Thank you everyone for joining us again. My name is Joe Giordano. I cover industrials and industrial technology here. As you will be reminded in every single meeting at this event, it is Extel season. We value your vote. If you found our work helpful, we appreciate it. For me, it's the multi-industrial category. Excited to have Cognex with us again. You guys have been a good participant every year. We have CFO Dennis Fehr. We have Greer here to answer your hard questions, in the front row here. I will keep it interactive if people want. Raise your hand and we can go that route. I will kick it off. Dennis, thanks for being here. I think we'll start on just the operational momentum that the firm has. I think that's the most significant part of the story right now. It's been pretty significant. Maybe give us a brief update of what's going on internally, and then we can touch on some of the outlooks and markets and stuff. Yeah, no, great. First of all, thanks for having us, and thanks everyone for your interest in Cognex and for following us. I think really big picture, I think over the last, lets say, 12 to 24 months, two things happened at Cognex. A, we had a leadership transition. We have a new leadership team, with Matt, the CEO, coming into the role officially perhaps 12 months ago, and unofficially perhaps 15 months ago. Myself, I'm there for 24 months or so. That means a lot of transformational change, which we are driving towards the operating model, bringing different type of management philosophy about how we think about the financial framework, about how we want to run the company. Certainly what we see at the same time is that probably since November last year, we saw a market inflection happening. That means supporting our growth strategy also from a market side. Yeah which probably for a more extended period of time before that was a headwind. Now it's really turned into a tailwind, and I think the results or early results of these two things coming together is strong EPS growth. We showed good growth in 2025. We're on a good path for 2026, and we clearly think that there is more runway for us to drive further EPS growth, as we think ahead for the next 18 months or so, or longer. I want to get into the markets, but I do want to just touch on, it was kind of a unique situation when you guys came in. Cognex, long history, unique culture. When you're going to come in and do changes like this, how did you balance having the authority to go make big changes with being respectful for why people are there in the first place, and balancing the future of the firm with the past, the history of the firm? Right. See, I think the one great thing about the Cognex culture is while we certainly pride ourself in being a bit quirky, and we do annual reports which are not the normal way how maybe companies do. O ne thing very clearly strong is the openness to change within Cognex. It's really kind of going back all the way to the days the company was founded and was founder-run. It was a very long time founder-run organization, which really drove the strong culture. It certainly also maybe you could argue, maybe limited in certain areas, perception of where could you grow, how could you grow, how you change the operating model. It instilled a strong culture of embracing change. In that regard, I would say probably, compared to maybe prior roles I had, I think driving change at Cognex is really supported by the culture. In that regard, I felt like striking the balance of driving change but preserving the culture has been actually comparatively easy, I would say. Interesting. Logistics been a source of strength the last couple of years. It's come from kind of a market you didn't participate in not terribly long ago to the largest one now. Where do you think we stand in that market, big picture? Yeah. See a logistics market which we have seen now for nine consecutive quarters of double-digit growth. It was a market where we made really a good step forward through the technology which we have introduced over the last maybe three to four years in terms of machine vision tunnels, enhanced barcode readings, and so on. Certainly, it was also the first market to recover from the trough, right? Right. It was one of the first end markets which kind of went into the down cycle in 2022, but it was also the first market to recover. In that regard, we saw probably for six out of the nine quarters I referenced, we saw really broad-based market growth. Yep. That means we saw strong growth with our top customers like Amazon, but also on a broader scale. W hat we have been seeing since the second half of last year, that it started to more like getting into a phase to digest that growth, especially on the broader scale of the market, versus larger scale customers have still been growing and are still growing at this moment. Our perception is that the market is more now settling into a phase maybe for another, can be six months, can be 18 months, a phase to digest growth. Beyond that, we see actually a lot of opportunities to see strong growth in logistics. It's a market which is highly under-penetrated from automation perspective. It's highly under-penetrated just from kind of tracking and tracing through barcode reading, and then we have an additional growth opportunity there by introducing machine vision for inspection tasks in logistics. In that regard, long-term growth outlook for logistics is great, but I would say for 2026 and maybe 2027, it's too early to say, probably more a phase to digest growth. One thing I thought was interesting with logistics specifically, when you have your large customers there. If I think about the landscape of the market coming out of COVID was kind of like a crazy build as much as you can kind of phase. Your sales there for that customer compared to now, when I think of today's market, it seems kind of like, okay, warehouse starts are kind of in the middle of where they were, it doesn't feel frenzied at all. Your sales to that customer are kind of the same now as it was when it felt very frenzied. Sure. In a weaker market, you're still generating that kind of sales level. It makes me think, what is different about the market today versus when you first started really making inroads there? You see, I think if we think about the last peak of the cycle in 2021, a lot was driven by greenfield build-outs. These greenfields were not fully automized end-to-end. That means we're still clearly driving penetration into some of these buildings and facilities today, and we still have a long runway to go, right? That means I mentioned before, like introducing vision on top of barcode reading. In that regard, maybe really describe to say, the market has found really a new low point, right? Maybe I would not say that we are at the low point right now, but clearly it's much more durable and much more sustainable in that sense than it probably was previously. Any kind of new technologies that those types of customers, that cohort is increasingly asking for you now versus when they first started putting stuff in? Absolutely, right. We launched end of last year, product family called the SLX, that's really bringing machine vision into logistics, right? Think about the traditional machine vision tasks in logistics was really tracking and tracing. That means making sure parcels are going through the right places or finding the right places and be it parcels or be it components or parts to be shipped to be put into the right parcels. That's just one thing of automation. The other thing is that you have other challenges in a logistics environment. For example, jam detection on a conveyor belt, or you have side by sides. That means you have parcels jammed together, you make sure that you really identify this as two and not only as one, or that you identify hazardous goods inside of a parcel, and you treat them very differently than parcels which don't have that. In that regard, this type of additional vision applications is really kind of the next level of automation frontier in the warehouse automation side. I want to shift to consumer electronics for a minute. I always kind of struggled understanding the growth algorithm for that market historically for Cognex. Yes. I understood why it would be steady. I didn't really understand why it should kind of consistently grow. Right. Seemed more sporadic to me. If I think about that market today, it does seem like we should kind of be into maybe a multi-year growth cycle with new form factor phones and more complex designs and potentially new market applications from physical AI-type applications. Just curious what your view is there and how should we think about it over the next couple of years? Yeah. Absolutely. I think consumer electronics feels very different in this cycle than it has felt at least the last two cycles before, right? If we think back in 2017, it was really driven by one large customer changing display technology. Yes. It was a very volatile upcycle, also once this technology change was adopted, there was also very strong compression afterwards. It was very cyclical. If you go back to 2021, again, they are much more driven by one large customer. At that time, you could argue a bit more driven by strong end-user demand, but very clearly very concentrated growth. What we are seeing so far is it's a very broad-based growth. That means its geographies, its customers, and then beyond customers, it's like the devices, what a machine vision is being used to inspect, right? Of course, there are smartphones, there are tablets, there's even desktop PCs and laptops. There are new companies entering the realm with kind of call it AI gadgets, which they are looking to launch. We have something which is also new for us, is kind of the data center supply chain, right? It's still a small market, but it's growing very rapidly for us. That means topics like, sorry, connector inspections, rack assembly, inspection type of applications. We're certainly also bringing AI-based machine tools, machine vision tools there, really help with such kind of inspections. In that regard, we see a very broad-based growth, and that makes this cycle feel more durable. Potentially a longer cycle, yet to be seen, but very clearly gives us a very different outlook into this market than what we have seen in the past, where especially the down cycle was very strong. I would expect that to be different in this cycle. Can you talk about your exposure to semiconductors, like where you play? I'm guessing every conversation in this building today is going to talk about how much spending is happening over the next foreseeable future here. Any reason to think that you wouldn't continue to participate in that? No, absolutely not. I think we are very strongly entrenched in that market, right? If you think back maybe 20 years, we almost were like a semi-cap company. Yeah. That means 70% of the business of the company at that time were a semiconductor business. That means we have very long-term relationships with the machine builders, right? That means where do we play? Basically, our machine vision products, they go inside of the machines, which are then being used for the wafer production or further down in the processing of the chips itself. In that regard, very deeply entrenched, very often highly technically designed and inspected. That means there's very little incentive for our customers to change, because change totally means cost them money, re-engineering, and so on running it through their customers. In that regard, what we really see at the moment is a very strong capacity-driven cycle. C learly it feels like it's kind of a semi super cycle. In that regard, it feels like a very good case to say, Cognex will grow with the super cycle for the years to come. Yeah. Let's shift over to margins since that's been a big part of the story here. Gross margins are high but have been stable. Most of the benefit here at the EBITDA, and you shifted your focus to EBITDA, mostly been on the OpEx side. What changed here philosophically to unlock what's happening here? I think first of all, it's a bit what you mentioned, and I alluded a bit before about new leadership team coming and taking a different view on the P&L. That means in the past, the company was really centered around top line growth and gross margins. It means on the one side, certainly high gross margins are great. You create a lot of leverage when you grow, and that kind of was a bit like the core DNA of the company to have outsized growth combined with strong gross margins. Then eventually it will result in a strong fall through. At the same time, when you focus and center so much about gross margin, you especially in the down cycle, you start to forget about your largest cost block in your P&L, which is the OpEx side. That means also like in terms of when you do portfolio decisions, it may lead to wrong allocation decisions, right? Because you focus on your high gross margin products, but if they come with a high SG&A tax to it, then maybe it's not your best product line for your bottom line. In that regard, really shifting away from gross margin as the core fundamental, let's say, margin aspect, I think is one key. Then second, certainly that we drove a strong focus on OpEx efficiency as a leadership team, and I think we have made good progress there over the last 12 to 15 months. We certainly have still a bit way to go, right? We talked about $35 million to $40 million of net OpEx reduction for this year. I think we are probably 80% through of executing these actions. We'll start to see, mostly in Q3, some of these results, and then I think we have very strong line of sight towards the rest of the 20% of the actions, which then will follow in the next couple of months. In that regard, I think we do a good job, or have done a good job in 2025 and are on a good path in 2026 to take cost out on the OpEx side. As we start to think about 2027, it will be all about productivity. That means like, from a today's perspective, you could make a good case that top line growth will still be attractive in 2027. That means for us as a leadership team to make sure that the OpEx growth will stay, let's say, in line, I mean, significantly below the top line growth and drive further leverage. Yes. You guys are organic. I know you have some weird offsets this year with stuff that was done last year. Organically, high single digits and OpEx down or flattish to down, at the end of the day, it's wonderful. It leads to a lot of leverage, but also makes me think like stuff should've been done, right? Yeah, sure. It's unusual to be able to do that. What levers do you have on a more consistent basis now that you've gone through the initial wave of easy stuff, easy-ish stuff? Right. What can you do, especially that you're growing, right? It's harder to take this stuff out as you're doing that. Right. See, I think very clearly what we're doing in 2025 and 2026 is right-sizing, right? Yeah. That means bringing it back to a level where it should be. That's clearly is a bit of a different playbook than when we start to think about maybe second half of 2026 or 2027. That's really all about driving this productivity. Here it's all about process and it's about automation, right? That's a bit like that change in terms of how we look at it from a management perspective, that we really think about the operating model of the company and how can we evolve the operating model here, right? Over the last 15 years or so, prior where the company also enjoyed, right, under Rob's tenure, the company grew, whatever, 15% CAGR in his 15 years. Phenomenal top line growth. Yeah. He achieved it by going after new vertical markets. The operating model of the company fundamentally didn't change. F or us to go really to the next level in terms of both top line size, but then also eventually thinking about like, how can we improve peak to peak and trough to trough? We need to change the operating model of the company, otherwise we will just stay the same in terms of our financial profile. W e are pleased as a leadership team that we are, in all fairness, we're just getting back to where we have been as a company, right? We're not at new heights at this moment. F or us as a leadership team now is about to show to ourself and to you guys here to show that we can improve peak to peak and trough to trough. I think we probably have an easier case, trough to trough, just compared to how much compression we have seen in the last trough. The peak to peak improvement is now that what we have to show next as a leadership team. Is there a way to use price more as a lever? Like in the past, if you look at all the growth that you've had over time, it's maybe more than 100% volume, right? Maybe price was even slightly negative. Yeah. No, absolutely. Is there a way to use that as a tool now? Absolutely. T he company in the past more approached pricing reactively, right? That means in times like 2021, 2022, when you had inflation and maybe the company kind of looked to pass through inflation. W e are thinking pricing very differently, right? We are thinking it much more in a sense, like what can we achieve over a three to four years time horizon, and we clearly think that there's an opportunity to use this as a compounding effect over this multi-year time of period. Right on the one side, certainly pricing, you have also today effects like memory chip pricing are increasing. We're also reacting to that and looking to pass through some of that. At the same time, there's a lot we can change in terms of the operating model. Again, that means I call it data-driven decision-making. That means what data and information are we giving our sellers at hand to make the best possible pricing decisions in their day-to-day life, right? Certainly, we have pricing approval processes and so on where you can also influence your pricing decisions. A lot of pricing decisions are still being made by sellers in the field, and that means giving them the right information, like what is a good price for this type of customer in that type of region. That already helps a lot. These are kind of these changes which we're driving in the company to just make, in this case, better decisions and then certainly aligning pricing better to the product life cycle. There are many areas we can really optimize and are optimizing the pricing playbook. In that regard, clearly our objective is to turn a pricing headwind, which we have seen especially in 2024, into a tailwind over the next couple of years. A ssociated with that is the Salesforce change, which kind of went with your whole changing of the parts of the pyramid that you're attacking. Right. Maybe talk briefly about that. I know we've talked about that in prior years. Where are we on what was previously the Emerging Customer initiative? I know we're not using those words anymore. Right. What has been done and why was it necessary? Right. Maybe first, why are we talking about winning more customers, right? It started really, if you think back at 2021, I said before, the last two cycles, they were driven by two large customers in terms of the growth. I think the company at that time realized that if you want to eventually double yourself again in terms of the revenue size, you can't just rely on two or a few customers, because obviously you will hit a ceiling much, much faster, and then you're exposing yourself toward this customer concentration risk. I think the conclusion strategic objective at that time, and that hasn't changed, was to say, let's broaden the customer base. Just the means were different, right? The Emerging Customer initiative was about hire more salespeople, reach more customers, put them into a separate organization, and just kind of almost you could argue brute force it in a sense. It's a very, very expensive way to do it because hiring a lot of people costs a lot of money, and then you drive a lot of inefficiencies with two different sales organizations. That means when we went away from Emerging Customer initiative to what we call Salesforce transformation, we didn't change the objective. The objective remained to say, "Let's penetrate a broader set of the customer market and SME type of customers." The means were very different, right? That means, again, here, much more focused on data and process orientation. That means from how we analyze our sales districts, right? The sales district, whatever, Northern Ohio or something like that, to really think about what type of customers are there, how many customers are there, what type of seller profiles do you need? Are these more machine builders? Are these more sophisticated end users? Are these more SME type of end users? What type of sellers do we deploy? How many do we really need? Then how do we generate marketing automation, lead generation, and so on. W e made tremendous progress in terms of everything sales organization related. That means we optimized and restructured the sales organization. We eliminated excess capacity there. We rewrote the sales playbooks in that regard. W e feel pretty good about that piece. W here we still have definitely more to do and much more opportunity is marketing automation, lead generation, top of funnel generation, so on. In that regard, I would say now what gives us the confidence to say we're doing well, I think it's two things. One thing, new customer acquisition last year was pretty good, was 9,000 new customers, one, compared to 3,000 the year before. Really in electronics and packaging end market is this broad-based growth, right? That's really what the strategic objective at the end is, that's what we are really seeing happening in this market. In that regard, I think we can see early success, or maybe it's not early anymore, right? We could argue we are on this as a company since 2023 if we include the Emerging Customer initiative. Clearly, we see signs of success. Are we at the end? No, we are not. W e still have a tremendous opportunity in sales productivity. Coming back to the margin question before, that gives us the confidence that we can drive further top-line growth without expanding OpEx at the same level. Actually, at a much, much lower level. I want to go to AI, the reason I waited on this is because you have been in AI for the entirety of the company's existence, and it feels this is not a new thing for you. How are you using it both internally to leverage it from a cost standpoint, from an efficiency standpoint, and how are you designing it into the new products? Yeah. There are really two pieces to the AI story, right? There's the product side, and then there's the, let's say, process efficiency side of the AI story. On the product side as a company, we embraced AI very early on, right? We made an early acquisition late 2017, early 2018, which really formed the core team of our AI vision team, of our AI vision models, and also starting to collect all the proprietary data sets. In that regard, we can clearly claim that we are the leader in AI machine vision technology. W e have shown this through products which we have launched since 2022, which are AI-enabled on the edge. We have the AI on the edge, that means running on the device. We are also a leader with our software offering in the deep learning technology. Now we have started to combine these two worlds with what we call OneVision, right? OneVision is basically, think about a virtual training room for everything that's running on a device. It's really very unique in the industry. In that regard, we are very differentiated there. Then, I guess on the process efficiency, we do what probably many other companies do, which is really fully leaning in, right? We have basically since two years, we already adopted AI-assisted coding. We have now a very, very high 90% plus usage rate of these rates. We're deploying AI really very meaningfully throughout the company from sales training to, like I said, software coding towards back-office applications in that regard, fully leaning in there. If I talked historically to Cognex about what gives you your moat, right? It's always been that this is really hard to do. Right. To program these things, to make the tasks that they do at speed is very challenging. I think there are those that want to make the case that having Claude code or whatever, can I just buy a camera now and myself, who doesn't know how to code, can I kind of recreate what you're doing much more easily today versus historically? How would you respond to that? Right. B asically, the tech side is clearly where we have the deepest moat. I think it's very hard to say, "Let's use some kind of open source type of software or use one of the coding assisting type of tools out there." Why is that? First of all, right at the end, you need to create a machine vision model which runs on a device, right? That means you cannot create something which has billions of parameters, and you need to have something which really fully utilizes the compute power, but cannot go beyond the compute power which you have available on the device. It's really highly specific, right? That means, at the end, we are talking about tiny defects, right? Think about a cookie packaging with a transparent foil, and you have a needle-type size of hole in there. That means tiny defects, highly specific, and then very fast. That means you need speed, you need accuracy, and it needs to be highly specific. That means you need a lot of data to train it. That means it's just not publicly available in that sense that you can kind of just stitch it together. In that regard, this whole theme of, "Hey, is AI more a risk or more an opportunity for us?" It's very clearly answered that it's a tremendous opportunity in terms of driving penetration. It means our newly launched AI vision tools can just solve tasks which couldn't be solved in the past without AI, and that basically creates markets. In that regard, I think we see AI as a friend, we are embracing it, and we are leading it. Have you seen any meaningful changes in who's participating? I do see big automation companies showing some capabilities, but it's hard to see how actually relevant they are in the market. Right. No, not really. I f you take a very big picture then over the last 20 years, you had Keyence on factory automation and SICK on logistics and rail automation. If you want to zoom in a little bit more, maybe you could argue that maybe five years ago, you saw the advent of some Chinese competition. It hasn't really changed, right? You have maybe Keyence and us as the key and top players, and then you have the rest, so to say. Yeah. Maybe there have been name changes, but no, not really. Yeah. Maybe we'll just close on capital deployment. It hasn't been part of the story for the most part historically. There's been a couple of deals along the way, but you seem more open now to opportunistically buy back stock when it makes sense, or we're talking about the potential for deals. How do you see balancing usage over the next couple of years? Yeah. See, I think we outlined our capital allocation strategy at the Investor Day, where we said, yeah, at the end, it's somewhere between M&A and opportunistic share buybacks. That means we're really looking at good entry points to buy back shares, and I think we found some nice points over the last 18 months where we have really been able buying back shares at attractive levels, like Q1 in the low 40s, almost $100 million deployed. Could call it a steal almost. Then certainly, we are out there in the market to look on the M&A side. We have more flexibility there. In the past, we were very focused on kind of smaller tech bolt-ons and high gross margins. We are much more open in both senses that we say bottom-line profitability matters, and then much more open in terms of what type of sizes we would also do. Clearly, we consider M&A as the icing on the cake, right? We think organically, we have a lot of growth opportunities, and we have also, organically, a strong margin expansion still ahead of us. We already expanded quite a bit, but we still can expand more. In that regard, we don't feel any pressure on M&A. Yeah, it's the icing on the cake. All right. I'll leave it there. Thanks everyone for listening, and enjoy the rest of your day. Thanks.