Cognex Corporation (NASDAQ:CGNX) Q3 2019 Earnings Conference Call - Final Transcript

Oct 28, 2019 • 05:00 pm ET

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Cognex Corporation (NASDAQ:CGNX) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Thank you. Our first question comes from the line of Joe Giordano with Cowen and Company. Please proceed.

Analyst
Joe Giordano

Hey, guys. Good evening.

Executive
Robert Willett

Hi, Joe.

Analyst
Joe Giordano

Rob, could you size that big order that was pushed? And is it something that you just found out recently? Is it something that you have visibility into, like, just delivering it after the quarter or something? I'm just trying to see how indicative it is of the logistics environment in general, or this is just kind of a one-off thing that gets fixed in a few weeks.

Executive
Robert Willett

Yeah. So it's a pretty substantial order. Let me give you a bit of color on it. So, overall, our logistics funnel is strong and growing, but we expect lower revenue year-on-year from logistics in Q4 as a result of this major customer delaying delivery of large orders to new sites. And this same customer did take substantial deliveries in Q4 of last year. So many of these orders are on our books, awaiting delivery, which we now expect to result in revenue next year and not in Q4. Visibility of that is quite recent for us, but we see probably that some major integrators may have had some more specific understanding of that situation earlier. So, we continue to see strength in our logistics business, particularly among a broad base of customers who are growing very, very well indeed and remain confident that we can grow it 50% over the long run. But we now just don't expect to grow at that rate for the full year in 2019.

Analyst
Joe Giordano

Can I just clarify one thing there? So, this is an order you have received, right? This is not an order that you thought you might get that didn't materialize, this is an order that you already have though?

Executive
Robert Willett

So it's an order that's coming in in many pieces, it's very substantial, right. So we don't have all of it, but we have many, much of it.

Analyst
Joe Giordano

Okay. And then I guess my follow-up. Yeah, go ahead please.

Executive
Robert Willett

I was going to sort of state it. I think it's really to do with changes at the customer, about their plans and the timing of their plans, which unfortunately for us is moving revenue out of this year and slowing down our overall growth rate in Q4 and for the full year for logistics.

Analyst
Joe Giordano

Okay. My follow-up would be around China. Obviously, a lot of talk around trade war and what a Phase 1 agreement might do. How much of this stuff -- do you attribute like any of this weakness to that specifically? And if there is some sort of like Phase 1 of 3 kind of deal coming out, does that change anything on the ground for you guys do you think any -- on the near term?

Executive
Robert Willett

It's difficult to call but I have to say, yes. I mean, certainly, China is our softest region at the moment, and after being a real engine of