Cognex(US:CGNX)2024-02-15 19:27Financial Data and Key Metrics Changes - Revenue declined 18% in Q4 2023, including a $7 million contribution from Moritex, and was down 17% for the full year [16][10] - Adjusted gross margin for Q4 was 70.7%, with a reported gross margin of 68.7%, impacted by acquisition costs and unfavorable mix [19][20] - Adjusted diluted earnings per share was $0.11 in Q4, reflecting a year-on-year decline due to lower revenue and margins [22] Business Line Data and Key Metrics Changes - Significant year-on-year declines were observed in consumer electronics and semiconductor markets, with broader softness across factory automation sectors [17][10] - Automotive sector showed softness in internal combustion but increasing demand from EV battery manufacturers [18] - Logistics remained stable, contributing growth sequentially and flat year-on-year [18] Market Data and Key Metrics Changes - Revenue in the Americas increased sequentially, driven by logistics growth, while revenue in China declined further due to a challenging economic environment [18] - China experienced the steepest year-on-year revenue decline of 29% in Q4 and 28% for the year, primarily affecting consumer electronics [86][90] Company Strategy and Development Direction - The company is focused on capitalizing on trends such as the shift to EVs and advancements in deep learning machine vision technology [14] - The Emerging Customer initiative aims to expand the sales force and is expected to generate over $50 million in incremental revenue in 2024 [32] - The company maintains long-term financial targets of 15% revenue growth, mid-70% gross margin, and over 30% operating margin, evaluated on an adjusted basis [7] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious investment environment with customers delaying orders and increased scrutiny on CapEx [10] - There are signs of stabilization in logistics and EV battery sectors, with expectations for growth in the second half of the year [41][112] - The company anticipates challenges in the first half of 2024 but remains confident in achieving long-term growth targets [42] Other Important Information - The company reported a strong net cash position of $576 million at the end of Q4, with no debt [23] - Paul Todgham, CFO, will be leaving the company on March 15, 2024, with an external search for a successor underway [26] Q&A Session Summary Question: Where are you seeing stabilization in Q1 guidance? - Management indicated stabilization in logistics and some larger markets, with EV battery manufacturing showing growth momentum [48] Question: Clarification on Q1 gross margin guidance? - Expected adjusted gross margin in the high 60% range, with headwinds from Moritex and a strategic logistics project [50][51] Question: Insights on the EV business? - Significant investments are being made in EV battery manufacturing, particularly in Europe and America, despite some market anxieties [62][67] Question: Trends in logistics outlook? - Optimism in logistics is driven by growth among smaller customers and potential automation in larger companies like Walmart and UPS [100][102] Question: Contribution from Moritex and trends in Japan? - Moritex is expected to contribute 6% to 8% of revenue, with signs of stabilization in the semiconductor market in Japan [120][121]