02 Jun 2020
Bosses agree to waive salaries as the machine vision firm takes significant steps to reduce costs.
Cognex, the Massachusetts-headquartered machine vision company, has announced plans to cut 8 per cent of its workforce - equivalent to 190 jobs - in response to the current global slowdown.
Combined with the closure of some offices, the measures are expected to save the Nasdaq-listed firm around $25 million in annual costs.
Growth plans ‘stifled’
As part of what the company described as “significant steps” to reduce expenses, Cognex CEO Rob Willett and chairman Robert Shillman have also decided to waive their own salaries for the remainder of this year.
Other senior executives have agreed cuts of up to 50 per cent to their own pay, while members of the the company’s board of directors have waived their cash fees.
“We had our business sized for continued growth this year,” said Willett in a company statement. “However, growth has been stifled due to the slowdown by manufacturers, particularly in the automotive industry which was our largest market last year.
“We are reorganizing Cognex to sharpen our focus on growth areas such as logistics and deep learning, and to integrate our recent acquisitions more fully. We view this time as an opportunity to prepare for success when business investment returns.”
News of the measures comes just a few weeks after the CEO reported that although Cognex’ business had remained solid in the opening quarter of the year, a sharp decline had begun shortly after that.
At $167 million, sales in the March quarter were down only slightly on the equivalent period in 2019, but that masked a more significant downturn in the automotive sector that has been evident since well before the Covid-19 crisis emerged.
Balance sheet flush
Cognex said that it expected the virus-related impact to be far more pronounced in the three months ending June 30, although the executive team did not give a detailed sales forecast beyond saying that its sales would be lower than in the March quarter. That would imply at least a 15 per cent decline from last year's total for the June quarter.
However, Cognex remains highly profitable, and with nearly $850 million in cash and equivalents and no debt on its balance sheet is in an extremely strong financial position to weather the ongoing pandemic.
“It is very unfortunate that these [cost-cutting] measures are necessary,” said company founder Shillman. “The confidence we have in the future of our business remains unchanged; unfortunately, that future is a bit further off than we would like due to the significant disruption of the global economy.
“In view of that, we have taken significant steps to protect the company’s long-term financial strength which are necessary to help ensure the wellbeing of our employees, our customers, and our suppliers.”
Instigating those measures will see Cognex register a restructuring charge in the region of around $20 million. That will impact the company’s profits in the current quarter, which Willett and Shillman will announce in a couple of months’ time.