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Basler confirms ‘record’ nine-month financial results...

09 Nov 2022

…while Cognex reports on “difficult” Q3 performance and expects a flat outlook.

Basler, a developer of image processing components for computer vision applications, has presented its final trading figures for the first nine months of 2022. For this period, Basler said it had reached a “new sales record and broken the barrier of 1,000 employees”.

Supply chain problems, Covid-19 restrictions, particularly in China, a cooling demand as well as the active strategic efforts to become a full range provider for image processing components with direct market access dominated the financial year 2022 to date, the company stated.

Compared to the equivalent period in 2021, sales increased by 25 percent to €205.2 million (previous year: €164.6 million). Incoming orders decreased by 12 percent to €209.7 million (previous year: €237.6 million).

Basler’s financial statement said, “High incoming orders and book-to-bill ratios persisted into the first quarter and then changed in the course of the first nine months. Accumulated, the ratio of orders received to sales is slightly positive.”

Image-processing market

At the end of September 2022, the VDMA (German Engineering Federation) reported an increase in sales of 6 percent for German manufacturers of image processing components compared to the previous year.

According to VDMA, the industry’s incoming orders increased by 8 percent in the same period. With a considerably higher sales growth, the Basler group gained further market shares in the reporting period. However, incoming orders show Basler’s “high share of business in Asia”, which traditionally is more early-cyclical and volatile.

At €24.3 million, earnings before taxes reached approximately the previous year’s level (previous year: €24.5 million). The pre-tax return rate amounted to 11.8 percent (previous year: 14.9 percent) and was on a solid level in the upper range of the forecast. The net profit for the period amounted to €19.2 million and was thus 3 percent above the previous year’s value of €18.7 million.

Basler noted that its cash flow position in 2022 was “very strongly influenced by extraordinary effects of the multiple M&A transactions”. Against this background, the free cash flow amounted to € -38.6 million (previous year: €16.0 million) in the reporting period.

‘Generally optimistic’ outlook

After a strong investment phase with a high working capital in the first nine months, the management expects a clearly positive free cash flow in the upcoming months.

Despite ongoing selective supply bottlenecks, declining incoming orders, cancellations, lockdown-related demand reduction in China and a slowing economy, management is generally optimistic about the rest of the year and recently increased its full-year forecast.

The sales forecast was adjusted upwards from €235–265 million to €262–270 million. At the same time, the forecast corridor for the pre-tax return margin was narrowed to 10 – 12 percent.

The company noted, “Even though the current macroeconomic and geopolitical outlook is very gloomy, the company is nevertheless optimistic about achieving our medium-term target of turning the Basler group to a full range provider and reaching a sales level of € 400 million by 2025.”

Cognex reports ‘difficult’ Q3 results

Camera and machine vision systems developer Cognex has reported its financial results for the third quarter of 2022. The table below shows selected financial data for Q3-22 compared with Q3-21 and Q2-22, and for the nine months of 2022 compared with the same period in 2021.

“We expected the third quarter would be difficult for Cognex,” commented Robert J. Willett, CEO. “Two challenges in the business―the June fire at our primary contract manufacturer’s site that destroyed a large amount of our component inventory and the slowdown in capacity expansion for e-commerce fulfilment by certain customers—lowered revenue significantly on both a year-on-year and sequential basis.”

Willett continued, “While we believe that overcapacity in logistics will dampen our results again in Q4, we replenished our inventory positions following the fire more quickly than we anticipated, and we believe that business disruption is behind us. The leadership team and I are grateful for the perseverance demonstrated by Cognoids and our suppliers as we worked through a difficult situation.”

Q3 in detail

  • Revenue decreased by 26 percent from Q3-21 and by 24 percent from Q2-22 (revenue decreased by 21 percent and 22 percent, respectively, in constant currency).
  • Gross margin was 73 percent for Q3-22 compared to 70 percent for Q3-21 and 72 percent for Q2-22.
  • Research, Development, & Engineering expenses decreased by 2 percent from Q3-21 and were flat with Q2-22. Incentive compensation in Q3-22 was lower on both a year-on-year and sequential basis, reflecting the reduced revenue level.
  • Selling, General & Administrative (SG&A) expenses decreased by 2 percent from Q3-21 and 6 percent from Q2-22.
  • Cognex recorded pre-tax charges of $2.9 million and $17.4 million in Q3-22 and Q2-22, respectively, related to the June 2022 fire at the company’s primary contract manufacturer.
  • The effective tax rate was 14 percent in Q3-22, 11 percent in Q3-21, and 9 percent in Q2-22.
  • Cognex’s financial position as of October 2, 2022continued to be strong, with $818 million in cash and investments and no debt.
  • Accounts receivable decreased by $34 million, or 26 percent from the end of 2021, and reflected the lower revenue level in Q3-22.

Financial Outlook – Q4 2022

Cognex said it expects revenue for Q4-22 will be between $235 million and $255 million. At the mid-point, this range represents an increase sequentially due to improved production lead times relative to Q3-22. On a year-on-year basis, the company expects revenue will be roughly flat at the mid-point due to growth from the broader market being offset by lower spending on large projects in logistics and a roughly 10-percentage point unfavorable impact of currency exchange rates.

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