Cognex Corp (CGNX) 2012 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Cognex fourth-quarter 2012 earnings call. At this time all participants will be in a listen-only mode. But later, we will conduct a question-and-answer session, which instructions will be given at that time.

(Operator Instructions)

As a reminder, today's conference is being recorded. Now, I would like to introduce your host for today, Richard Morin. Richard, please go ahead.

Thank you, and good evening, everyone. Earlier tonight, we issued a news release announcing Cognex's earnings for the fourth quarter of 2012 and we've also filed our annual report on Form 10-K. For those of you who have not yet seen these materials, both are available on our website at www.Cognex.com. They contain highly detailed information about our financial results.

During tonight's call, we may use a non-GAAP financial measure, if we believe it's useful to investors or if we believe it will help investors better understand our results or our business trends. For your reference, you can see the Company's income statement as reported under GAAP in Exhibit 1 of the earnings release, and a reconciliation of certain items in the income statement from GAAP to non-GAAP in Exhibit 2. I'd like to emphasize that any forward-looking statements we made in the earnings release, or any that we may make during this call are based upon information that we believe to be true as of today. Things often change, and actual results may differ materially from those projected or anticipated. You should refer to the Company's SEC filings, including our most recent Form 10-K, for a detailed list of these risk factors. Now, I'll turn the call over to Cognex's Chairman, Dr. Bob Shillman.

Thanks, Dick. And good evening everyone. I'd like to welcome you to our year-end conference call for 2012. Right now, I'm in San Diego, where first of all it's sunny, that's the important thing, and no two feet of snow, but more importantly, that's where our advanced R&D team is. Currently they're working on some very exciting new technology that will be incorporated into one of our future products. I hope to tell you about their inventions, and that new product in the near future. But for now, I'm going to hand the microphone over to my partner, Rob Willett, Cognex's President and Chief Executive Officer, who will give you details on our Q4 and year-end financial results. I'll be available at the end of the call to answer any questions that you may have for me, but right now, I'm going to hand the microphone over to Rob. It's all yours.

Thank you, Dr. Bob. Good evening everyone. Earlier tonight, Cognex reported its fourth consecutive year of record revenue. Revenue for 2012 was $324 million, which represented a slight increase over 2011. Normally, we would expect our growth rate to be much higher. However the downturn in semi, solar industry contraction, and unfavorable currency exchange rates reduced revenue by a combined total of $23 million. Backing that out, revenue growth was closer to what we would expect in a year of economic uncertainty.

Highlights in 2012 include our continued strong execution in the factory automation market, which set a new annual revenue record. We were particularly pleased with the contribution from ID products, our fastest-growing strategic initiative. Our market expansion efforts in China also continued to make good progress. Other good news came from the surface inspection market, which set a new annual revenue record. We were highly profitable in 2012, reporting margins that tracked at or above our long-term targets. Gross margin was 75% for the year. Our operating margin was 26%, and net margin was 21%, even with the investments we made in new product development and sales force expansion to drive future growth. We ended 2012 stronger than anticipated, with fourth-quarter revenue that exceeded our guidance. In addition, reported earnings were $0.02 per share above the Thomson Reuters First Call consensus estimate, and that's after a higher-than-expected tax provision.

Looking at the fourth quarter in more detail, reported revenue was $82 million. The lion's share came from factory automation, where revenue was $62.3 million, and accounted for 76% of our total business. ID products continued to outpace the rest of our business. In constant currency, ID products revenue increased 22% year-on-year and 12% over the prior quarter. Looking at factory automation from a geographical perspective, Asia was our best-performing region in terms of percentage growth. Factory automation revenue from Asia grew 16% year-on-year in the fourth quarter, as a result of strong contributions from Korea and China. On a sequential basis, Asian factory automation declined 21%, due to volatile spending among consumer electronics manufacturers. In the Americas, factory automation grew 1% year-on-year, and 4% over the prior quarter. While growth in this region was modest for most of 2012, we're cautiously optimistic that momentum is improving.

Factory automation revenue from Europe decreased 3% year-on-year. However, it increased 12% over the seasonally slow third quarter. Strong execution by our sales team in the European factory automation market drove gains in a tough environment. In Japan, the factory automation market continued to weaken throughout 2012. As a result, our revenue in this area declined 17% year-on-year in the fourth quarter. Japanese factory automation increased 1% sequentially.

In surface inspection, fourth-quarter revenue was $14.4 million, and was the second-highest quarter ever for that segment. As we have said in the past, service inspection is a lumpy business. Revenue declined 11% from the record level reported in the fourth quarter of 2011, but increased 22% over the prior quarter. Revenue from the semiconductor and electronics capital equipment market was $5.5 million in the fourth quarter. This represents an increase of 5% year-on-year, and a decrease of 20% on a sequential basis. We saw unexpected upside to semi in the quarter, due to the receipt of a couple of relatively large orders. It's too soon to say if that signals the beginning of a broader recovery.

Turning now to innovation, we continued to invest heavily in engineering to increase new product offerings and accelerate times to market. These investments are bearing considerable fruit. If you look at the 18-month period ending in mid-2013, we are launching more new products than at any other time in our Company's history. So far in 2013, we added two important barcode readers to our ID product line. Cognex's vision-based technology is a disruptive force in ID. Because of its performance advantages, we are gaining share from outdated laser scanners, that have for many years been the industry-standard.

The DataMan 503 extends our ID product line into the high-performance high-priced end of the logistics market. Here, customers need to accurately identify their products moving through their distribution centers on wide conveyor lines at very high speeds. We also entered the large existing market for lower-performance and lower-price point ID products with our recently introduced DataMan 50. DataMan 50 delivers higher read rates and greater reliability than low-cost laser-based readers currently used in these applications. Its incredibly small form factor enables integration into very tight spaces, opening opportunities on production lines and in assembly machinery.

Moving to other product news, we made our industry-leading OCRMax technology significantly more powerful, and simple to set up. These advancements increase the speed and ease of use of our high-performance optical character reading software, making it available to a broader range of customers. There are more major product launches slated for introduction in the coming weeks.

The last topic in my prepared remarks is our outlook for the first quarter of 2013. We're seeing strength in areas such as ID products, even with the continued economic uncertainty. However, surface inspection revenue is expected to be lower than Q4, which was our second-highest quarter ever. We also normally see a decline in factory automation from Q4 to Q1. As a result, we expect the first quarter revenue will be between $78 million and $81 million. Gross margin should continue to be in the mid-70% range. Operating expenses are expected to increase by approximately 5% on a sequential basis. The effective tax rate is expected to be 19% before a tax benefit of $555,000, related to the retroactive reinstatement of the Federal R&D Tax Credit for 2012.

Now, let's open the conference call up for your questions. Operator, we're ready to take questions.

(Operator Instructions)

Our first question is coming from Tom Hayes from Thompson Research. Please go ahead, Tom.

Just wondering, you posted really nice growth in the margin front on the service component of your business this year. I was just wondering if maybe you could provide your thoughts on the catalysts for that growth we saw this year, and then the sustainability of that growth going into 2013?

Yes, Tom, I think a couple of points I would point to. One is the service revenue at Cognex comes from two areas. One is from a surface inspection business, and there, I think, the team has done a really nice job of understanding and managing that business. Much better than we have in the past, and I think they built in a lot of sustainable productivity improvements that I do expect to continue.

The other area is what we call vision solutions business at Cognex, which is really how we service some very large and important accounts, who have technically sophisticated needs for vision. And we partner with them on some of their most difficult manufacturing problems to apply our vision tools. That business is also being better-managed I think than it has in the past. And margins -- we continue to see strength in there over the long-term. However, I would say that business is project-based. So at times even over year-long periods you're going to see fluctuations in that business based on when revenue comes.

Okay. Great. Just staying on the R&D and SG&A fronts, you've indicated in your release that they were both partly lower because of reduced bonus accruals. I was just wondering if you could maybe give us some degree of magnitude for that lower bonus accruals so we can factor that in?

I guess the thing on the bonus accruals -- what we had is last year, we beat our overall targets, so the bonus plans -- we had an improvement this year. We did not meet our original plan, and I'm just flipping through a couple of pages here. So on the MVSD R&D side, our bonus accrual this year was about $1 million less than it was last year. And on the surface -- okay. For R&D was about $1 million. I'm sorry.

Okay. All right. Thank you.

Our next question is from Zach Larkin from Stephens.

Congrats on a great quarter. Rob, I wondered if you could talk maybe a little bit more about the weakness you mentioned in Asia, particularly in the consumer electronics segment. Is that something that you are viewing as just transitory in nature on the specific quarter? Something you'd expect to come back, and maybe just frame how we should think about that segment going forward?

Yes. So in China, certainly we have a number of very large customers, both contract manufacturers and brand owners in the consumer electronics space. And the revenue from that market can be volatile, because spending is based upon product design cycles and introduction schedules. So that's what drove a lower sequential Asia FA revenue that you are referring to in Q4. We think the long-term prospects in that market are very good. They continue to be very good. But you're going to see lumpiness based around product introductions and investment schedules from big names.

Okay. Thanks very much for that color. Looks like if you look at the trends in Europe, it appears that we've had a fair bit of stabilization, at least in the quarter. Would you characterize that comment as correct, and maybe give a little bit, any color on order rates and what you're seeing out of that region?

Yes. I think we're very pleased with how our team in Europe is performing. I'd say we are outperforming the underlying markets, but based on good sales execution that we're seeing. Our channel into factory automation also includes OEMs that export a lot from the region and also ID products that are gaining traction. So overall, I'd say we're feeling good about the way we're executing in that market.

But I think your question is more about what are we seeing in the market overall? And I would say it's a mixed picture. I would say Southern Europe automotive, particularly southern European companies that are dependent on European buyers, it looks very poor. Their performance is under a lot of pressure. Where it's much better, from our perspective, is in Eastern Europe, automotive for instance. And German automotive where we are continuing to see much more stability, like you are pointing to.

I would also say, we're seeing strength in consumer products, where some larger brand owners and also machine builders are generally experiencing stable business, relatively economically resilient in nature. And they are certainly investing in factory automation and vision. That's what we see.

Maybe one final question if I could. You commented, Rob, on the guidance we should expect web and surface inspection to be coming down Q-over-Q, which I don't think would be a huge surprise. Do you see the revenues in that segment being in the $12 million to $13 million-ish range we've seen on prior quarters in 2012, is that a reasonable range to think about as we're thinking about 1Q 2013?

Your question is around surface inspection specifically?

Yes, sir.

Well, I think you said 2012 to 2014. I think a year ago, they were around $11.5 million. I would expect them to be slightly up on that.

All right. Thank you very much. Congrats again on the quarter.

Thank you. And we'll take our next question, coming from Ben Rose, from Battle Road Research.

Rob, in the automotive sector, in the US in particular, I was curious to see what you may have seen in terms of demand in this quarter and what your view is regarding follow-on demand in 2013?

Ben, your question relates to automotive in where?

Sorry, in North America.

North America specifically. So I would say American automotive appears to be picking up, and we're making inroads into automotive in general. I think we expect to see automotive in America grow, but not very strongly. Just somewhere I would say in the mid-to high-single digit looking forward. There's still a lot of uncertainty, I would say, around that level of spending. And obviously with some players reporting better performance and better investment. But I'd say we're cautiously optimistic about American automotive.

Okay. And then follow-up question would be, I realize we're in the pretty early days of the recent introduction of the new DataMan products for logistics, but is there any commentary you can make regarding the markets' initial reaction from your perspective, and perhaps what we might expect in the first quarter, in terms of maybe any orders that are out there for you?

Yes. So as I mentioned in my prepared remarks, we introduced the DataMan 503 in the quarter, at a very major trade show here in the US, which some people on the call I think attended, ProMat. And we were not surprised, but gratified, I would say, by the reception that we got. This is breakthrough technology, and it's certainly true, a lot of end users and integrators to Cognex who perhaps hadn't thought of us before in that space. So that's very positive at the high end. I think what you've got to bear in mind, though, is that the logistics market is a large market that's relatively conservative in its adoption of technology. We are definitely making inroads, but I wouldn't expect to see huge sales of that product in this quarter or next quarter. I think it's a journey, and we're making solid progress into logistics.

And then on the lower end of the market, we've introduced the DataMan 50, which brings a lot of the power of Cognex vision to the lower price points in ID. And this might integrate particularly into machines, and into manufacturing lines with a very small form factor, which means it can fit in places other products can't. That's a market that, I'd say, has been relatively underserved in terms of performance and read rates and power. And the DataMan 50 is a product that takes us to those places. And there, I think potentially we could see some pretty rapid adoption as we start to launch that product into the market. So we know we're really just at the early stages of introducing it. Again, I wouldn't expect much in the quarter but I think in the second half of the year we could expect more.

Generally, in ID, we've seen some good growth rates. ID product revenue grew 24% over 2011 in constant currency last year. So we're shooting for 30%. And I think depending on the macroeconomic environment, we should be able to achieve that if things get better, but if things continue to stumble along, I still think we can expect 20% growth rate out of our disruptive ID technology.

Okay. Thank you very much.

We'll take our next question, coming from Jagadish Iyer from Piper Jaffray.

Just two questions. I wanted to find out, how should we be thinking about the 2013 revenues be between your three end markets, semi, factory automation, and as well as the web and surface inspection in terms of the trajectory, as we progress through the year?

I think we're focused, as you know, on factory automation. That's represented as I think we said a little more than 75% of our business. Coming through the back end of this year. And that's where we'll focus. And we expect to report our highest growth rates in that area of the business. As you know, we don't give full-year guidance or anything, but we do expect that to be the best performer. And our long-term target for 20% growth rate -- but I don't think under the current macroeconomic conditions, we can expect that kind of growth rate, but we do expect good performance and out-performance by Cognex vision and factory automation.

If we turn to semi, semi is very difficult market to call, really. It's a very cyclical market. I think we were around $5.5 million in the last quarter, we reported. I think at some point we should see a pick-up in that market, but we really don't know when we're going to see that. It's too soon to say.

And then if we get to surface inspection, that's more of a business selling into paper, and metals are the major end markets there. And in that, we do expect to see growth out of that business probably in the low- to mid-single digits this year. And again, likely revenue to be lumpy I would say, as we've always experienced based on products and timing of capital spend. But I hope that can give you a bit of color.

That's great, this is really super helpful. The second thing is, I wanted to find out, I know you alluded to the logistics business, but I just wanted to get your thoughts in terms of how far are you from the tipping point for volume adoption in terms of the logistics, and when will you really see that what leads to, what kind of milestones are you looking forward to, so that we can see that okay, that's going to accelerate sooner than later?

Yes. We see logistics as a pretty fertile market for vision technology at the moment. And we see it as the market, an addressable market that now is around $250 million, where our sales are around $5 million into that segment. So we have a lot of headroom that we see. In terms of the tipping point, what we're looking to happen is for a number of very large end-user customers who have our technology currently under trial, to move forward with some of their big capital investment plans. And we're hoping and we're working towards that happening sometime around the middle of the year, I would say, when we hope to be able to report more specific news in that respect. But I would say we're very pleased with what we're seeing at the moment and the reception we're getting to the new products that we're putting into that space. But again, don't expect huge tipping points in the revenue from logistics in Q1 or Q2.

Fair enough. And just a quick thing on the housekeeping on the OpEx trends, should we assume that you're going to -- how should we be thinking about it? Because we want to look at how the OpEx is going to move forward going into the remainder of 2013. So how should we be thinking about it, please? Thanks.

We are continuing to invest in engineering. And in our sales channel for areas where we see growth. But we are not planning for major increases until we see the automation market improving. We are confident in our strategy of product strategies and sales channel strategies, such as places like in China or to support ID, we're going to go on investing at a moderate rate in that and expect operating expenses to increase single digits as we move through the year, but we're attentive to macroeconomic concerns, and we're watching our spending carefully. But Cognex is really a growth company, and we're focused on growth and around margins when we deliver growth, it's very positive for our operating margins. So what we don't want to do is slow the momentum we have in our business, particularly in ID. So you're going to see us going on investing with confidence around those initiatives, as we move through the year.

Congrats on the good results. Thank you.

We'll take our next question, coming from Jim Ricchiuti, from Needham. Please go ahead.

I joined the call a few minutes late. Rob, did you provide a dollar number for ID in the quarter?

I don't think I did, but I think I can. It's $19.7 million.

Okay. And then for the -- as you look out for this year, you still feel comfortable, even off a larger revenue base, that this ID can grow 20% or more?

Jim, as I said just a little while ago, we target 30% growth in that space. We delivered more than 20% constant currency growth, and we are launching a lot of great products into the space. So we are confident, yes.

Okay. That leads into my next question. It sounds like you're going to have a pretty active new product year. Should we assume that some of these new products, the more significant ones, would you expect them to be contributing to revenues in the second half of the year?

You're going to see some new products coming from us. I would say, the products you've seen already are the ones I think will contribute significantly to the second half of the year. But you are going to see a product we will be launching in the next few weeks or so, that takes us into a new market that we haven't served before. And that's another step for us, along the lines of what we were doing in logistics a year or two ago. So to answer your question, I don't think some of the products we're going to launch in the next few weeks are going to have substantial revenue impact for this year. I think some of the ones that you haven't yet seen are going to be more next year and the year after.

Okay. And the business in Asia and factory automation down sequentially, did you give any color specifically on greater China? I think your commentary about consumer electronics, I'm curious about the broader factory automation market for you in China. How did that play out in the quarter?

I think we see the factory automation space in China providing solid growth for Cognex, overall. But in that market, we're still overly dependent on electronics. And so what really can skew our quarterly revenue results in China are specific large orders from large electronics manufacturers and sub-contract manufacturers. So we saw some of those in Q3. We didn't see many of those in Q4, and we fully expect to see those coming back in the first half of this year.

So I'd say that's kind of a color on our own results. And as I said earlier, that tends to be a result of design cycles and product introductions from major brands. A different issue, I think, maybe in what you're asking, is about the broader factory automation market in China. And I think we saw perhaps some slowing in the fourth quarter around some changes going on in the country, around leadership changes and investments and capital flows. But broadly, we still saw growth among other markets like automotive, food and beverage, which we are slating to be bigger parts of our revenue in China in years to come and where we're seeing good growth coming, particularly in automotive I would say.

And Japan -- any sign of that -- do you think it's bottomed or are you still seeing pressure there? It was down I guess certainly year-over-year. It seems to have bottomed out sequentially, but what's the outlook there for this year?

It's really difficult to call. I've got to tell you. I think what we've seen over the last one, two, or more years is big Japanese consumer electronics manufacturers, and famous names really having a very difficult time, and not investing a lot in machine vision. And so we've seen those businesses move -- manufacturing or that market share, move offshore to places like Korea and Taiwan and China, where we have picked up a lot of it. And then in Japan specifically, obviously, we are reading about changes in macroeconomic policy and investment that's going on there. But I think it's too soon to say whether that's going to result in a big investment in automation going forward.

I think other factors to point out is ID is a good place for us in Japan, and our team is really starting to sell ID into the Japanese market well. And ID products revenue in Japan grew 40% in 2012 over 2011. It's a small base for us and we've been slow to get into that market, but now we're getting some traction. We also have a relationship with Mitsubishi, which provides us a broad channel into the Japanese market. And so the overall business with Mitsubishi was down much less than others, overall, in fact it was broadly almost flat year-on-year. The final comment I'll make about Japan obviously has to do with currency, though. I think as you're all aware, the Japanese currency has weakened significantly, and that will have an impact on our reported revenues, I think, if it remains at its current rate as we go through the year.

Got it. Last question for me, Rob, if you just look at the year, look at 2013 versus where you saw 2012 this time last year, how much more optimistic are you about the business, recognizing it's still a difficult economic environment?

Yes. It's a difficult question. I'd say I'm less pessimistic than I was, but I would not use the word optimistic to describe my views about the market.

Thanks a lot.

Thank you, and I'm showing just one more question in the queue, coming from Richard Eastman, from Robert Baird. Please go ahead.

Could you -- this may be in the K, but could you put a dollar number on your total China sales in 2012? And maybe give us some sense of expectation in terms of what you expect out of the investments you made there from sales and I guess on new products?

That information is not in the K, and to be perfectly honest with you, I don't have it available here in the information we have with us specifically. I think we'll have to provide that to you off-line.

I will make a few comments, Rick. One of which is our factory automation business in China, not our entire business, but our factory automation business in China was $27 million in 2012. So we also have semi and surface vision business. So just to give you a bit of a --

Rob, are you seeing any noticeable uptick in growth in the use of any of your vision products, inside or any of your vision products in robotic vision? Those factory automation applications?

Right. So there's been a lot of press around robots. So the first thing is, Cognex sales vision into the major robotic manufacturers of the world, or most of them I would say. So we have very strong relationships with three of the four largest robot manufacturers in the world. And that has been a core part of our business for a long time. Most of those big robots are sold into automotive.

I think the press that you're seeing a lot about at the moment, Rick, is around what I would call collaborative robots. They're getting a lot of publicity, 60 Minutes and all that. And we are working with some collaborative robot manufacturers today, particularly among bigger names who are already integrating Cognex vision into those products. And then we're also in discussions with really pretty much all of the major names, or most of the major names you're hearing about.

Then I guess if you didn't ask it, what you're wondering is, how does that translate into revenue? I think it's still very early stage. I think that these small collaborative robots working themselves next to people, I think those are still kind of very much at the concept phase. We may see a few thousand of those sold, but I think they'll be sold more into showcase environments. And then I think that market may end up being a large market here in a couple years. I think we're very well-positioned to take advantage and we have very good products for them which meet their performance and price points. But certainly in terms of revenue expectations for 2013 or 2014, it's not going to move the needle for us.

Yes. Okay.

Maybe just one other point, tied up with that what I would call the autonomous guided vehicle market, small robots that move around and that's also -- my comments would apply to that as well.

Okay. And then I have a question -- maybe this is one if Dr. Bob is still on the line --

I am.

I'm curious about -- we had a lot of excitement and a lot of discussion around the VSoC technology, might be two years ago now, and it seems like some of the things we picked up that maybe some of the benefits of VSoC you've managed to accommodate in the software upgrades. I'm curious if this VSoC technology is still a fundamental technology for any upcoming new product launches.

Rob, can I answer that?

Please. Go ahead.

That's a very good question. VSoC cost us a ton of money, I don't have it at the tips of my fingers, to develop and to get into production. Very advanced product. Without VSoC, we would not have been able to introduce the DataMan 500. Subsequent to that, a couple years later, we were able by some various software techniques and some new chips that are commercially available, to equal or exceed the performance of VSoC, so the DataMan 503, which we talked about, does not rely on VSoC. It relies on the software innovations that have been made by the Company, and commercially-available chips.

But VSoC is far from dead. One of the products that is now being beta tested I don't think it's quite released yet, Rob will tell you more about it at some point, it is a product that enters Cognex into a market that we have not played in at all, which we believe is very profitable, and is machine vision, it's a segment in factory automation, but it's an application that we have not been able to develop a product, or hadn't before. Now, with VSoC, we are introducing yet another brand-new product based on VSoC. And who knows? The next generation of that may not need VSoC either.

But VSoC is very special. It allows us to get into these specialized applications quickly. And then reduce price later and perhaps even design it out. Does that answer your question?

It does. You're very active with the technology, and it's a great entry point, it sounds like, into some new verticals.

Right. Despite all the money that we've spent on R&D, we continue, as you have seen today, to generate fantastic results. And I say fantastic -- the revenue beat records but earnings didn't, but that's easily understandable. What's hard to understand is how we broke our revenue record in such a very challenging economic environment, in most parts of the world.

Sure. Understand. Thank you. One last thing, Rob, when I look at the first-quarter revenue guidance, and I think about the FA and the SISD business, maybe typical seasonal declines that they show from Q4 into Q1, at least it suggests that your semi OEM revenue maybe is up a little bit, sequentially. Is that a function of a couple large orders, or are you maybe implying that you're at least at the bottom?

I would say you should figure on our figuring on semi revenue being broadly flat.

Sequentially?

Sequentially, and as I said, it's really too soon to say whether this is the bottom or not.

Okay. Thank you very much.

Thank you. And I'm showing one more question now, coming from Jagadish Iyer from Piper Jaffray. Please go ahead.

Just a quick follow-up. I wanted to find out, was there any buyback in the quarter in terms of -- and what are your plans in terms of, can you give us, like given the cash on your balance sheet, just wanted to understand a little bit more about the buybacks. Thanks.

There was no buyback during the quarter. We in fact spent close to $55 million in the quarter on dividends. And we will be reviewing buyback potential during 2013.

I'd like to comment a bit about that, and of course now Dick is getting nervous, and Rob too. There are a number of ways that can be used to reward shareholders, of course. The best way is increasing share price. All right? The way you increase share price, the best way we can increase share price is to increase earnings per share. There's no question about that. In challenging economic times, 2012, we didn't increase earnings per share. So that's pretty tough -- although the share price has increased.

Another way of rewarding shareholders is through cash dividends. And we have done that. Matter of fact, some people would say we've overdone it. We anticipated the increase in tax rates and gave what we call the very special dividend already. Another way of rewarding shareholders is by buying back shares, which some people think supports the price of the stock, but we would never do that, by the way. That's never our intention, but more importantly it gives everybody a larger-percentage ownership of the Company.

And so we consider all three of those methods -- the first, our biggest effort and thought is on growing the Company, growing earnings, and the share price will take care of itself. The second way, what we've done very frequently is dividends. We've been doing that for many years, and we have in the past purchased stock I can't think of how many hundreds of thousands, but lots of stock has been repurchased. And we have an authorization to even purchase more, and I believe would be in the market from time to time doing that also. But if you have any other suggestions on the ways that we can reward shareholders, those are three ways that we know about. But we'd be happy to consider any alternatives.

Thank you, Dr. Bob. That is clear.

You're welcome. All right. I'm going to wrap it up now. The sun is still shining, and I have to go out and polish my Ferrari and my Lamborghini, while Rob shovels out his BMW. So let me just summarize that we're very pleased with the results. Sure, we would have been happier to show earnings growth too, but we are pleased. Our outlook is cautiously optimistic. Even though, when we're super optimistic, we still are careful about spending money. And I have to say that Rob is as careful or perhaps more careful than I am on expenses. So you should have a high degree of confidence that these expenses -- whatever he projects, he will most likely undershoot those numbers on expenses, and he'll do better than those revenues.

So despite the uncertainty in the world and the economy, we remain very, very optimistic and positive about the products we are introducing, which are leading-edge. No one has product like Cognex does. Of course, after they're out there a few years, people catch up, but we're always introducing what we call highly advantaged and disruptive products, and you'll see more of those coming out in 2013. And I hope to be on those calls when Rob reports -- or I expect to be on those calls when Rob talks to you about those products and the revenue and profit that we're going to be bringing in. Thank you all for attending, and I look forward to speaking with you at future conferences and on future conference calls. Good night.

Thank you, ladies and gentlemen, for your participation in today's conference. You may now disconnect and have a great day.