Cognex has announced job cuts, as it takes steps to lower expenses because of deteriorating market conditions.
Approximately 190 employees will lose their jobs across the machine vision firm's global workforce, 8 per cent of its headcount.
Cognex CEO, Rob Willett, and chairman, Dr Robert Shillman, will waive their salaries, and the company’s board of directors have waived their cash fees for the remainder of the year. The company said it will also reduce leased office space.
Willett commented that 'growth has been stifled due to the slowdown by manufacturers, particularly in the automotive industry which was our largest market last year.'
Cognex expects to record a total restructuring charge of approximately $20m, 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 annualised cost savings of approximately $25m.
The company recorded a decrease in revenue of 4 per cent in the first quarter of 2020, compared to Q1-19. Revenue for Q1-20 was $167m. As of 29 March 2020, Cognex had $845m in cash and investments, and no debt.
'It is very unfortunate that these measures are necessary,' said 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 well-being of our employees, our customers, and our suppliers.'
Willett added: 'We are reorganising 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.'
As part of the restructuring, Cognex expects to record a non-cash charge of between $15m and $30m in the second quarter for the impairment of intangible assets and write-down of excess or obsolete inventory because of the deteriorated business conditions.
