All right, I think we're live. All right, great. So welcome to the afternoon session. We're really excited today to have Cognex's Dennis Fehr here with us today, CFO of Cognex. Dennis, I don't know if you wanted to open up with any prepared comments, or we can get right into it, however you want to do it. Maybe a few words. So thanks to all, first of all, for everyone being here, your interest in Cognex. Thanks for following us. Excited to be here. I think maybe for those of you who don't know the Cognex story so well, Cognex, we think of ourselves as being the technology leader in machine vision. It's kind of a subsegment of factory automation where we are working traditionally with the most sophisticated, most complex use cases and customers, and have been driving more towards the direct sales approach over the last couple of years, broadening our customer base, and in general, we differentiate through our software and more and more also through customer experience, and that allows us to drive attractive growth and bottom line margins. Yeah. So Dennis, it's a good overview. Look, Cognex has had incredibly good fundamentals over a long period of time, almost 70% type gross margins. In the past, we've had EBITDA margins that have been north of 30%. It's interesting. You've been the CFO now for about 20 months. What's been interesting to me is you've now introduced a new through-the-cycle financial framework. I think you've implemented some structural cost actions. And you're changing the way I think the company is running with more financial rigor. When you think about the kind of changes that have been put in place, what have you been learning through this 20-month period? What's the new Cognex going to look like? And then we'll go from there. Right. Yeah, I think you're making a good point that Cognex traditionally had very attractive margin profiles and lost it a little bit in the last down cycle. And when I joined 20 months or so ago, I outlined three CFO priorities, and my first one was to drive profitability. And clearly, while we are not where we have been traditionally, I think we have seen nice increments. We're now on five quarters of double-digit Adjusted EPS growth. I have been seeing it really impacting Adjusted EBITDA margin in a positive way. And so in that regard, I start to see changes there. And the second priority I put out was about increasing capital efficiency. And here also, I think we can see on a trailing 12-month basis, greater than 100% free cash flow conversion rate. We have stepped up also significantly on share buybacks and have been actually returning more than 100% of our free cash flow to shareholders in the form of dividends and mostly buybacks. And then my last one, third priority was about enhancing kind of investor communication. I hope we did a good step on that one on Investor Day. It was It was outlining a new financial framework, kind of strategic objectives and clear outlining and articulating how we want to get there. So in that regard, I feel like clearly looking back at these 20 months, I can say we are seeing impact, but at the same time, it's also clearly that we're not there as a company where we have been traditionally or historically. And it's clearly for us, right, Matt, with a new CEO coming in earlier this year, we still have work to do. And we acknowledge that. But at the same time, we're excited about what we can still do. Yeah. So look, for those that are not familiar, you outlined at your Investor Day a new through-the-cycle framework of 13%-14% revenue growth, which embedded 10%-11% organic growth and 20%-30% EBITDA margins. So let's kind of peel back the onion and how we're kind of thinking about these targets longer term, and then we can start thinking about the nearer term as well. Great. So from a longer term perspective, 20%-30% EBITDA margins, super wide range, right? Yes. It seems like this year you're probably going to end at the lower end of that range. How are you thinking about the progress from 20% to 30%? Yeah. See, I think maybe as additional context, 2024, we ended with about 17% on segments. In that regard, clearly below that range, and also absolutely acknowledging that 20%-30% is a large range. But for us, it was important to put out a range where we have a credible line of sight to get to, and when we came out on investor day, we said, "We want to be in this range latest in 2026." And if you take our Q4 guide, implied guide for the full year, that basically would mean that we're already achieving the 20% a year ahead of our schedules. In that regard, we are definitely positive in the progress which we are making, and then for us, we are thinking really in milestones when we think about the time ahead, right? The next big milestone from here would be to achieve 25% kind of sustainable number. Sustainable, I mean, I would like to be at 25% also at the bottom of the cycle and not in the middle or in the upper part of the cycle. In that regard, as we're now more at 25%, more at the low end of the range of this 20%, we're certainly still two to three years away from this 25%. That's kind of the next number I have in my mind where I would like to get to. The question of how fast we get there is really then about growth, right? I can get there, in my mind, also about cost management, but certainly the more growth I can get, the faster I can achieve this 25%. That will be then the question, does it take two years or does it take three years to get to the 25%? Then certainly, eventually, I would like to see even higher numbers, but that's then kind of the milestone after the next milestone. Okay. So interesting. A couple of things that you said there, right, which were some of it is going to be growth dependent. So the big question is how much growth, right? Because I don't think it's 10%-11%. I think it's probably something lower than that. So why don't we start there? So to get to a 25% type margin in the next two to three years, what do you envision from a growth perspective to get there? Right. So I think when we talked about the growth framework, we clearly said that it's through cycle growth. And then at Investor Day, we talked about that there are three phases of a cycle. So there's an initial phase of the cycle, typically mid-single digit growth. And that's kind of, we said in the last earnings call, that's where we feel like we are right now. And we believe that with this mid-single digit growth, we can still drive a bottom line growth of 20%. And bottom line growth, I mean, adjusted EPS. So we can still drive outsized growth by really taking OPEX and either flattening that or even shrinking it. And then when we eventually will reach the second phase of the growth of the cycle, which typically has more outsized growth, then we are thinking more about OPEX growth, maybe half or less than half of the revenue growth. And that would basically then also lead to outsized bottom line growth. So in that regard, when I say I can reach 25%, I don't need to be in the second phase of the cycle, but it would just take a little bit longer, more three years than two years if we would not hit the second phase of the cycle. Yeah. So for somebody who's covered Cognex for a minute, the way you're talking about the financial leverage is a lot different than the way the company used to be run before. It used to take a lot more organic growth to really kind of see the bottom line performance as well. So it's great to see, I think, the operational discipline and the rigor that you guys are bringing to the organization. So we'll get to growth in a second. So when you think about the levers then just on the cost structure, so let's just start with OPEX, right? How are you thinking about how much opportunity there is? Is it toggling back just on variable expenses? What is the opportunity within OPEX? Right. So when we described at investor day our path to get to this 25%-30%, we put out an Adjusted EBITDA margin walk. And it was really very heavily geared on the OPEX side, right? So we said 500-600 basis points OPEX efficiency, and then almost the same 500 basis points additional leverage. So that means that's really where the majority of the bottom line improvement comes from. And then certainly, OPEX is a wide field. So I sometimes get asked, "Which part of the OPEX you're really referring to? Is it SG&A? Is it GA? Selling? Is it on the R&D side?" And I said, "It's everything, basically." I think we clearly have opportunities on the R&D side where with our new platform strategy, which we are harvesting right now, right? That was basically something worked on for the last three or four years to have a common software architecture across all product lines. That means we're creating engineering efficiency there. Now we are introducing kind of AI-assisted coding for our software engineers. So we have huge productivity gains in the R&D side. And then on the SG&A side, I clearly think G&A, there's work, and we have done quite some work there, and we'll have more opportunities there. And I think the biggest piece probably is the selling side. I think some of you may have followed us now for at least the last two or three years, remembering the days when we talked about Emerging Customer Initiative. And that was a lot about more boots on the ground and with that also more OPEX and the P&L. And since then, we shifted more towards talking about Salesforce transformation. And here some people think we just rebranded the one thing into the other, but I think it's a very, very different approach at the end. I think both Emerging Customer Initiative and Sales force Transformation had the same objective. That means going beyond the existing core of the customers and going to broader customers and increase the count of customers. Objectives are the same, but the approach is very different. Emerging Customer was a lot about more people and then give them easy-to-use product to sell in a standalone sales organization. Whereas Sales force Transformation basically is focusing very much about Sales force efficiency and thinking about how can we leverage kind of process and tools and data-driven analytics to make a more efficient Sales force. It's also changing the management style of our sales organization. It's not a standalone organization anymore. It's bringing it all together with three distinct different selling styles. And then it kind of goes beyond just easy-to-use products to a more holistic customer experience. In that regard, while Sales force transformation still has this objective to increase the customer count, it has also a very strong objective to increase the Sales force efficiency. And that gives us basically, coming back to the EBITDA and margin expansion discussion, that gives us this opportunity to do both, to increase customer count and be efficient on the OPEX side as we are going away from this more boots on the ground concept. Yeah. Super helpful. So if I parse out those two elements, I know there are more than two elements, but two main elements. You take a look at the R&D perspective. You used to spend 14%-16% any given year. I mean, it was like clockwork, right? It sounds to me like, not to put words in your mouth, but that sounds to me like there's probably a few hundred basis points of opportunity just in R&D. Yeah. I think that's probably kind of a low teens, and that would give you maybe 200, 300, 400 at most basis points, but it's a good number to bring down to the bottom line. Okay. Great. And then on the OPEX side with the shift, and that was a really good explanation of it. It sounds like I remember there was a decent amount of attrition associated with the Emerging Customer Initiative as well. And so you tried it, didn't work out necessarily as well, but now you've shifted and you're really focused on productivity improvements as well and leveraging technology to help get good leverage out there. And I think that is really the key piece, right? It's not only about just how many people do you have, but it's really how do you manage, right? It's really about thinking about how do you create leads and then how do you feed them into the sales organization and how do you make them focused. And that's really coming through a lot through data management, through tools. And then certainly, there's also kind of sales management aspects to it. I think about leaderboards, sales leaderboards, what are your KPIs? How are each of the sales engineers performing? How do they stack rank against their peers? So it's a very different management approach to what has been done in the past. And so in that regard, we clearly believe that we can achieve both the Sales force efficiency as well as the increase of the customer count. Makes total sense. Okay. Let's go back to organic growth. Sure. So you mentioned earlier, okay, long-term targets, 10%-11%. You made a comment earlier around getting 20% EPS growth out of mid-single digit type organic growth. Let's double-click on the mid-single digit organic growth. So as you're thinking about where we sit today, and I fully recognize that your business is short cycle, is that kind of the right framework then for next year? Give us a little bit more color on that mid-single digit comment. Yeah. No, thanks for bringing that up. So I think I would like to shift everyone's attention first to that we are a short cycle business with also only so and so much of visibility into our end market. So think about from a funnel perspective in factory automation, maybe you have a three-month visibility. And then if we as a management team want to extend that view, we use kind of macroeconomic data like the PMI. And the PMI gives us a snapshot in time to say where is PMI today? That maybe lets us get a view for month four to month six, maybe to month eight, gives us an indication. So in that regard, when we talked about the last earnings call and we said, "Hey, PMI today doesn't show an inflection," that means on that basis, we as a management team are basically thinking about how do we run the business in such a macro environment. And I think what we wanted to bring across is that as long as we are seeing that macro environment is not inflecting, we will keep on being very tight on cost. We will work the OPEX side to achieve that mid-single digit growth with maybe 20% or so adjusted EPS growth. Now, keep in mind, this is a snapshot in time. In three months or in five months, PMIs could look different. We as a management team don't have that crystal ball to say, "How will that look in five months?" So could in five months, PMI show a very different picture about either more growth or less growth? Of course, it could. But I think what I really want everyone to think about is if we can achieve on a mid-single digit growth, 20% adjusted EPS, you can also imagine what that EPS growth could be if PMI would start to inflect. So I think about the opportunity there. Yeah. I think that's a really good way to contextualize it. And the reality is you are a short cycle business. Historically, you've only given guidance one quarter out, although you're giving more information now than we've seen historically, which is great. Let's then talk about your different end markets, right? So let's start with logistics. So logistics has seen a nice rebound the last, I think, seven quarters, right? You've seen double-digit growth in that business. It seems like a lot of that is coming from just increased penetration of the warehouses at this point with automation. Talk to us about what you're hearing from your customers, the sustainability of this business continuing to grow at this clip into next year. Right. So yes, overall, the last two years have been very great in logistics, and it's part of a different type of cycle than we saw in the 2021 peak, where it was all about building out more capacity in terms of square footage. So this cycle is all about more automation and taking cost out of the network and trying to optimize basically the cost per parcel or package ship. In that regard, we think that provides the basis for a much longer-lasting cycle as we can see that the penetration of automation is comparatively still low in that industry, and that gives us really a view that we could see really this multi-year, five, six years growth, but then at the same time, growth is never linear. In that regard, after two years of outsized growth, I think there's a natural base effect that growth rates would come down. Second, would someone think like, "Oh, the industry may take a pause and maybe we'd see a lower growth just to absorb everything that was done before more capital is then being allocated in maybe 2027?" In that regard, we started to feel like that in the broader market. We already started to see some of that in the second half of 2025, where growth was more geared towards larger customers. In that regard, that makes us think 2026 could be a year where logistics growth rates are a little bit lower for both the base effect and then a general just absorb all of that. And then at the same time, we're seeing other verticals like consumer electronics, which hadn't been growing for three years and which we are seeing to start coming back to growth. So we're basically thinking right now that maybe 2026 will be more about logistics slowing down a little bit and maybe consumer electronics picking up some of that. All right. So talk about that because consumer electronics has also been growing in 2025, and you've benefited to some degree from manufacturing going from one region to the next, right? So China to India, etc. So you kind of think about the 2026 growth rate. You've got form factor changes, which are also super important. And I know we'll find out a lot more in the April time frame from your big customers. But what gets you what are you saying went about in 2026, and why do you think the growth rate will accelerate? Right. Yeah. No, first, consumer electronics, first time, a small growth in 2025 after three years of basically no growth or decline, if you want to say so. Also kind of compared to historical levels, pretty compressed. And we saw in this year really a couple of things. So first of all, I think what we really like to see this year is that it's broad-based. So that means not limited to one or two larger customers, but that we are seeing it broader in the industry. And there are different angles to that. There are clearly shiftings and shifts in supply chains, which are happening this year, which we think can extend into next year as well in terms of where our devices are assembled. And then we think there could be in 2027 and 2028 kind of the component piece, like where are being components manufactured. And that could be even that you would see them not shifting within Asia, but from Asia actually even into the U.S. In that regard, this theme of recalibration of global supply chains, we think clearly has a runway beyond 2026, also into 2027 and 2028. You already mentioned kind of form factor additions. That's clearly an interesting play. But then it also seems what we are seeing and reading as well is that clearly the pandemic drove a lot of kind of outsized end-user consumer spending on such devices. And there seems to be a natural refresh cycle coming up, already starting to seeing this year, some of our customers talking about that publicly. And that could certainly also accelerate into 2026 and 2027. So in that regard, I would say all the fundamentals more pointing towards that consumer electronics is going to accelerate, but also very clearly from a low bottom, right, from a really compressed level, which certainly gives the upside. Yeah. No, that's great to hear. I mean, look, I remember the form factor change, the iPhone X in 2017, all that shift to OLED. When you think about those form factor changes, I know it's probably hard to gauge, but is there anything that is comparable to what we saw in that 2017 timeframe? It was It was a great year for Cognex, and the growth rates were incredible, largely driven by electronics. So yeah, is there anything that you see out there right now that is really kind of shifting that could really accelerate the growth rate? See, I think there's certainly clearly if you change for the entire product lineup, you make a complete makeover. That certainly drives really outsized growth. And when you change maybe one form or add one form factor versus another, it's clearly a different type of growth. But clearly, I think that's not a 2026 topic probably, but I think there are a lot of companies out there that are working on what's coming beyond the smartphone, right? I mean, at the end, we're almost like 20 years soon on this kind of smartphone era. And I definitely think there will be the day coming where we all look back and say, "Oh yeah, we all walked around with these weird things." And I can't say whether it's glasses, right? Clearly, there are some companies out there. As Meta had some early successes with their glasses. So it will be interesting to see what comes after the smartphone. But I think clearly the companies are thinking and pushing into this direction that this form factor of the smartphone is not the end of the consumer electronics innovation cycle. I clearly believe into that. Yeah, great. I'm going to keep going on some of the end markets, but I'll open it up to the audience for questions as well. Let's talk about the consumer packaging. It has been nice. We've seen nice healthy growth in 2025. It seems like a lot of that is driven by internal initiatives. So maybe, just no pun intended, unpack what's been going on there. Yeah. No, see, I think packaging, maybe for those who are not so familiar, packaging, we basically describe food and beverage and then fast-moving consumer goods. And we call it packaging because it's all about package inspection type. Also, it's really an application name, but vertical markets behind their fast-moving consumer goods, pharmaceutical, food, and beverage. And it's really, to some extent, you could argue compared to logistics and consumer electronics, it's a much more boring market because it doesn't go through these innovation cycles where you all of a sudden have new innovations coming up. You don't have kind of this potential outsized growth, but it can be a very steady kind of attractive growth for us in that way that it provides more stability into our growth numbers, which traditionally have been very cyclical, right? Just underlying these verticals are much less cyclical by itself than consumer electronics, right? So in that regard, we like that to bring more stability into the growth and into the number overall. And the success in this year is really driven by our kind of Salesforce initiative in that regard. And it's nice to see that, right? I mean, certainly, especially if you go back to 2023, there have been outsized investments, and certainly would like to see the return on that. Sure. And is it fair to say that that business for you is still fairly under-penetrated? And And because of the investments that you've made, this should be a growth avenue for you going forward? I think absolutely. I just would caution, it's not a market where I would expect you would see like 20%, 30%, 40% growth rates. But if we can get it to that it grows for three, four, five years at high single digits every year, that I would call success in that market. Great. Auto. Wherever you want to go with auto. But I guess maybe I'm sure I can do this, but if you could just level set how much auto is down for you. And then whether you've now, it seems like you've now seen a bottoming, but go ahead. Right. So we said last year it was down 14%, was the one market which was down. All our other markets were flat or up. And then this year we talked about it would be declining at a lower rate. So think about more like high single digits. But I think positively that especially when we start looking at it sequentially, that it starts to show signs of stabilization. I think we probably may want to see another quarter, maximum two more quarters before we call it really a bottom. But I think we are close or at the bottom. And interestingly, we start to see a geographical diversification, right? So that means the Americas is actually the market recovering the fastest, and whereas we see back to growth already versus Asia kind of more neutral, and then Europe still going down. So in that regard, a bit geographically different, but clearly it's a market where I think I'm not having too much expectations for 2026. So base scenario would call it flat. And then I think a question would be, right, if you look at some of the automotive metrics, that certainly the fleets which are out there, they're getting more older and older because consumers are holding back because of high interest rates. So certainly the moment where interest rates come down again, would there be some inflection point that consumers would start to replace some of the older vehicles? I can't call exactly when that will be, but that opportunity is clearly there. Is it in 2026? I think not, but beyond that perhaps. Is your business over-indexed to a particular region? Are you over-indexed to the U.S. versus China versus Europe? And then similarly, EVs versus legacy ICE platforms? Yeah. First question maybe on regions, and I take this as a general question, not just for auto. Auto, yeah. No, it's fairly nicely distributed. So in that regard, almost like similar shares, Americas, Europe, and Asia. So that means sometimes getting asked, are you also good with Chinese OEMs? So we're also doing good business there. Think about India, Japan, even Japan, where it's otherwise a tough market for us. We're having good business there. So yes, I think we're generally geographically diversified on auto. Great. I'll open it up to the audience if there's any questions, or else I'm happy to keep going. Okay. So I'm sorry, does somebody have a question? No? Okay. So let's talk about gross margins. I know that it's not part of your financial framework anymore, right? It's organic growth, EBITDA margins. But gross margins this past quarter, adjusted for the one-month Moritex and the commercial agreement, was 67.7%, right? Yeah. For the quarter. What caused the deterioration of roughly 170 basis points? What drove that deterioration this quarter? Right. So yeah, maybe coming back to your initial statement on gross margins. So basically, we think at the end, first of all, that we create value for our shareholders if we drive bottom line. That means adjusted EPS growth first and foremost. And that certainly comes both through top-line growth and then overall managing the P&L. And that's where we're focusing on. And I think the third quarter was pretty strong in that regard, right? Adjusted EBITDA margin, 450 basis points up year over year. Adjusted EPS, almost 50% up year- over- year. But clearly, gross margin declined by about 170 basis points. So fair question to say, like, "Hey, what's happening on the gross margin line?" And clearly, right, to achieve bottom line, we can work on OPEX and gross margin as a piece. I think if you now zoom out a bit beyond Q3, then you see over the last couple of years, gross margins declined from mid-70s% now into the high 60s%. I think the strongest effect in there is clearly a mix, right? You had two strong effects. First, the Moritex acquisition late 2023, which basically took down gross margins by 200-300 basis points. Then a mixed effect by logistics growing and factory automation not growing. These are really the strongest drivers if you take this longer-term view. But then there are two other effects, which I would call really gross margin deterioration versus the first two I just described are really mix, right? And not really a deterioration in itself, right? One effect as we talked mostly late 2024 about was China pricing, right? So that we saw much stronger competition and pricing happening in China. And the good news is that I think in this earnings call, we already talked about it, that we saw pricing in China stabilize. And I think we definitely rather see now on a global scale, the pricing can be rather an opportunity than a tailwind going forward, sorry, a headwind going forward. It clearly has been, but I think there's an opportunity for us as a company to turn that around. And then the second effect in gross margin, again, it's more a dilution effect that's tariffs, right? So we basically have been saying that we are able to offset the cost of tariffs on the bottom line on a think about like a dollar-for-dollar basis, but that clearly has a dilutive impact to gross margin of about 50 basis points. And so in that regard, I would say there have been topics about which kind of brought gross margins down on deterioration, but not on a level of 170 basis points. The strongest effect of that one is mix, right? So if you think about on Investor Day, I presented this Adjusted EBITDA margin walk, and one piece of there was COGS and pricing. And we said we want that to be positive. Clearly, if I would show you that chart today, it would show a negative, but I still think that that can turn around into a positive. And I think Matt and myself are pretty committed to that. Okay. Great. So if I think about kind of the framework then for 2026, based on what I've heard you say today, it looks like from a growth perspective, mixed is probably going to be less of a headwind, right? Because logistics may be not growing as fast. Right. If I come in. Right. If I come in. Electronics may be growing faster. China pricing stabilizing, less of a headwind. And then tariffs, I mean, have you seen most of the impact from tariffs already? I guess you can. Oh, you will still have like the first quarter, right? Like it started in mid of April last this year, sorry. So you will still have like a few basis points, but basically where you're getting to, like if you think about 2026 gross margin, would you see that further sliding or would it stabilize? I would say like we would think much more about a stabilization than a further sliding. Okay. Great. That's where I was getting to. It sounds like it's bottomed. Okay. On an organic side, for sure. Sure. I would take the inorganic side as a different conversation, right? Sure. And so last question, the inorganic side, right? And we only have about a minute left, but maybe part of your longer-term framework is to do more M&A. Talk about the pipeline and how you guys are thinking about potentially putting more capital there. Right. So when we did Investor Day, we talked about the growth algorithm, and we said 10%-11% CAGR on organic, and then we said like 3% plus on M&A. I think what we wanted to bring across with that is that we said like we're ready to consider opportunistic M&A as part of the growth algorithm. But at the same time, we didn't want to bring across like, "Hey, we're trying to offset anything of the core, of the core growth," but more like to say like we are open to these M&As if we find the right target where we feel like it has a good fit, it brings strong synergies, and Cognex is the right owner. So in that regard, we don't feel a pressure that we could sit here still in two years and we wouldn't have done an M&A, and I would still feel good as long as we delivered on the rest of our financial framework. Great. So we've run out of time, but thank you very much for coming here today. It's great seeing you. Yeah. Thanks, Joe, for having us. Thanks. Appreciate it. Thank you. Thank you. I appreciate it.