Cognex(US:CGNX)2022-02-16 16:00Revenue and Market Presence - Cognex's machine vision products accounted for approximately 70% of total revenue in 2021, with logistics, automotive, and consumer electronics being the largest industries served [10]. - Sales to customers outside the United States represented approximately 62% of total revenue in 2021, with Europe contributing 24%, Greater China 19%, and other regions 19% [22]. - Cognex Corporation reported revenue of $1,037,098,000 for the year ended December 31, 2021, a 28% increase from $811,020,000 in 2020, driven by a 65% increase in logistics industry revenue [76]. - Revenue from the logistics industry was the largest market for Cognex in 2021, significantly contributing to overall revenue growth, particularly from e-commerce and omni-channel retailers [76]. - Revenue from customers in the Americas increased by 40% in 2021, primarily due to higher logistics industry revenue [78]. - Revenue from customers in Europe increased by 19% in 2021, with a 15% increase when excluding foreign currency exchange rate impacts [80]. - Revenue from Greater China increased by 19% in 2021, with a 12% increase when excluding foreign currency exchange rate impacts, driven by the automotive and semiconductor industries [81]. - A significant portion of the company's products is manufactured by a third-party contractor in Indonesia, which has led to potential delays in delivery schedules due to COVID-19 and other factors [32]. - The company has a large customer in the logistics industry that represented approximately 17% of total revenue in 2021, highlighting revenue concentration risks [39]. Financial Performance - The company has maintained historically high gross margin percentages in the mid-70% range, reflecting the value placed on its innovative products [13]. - Gross margin decreased to 73% in 2021 from 75% in 2020, primarily due to higher inventory purchase prices and a greater percentage of revenue from the logistics industry, which has lower gross margins [74]. - Operating income expanded to 30% of revenue in 2021 compared to 21% in 2020, resulting in net income of 27% of revenue in 2021 versus 22% in 2020, with net income per diluted share increasing to $1.56 from $1.00 [74]. - Cognex's net income increased to $279,881,000 for the year ended December 31, 2021, compared to $176,186,000 in 2020, representing a year-over-year increase of 58.7% [160]. - The company generated net cash provided by operating activities of $314,065,000 in 2021, up from $242,400,000 in 2020, indicating a growth of 29.6% [160]. - Total dividends paid by Cognex in 2021 amounted to $43,263,000, compared to $390,508,000 in 2020, which included a special cash dividend of $351,428,000 [66]. - Cognex's stock performance showed a cumulative total shareholder return of 262.48% from December 2016 to December 2021 [69]. Research and Development - Research and development expenses were 13% of revenue in 2021, down from 16% in both 2020 and 2019, indicating a focus on maintaining product leadership and innovation [20]. - Cognex plans to continue investing in core markets like automotive and consumer electronics while expanding into logistics, particularly in e-commerce and omni-channel retail [13]. - Research, development, and engineering expenses increased by $4,390,000, or 3%, in 2021, with RD&E expenses as a percentage of revenue decreasing to 13% from 16% in 2020 [89]. Operational Challenges - The company has experienced disruptions in the supply of key electronic components, resulting in higher purchase costs and manufacturing delays [33]. - The COVID-19 pandemic has created macroeconomic uncertainty, affecting customer orders and potentially leading to delayed revenue recognition [38]. - The company has faced labor shortages and operational challenges at its distribution centers due to COVID-19, which may impact shipping and customer satisfaction [36]. - The company may face challenges in managing product transitions and accurately forecasting customer demand, leading to excess or obsolete inventory [33]. Corporate Governance and Strategy - The company is selective in its acquisition strategy, aiming to enhance long-term growth and profitability through targeted business acquisitions [14]. - Cognex emphasizes a unique corporate culture that fosters innovation and employee engagement, which is critical for executing its strategic initiatives [25]. - Cognex's executive team includes Robert J. Willett as President and CEO, and Paul D. Todgham as CFO, with a focus on strategic growth and financial oversight [63]. Financial Position and Investments - As of December 31, 2021, the company had approximately $721 million in debt securities, with a net unrealized loss of $3,902,000 [50]. - The company had approximately $907 million in cash and investments as of December 31, 2021, and no long-term debt, positioning it well to weather economic downturns [55]. - The company has a diverse investment portfolio, including corporate bonds, treasury bills, and municipal bonds, which are reported at fair value [133]. - The company utilizes foreign currency forward contracts with maturities of up to 95 days to manage exposure to fluctuations in foreign currency exchange rates [130]. Stock and Shareholder Information - Cognex repurchased a total of 1,436,000 shares of its common stock in the fourth quarter of 2021 at an average price of $78.92 per share, completing its previous stock repurchase program [66]. - The company declared a cash dividend of $0.065 per share in the fourth quarter of 2021, an increase from $0.060 per share in the previous quarters [66]. - Cognex's common stock is traded on NASDAQ under the symbol CGNX, with approximately 650 shareholders of record as of January 30, 2022 [66]. Regulatory and Compliance Risks - The company is exposed to regulatory and compliance risks in international operations, which could adversely affect its business and operating results [56]. - The company may face impairment charges related to its investments or acquired intangible assets, which could materially impact operating results [50]. - The company is subject to foreign currency exchange rate fluctuations, with approximately 49% of sales in 2021 invoiced in currencies other than the U.S. Dollar, potentially impacting operating income [52].