Cognex Corp (CGNX) Announces Significant Cost-Cutting Measures, to Reduce Headcount by 8%

May 28, 2020 4:14 PM EDT

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Cognex Corporation (NASDAQ: CGNX), the leader in machine vision, today announced that it has taken significant steps to reduce expenses due to the deteriorating market conditions and to position the company for growth when conditions improve.

The actions being taken by Cognex include a reduction in its global workforce of approximately 190 employees (8% of its worldwide headcount) and a reduction in leased office spaces. In addition, Cognex CEO, Rob Willett, and Chairman, Dr. Robert Shillman, decided to waive their salaries, and the company’s Board of Directors have waived their cash fees for the remainder of the year. These measures follow actions previously taken by Cognex during the past two months to reduce spending and restrict new hiring.

“It is very unfortunate that these measures are necessary,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “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.”

“We had our business sized for continued growth this year,” said Robert J. Willett, Chief Executive Officer of Cognex. “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.”

Pre-tax Charges for Restructuring and Asset Impairment

Cognex expects to record a total restructuring charge of approximately $20 million, primarily in the second quarter of 2020, for the workforce reduction and lease terminations. These actions, together with steps previously taken, are expected to result in annualized cost savings of approximately $25 million. In addition, Cognex expects to record a non-cash charge of between $15 million and $30 million in the second quarter for the impairment of intangible assets and write-down of excess or obsolete inventory due to the deteriorated business conditions.

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