAP to Non-GAAP is shown in Exhibit 2 of this news release.

“Overall, I am pleased with our first quarter results,” said Robert J. Willett, Chief Executive Officer of Cognex. “Revenue was the second highest of any quarter in our company’s 41-year history and operating margin was above our 30% long-term target. This solid start to the year was driven by the increasing adoption of machine vision technology and the hard work of Cognoids through difficult conditions around the world to support our customers, manage our supply chain, and continue our product development efforts.”

Mr. Willett continued, “While our Q1 results were good, we believe growth momentum is slowing. We are currently hearing from customers that automation projects are taking longer to deploy, and some are being delayed, because of supply chain challenges and staffing shortages.”

Details of the Quarter

Statement of Operations Highlights – First Quarter of 2022

• Cognex reported record first-quarter revenue of $282 million for 2022. Revenue increased by 18% from Q1-21 and 16% from Q4-21. Growth came from multiple end markets on both a year-on-year and sequential basis, including a notable contribution by customers in logistics. In addition, improved supply conditions and delivery times on Cognex products in the first quarter helped the company ship a considerable level of orders that were in backlog at the end of 2021.

• Gross margin was 72% for both Q1-22 and Q4-21 compared with 77% for Q1-21 due to higher prices Cognex has been paying to purchase components and other inventory that are in short supply. In addition, the revenue mix in Q1-21 was more favorable than in Q1-22.

• Research, Development, & Engineering (RD&E) expenses increased by 6% from Q1-21 and by 2% from Q4-21. Cognex incurred higher costs associated with the company’s investment in engineering resources on both a year-on-year and sequential basis. These increases were partially offset by the impact of foreign currency exchange rate changes and lower incentive compensation.

• Selling, General & Administrative (SG&A) expenses increased by 12% from Q1-21 and decreased by 3% from Q4-21. SG&A spending increased year-on-year due to higher personnel-related costs (including additional sales headcount), travel, stock-based compensation expense, and sales demonstration equipment tied to new product launches. Like RD&E, the increase in SG&A spending was partially offset by foreign currency exchange rate changes and lower incentive compensation.

• The effective tax rate was 23% in Q1-22, 11% in Q1-21, and 8% in Q4-21. All periods presented include a varying discrete tax benefit or expense, which are summarized in Exhibit 2. Excluding these discrete tax items, the effective tax rate was 16%, 18%, and 8%, respectively. The decrease year-on-year was due to the expectation that more of the company’s profits will be earned and taxed in lower-tax jurisdictions. The increase on a sequential basis was due primarily to a true-up of the 2021 annual tax rate in Q4-21 to 16% from 18%.

Balance Sheet Highlights – April 3, 2022

• Cognex’s financial position as of April 3, 2022 continued to be strong, with $794 million in cash and investments and no debt. In Q1-22, Cognex generated $50 million in cash from operations and $4 million in net proceeds from the issuance of common stock under stock plans. In addition, the company spent $130 million to repurchase its common stock and paid $11 million in dividends to shareholders. Cognex intends to continue to repurchase shares of its common stock pursuant to its existing stock repurchase program, subject to market conditions and other relevant factors.

• Inventories at April 3, 2022 increased by $24 million, or 21%, from the end of 2021 to support the company’s higher anticipated business level in 2022. Cognex is also securing strategic components and other inventory to mitigate exposure to demand changes and component shortages and is paying a premium to do so.

Financial Outlook – Q2 2022

• Cognex expects revenue in Q2-22 will be between $265 million and $285 million. On a sequential basis, the company believes that higher revenue from the consumer electronics industry will be offset by the timing of large projects in logistics and slower spending trends in the broader factory automation market. For all of 2022, Cognex expects that annual revenue from both consumer electronics and logistics will grow over 2021.

• Gross margin for Q2-22 is expected to be in the low-70% range, and below the company’s mid-70% long-term target due to higher supply chain costs.

• Operating expenses are expected to be roughly flat on a sequential basis.

• The effective tax rate is expected to be 16%, excluding discrete tax items.

Non-GAAP Financial Measures

• Exhibit 2 of this news release includes a reconciliation of certain financial measures from GAAP to non-GAAP. Cognex believes these non-GAAP financial measures are helpful because they allow investors to more accurately compare Cognex results over multiple periods using the same methodology that management employs in its budgeting process and in its review of Cognex’s operating results. Non-GAAP presentations exclude certain one-time discrete events, such as discrete tax adjustments (because these costs are outside of Cognex’s normal business operations and not used by management to assess Cognex’s operating results). Cognex does not intend for non-GAAP financial measures to be considered in isolation, or as a substitute for financial information provided in accordance with GAAP.

• We estimate the tax effect of items identified in the reconciliation by applying the effective tax rate to the pre-tax amount. However, if a specific tax rate or tax treatment is required because of the nature of the item and/or the tax jurisdiction where the item was recorded, we estimate the tax effect by applying the relevant specific tax rate or tax treatment, rather than the effective tax rate.

Analyst Conference Call and Simultaneous Webcast

• Cognex will host a conference call today at 5:00 p.m. Eastern Daylight Time (EDT). The telephone number is (877) 704-4573 (or (201) 389-0911 if outside the United States). A replay will begin at 8:00 p.m. EDT today and will be available until 11:59 p.m. EDT on Sunday, May 8, 2022. The telephone number for the replay is (877) 660-6853 (or (201) 612-7415 if outside the United States). The access code for both the live call and the replay is 13728103.

• A real-time audio broadcast of the conference call or an archived recording will be accessible on the Events & Presentations page of the Cognex Investor website: https://www.cognex.com/Investor.

About Cognex Corporation

Cognex Corporation designs, develops, manufactures, and markets a wide range of image-based products, all of which use artificial intelligence (AI) techniques that give them the human-like ability to make decisions on what they see. Cognex products include machine vision systems, machine vision sensors, and barcode readers that are used in factories and distribution centers around the world where they eliminate production and shipping errors.

Cognex is the world's leader in the machine vision industry, having shipped more than 3 million image-based products, representing over $9 billion in cumulative revenue, since the company's founding in 1981. Headquartered in Natick, Massachusetts, USA, Cognex has offices and distributors located throughout the Americas, Europe, and Asia. For details, visit Cognex online at www.cognex.com.

Certain statements made in this news release, which do not relate solely to historical matters, are forward-looking statements. These statements can be identified by use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, the expected impact of the COVID-19 pandemic on our assets, business and results of operations, customer demand and order rates and timing of related revenue, managing supply shortages, delivery lead times, future product mix, research and development activities, sales and marketing activities, new product offerings and product development activities, capital expenditures, investments, liquidity, dividends and stock repurchases, strategic and growth plans, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the reliance on key suppliers to manufacture and deliver quality products; (2) the inability to obtain components for our products; (3) the failure to effectively manage product transitions or accurately forecast customer demand; (4) the inability to manage disruptions to our distribution centers; (5) the inability to design and manufacture high-quality products; (6) the impact, duration, and severity of the COVID-19 pandemic, including the availability and effectiveness of vaccines; (7) the loss of, or curtailment of purchases by, large customers in the logistics industry; (8) information security breaches; (9) the inability to protect our proprietary technology and intellectual property; (10) the inability to attract and retain skilled employees and maintain our unique corporate culture; (11) the technological obsolescence of current products and the inability to develop new products; (12) the failure to properly manage the distribution of products and services; (13) the impact of competitive pressures; (14) the challenges in integrating and achieving expected results from acquired businesses; (15) potential disruptions in our business systems; (16) potential impairment charges with respect to our investments or acquired intangible assets; (17) exposure to additional tax liabilities; (18) fluctuations in foreign currency exchange rates and the use of derivative instruments; (19) unfavorable global economic conditions, including high inflation rates; (20) business disruptions from natural or man-made disasters or public health issues; (21) economic, political, and other risks associated with international sales and operations, including the impact of the war in Ukraine; and (22) our involvement in time-consuming and costly litigation; and the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2021 and Form 10-Q for the fiscal quarter ended April 3, 2022. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. Cognex disclaims any obligation to update forward-looking statements after the date of such statements.

Exhibit 1
COGNEX CORPORATION
Statements of Operations
(Unaudited)
Dollars in thousands, except per share amounts
	Three-months Ended
	Apr. 3, 2022			Dec. 31, 2021			Apr. 4, 2021
Revenue	$	282,407		$	244,065		$	239,027
Cost of revenue (1)		78,790			69,082			54,045
Gross margin		203,617			174,983			184,982
Percentage of revenue		72	%		72	%		77	%
Research, development, and engineering expenses (1)		36,054			35,489			34,105
Percentage of revenue		13	%		15	%		14	%
Selling, general, and administrative expenses (1)		80,835			82,974			72,424
Percentage of revenue		29	%		34	%		30	%
Operating income		86,728			56,520			78,453
Percentage of revenue		31	%		23	%		33	%
Foreign currency gain (loss)		(444	)		(37	)		(1,008	)
Investment and other income		1,420			1,464			1,386
Income before income tax expense		87,704			57,947			78,831
Income tax expense		20,371			4,412			8,983
Net income	$	67,333		$	53,535		$	69,848
Percentage of revenue		24	%		22	%		29	%
Net income per weighted-average common and common-equivalent share:
Basic	$	0.39		$	0.30		$	0.40
Diluted	$	0.38		$	0.30		$	0.39
Weighted-average common and common-equivalent shares outstanding:
Basic		174,146			176,123			176,288
Diluted		176,668			179,322			179,971
Cash dividends per common share	$	0.065		$	0.065		$	0.060
Cash and investments per common share	$	4.57		$	5.17		$	4.96
Book value per common share	$	7.82		$	8.15		$	7.68
(1) Amounts include stock-based compensation expense, as follows:
Cost of revenue	$	563		$	380		$	248
Research, development, and engineering		4,448			3,377			4,003
Selling, general, and administrative		10,045			6,664			7,758
Total stock-based compensation expense	$	15,056		$	10,421		$	12,009

Exhibit 2
COGNEX CORPORATION
Reconciliation of Selected Items from GAAP to Non-GAAP
(Unaudited)
Dollars in thousands, except per share amounts
	Three-months Ended
	Apr. 3, 2022			Dec. 31, 2021			Apr. 4, 2021
Discrete tax adjustments reconciliation
Income before income tax expense (GAAP)	$	87,704		$	57,947		$	78,831
Income tax expense (GAAP)	$	20,371		$	4,412		$	8,983
Effective tax rate (GAAP)		23	%		8	%		11	%
Discrete tax benefit (expense) related to stock-based compensation		(117	)		1,148			5,207
Discrete tax benefit (expense) related to tax return filings and other		(6,221	)		(1,173	)		—
Total discrete tax adjustments	$	(6,338	)	$	(25	)	$	5,207
Income tax expense (Non-GAAP)	$	14,033		$	4,387		$	14,190
Effective tax rate (Non-GAAP)		16	%		8	%		18	%
Net income (Non-GAAP)	$	73,671		$	53,560		$	64,641
Percentage of revenue (Non-GAAP)		26	%		22	%		27	%
Net income per diluted weighted-average common and common-equivalent share (GAAP)	$	0.38		$	0.30		$	0.39
Per share impact of discrete tax adjustments identified above		0.04			—			(0.03	)
Net income per diluted weighted-average common and common-equivalent share (Non-GAAP)	$	0.42		$	0.30		$	0.36
Diluted weighted-average common and common-equivalent shares outstanding (GAAP)		176,668			179,322			179,971

Exhibit 3
COGNEX CORPORATION
Balance Sheets
(Unaudited)
Dollars in thousands
	Apr. 3, 2022		Dec. 31, 2021
Assets
Cash and investments	$	794,164	$	907,364
Accounts receivable		155,065		130,348
Inventories		136,660		113,102
Property, plant, and equipment		77,870		77,546
Operating lease assets		32,217		23,157
Goodwill and intangible assets		252,228		253,601
Deferred tax assets		412,333		418,570
Other assets		73,578		79,974
Total assets	$	1,934,115	$	2,003,662
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses	$	107,855	$	136,483
Deferred revenue and customer deposits		54,455		35,743
Operating lease liabilities		34,530		25,581
Income taxes		83,585		66,517
Deferred tax liabilities		279,729		293,769
Other liabilities		15,216		15,476
Shareholders' equity		1,358,745		1,430,093
Total liabilities and shareholders' equity	$	1,934,115	$	2,003,662

Contacts

Susan Conway
Investor Relations
+1 508-650-3353
Susan.conway@cognex.com

EX-99.2

Exhibit 99.2

Cognex Appoints New Board Member

NATICK, Mass.--(BUSINESS WIRE)--May 5, 2022--Cognex Corporation (NASDAQ: CGNX) today announced the appointment of Dr. John T.C. Lee, President and Chief Executive Officer of MKS Instruments, Inc., to Cognex’s Board of Directors, effective immediately. Dr. Lee will serve on the Audit Committee and Compensation/Stock Option Committee.

“We are pleased to welcome John to our board,” said Anthony Sun, Chairman of Cognex. “His executive perspective leading a large international technology company and extensive operating experience will strengthen our board. We look forward to his contributions in the years ahead.”

Dr. Lee has been Chief Executive Officer and has served on the board of directors of MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity with nearly $3 billion in annual sales, since 2020. Prior to that, he held a series of progressive leadership roles after joining the company in 2007. Earlier in his career, Dr. Lee worked at Applied Materials, Inc., Lucent Technologies, Inc., and AT&T Bell Labs. He has served as Vice Chair and a member of the Executive Committee of the Board of Directors of the Massachusetts High Technology Council since 2021. Dr. Lee holds a B.S. from Princeton University and both an M.S.C.E.P. and a Ph.D. from the Massachusetts Institute of Technology, all in Chemical Engineering.

About Cognex

Cognex Corporation designs, develops, manufactures, and markets a wide range of image-based products, all of which use artificial intelligence (AI) techniques that give them the human-like ability to make decisions on what they see. Cognex products include machine vision systems, machine vision sensors, and barcode readers that are used in factories and distribution centers around the world where they eliminate production and shipping errors.

Cognex is the world's leader in the machine vision industry, having shipped more than 3 million image-based products, representing over $9 billion in cumulative revenue, since the company's founding in 1981. Headquartered in Natick, Massachusetts, USA, Cognex has offices and distributors located throughout the Americas, Europe, and Asia. For details, visit Cognex online at www.cognex.com.

Certain statements made in this news release, which do not relate solely to historical matters, are forward-looking statements. These statements can be identified by use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements—which may include statements regarding business and market trends; future financial performance; growth opportunities; and strategic plans—involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the inability to attract and retain skilled employees and directors and maintain our unique corporate culture; (2) the failure to effectively manage our growth; (3) the impact of competitive pressures; and the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2021, and Form 10-Q for the fiscal quarter ended April 3, 2022. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. Cognex disclaims any obligation to update forward-looking statements after the date of such statements.

Contacts

Susan Conway
Investor Relations
+1 508-650-3353
susan.conway@cognex.com

XML

Document and Entity Information	May 04, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 04, 2022
Entity Registrant Name	Cognex Corporation
Entity Incorporation, State or Country Code	MA
Entity File Number	001-34218
Entity Tax Identification Number	04-2713778
Entity Address, Address Line One	One Vision Drive
Entity Address, City or Town	Natick
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01760-2059
City Area Code	508
Local Phone Number	650-3000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000851205
Title of 12(b) Security	Common Stock, par value $.002 per share
Trading Symbol	CGNX
Security Exchange Name	NASDAQ