NATICK, Mass., May 2, 2024 /PRNewswire/ -- Cognex Corporation (NASDAQ:CGNX) today reported financial results for the first quarter of 2024. Table 1 below shows selected financial data for Q1-24 compared with Q1-23 and Q4-23. "Our first quarter results reflected a challenging, yet stable business environment," said Robert J. Willett, CEO of Cognex. "Revenue across most of our factory automation end markets was down year-on-year in the quarter. Revenue improved sequentially as we are seeing early indications of recovery in certain end markets." Mr. Willett continued, "We recently launched the industry's first AI-enabled 3D vision system, and we continue to advance our Emerging Customer initiative. We believe the progress we are making on our strategic initiatives keeps us well-positioned to capitalize on exciting industry trends as the operating environment begins to improve."   Table 1 (Dollars in thousands, except per share amounts) Current Quarter Q1-24 Prior Year Quarter Q1- 23 Y/Y Change Prior Quarter Q4-23 Q/Q Change Revenue $211 $201 +5 % $197 +7 % Operating Income $14 $22 (36 %) $13 +12 % % of Revenue 6.7 % 11.0 % (428 bps) 6.5 % +27 bps Adjusted EBITDA* $25 $27 (7 %) $25 +1 % % of Revenue 11.9 % 13.5 % (159 bps) 12.6 % (70 bps) Net Income per Diluted Share $0.07 $0.15 (53 %) $0.07 +7 % Adjusted EPS* $0.11 $0.13 (14 %) $0.11 +2 %   Note: Numbers shown may not foot due to rounding. *Adjusted EBITDA and Adjusted EPS exclude Non-GAAP adjustments. A reconciliation from GAAP to Non-GAAP metrics is provided in this news release.   Details of the Quarter Statement of Operations Highlights – First Quarter of 2024 Revenue increased by 5% from Q1-23. Excluding the 8% contribution of Moritex and 1% negative impact of FX, revenue declined by 3%. The slight year-on-year decline in revenue was driven primarily by the continued softness across our factory automation business, partially offset by growth in Logistics and Semi. Sequentially, revenue increased by 7% from Q4-23, or 2% excluding the contribution of Moritex and FX, with slight growth across most end markets. Gross margin was 67.3% for Q1-24 compared to 71.5% for Q1-23 and 68.7% for Q4-23. We recorded $3 million in acquisition charges and amortization of intangible assets in cost of revenue in the quarter, primarily related to the Moritex acquisition. Adjusted gross margin was 68.8% for Q1-24 compared to 71.8% for Q1-23 and 70.7% for Q4-23, in line with our prior guidance. The year-on-year stepdown was driven by an approximately 2 percentage point dilution effect from a full quarter of Moritex, and a 1.6 percentage point impact from one-time events in the quarter, primarily a strategic logistics project completed in the quarter that is expected to drive longer-term, high-margin subscription revenue. Operating expenses increased by 5% from Q1-23 and increased by 4% from Q4-23. We recorded $3 million in acquisition charges and amortization of intangible assets in operating expenses in the quarter, primarily related to the Moritex acquisition. Adjusted operating expenses increased by 3% from Q1-23 and increased by 5% from Q4-23, in line with expectations. The year-on-year increase was primarily driven by incremental costs related to Moritex and our investment in the Emerging Customer initiative, partly offset by lower headcount excluding these investments. Net Income declined by 53% from Q1-23 and increased by 7% from Q4-23. Adjusted Net Income declined by 15% from Q1-23 and increased by 2% from Q4-23. The year-on-year decline in Adjusted Net Income was primarily driven by the above-mentioned gross margin effects and investment in our Emerging Customer initiative. The effective tax rate was 32% in Q1-24 and 2% in Q1-23. Excluding discrete tax items and the tax impact of non-GAAP adjustments, the adjusted effective tax rate was 16% in both periods.  Balance Sheet and Cash Flow Highlights – March 31, 2024 Cognex's financial position as of March 31, 2024 continued to be strong, with $557 million in cash and investments and no debt. In Q1-24, Cognex generated $14 million in cash from operations. In addition, the company spent $9 million to repurchase its common stock and paid $13 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. Financial Outlook – Q2 2024 Cognex expects revenue to be between $230 million and $245 million. This range represents a sequential increase in revenue from Q1-24 to Q2-24 due to typical seasonality of consumer electronics revenue. Adjusted gross margin1 is expected to be slightly above 70%, an increase from 68.8% in Q1-24 as we move beyond the one-time events in the first quarter. Adjusted operating expense1 is expected to increase by low- to mid-single digits on a sequential basis as we expect additional investment in the company's Emerging Customer initiative. The adjusted effective tax rate1 is expected to be 16%.  1Cognex has provided the forward-looking non-GAAP measures of adjusted gross margin, adjusted operating expense, and adjusted effective tax rate, but cannot, without unreasonable effort, forecast such items to present or provide a reconciliation to corresponding forecasted GAAP measures. These include special items such as restructuring charges, acquisition and integration charges, and amortization of acquisition-related intangible assets, all of which are subject to limitations in predictability of timing, ultimate outcome and numerous conditions outside of Cognex's control. Additionally, these items are outside of Cognex's normal business operations and not used by management to assess Cognex's operating results. Cognex believes these limitations would result in a range of projected values so broad as to not be meaningful to investors. For these reasons, Cognex believes that the probable significance of such information is low. Information with respect to special items for certain historical periods is included in the section entitled "Reconciliation of Selected Items From GAAP to Non-GAAP". Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call today at 8:30 a.m. Eastern Daylight Time (EDT). The telephone number is (877) 704-4573 (or (201) 389-0911 if outside the United States). 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.    COGNEX CORPORATION CONSOLIDATED BALANCE SHEETS December 31, March 31, 2024 December 31, 2023 (In thousands) ASSETS Current assets: Cash and cash equivalents $           138,859 $           202,655 Current investments, amortized cost of $141,876 and $132,799 in 2024 and 2023,respectively, allowance for credit losses of $0 in 2024 and 2023 139,334 129,392 Accounts receivable, allowance for credit losses of $1,339 and $583 in 2024 and 2023,respectively 138,556 114,164 Unbilled revenue 2,737 2,402 Inventories 170,871 162,285 Prepaid expenses and other current assets 71,173 68,099 Total current assets 661,530 678,997 Non-current investments, amortized cost of $285,376 and $250,790 in 2024 and 2023,respectively, allowance for credit losses of $0 in 2024 and 2023 278,426 244,230 Property, plant, and equipment, net 104,111 105,849 Operating lease assets 74,113 75,115 Goodwill 386,157 393,181 Intangible assets, net 105,054 112,952 Deferred income taxes 397,563 400,400 Other assets 6,279 7,088 Total assets $       2,013,233 $       2,017,812 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: