Cognex - Q3 2013
October 28, 2013
Transcript
Operator (participant)
Good day, ladies and gentlemen, and welcome to the Cognex third quarter 2013 Earnings Call. At this time, all participants will be in a listen-only mode, but later there will be a question-and-answer session, and instructions will be given at that time. If anyone should require audio assistance, you can press star, then zero, and an audio operator will assist you. As a reminder, today's conference is being recorded. Now I would like to turn it over to your host, Richard Morin.
Richard Morin (CFO)
Thank you, and good evening, everyone. Earlier tonight, we issued a news release announcing Cognex's earnings for the Third Quarter of 2013, and we also filed our quarterly report on Form 10-Q. 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 is useful to investors, or if we believe it will help investors better understand our results or 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. 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.
Robert Shillman (Chairman)
Hey, Dick, and hello, everyone. I'd like to welcome each of you to our third quarter conference call for 2013. As you might have been able to see in tonight's news release, which we just issued, we reported simply outstanding financial results for the third quarter, with records both in revenue and in net income. Right now, I'm calling in from our R&D center in San Diego, and the team is at our Natick headquarters. For the details of the quarter, I'm going to hand the microphone over to Rob Willett, my partner, and our President and CEO. I'll be available at the end of the call to answer any questions that you might have for me. Now, Rob, the microphone is yours.
Robert Willett (CEO)
Thank you, Dr. Bob. Good evening, everyone. I'm delighted with the results we reported tonight for the third quarter of 2013. We reported record revenue and record net income during what is typically a seasonally soft quarter for Cognex. Our strong financial performance was driven by record quarterly revenue from customers in the factory automation market. We continue to execute very well on this year's strategic initiatives for factory automation, which are ID products, China, and sales execution. This is particularly true of ID products. Revenue from ID products grew faster than the rest of our business in Q3, and we set a new quarterly revenue record for that product line. Gross margin was strong at 76%, consistent with the gross margin reported a year ago and in the prior quarter. Operating income increased to 26% of revenue from 23% in the prior quarter.
We delivered record net income equal to 23% of revenue, up from 19% in Q2. Reported earnings for Q3 were $0.23 per share, and that includes $0.02 from favorable tax credits. Let's now turn to the details of the quarter. Typically, we see a notable softness in factory automation during the third quarter, especially with our customers based in Europe. But that seasonal trend did not occur this year. Instead, factory automation revenue was a record $72 million in Q3. This level is an increase of 18% year-over-year and 7% higher than the prior record set just last quarter. Looking at factory automation from a geographic perspective, Asia, excluding Japan, was our best-performing region in terms of percentage growth. Factory automation revenue from Asia increased 21% year-over-year and 7% over an exceptionally strong quarter in Q2.
China continued to deliver strong growth, with sales to consumer electronics manufacturers driving factory automation revenue from Asia to a new quarterly record. The Americas also set a new quarterly revenue record, helped by large ID product orders for logistics applications in distribution centers. We are finally starting to see substantial orders after lengthy customer evaluations. Revenue from the Americas' factory automation market increased 20% over the third quarter of 2012 and 8% over the prior record reported last quarter. In Europe, factory automation revenue increased at the fastest rate for that region so far this year. Revenue increased 21% year-on-year and 10% sequentially. In constant currency, the increase was 15% and 8%, respectively. In Japan, factory automation revenue decreased 13% year-on-year and 5% from the prior quarter. However, the year-on-year decline was due to the negative impact of a weaker yen on reported revenues.
In constant currency, revenue increased 9% over the third quarter of 2012. Revenue from the semiconductor and electronics capital equipment market, or SEMI as we call it, was $5.7 million in the third quarter. That level represents a decrease of 17% year-on-year and 20% from the prior quarter. In the surface inspection market, third quarter revenue was $12.8 million. This represents an increase of 9% year-on-year and 5% on a sequential basis. Surface inspection revenue can be uneven due to the timing of deliveries and installations and the impact of revenue deferrals. We continue to perform well in surface inspection, and demand remains at a high level. Moving on to operating expenses, RD&E and SG&A totaled $46 million for the third quarter.
While this level of spending represents a modest increase over the prior quarter, it is significantly higher than a year ago due to our investments in engineering and sales to drive growth. Our willingness to invest in our business has resulted in the launch of important new products over the past 12 months in areas such as ID products, where we have great momentum. Our expanded market presence in China helped us deliver approximately 30% of our factory automation growth in the first 9 months of 2013. We feel good about these investments, and we are pleased to see them deliver for us. In summary, we had a great third quarter, and things look bright for Cognex as we head into the fourth quarter. In regard to specific guidance, we believe revenue for Q4 will again set a new record in the range of $93 million-$96 million.
We have good momentum in Factory Automation, and we expect Surface Inspection to have their best quarter of the year in Q4 as normal. Operating expenses are expected to increase by up to 4% on a sequential basis. There were savings in Q3 from employee vacation time that are not expected to repeat. Commissions are expected to increase due to the higher level of business and the fact that some sales engineers will reach higher bonus levels. We expect higher professional fees related to patent infringement actions and the year-end audit. The effective tax rate, excluding discrete tax items, is expected to be 19%. Now let's open the call up for your questions. Operator, we are ready to take questions.
Operator (participant)
Okay. So at this time, ladies and gentlemen, if you do have a question or comment, press the star followed with the one key, and you'll be placed into a question queue. So again, for any questions or comments, press the star followed with the one key at this time. We'll give this a few moments to assemble our question queuing. Okay. And what it looks like our first question is from Jim Ricchiuti from Needham & Company. Jim, please go ahead.
Jim Ricchiuti (Analyst)
Thank you. Good afternoon.
Richard Morin (CFO)
Hey, Jim.
Robert Willett (CEO)
Hey, Jim.
Jim Ricchiuti (Analyst)
Wondering if you could give us the dollar number for the ID business in the quarter? Looks like another strong quarter.
Robert Willett (CEO)
Sure. Yeah. So record ID products revenue was at $25.5 million in Q3, representing growth of 45% year-on-year, helped by large orders from customers in logistics that were received after lengthy evaluations.
Jim Ricchiuti (Analyst)
Rob, where do you stand with a couple of those large contracts that you've talked about in terms of shipping against them? Is there much to ship in Q4? And maybe you can give us a sense as to how the pipeline looks for ID in general and logistics in particular.
Robert Willett (CEO)
Yeah. I think we've seen consistent strengthening in that business, and we see our sales funnel building both in ID and logistics, which we're reporting as part of our ID business. So in Q3, we announced that one retailer placed orders in excess of 1 million for Cognex DataMan 300 ID readers, and that a parcel delivery company placed orders in excess of 4 million. And we've received follow-on orders from both of those companies. And revenue in Q3 includes approximately $3 million related to the orders received during the quarter from the major retailer and a parcel delivery customer of approximately $2.5 million. So these orders were built into our guidance. Sorry, Dick.
Richard Morin (CFO)
Yeah. I think I'd want to make one correction. It wasn't 3 million that shipped during the quarter from the retailer. It was 3 million in total between the two.
Robert Willett (CEO)
Sorry. Sorry. Yeah. Exactly right. So $600,000 from the retailer and $2.5 million from the parcel delivery customer approximately. So that's kind of you can and we expect more of that business to ship again in Q4 as well.
Jim Ricchiuti (Analyst)
Can you talk at all about the nature of the follow-on business with both of those customers in terms of are these for new distribution centers?
Robert Willett (CEO)
Yeah. So the major retailer has facilities, new greenfield facilities they're building and upgrades to existing lines, mostly in the U.S., but all around the world. And they're looking to place further orders as we move into next year. The parcel delivery business, yeah, we're seeing repeat orders from that customer as the months go by. So we see more potential from that customer too. And I would say perhaps more interesting and more exciting from our perspective is we're in trials at many other very large customers that you would recognize the names of as our reputation is starting to build in this market.
Jim Ricchiuti (Analyst)
Got it. Would you be able to say, Rob, not by name, but just in aggregate, how many potential logistics customers are evaluating right now that would be of size?
Robert Willett (CEO)
I would say between 5 and 10 large, very large global players. And then I'm going to say more than 20 additional kind of smaller retailers and other organizations.
Jim Ricchiuti (Analyst)
Okay. Thanks very much. I'll jump back in the queue.
Robert Willett (CEO)
Sure.
Operator (participant)
Thank you. We'll take our next question coming from Ben Rose from Battle Road Research.
Ben Rose (Analyst)
Good afternoon. I was curious to know, Rob, in terms of end-user markets during the quarter, was there any noticeable change in terms of the mix? I guess interested specifically in your thoughts on the automotive sector as well as the medical device area?
Robert Willett (CEO)
Yeah. Well, hey, Ben, I think in terms of markets, our best-performing markets in the quarter were consumer products, electronics products, life sciences, logistics and distribution, and medical devices. I'm talking in terms of percentage growth during that time. All of those performed very well indeed. Our business in automotive, you asked about, it did grow in the quarter, but in the low to mid-single digits. I think as we expected, some of our smaller high-growth markets are where we see a lot of our growth coming from at this time. Then electronics products continue to perform very well for us, both on a percentage and dollar basis.
Ben Rose (Analyst)
Okay. And I was curious to know, I know you had announced a suit against Microscan back in April, and I was curious to know if there was any update from the company's perspective as to the progress of that?
Robert Willett (CEO)
Yeah. Corrected. I mean, the latest news on that is that we have a court date in the Federal District Court of New York. It was originally scheduled for October, and it's been moved to February. And we're proceeding on that basis.
Ben Rose (Analyst)
Okay. Sorry, finally, just a quick question for Dick. With regard to the share repurchase program, is a specific goal of that to prevent option dilution, or is it sort of more of an opportunistic program from your perspective?
Robert Willett (CEO)
It is more of the former than the latter. So more for offsetting the dilution as opposed to just doing it on an opportunistic basis.
Ben Rose (Analyst)
Okay. Thank you.
Operator (participant)
Thank you. We'll take our next question coming from Jagadish Iyer from Piper Jaffray. Please go ahead.
Jagadish Iyer (Analyst)
Yeah. Thanks so much for taking my question. Two questions. First, on your logistics portion of the business, Rob, I was just wondering what is the next geography that could potentially take off? And I was just curious, how long is the evaluation cycle other than in the U.S., which has taken you a longer time? I'm just trying to get a scale of how fast adoption could be globally. And then I have a follow-up, please.
Robert Willett (CEO)
Well, you're right, Jagadish, that the U.S. is where we're really seeing a lot of the initial uptake of our products. And then we're really in evaluations, and we're making sales, relatively small sales, in all of our other regions right now. So it's difficult to predict where the pop will happen next outside of the U.S. But I think we're well positioned in all of the regions. And yeah, so that's how I would describe it.
Jagadish Iyer (Analyst)
Yeah. I mean, would you spell out and say maybe it could be in Asia or in Europe, or it's too early to tell at this point?
Robert Willett (CEO)
I mean, the answer is yes, it could be. I mean, in a way, the dynamics that I see in those other markets are similar to the dynamics we were seeing about 18 months ago in the U.S., where I think the market is starting to see the significant superiority of our products. And they're in trials, and they're in small trials, which was what happened in the U.S. And then we're expecting that news and understanding to result in significant growth in months and quarters to come.
Jagadish Iyer (Analyst)
Just as a follow-up, I just was curious, what kind of competitive dynamics are you seeing in the logistics space, please?
Robert Willett (CEO)
Well, that's a market that's had two significant players in it today, the German company SICK and the Italian company Datalogic. And we're certainly seeing our reputation is growing in that market. And we're starting to see integrators and obviously end users really adopt our product and see the superiority of it against both of those major incumbents. So that's the dynamic that I would point to.
Jagadish Iyer (Analyst)
Okay. Just if I can squeeze one last one from looking at your semis revenue, it's almost kind of bottomed out at like $5. What is going on in the semi space right now? And do you see some kind of a recovery happening potentially in the fourth quarter or looking at 2014? Thanks.
Robert Willett (CEO)
Right. Well, Jagadish, if you've been following Cognex for any length of time, you know we'd never say that it's bottomed unless it was a zero. So it's very hard to call. We don't expect to see much or any growth in semi in Q4 relative to Q3. And it's really difficult to say what will happen next year. I mean, there are longer-term dynamics that might point to the growth, the sort of cyclical upturn in the business, but it's very hard to know if and when those will come. So yeah.
I would say that the predominance of our factory automation business now in terms of the size of our revenue and where the growth is coming from really gives us much more confidence in the long-term outlook of our business relative to what it would have been 5, 10 years ago when we were more dependent on semi.
Jagadish Iyer (Analyst)
Thanks so much.
Operator (participant)
Thank you. Our next question is coming from Jeremy Capron from CLSA.
Jeremy Capron (Analyst)
Good evening.
Robert Willett (CEO)
Hello, Jeremy.
Jeremy Capron (Analyst)
A question on your factory automation business outside of ID, which obviously seems to be driving much of the growth we've seen in the last quarter. Could you comment on those other factory automation markets, quality inspection products, etc.? Because it seems that if we back out ID, the rest of the factory automation business seems to be growing at a much slower pace.
Robert Willett (CEO)
Yep. So our flagship In-Sight products performed relatively well in Q3 relative to more recent quarters, with revenue increasing both year-over-year and sequentially. In-Sight revenue, our vision systems business, grew in the high single digits in Q3, which I would say is probably in line with how the global market for those products are performing. Now, obviously, we're not satisfied with that. We're Cognex, and we expect to outperform the market. But I think that kind of high single-digit growth that you're seeing in some of these core vision markets is probably what we're achieving and what the market is achieving right now. I think where we're really focused on is accelerating growth through new product development and entry of those products into adjacent markets.
So things like our displacement sensor, new products also we have coming in the vision systems product line are how we expect to accelerate that growth going forward. You were asking about other things going on. Obviously, China is an area where there's a lot of vision technology being adopted and used and where we're seeing a lot of growth. So that is certainly an area where we're pleased with the kind of growth and dynamics that we see and our execution. And then counter to that is certainly Europe, where we see less growth and less opportunity in the short-term future for vision products growth.
Jeremy Capron (Analyst)
Great callout. Thank you. If I may ask another question regarding the ID business and in the logistics applications in particular, are you seeing any of your more traditional competitors in the vision space trying to come up with logistics products?
Robert Willett (CEO)
Well, it's a pretty big market. We've sized it at around $250 million. So of course, there are always new products being introduced in that market. We're seeing our competitors launch products, area-based vision products with high-resolution imagers. Where they're unable to compete with us is on software performance and optics and some of the core vision skills that we have. So although we see them trying to compete with us, we see our performance and particularly also our cost structure to be highly advantaged over anything we're seeing come into the market right now. And obviously, we're not standing still.
Jeremy Capron (Analyst)
Great. Just one last question on capital allocation. I'm seeing the cash pile rising quarter after quarter. I wonder if you could give any indication on how you think it's best to use that cash. I know you have a share buyback program ongoing, but I mean, the business is obviously generating a lot of free cash flow. What's the view here?
Robert Willett (CEO)
Well, clearly, the best use of that cash from our perspective would be to use it in acquisitions. We have an active program. We are looking at potential entities to buy in different market segments in different geographies. Have not been able to find anything that fits all of the criteria that we're looking for at present. The main thing that we're doing these days is, in fact, the buyback.
Jeremy Capron (Analyst)
Great. Thank you very much.
Robert Willett (CEO)
Thanks.
Operator (participant)
Okay. Thank you. Our next question is coming from Richard Eastman from Robert W. Baird.
Richard Eastman (Analyst)
Yes. Good afternoon.
Robert Willett (CEO)
Hey, Rick. Hey, Rick.
Richard Eastman (Analyst)
Last quarter. Just a question. Just to double back on Factory Automation, can you just give the growth rate for China in the quarter?
Robert Willett (CEO)
Yep.
Richard Eastman (Analyst)
If you wouldn't mind just sizing it in terms of dollars for the quarter?
Robert Willett (CEO)
Yep. I'm going to give you a number, and then Dick can correct me.
Richard Eastman (Analyst)
Okay.
Robert Willett (CEO)
It was Factory Automation. China was about a little over $10 million in the quarter and grew around 28%.
Richard Eastman (Analyst)
Okay.
Robert Willett (CEO)
That's correct. Yeah. That's year-over-year. Yeah. Year-over-year. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Rick.
Richard Eastman (Analyst)
Yeah. Dick, is that okay?
Robert Willett (CEO)
Yeah. Rick.
Richard Eastman (Analyst)
Then just a question. When I think about that growth coming out of China, you've talked to some end markets in factory automation that grew strongly: consumer products, electronic products. And I presume that that growth, those end markets are the driver in China versus product ID in rest of world. Is that a fair?
Robert Willett (CEO)
Yeah. I'm not sure I understand the last bit. Product ID in rest of world.
Richard Eastman (Analyst)
Well, so if I'm just thinking China, I would think much of your ID product growth is coming out of Americas versus when I look at China's growth at +28%, presumably the growth there is more in the In-Sight products for inspection in these other markets.
Robert Willett (CEO)
Well, our business in China is the largest vertical market, electronics. And there we're doing a lot of sophisticated vision activity. But what we are seeing is some important new growth vertical markets in China for us anyway, are small and getting large quickly. And I would point to automotive and really the broader ID business, right? So in that, we've sold more into automotive in the first three quarters of the year than we sold all last year in China. And the same could be said of ID. We've sold more ID into China in the first three quarters than we sold all last year. And both of those pieces, admittedly, they overlap with some ID in automotive, right? But both of those pieces are approaching $10 million annualized.
Richard Eastman (Analyst)
Okay. Can I just ask, within the factory automation business, there was some commentary earlier this year about prototyping and some piloting of ID products or sensors that would go more into the medical device instrument market. I'm wondering, is that the follow-on to this logistics product uptake?
Robert Willett (CEO)
We refer to the market for OEM engines into life sciences, Rick, which is, I think, what you're referring to.
Richard Eastman (Analyst)
Yes.
Robert Willett (CEO)
That's a market we've been working on for a number of years. We're getting designed into significant manufacturers of OEM equipment in that market. We have a very powerful engine that is starting to get specced into some very major customers in that market. As I think of that market, it's about a $100 million market, and it has a very long sales cycle. So these life science OEM customers, they go through probably a 3-year design cycle, which includes getting FDA approval in many cases. But once we're specced in, there's very little change that goes on inside the product because of the regulation around it. Then it can be a 7-12-year product life. So it's a market we really like. It's a market we don't expect to see very significant revenue on in the next few quarters.
But it is a market that we do see being a major part of Cognex's business in a few years from now.
Richard Eastman (Analyst)
I see. Okay. And then just one question. I thought I'd maybe bounce off Dr. Bob because I know from an M&A standpoint, technology standpoint, at least my feeling is you're the point person. And do you see in the marketplace any significant shift in investment into 3D and perhaps away from 2D vision?
Robert Shillman (Chairman)
This is Bob. No. Well, there is a significant, I wouldn't say a significant shift. 2D is extremely important and can handle most vision problems. But there is additional investment going on, certainly at Cognex. It's a focus of our top R&D team right now. And a lot of engineers are working on what we call displacement sensor to distinguish it from our regular vision systems and 2D sensors. We are not the first into that area. And many times in our history, we have not been first. We like to think of ourselves as fast followers, which means we get technology, we develop a lot of it, keep it on the shelf until someone else perhaps verifies the existence of a profitable business because there are just so many opportunities for machine vision and for processing image analysis, but very few of them are profitable.
So we like to say that we're a fast follower. We've done that many times. We were not the first with products like In-Sight, but we followed fast and took over the business. We expect to do the same thing with displacement sensing. Displacement sensing, by the way, is not only valuable on the factory floor where they're putting assemblies together to make sure that all of the parts are in the right place and they're at the right height, etc. But it also turns out to be very important in logistics where the height of something helps you determine where the box is and where the label is. So we're finding that our investment in 3D, although not yet paying off, we expect that to grow rather substantially in the coming short term.
Richard Eastman (Analyst)
So this is technically.
Robert Shillman (Chairman)
So I would say that now we don't see many other companies investing in 3D. It's very complex. 3D, getting that third dimension, is very, very complex and depending on the accuracies and the field of view that you want and the depth of field. And it's going to be companies like Cognex. And of course, some of our competitors, one or two of them, have 3D products that we will soon surpass on the technological basis.
Richard Eastman (Analyst)
Does Cognex's technical competence in 2D when it comes to software and processing the data and processing speeds, does that transfer over to the 3D world well? Or is that?
Robert Shillman (Chairman)
Yes. Very well. Very well. The complexity in 3D is obtaining what's called a point cloud. That means all of these local measurements, point measurements of the distance of something, and then assembling those point clouds into shapes that can then be handled by the standard 2D software. So we have a significant advantage in that we have a very large team, of course, the largest in the world, with expertise in analyzing 2D images. And ultimately, 3D is not much different from that in the software world. The challenge to us has been manufacturing and speccing out and designing, of course, hardware that can give you very accurate point clouds.
Richard Eastman (Analyst)
I see. Okay. All right. Well, thank you.
Robert Shillman (Chairman)
So I think what you're getting at or what somebody would get at, are there significant barriers ahead for us? Do we have to continue spending even higher amounts of engineering dollars in analyzing those 3D images? The answer is no, we don't.
Richard Eastman (Analyst)
Because it seems like in the marketplace, the technology, the hardware to capture the point cloud data points is there, but the software is not. And that seems to be.
Robert Shillman (Chairman)
Well, that's right. That's where we will have, I think, a substantial lead.
Richard Eastman (Analyst)
I understand. Okay. Thank you.
Robert Shillman (Chairman)
You're welcome.
Operator (participant)
Thank you. And we'll take our next question from Jim Ricchiuti from Needham & Company.
Jim Ricchiuti (Analyst)
I just wanted to go back to a comment earlier. Did you say the SIS business, you're expecting, you're anticipating record revenues in Q4? So you expect it to be above Q4 of last year?
Robert Willett (CEO)
No. No. No. Not say record revenue. It was.
Richard Eastman (Analyst)
Okay. Sorry.
Robert Willett (CEO)
It was going to grow. It was going to be the best quarter of 2000. For SIS, they would have their best quarter of 2013 in Q4, which is fairly typical for them.
Richard Eastman (Analyst)
Got it. Okay. The improvement that you're seeing there, any particular markets? Just in general, I wanted to just follow up with one question regarding the domestic business. If you saw any impact at all just from the shutdown in terms of customers possibly temporarily pulling back a little bit?
Robert Willett (CEO)
No. We didn't really see any impact to that. And then in terms of areas where we do see strength in surface inspection, aluminum. And aluminum, as it relates to its being used in automotive markets, is certainly a growth area. And that, particularly in China, also is an area. So metals there. But then our U.S. business has performed well and continues to perform well in surface inspection, particularly in the paper market.
Richard Eastman (Analyst)
Okay. And Rob, just one final question, if I may, on Japan. How satisfied are you with the progress you're making there?
Robert Willett (CEO)
Well, as I tell people, it's a personality problem I have. I'm never satisfied, really. But joking aside, we're definitely seeing improvement in our Japanese business. And factory automation in China, sorry, in Japan, is starting to grow again. We have a long-serving Cognoid, very dynamic leader who's been with the business a long time, who's taken over as the sales lead for about a year now. And we're certainly seeing the team there drive some growth in ID and in factory automation. But of course, share in the FA market in Japan is small. So we're encouraged, but we have a long way to go.
Richard Eastman (Analyst)
What about with the Mitsubishi channel?
Robert Willett (CEO)
Yep. So those have continued to grow and performed well in the third quarter. So definitely, the Mitsubishi channel is giving us access to a much broader base of the Japanese market than we have otherwise had access to. So a lot more leads and a lot more opportunities to go and get those customers. And then we have been adding salespeople to our Japanese business. And that also, we believe, will help us drive growth as we move into next year, really in factory automation.
Richard Eastman (Analyst)
Okay. Thanks a lot. Congratulations on the quarter.
Robert Willett (CEO)
Thank you.
Robert Shillman (Chairman)
Thank you, Rick.
Operator (participant)
Okay. Thank you. I'm showing no further questions in the queue at this time. I'd like to turn the call back to Dr. Shillman for any concluding remarks.
Robert Shillman (Chairman)
Yeah. Thank you. Just to wrap up, we're very happy with the results that we reported for the third quarter. We're looking at the order backlog and the shippable backlog. We anticipate reporting similarly impressive results in this coming last quarter of 2013. I want to thank the entire Cognex team. It starts with marketing telling us what products we should build and then engineering building them and manufacturing and operations, getting them built and delivering them from all over the world. A lot of work, a lot of moving parts. I just want to thank the entire team, and in particular to my partner, Rob Willett, for running this team and fine-tuning it to the degree that it is now. Thanks for joining us. We look forward to talking to you sometime, of course, in 2014. Take care.
Operator (participant)
Okay. Ladies and gentlemen, this does conclude your conference. You may now disconnect and have a great day.