Cognex Corporation (Nasdaq: CGNX), a leading manufacturer of barcode readers, reported lower revenues and earnings for the second quarter of 2019. The results, however, topped the Street view. The company also said it expects a decline in third-quarter revenues, triggering a stock sell-off during Monday’s after-hours trading session.
The Natick, Massachusetts-based company said its revenues dropped 6% annually to $199 million in the June quarter, hurt by the persistent softness in the consumer electronics and automotive market. The top-line exceeded the consensus forecast.
The Bottom-line
Earnings, adjusted for one-off items, declined to $0.27 per share from $0.31 per share in the second quarter of 2018. The bottom-line, meanwhile, topped the Street view. Reported profit dropped to $48.75 million or $0.28 per share from $56.20 million or $0.32 per share a year earlier.
Revenues were negatively impacted by the persistent softness in the consumer electronics and automotive market
“Our Q2 results were in line with our guidance and we were highly profitable, reporting an operating margin of 26. But, as expected, revenue declined year over year due to persistent softness in our two largest markets, consumer electronics and automotive,” said chairman Robert Shillman.
Outlook
Looking ahead, the management expects third-quarter revenues in the range of $175 million to $185 million, which represents a marked decline from the preceding quarter and the third quarter of 2018. The weak guidance reflects a further deterioration in business conditions in Europe and Asia, specifically lower demand for consumer electronics.
Third-quarter gross margin is expected to be in the mid-70% range, which is slightly lower than the previous quarter’s levels. The company expects operating expenses to be relatively flat sequentially and sees an effective tax rate of 16%, before discrete tax items.
Stock
Though Cognex’s stock grew steadily at the beginning of the year, it pared the gains in recent weeks and settled at around $40. The stock, which gained 9% since the beginning of the year, lost sharply Monday evening after the earnings report.